Was Barry Diller uncomfortable with giving up control of Expedia?

Barry Diller sold his controlling stake in TripAdvisor to Liberty Media, but he insists on staying on as chairman, with his 62% voting control, at Expedia Inc.

Is it because of a lack of confidence in Expedia’s direction?

Is it Diller’s view that TripAdvisor CEO Stephen Kaufer is the class valedictorian while Expedia CEO Dara Khosrowshahi needs some home-schooling?

Perhaps we are making too much out of a recent Expedia SEC filing containing a Diller email to Expedia employees. Diller explains that he plans to stay on and retain his holdings in Expedia despite his selling off of his TripAdvisor stake.

Here’s the Diller email:

To: All Expedia Employees

From: Barry Diller

Re: Message from the Chairman

As many of you may have read of the sale of our family’s interest in TripAdvisor, and with questions of whether or not this is the first step in a general disposal of assets, I wanted to be quite clear that the answer to that question is ‘NO’.

This is the statement that I made about TripAdvisor:

“Ever since we acquired TripAdvisor in 2004 it’s been one of the smoothest and most trouble-free growth stories I’ve ever known,” said Barry Diller. “During that time it grew from a startup with $23 million in annual revenues to a $5 billion plus public company with a global brand that operates the world’s largest travel site. Its great progress has happened because of the superb talents of its co-founder and CEO, Steve Kaufer, and the team he leads. My only reason for resigning as Chairman and disposing of my interests is that I have more obligations than time and transferring control of TripAdvisor to Liberty is something I’m very comfortable with — Liberty has proven itself a fine steward and leader of its controlled businesses.”

Since the original sale by Microsoft ten years ago, I’ve been the Chairman of Expedia, through all it’s good times, and some less than good, and enjoyed it thoroughly. I’m very proud of the work you all do and the prospects for the future and plan to stay engaged as long as I’m sentient. I hope this clarifies, and I hope you all have a wonderful holiday and new year…

Barry Diller

Notice that Diller, who became chairman of Expedia in 2002 when his USA Networks bought the controlling stake in Expedia from Microsoft, goes out of his way to praise TripAdvisor’s Kaufer.

And Diller mentions his “good times, and some less than good” at Expedia.

In Diller’s and Khosrowshahi’s tenures at Expedia, the firm became the largest travel company in the world.

But, Expedia, engrossed in technology platform issues and late to diversify its merchant hotel business, then saw its competitive advantage slip, with the Priceline Group taking up the slack.

Kaufer gets praise, Khosrowshahi a no-show

While there’s ample praise for Kaufer, there’s no mention of Khosrowshahi in Diller’s letter to Expedia employees.

Perhaps if all were well, there would have been a pat on the back or a show of confidence for the Expedia CEO in the email.

Carroll Rheem, senior director of research at PhoCusWright, thinks Diller’s mention of Kaufer was designed to head off any speculation that Diller sold his TripAdvisor stake because of any bad blood or disagreements between the two.

Rheem says TripAdvisor “is the largest player and no one touches it in the travel media space.”

On the other hand, “Expedia has challenges,” Rheem says, although she doesn’t think it is underperforming. “It is a different game, with a heck of a lot of competitors, and a lot of money at stake.”

Diller may think “there is a lot more to do” at Expedia than at TripAdvisor.

Expedia has shown signs of being on the comeback trail, in terms of its competition with Priceline in the global hotel business, and Diller is staying on board, perhaps because he may not envision a smooth ride.