Barry Diller: Cornerstone deal was a mistake

Barry Diller, chairman of IAC/InterActiveCorp, said he made a "mistake" acquiring Cornerstone Brands three years ago in hopes that the catalog operator's home products selection would compliment HSN, his St. Petersburg-based TV shopping network.

Diller told analysts Wednesday the connections between HSN's merchandise needs and the owner of Ballard Designs, Frontage and Garnet Hill, for which he paid $720-million, never meshed.

Diller said when IAC spins off HSN and Cornerstone this spring, he expects HSN to overhaul or sell the catalog business outright.

The spinoff hinges on the outcome of a lawsuit headed for trial in Delaware on March 10. IAC'S biggest shareholder, John Malone's Liberty Media Corp., is trying to oust Diller, claiming he violated a proxy agreement that enabled Diller to control IAC for 13 years by voting Liberty's shares.

Diller countered that Liberty never objected to the spinoff until learning it would not get back controlling interest in HSN without paying more for it.

- Times staff writer