Settlement discussions between IAC/InterActiveCorp and Liberty Media Corp. are continuing, even as the companies fight over control of IAC in Delaware Chancery Court, a witness for IAC testified this morning, the Wall Street Journal reports.

Pamela Seymon, a lawyer for Wachtell Lipton Rosen & Katz, revealed that discussions persist while being cross-examined by Liberty lawyer Thomas Bayliss, of Abrams & Laster. "There are settlement discussions which I obviously will not testify about," she said. Ms. Seymon said that she wouldn't characterize the discussions as serious "negotiations" and that nothing was at the stage where it would be presented to the IAC board. Liberty owns a majority voting stake in IAC but under a longstanding proxy agreement allows IAC Chairman Barry Diller to vote the stake.

Yesterday IAC Vice Chairman Victor Kaufman testified that the two companies had had extensive off and on discussions over the past year about possible deals, primarily asset-for stock swaps where Liberty would swap its stake in IAC for one of IAC's businesses such as the HSN home shopping network. Mr. Kaufman testified the discussions had occurred as recently as January and that IAC was still interested in such a deal.

In recent weeks Liberty had presented IAC with a settlement option where it would give up its stake in IAC in exchange for control of both HSN and IAC's time-share exchange business Interval International, according to people familiar with the matter, although it is unclear whether that particular scenario is still on the table.

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