TCI May Pull Out of QVC’s Bid for Paramount : Mergers: Regulatory concerns cited as cable giant weighs dropping out. BellSouth Corp. is in wings as a potential investor.

Cable TV giant Tele-Communications Inc., one of the four backers behind QVC Network Inc.’s hostile bid for Paramount Communications Inc., is considering bowing out because of regulatory problems its presence has created, industry sources say.

The sources added that QVC continues to talk with BellSouth Corp. about the phone company coming in as an investor--perhaps to replace TCI. BellSouth’s entry could enable QVC to boost the cash portion of its bid significantly.

One source said the situation was “very fluid” but that a decision could be imminent.

Indeed, Wall Street traders have raised the possibility that QVC, with the help of a Baby Bell such as BellSouth, may make an all-cash bid for Paramount.

QVC and Viacom are waging a takeover battle for Paramount. Both companies are offering similar cash-and-stock bids valued at about $10 billion.

Viacom appears to have the edge because its tender offer, which is supported by both Viacom’s and Paramount’s boards, is to expire Nov. 22, two days ahead of QVC’s.

An all-cash offer from QVC would put extraordinary pressure on Viacom Chairman Sumner Redstone, who has vowed not to take on too much debt in his quest for control of Paramount. He has been equally passionate about retaining control of his company.

Redstone could either recruit another partner or walk away from the deal with a $100-million break-up fee and other profits from the “lockup” provisions granted Viacom in its merger agreement. QVC has challenged those provisions in court.

QVC has also recruited its own investors to help back its Paramount bid. They include TCI affiliate Liberty Media Corp., Comcast Corp., Cox Enterprises and Advance Publications. Each partner has agreed to invest $500 million.

But in response to concerns about potential regulatory problems, QVC Chairman Barry Diller and TCI Chief Executive John C. Malone have debated whether QVC would be better off seeking other investors.

Since TCI agreed to be acquired by Bell Atlantic Corp. last month, Malone has told associates that he would consider bowing out of QVC “provided he was assured of access to programming for his cable systems,” said one executive, who spoke on condition of anonymity.

“It’s obvious that he’s a regulatory lightning rod,” said another associate. “He’ll do whatever he can to make the deal happen.”

Complicating the picture further are investment and alliance conversations Malone has had with the two Hollywood studios owned by Japanese corporations Sony Pictures and MCA Inc.

QVC representatives were in contact Thursday with the Federal Trade Commission, responding to questions that have arisen as part of the antitrust review mandated by the Hart-Scott-Rodino Act. The initial review was to expire today, but QVC expects the agency to ask for more information .

Sources were unsure Thursday how much BellSouth might invest. During the early stages of QVC’s bid, BellSouth offered $5 billion to be an equal partner, but Diller was unwilling to share control and cut the proposed investment to less than $1 billion. Wall Street traders are eagerly talking again of BellSouth investing $5 billion--and enabling QVC to offer all cash for Paramount.