Diller Seeks to Form New Cable Venture : Entertainment: The former head of Fox Inc. is working on a deal that would propel him to the forefront of cable TV’s technological revolution.

Barry Diller, the former Fox Inc. chairman who resigned earlier this year to start his own business, is in discussions to form a new cable TV venture with backing from industry giants Tele-Communications Inc. and Comcast Corp., knowledgeable sources said Wednesday.

Diller, who last summer tried but failed to acquire NBC from General Electric, has been working on the cable TV venture for several months.

A major part of the business plan, according to sources, is a “revolutionary” approach to how products are sold on television. The venture is said to take advantage of new “pay-per-view” technology, both through movies on demand and home shopping.

The deal, if it comes together, would propel Diller to the forefront of the technology revolution in cable TV. The traditional media environment of a few established networks and leading cable TV channels is giving way to a new “video on demand” era.

Both TCI and Comcast are leaders in the high-technology development of cable TV.

Last week, for example, TCI announced that it will introduce “digital compression” technology that could allow it to provide its subscribers more than 500 channels by 1994. The technology--which converts analog signals into digital signals and then squeezes them so more channels can be transmitted--could provide viewers with a vast number of specialized channels and pay-per-view film choices.

Diller “thinks the future is not in broadcast TV,” said a knowledgeable source whom Diller has frequently consulted in the last year. “He thinks it’s in cable TV.”

A spokesman for TCI declined comment. A Comcast spokesman and Diller could not reached for comment.

Denver-based TCI is the country’s largest cable TV operator, with 10 million subscribers, or about 20% of the nation’s cable TV homes. It also owns 5% of Liberty Media Corp., which has stakes in Turner Broadcasting System Inc. and several cable TV networks. TCI Chief Executive John Malone and Chairman Bob Magness together own about 56% of Liberty Media.

Earlier this week, Liberty Media, which was spun off from Tele-Communications, announced that it will pay $150 million in cash and stock for control of the Home Shopping Network. Liberty is also teaming up with Comcast to gain control of the rival QVC Network, prompting speculation that Liberty may seek to combine some of the operations of the two networks.

The combination of Home Shopping Network’s huge, computerized telephone infrastructure--said to be capable of handling up to 20,000 calls a minute--with TCI’s new digital technology that may create more than 500 channels, suggests that the new venture would soon be on threshold of establishing a huge pay-per-view movie system.

Many in Hollywood view so-called “video on demand”--in which home viewers would have the equivalent of a video rental store at their fingertips--as the next big breakthrough for the industry. Such a breakthrough would be welcomed by the studios because they would receive a bigger chunk of the rental revenue than they do from video rentals.

Diller stepped down as chairman of Fox Inc. last February, capping an illustrious career that saw him head two major Hollywood studios.

At Fox, the volatile but innovative Diller built Fox into the fourth TV network on the strength of unsophisticated entertainment shows such as “Married with Children,” and guerrilla programming tactics.

But in his last couple of years at Fox, colleagues said Diller had grown weary of the hustle of Hollywood, particularly the movie side of the business. Instead, most of his energy has been focused on television, and he has buried himself in study over the last year of computers and high-technology TV applications.

Philadelphia-based Comcast, the nation’s fourth-largest cable TV operator, is one of the fastest growing, with about 2.8 million subscribers. Revenue this year is expected to reach $876 million. Locally, Comcast serves such areas as the Simi Valley, Ontario and parts of Orange County.

Times staff writer James Bates contributed to this story.