Spectator Ego Is of Paramount Importance

By KURT ANDERSEN

The decision to spend billions to take over a company is seldom either strictly logical or strictly emotional. There are always spreadsheets to scrutinize, sure, but there's also that extra-rational accumulation of wishful hunches and adrenal instinct that makes people finally just go for it. Since show-business executives are uncommonly sensitive to go-for-it twitches, it would have been weird if a competing bidder had not stepped in to turn the friendly merger of Paramount Communications and Viacom into the high-strung, insanely complicated struggle it became last week. .

The collective id of the players was already breathtaking. Now comes Barry Diller -- hypersmart, overweeningly arrogant, terrifyingly blunt -- teamed up with John Malone, who is said to operate in a perpetual suffer-no-fools, scorched-earth mode.

The narrative gets richer. A decade ago, Diller brilliantly ran Paramount under Martin Davis, and the antipathy today is intense and mutual, although not, according to two entertainment power brokers close to Diller, an important impetus for the current takeover attempt -- just a "cherry on the sundae," says one.

The great industrial consolidations of the Rockefellers and Harrimans a century ago were simpleminded checkers games by comparison to this 3-D chess match. Tracking the corporate cross-purposes and potential conflicts of interest makes the brain hurt. Paramount's Davis, surely a lame duck no matter who wins, wants Sumner Redstone's Viacom to become his proprietor, but both will be millions richer even if Diller and Malone prevail. Because Malone controls a quarter of the stock in Turner Broadcasting, mellowing Ted Turner (he told someone recently he's "a lot less hungry" than certain other moguls) was persuaded last week not to offer his own competing bid for Paramount. If Turner had wound up buying Paramount, it would have left Time Warner, which owns a fifth of Turner (and which has a seat on QVC's board), in the untenable position of owning a large piece of Paramount, one of its primary Hollywood competitors. Oddly, no one seems to recall that one of Paramount's most compelling assets in the current deal, a library of 300 postwar movies, was leased away last summer -- to Turner. Nor has anyone mentioned that QVC and Paramount, adversaries in this fight, have been in business together since last spring, as principal backers of a new media- investment firm. (Of course, Time Warner employs this writer, and Viacom employs this writer's spouse.)

All the pots and all the kettles are black. Viacom had a point when it sued Malone last week, accusing him of "bullyboy" monopolism (Malone not only is the country's largest cable-system operator, but owns significant chunks of a dozen basic cable channels, and with Paramount would get half the USA Network). But Viacom enjoys a pretty monopolistic lock on the music-video business with its MTV.

A year ago, before Diller hooked up with Malone at QVC, the cultural elite considered shopping by TV a joke, unworthy of serious interest. But Diller's involvement in one stroke transformed home shopping's image from pathetic trailer-park quasi-entertainment to visionary locomotive into the future. Yet he must have realized the frenzied run-up of his stock wouldn't continue indefinitely, and he certainly knows, according to a friend, that without a real Hollywood movie studio he cannot be a full-fledged member of Hollywood royalty. Analysts can talk about corporate fit and maximizing shareholder assets all they want, but the latest offer for Paramount is importantly about maximizing Barry Diller's stature among a few thousand residents of West L.A. and Manhattan.