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The Bankers Behind the Bidding Are a Virtual Finance Who’s Who

For people watching the Paramount Communications circus, one of the best sideshows is the battle of the investment banking stars.

It’s got chills (reputations are on the line), thrills (what’s the strategy?) and even some well-known animal acts (names withheld for obvious reasons).

Representing Paramount are Felix G. Rohatyn and Steven Rattner of Lazard Freres & Co. Viacom’s friendly bid is being handled by Smith Barney Shearson’s Robert Greenhill and Bear Stearns’ Alan (Ace) Greenberg. Rival bidder Barry Diller of QVC has Herbert Allen Jr. of Allen & Co. in his corner.

As a group, they’ve helped broker some of the biggest business deals of the late 20th Century, ranging from the rescue of New York City to the $6.6-billion marriage of MCA and Matsushita Electric Industrial Co. Individually, they are the princes of finance, routinely commanding millions of dollars in fees, and some of the most tenacious people around. Yet they also owe their jobs to relationships--since most have pre-existing ties to their companies.

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“Everybody in that business works for everybody,” said one Wall Street source. “And somehow, they always end up where they’re not conflicted.”

While the Paramount bidding still has a ways to go, Allen and Diller have emerged as the most exciting pairing so far. Sources credit Allen with helping to shape the strategy that’s made Diller the darling of Wall Street--at least in the early going.

His Allen & Co. is part of the “think tank” that meets regularly to discuss everything from financing the $9.8-billion deal to press strategy. Allen’s presence also carries a lot of symbolic value, since he’s been involved in a host of major media deals, including Sony-Columbia, Matsushita-MCA and the recent $400-million financing of Savoy Pictures Entertainment.

“Herbert personally has a lot of wealth and success, which allows him to choose his relationships very carefully,” says one source close to the banker.

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The intensely private Allen has advised all three companies at various times, and Diller and Viacom Chairman Sumner Redstone both attended his recent investment conference in Sun Valley, Idaho.

Some considered it a strategic error when Redstone went forward without Allen. The Viacom chief sent him a $1-million check for past services in a bid to keep him out of the deal, but Allen returned it.

Redstone by then had already committed to Greenhill, whom many credit with setting the sale in motion. The Smith Barney banker is said to have ferociously lobbied to bring Redstone and Paramount Chairman Martin Davis together. His courtship of Redstone included an invitation to tennis camp.

Viacom’s friendly $7.9-billion bid was a coup for Greenhill and his company. “Greenhill had to establish himself at Smith Barney and he needed a deal,” said one financial source. “So he went out trolling, and he just happened to be there when Sumner was about to bear-hug Marty. It was perfect timing.”

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Greenhill’s greatest challenge now is to help hold the Viacom-Paramount deal together. At the same time, some see the investment banking role as more passive than it was in the creative financing environment of the 1980s.

“You got two very legitimate buyers of this company,” said Michael Garstin, who heads mergers and acquisitions for Daniels & Associates. “Who’s going to win is not a function of the tactics employed by the lawyers and bankers. It is a function of what the principals are willing to pay.”

Paramount is the latest of many consulting roles for Greenhill. Previously, he advised Davis on Paramount’s hostile bid for Time Inc. and co-managed a $1.5-billion preferred offering by RJR Nabisco Holdings Inc., which ultimately failed.

Greenhill was also heavily involved in the 1980s merger wave and at one time was seen as a leading candidate to head Morgan Stanley.

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Bear Stearns, Viacom’s other banking adviser, has managed or co-managed underwritings in recent years for entertainment companies such as Disney and Time Warner, in addition to Viacom.

Sources say Redstone wanted Bear Stearns’ Greenberg with him because of their long history. Greenberg has handled the bulk of Redstone’s stock purchasing programs. He’s also given general advice to the Viacom chairman. “He likes our judgment,” Greenberg said Monday.

Like Redstone, Paramount’s Davis turned to familiar faces when it came time to hire an investment banker. Lester Pollack, a general partner in Lazard Freres, sits on the Paramount board.

In Rohatyn he has another influential finance figure. The investment banker is best known for helping to pull New York City back from near bankruptcy in the 1970s, but he also has strong entertainment ties, having once sat on the board of MCA Inc.

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Strictly speaking, it was Rohatyn and other top executives who won Lazard the account. But the day-to-day details are being handled by Rattner and his team.

“Marty relies a lot on Felix, and Felix relies a lot on Rattner,” said one investment banker who has worked with both parties on other deals.

Though he’s only 41, Rattner is one of the veterans of the 1980s merger mania among media companies. Rattner became an expert on media companies by actually working for one--as a business and finance reporter at the New York Times.

In the go-go 1980s, Rattner worked on a wide array of media mergers and acquisitions, including the 1985 deal to sell KTLA-TV Channel 5 for $510 million to the Tribune Co. While at Morgan, Rattner helped defend CBS against its hostile bid from Ted Turner and the Pulitzer family, which owns the St. Louis Post-Dispatch, from the advances of Alfred Taubman.

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Indeed, in a business renowned for its button-down sobriety, Rattner has had the audacity--"cheek” as one former colleague puts it--to practice the art of self-promotion.

During an industry convention in Dallas a few years ago, for example, Rattner hired out the entire Southfork Ranch where “Dallas” was filmed to throw a party for clients and, more important, potential clients. Rattner wore a blue blazer, gray flannels--and cowboy boots.


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