QVC Finds 2 New Backers in Battle to Buy Paramount : Media: Viacom says takeover rival’s latest offer contains ‘onerous terms’ for QVC.

Reinforcing its bid for Paramount Communications, Barry Diller’s QVC Network Inc. said Sunday it secured an extra $1 billion in financing from Cox Enterprises Inc. and Advance Publications Inc.

QVC’s effort to edge out Viacom Inc. for the prized movie studio was thus bolstered by two major media concerns--Cox, whose holdings include the Atlanta Journal & Constitution, and Advance, publisher of The New Yorker. Both also have extensive cable holdings.

The two new backers of QVC, whose investments are contingent on the success of QVC’s bid, emerged as another of QVC’s backers, Denver-based cable TV giant Tele-Communications Inc., is said to be looking elsewhere for a studio.

A knowledgeable executive said that TCI Chief Executive John C. Malone has had discussions with Matsushita-owned MCA Inc. about a stake in that company, but no deal is at hand.

Malone is also said to be interested in Sony Pictures and Fox, but one informed source who asked not to be named dismissed as “absurd” the notion that Malone would simultaneously invest in two different studios.

Last week TCI agreed to be acquired by Bell Atlantic in what is widely seen as one of the most important mergers in years. Malone then appeared to distance himself from QVC when he described the takeover battle for Paramount as “peripheral.”

But Diller said in a statement Sunday that Cox and Advance give QVC extra security to proceed with its Paramount bid with “credibility and confidence.”

Viacom blasted the latest QVC announcement, saying the agreement imposed “onerous terms” on QVC. Viacom maintained that its bid “offers far more rewards for Paramount shareholders” and said its merger “will be completed.”

QVC is still discussing an investment from Atlanta-based Bell South, but for QVC “the need now is obviously diminished,” said an executive close to the talks. If Bell South does not make the investment, the executive said, the telephone company might make its own bid for Paramount.

Advance Publications is the privately held Newhouse family media empire. Its holdings range from Vogue to major newspapers to cable TV operations serving 1.4 million subscribers, making Advance the nation’s eighth-largest cable company.

Atlanta-based Cox owns 17 newspapers and is the sixth-largest cable operator with 1.7 million subscribers. Last year the company had about $2.5-billion in revenue and profits of about $209 million.

Cox and Advance are partners with TCI in the Discovery Channel on cable. Like Paramount, which owns Simon & Schuster, Advance is also a major publisher of books; it owns Random House.

Paramount’s board of directors, which has agreed to a friendly merger with Viacom, said last week that it would begin “informational discussions” with QVC to learn more about its proposed bid but reiterated its commitment to Viacom.

Viacom, the parent of MTV and other cable properties, is suing TCI over alleged monopolistic practices. It has tried to discredit QVC’s offer by calling the company a proxy of the “Malone group.” Diller said that attempts to “denigrate” QVC and its partners as “pawns of anyone” were aimed at diverting attention from the “obvious difference” between the two competing bids.

QVC’s offer for Paramount is valued at $9.6 billion, while Viacom’s is valued at $8.2 billion, but the two offers contain differing mixtures of cash and stock.

QVC, a home shopping channel, has now lined up $5 billion in financing toward its bid, including $500 million each from Comcast Corp. and Liberty Media Corp. and $3 billion in bank financing.

Each of QVC’s four investors will buy $250 million of QVC common stock at $60 a share and $250 million of “convertible exchangeable preferred stock.” The convertible preferred yields a 6% annual dividend that will be paid--at QVC’s option--in cash or QVC common. Comcast’s and Liberty’s investments have been modified to reflect the Cox and Advance agreements.

After the merger, Cox and Advance would each get a seat on the QVC board. Comcast and Liberty already each have two seats on QVC’s board. If the merger does not occur, Cox and Advance still have an option to invest $100 million in QVC common at $60 a share.

Following the acquisition of Paramount, Liberty and Comcast would own about 10% of QVC. Cox, Advance and Diller would each own 5%. Currently Diller, Comcast and Liberty vote their shares as a block.

QVC’s investments from Comcast, Liberty, Cox and Advance align the home shopping channel with four of the country’s top 10 cable operators. Thus, should QVC succeed, Paramount would become the first Hollywood studio significantly owned by players in the fast-growing cable TV industry.

Staff writers Alan Citron and Kathryn Harris contributed to this story.