Diller on Diller : QVC Chief Says He’s Matured and Is Doing What He Has To

High above Manhattan, in his apartment at the Waldorf-Astoria Towers, QVC Network Chairman Barry Diller awaited the next move from his old friend and current competitor, Viacom Inc. Chairman Sumner Redstone, in their fight for Paramount Communications Inc.

Within hours, Viacom would file a widely anticipated antitrust lawsuit against QVC and its key backers. Regardless of the lawsuit’s merit, it served a strategic purpose for Viacom to slow the pace of the battle, which has pummeled Viacom’s stock and depressed the value of its bid for Paramount.

It is Diller’s first experience with a takeover battle, but he has remained remarkably calm all week. Renowned for abrupt, two-second phone conversations, he has spoken patiently and at length with influential Wall Street analysts, attempting to woo them to his side.

For Diller, Paramount clearly represents a key acquisition as he builds his empire.

“Look, I’m not a great believer in the mostly meaningless usage of ‘synergy,’ ” he said. “But for us, investing in interactivity is part of our lifeblood. . . . I believe that is one of the strongest reasons for why QVC and Paramount should be together. We really are doing it because we have to.”

Diller cautiously agreed to speak to The Times on Thursday to clarify some aspects of his business plan should QVC’s $9.5-billion bid prevail.

There’s also a personal motive. Diller is vexed by recent media accounts of his life that portray him as a private man, leery of photographers. He wants to refute stories that he is waging a vendetta against his former boss, Paramount Chairman Martin S. Davis.

Indeed, even the most casual acquaintances have seen Diller evolve from a tense, solitary executive 10 years ago. Still intense and passionate about his business, he nevertheless has developed a smooth, cordial public persona, enabling him, for example, to move easily Wednesday night through a crowd of 1,500 cable television executives at an industry dinner.

To make his entrance at the New York Hilton, Diller linked arms with actress Jane Fonda and her husband, cable entrepreneur Ted Turner--clearly relishing the impact on spectators who knew Turner was a potential rival in the Paramount bidding. (Moments later, Turner announced that he was withdrawing, at least temporarily.)

At 51, Diller contends that he has matured as a businessman as well, no longer creating bottlenecks by micro-management.

“I’ve grown beyond micro,” Diller said. “I’ve demonstrated it at Fox; I think I’m demonstrating it at QVC. I intend to demonstrate it in the future.”

His frugality has not changed, however: Diller is trying to keep the takeover battle costs below $1 billion. And so far he has not enlisted the help of commercial bankers.

Under the current proposal, QVC must come up with $3.5 billion in cash: Already, $1 billion has been committed from investment partners Liberty Media and Comcast Corp., while another $1 billion would come from Paramount’s own cash resources.

“Is there anybody in the world who doesn’t think we can borrow $1 billion, $1.5 billion?” Diller asked. “I’m not paying for any bank commitments . . . until we know more.”

If QVC wins Paramount, Diller said, he will sell its television stations to comply with regulatory rules that prohibit ownership of cable systems and TV stations in the same markets. Although QVC does not own cable systems, its two largest shareholders--Liberty Media and Comcast--do.

The QVC chairman declined to discuss Paramount’s other assets, but he is known to value the powerful publishing division, while being less enamored with Paramount’s theme park business.

Diller said any discussion of a management team would be premature, although he acknowledged for the first time his pursuit last summer of Warner Bros. President Terry Semel, who has since signed a contract renewal.

Diller certainly knows Paramount. He ran its entertainment division for 10 years, but felt adrift and restless after the 1983 death of Charlie Bluhdorn, his mentor and chairman of the parent company, then called Gulf & Western. In 1984, he quit to become chairman of 20th Century Fox Film Corp., owned at the time by oilman Marvin Davis and later by News Corp.’s Rupert Murdoch.

Diller takes umbrage at critics who say he was too busy with the Fox Network to manage the movie division properly.

“The movie company lost $300 million (in the two years) before I arrived. We brought it to profitability in 10 months. We never had a loss beyond that,” he said.

In early 1992, Diller quit Fox to search for a company of his own. In December, he settled on the burgeoning home shopping business of QVC Network--and struck a deal with shareholders Comcast Corp. and Liberty Media Inc., together controlling 47% of the voting stock.

Diller has since become a champion of the interactive potential of cable TV--and a darling of Wall Street, as the stock of QVC doubled. Against all predictions, QVC shares have gained value since the Monday announcement of its hostile bid for Paramount--most stocks drop after such news. QVC jumped $1.75 a share to $61.75 in trading Thursday.

Diller refused to say how he might exploit the Paramount film library if cable TV or telephone wires are upgraded to provide movies on demand to home subscribers. Still, he said that QVC Network--with its interactive business of retail shopping--will be on the cutting edge.

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War for Paramount: Wall Street’s View

The bidding war between Viacom and QVC Network for Paramount Communications has so far benefited Paramount shareholders in a big way--but not necessarily Viacom and QVC holders. The stocks’ trends since June 1:

QVC:

Thursday close: $61.75

Paramount:

Thursday close: $76.875

Viacom:

Thursday close: $60.25

Source: Dow Jones