BellSouth Joins QVC’s Bid for Paramount : Merger: Baby Bell commits $1.5 billion. Liberty Media will bow out if QVC acquires studio because of pending TCI deal.

Ending weeks of speculation, BellSouth Corp. joined QVC Network Inc.’s bid for Paramount Communications Inc. on Thursday with a commitment of $1.5 billion, while investor Liberty Media Corp. announced that it will bow out entirely if QVC acquires the studio.

Under a deal that awaits approval by the Federal Trade Commission, Liberty said it will sell its 22% stake in QVC within 18 months to satisfy FTC concerns about its affiliation with cable TV giant Tele-Communications Inc.

Liberty has agreed to be reacquired by TCI, which in turn has struck an agreement to do a mega-merger with Bell Atlantic Corp.

The moves clear the way for QVC to improve its tender offer for Paramount, which was topped last weekend by Viacom Inc. Wall Street traders say QVC might announce a higher bid as early as today but no later than Monday--because QVC needs to go into a Delaware court hearing Tuesday with proof that it has an equally attractive bid for Paramount. QVC is asking the court to force Paramount to the bargaining table, despite its friendly Viacom deal.

Paramount jumped $2 to close at $82.50 on the New York Stock Exchange, while BellSouth added 50 cents to close at $57.625. QVC slipped 50 cents to $51.75. Viacom A eased 37.5 to $55, and Viacom B was unchanged at $47.50.

Liberty’s promise to withdraw from QVC fanned speculation that TCI Chief Executive John Malone has already turned his acquisitive eye toward Matsushita Electric Industrial Co.’s MCA Inc.

Indeed, Matsushita confirmed that senior executive Keiya Toyonaga met with Malone this week in New York, but said, “We have no intention to sell MCA stock.”

Toyonaga’s action ruffled feathers at MCA, where one executive noted that news of the meeting was “not good for morale around here.”

One industry source said it was Malone’s third such meeting with Matsushita. Another executive described the sessions as part of the ongoing “mating” dance among entertainment, cable TV and telecommunications companies.

Under the terms of the agreement announced Thursday, BellSouth’s investment in QVC is contingent on a successful merger with Paramount. BellSouth would become the largest QVC shareholder after purchasing $1 billion in common stock (about 16.7 million shares at $60 per share), and $500 million of QVC 6% convertible exchangeable preferred stock, convertible to about 7.6 million shares of QVC common.

In addition to gaining three seats on the QVC board, BellSouth will form a joint venture with QVC to create and distribute interactive TV services worldwide.

If QVC fails to acquire Paramount, BellSouth has a six-month option to purchase $500 million shares of QVC common stock at $60 per share and join the controlling QVC shareholder group. That group has included chief executive Barry Diller’s Arrow Investments, Comcast Corp. and Liberty Media; but Liberty has agreed to exit the agreement during the bidding.

In a telephone interview, BellSouth chief executive John Clendenin called Paramount “a gem” whose programming would help differentiate the Baby Bell’s services from its competitors. But he said he was equally as interested in QVC, which he believes will help his firm become an interactive communications leader. That’s one reason he fought so hard to get three seats on the QVC board of directors.

“We did not want to be just a financial investor. We wanted an involved ownership position that made us a full-fledged partner. We worked very hard to achieve that, and we are delighted with the results,” Clendenin said.

The final BellSouth agreement came after weeks of intense negotiations. Clendenin was awakened several times Wednesday with status reports from New York.

“Is it daytime yet?” Clendenin joked Thursday afternoon. “I’m not sure when last night ended. I think we sort of stopped the clock.”

Several analysts, however, said QVC may need more than BellSouth’s $1.5-billion investment.

“I think (QVC) will come up with at least $90 a share,” said Lisbeth Barron, an analyst at S. G. Warburg. Added Merrill Lynch’s Hal Vogel: “ . . . it’s not decisive.”

Advance Publications, which is controlled by the Newhouse family, is said to be willing to double its investment to $1 billion, which would give QVC $2 billion.

In any case, the QVC partners believe that money is not the problem. “Barry will not lose because of inadequate financing,” said one source close to QVC. “He has all the cash he need.”

Times staff writer Amy Harmon contributed to this story.