The future of Paramount Communications Inc. is in the hands of its shareholders now that its board of directors has reversed itself and agreed to a $10 billion merger with hostile bidder QVC Network Inc.
It was a big setback for Paramount chairman Martin Davis and friendly suitor Viacom Inc., the cable TV operator that started the biggest takeover battle of the 1990s with plans to join Paramount in an entertainment colossus.But Wednesday's decision does not end the 3 1/2-month struggle. Shareholders do not have to accept the QVC bid, and Viacom can raise its $9.6 billion offer.
Davis has sought to repel QVC Network and the cable shopping channel's chairman, Barry Diller, a TV programming entrepreneur he once fired as head of Paramount's Hollywood studio. In many respects, the Viacom-QVC rivalry is a duel between the two entertainment moguls.
The prize is Paramount, a conglomerate that could provide vast amounts of programming needed to fill the "information superhighway" being developed as cable, telephone and computer technologies converge in America's living rooms.
Paramount produces movies ("Addams Family Values," "Wayne's World 2") and television ("Wings," "Entertainment Tonight"). It also owns TV stations, cable networks, Madison Square Garden, basketball's New York Knicks, hockey's New York Rangers, five theme parks and publishing giants Simon & Schuster, Prentice-Hall and Pocket Books.
Davis has argued that Viacom is a better match for Paramount. Viacom owns the MTV, VH-1 and Nickelodeon cable networks, the Showtime channel, TV and radio stations and cable systems.
Shareholders have until Jan. 7 to decide whether to tender their shares to QVC. If QVC holds 51 percent of Paramount stock by then, the remaining shareholders will get the chance to sell their stake in the company to QVC.