Barry Diller denies media empire cheated Tinder founders out of $2bn

Barry Diller on Monday denied accusations his media empire had a pattern of cheating entrepreneurs as he took to the stand to defend claims that IAC fleeced the founders of dating app Tinder out of $2bn.

“The only thing we want is [valuations] to be fair . . . If we are out of faith with our employees we won’t have any,” said Diller, a longtime Hollywood executive who became an internet investor backing such companies as Expedia and TripAdvisor.

IAC’s most successful venture, Tinder, is now the subject of an ugly dispute with its six founders, including Sean Rad, who have sued Diller’s company in New York state court for allegedly lowballing a 2017 buyout of equity they held.

At the time, Tinder was valued at $3bn by independent investment bankers, a figure the founders — who owned roughly 20 per cent of the company — today argue was $10bn below its then fair value.

Diller, 79, admitted he had little day-to-day oversight over Tinder, testifying he recalled only meeting Rad in person once and that he did not know the intricacies of the contract the Tinder founders had struck with IAC over their equity.

When asked about Tinder’s operating performance in 2016 and 2017, Diller conceded he knew most about registrations — “the top of the funnel” as he called it — which he said showed the dating app’s growth was slowing. Rad’s lawyers have argued that other metrics, such as revenue, prove Tinder was still in expansion mode though Diller said he had not followed those figures as closely.

Rad’s lawyers pressed Diller over Greg Blatt, a longtime IAC lawyer and top executive who replaced Rad as Tinder head just before the 2017 valuation process. Rad has alleged that Blatt was parachuted in to manipulate the valuation. IAC contends Blatt was in fact appointed to rescue Tinder from Rad’s failed stewardship.

Diller said Blatt was “extremely bright, very hard working, with curiosity”. When asked if Blatt was a bully, Diller responded: “He is passionate, he is theatrical. He is a decent person. He is wilful. Some might be intimidated. He has a certain flamboyance.”

Diller’s appearance on the witness stand in the New York courtroom where the trial is being held gave a window into the life of one the most influential media moguls.

In 2014 before the conflict between Rad and IAC erupted, Diller sent an email to Rad writing “ . . . talking today to one of the deck crew on my boat — they said Tinder has been a social godsend in more ways than browsing. The boat travels a great deal, and is now in the Caribbean.”

When Diller was asked about what he was doing in 2016 and 2017 — when the Tinder valuation process was proceeding — he mentioned his directorships at Coca-Cola and The Washington Post as well his efforts to build a public park, now known as Little Island, on the Hudson River adjacent to IAC’s headquarters.

Rad’s lawyers shared a 2015 email exchange between Diller and Jack Welch, the longtime General Electric chief executive who was a paid adviser to IAC. In the email, Welch referred to Blatt as a “cancer”, an assessment that Diller testified on Monday he disagreed with.

The back and forth between Rad’s lawyer, Orin Snyder, and Diller was tense at times and at one point Judge Joel Cohen asked for “a little less sparring”. Each side’s lawyers on multiple occasions retreated to the judge’s chambers to argue over the scope of questioning, leaving Diller alone on the witness stand until they returned. At one point Diller joked, “it would be interesting if we all got up and left”.

“Tinder was in chaos since inception because Sean Rad was a bad leader,” IAC said in a statement on Monday. “Plaintiffs are wasting the jury’s time by calling witnesses like Mr Diller — who had nothing to do with Tinder’s valuation — because they’re more interested in grandstanding than showing evidence.”