Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, October 27, 1993 TAG: 9310270037
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Long
If moviegoers responded with anything near the fervor that Wall Street and the media have shown for the real thing, it would be a box-office smash.
Why has the bidding war for Paramount drawn such interest, and does it really matter to consumers who wins?
Here's the context of the biggest takeover battle since the 1980s.
Q. Why has Paramount attracted such intense interest?
A. Paramount is one of the last studio owners that hasn't been acquired in the past decade and is viewed as a promising base to compete effectively in the developing electronic information age.
Paramount has a rich heritage of films, TV programs and production experience that has become increasingly attractive as technology promises to put thousands of choices - like movies anytime and customized home shopping - at consumers' fingertips.
Its library contains 900 films, including "The Godfather," "Raiders of the Lost Ark" and "Beverly Hills Cop," and 6,100 TV programs, including "Cheers" and "Happy Days."
Its publishing operations include Simon & Schuster, and its books are seen as potentially valuable electronic educational tools that students could use anytime they wanted.
Paramount is using its TV stations to launch a new TV network. Its theme parks, including King's Dominion in Virginia, and Madison Square Garden in Manhattan offer settings for live entertainment. It also owns two sports teams, the New York Knicks in basketball and Rangers in hockey.
Q. But why is Paramount considered such a hot property now?
A. It has long been thought that Paramount would be a buyer rather than the target in a takeover deal. That perception changed last month when it agreed to be acquired by Viacom, a leading cable TV company.
Martin Davis, Paramount's chairman and chief executive, unsuccessfully sought to buy Time Inc. just as Time was about to merge with Warner Communications Inc. four years ago.
But Davis said he has since decided that Viacom Chairman Sumner Redstone offered the best opportunity for Paramount to grow, and his board agreed to an $8.2 billion merger in mid-September.
Critics said Davis also is wary of Barry Diller, who once worked for him as the head of Paramount Pictures and has been looking for a way to turn his cable shopping channel, QVC Network Inc., into a global media power.
Q. So doesn't this amount to a street fight between two rich guys?
A. It's more. The standoff between Redstone, one of the nation's richest men, and Diller, who could become one if his global ambitions are realized, has drawn some of the biggest names in the communications industry into their fight.
Redstone has agreed to sell stakes in Viacom for $1.8 billion to the world's biggest video retailer, Blockbuster Entertainment Corp., and to the regional phone company for New York and New England, Nynex Corp.
Diller has raised $3 billion in bank financing and $2 billion by promising a stake in the merged company to the cable TV system operator Comcast Corp, the cable channel investor Liberty Media Corp., the diversified media company Cox Enterprises Inc. and the Newhouse family's Advance Publications Inc. (Liberty Media holds a stake in Home Shopping Network Inc., the St. Petersburg, Fla.-based television retailer with an order-filing warehouse in Salem.)
Q. Will consumers see any difference depending on who wins Paramount?
A. Maybe at the margins. Both suitors plan to make the new company a global leader in providing entertainment, information and other services that technological developments are expected to lead consumers to demand.
Paramount said Tuesday it was teaming with TV station owner Chris-Craft Industries Inc. to form a fifth broadcast TV network debuting in January 1995, initially with four hours of programs over two nights.
Viacom owns five TV stations affiliated with other networks but approved Paramount's network plans. It owns cable TV channels including MTV, VH-1, Nickelodeon and Showtime. Some already are seen abroad and could widen distribution for Paramount programs.
Redstone plans to introduce characters from MTV into Paramount's theme parks and open stores featuring merchandise from both companies.
QVC's Diller wants to accelerate Paramount's movie production and has expressed interest in launching a new broadcast TV network. His experience in heading both the Paramount and Fox studios and as the creator of the fourth major broadcast network at Fox are his main credentials.
Diller hasn't disclosed his plans for a new network, but it probably would include an interactive element, encouraging viewers to respond to what they see on the screen. More shopping services could be expected from a QVC-Paramount combination.
QVC's link with Liberty is important because Liberty is headed by John Malone, who also heads the nation's biggest cable TV system operator, Tele-Communications Inc. That could mean more cable subscribers would get Liberty's Encore movie channel and fewer would get Viacom's Showtime.
Earlier this month, Malone agreed to sell his company to Bell Atlantic Corp., an aggressive phone company. The significance of this in the Paramount takeover remains unclear, but presumably it strengthens QVC's financial muscle.
by CNB