Barry Diller Settles Government's Lawsuit Over Stock Purchases

Eriq Gardner
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When a media titan purchases a large stake in a corporation with the potential of affecting commerce in the United States, the government wants to know about it.

Barry Diller has agreed to pay $480,000 to settle allegations that he violated the notice and waiting requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The law is meant to give federal antitrust agencies an opportunity to investigate a proposed transaction to consider the possibility of moving to block it.

The IAC chairman got into trouble after he acquired 120,000 shares of voting securities of Coca-Cola in November 1, 2010. As a result, he held in excess of $63.4 million of stock, about the threshold for triggering notification obligations.

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Between November and April 26, 2012, Diller acquired an additional 605,000 shares, and according to a complaint (read here) that was filed by the United States of America against Diller in D.C. federal court on Tuesday, "each acquisition of Coke voting securities by Diller during this time period resulted in Diller holding a reportable amount of Coke voting securities."

But he didn't file any HSR notice and on August 27, 2012, he purchased an additional 264,000 shares of Coke for approximately $20.3 million. That brought his stake to about $136.4 million.

The following month, the Coke-loving media mogul was contacted by the in-house counsel for Coke about HSR.

Diller soon made corrective filings.

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But the FTC wasn't satisfied because he was "in continuous violation of the HSR Act" from November 1, 2010 to June 22, 2012.

In seeking the remedy, the U.S. government notes that Diller allegedly violated the HSR before -- in 1998, when he controlled USA Networks and it acquired CitySearch. Fifteen years ago, Diller made a corrective filing for this and is said to have "acknowledged that the transaction was reportable under the HSR Act but asserted that the failure to file and observe the waiting period was inadvertent."

The FTC now says that Diller has agreed to pay $480,000 to settle the latest dispute. The commissioners voted 4-0-1 (one member abstained) to refer a complaint and settlement to the Justice Department.

Twitter: @eriqgardner