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

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

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

Liberty has agreed to be reacquired by TCI, which is in the midst of a mega-merger with Bell Atlantic Corp.

The moves clear the way for QVC to improve its tender offer for Paramount, after Viacom Inc. upped the ante. QVC has lined up $3 billion from its partners and $3 billion in bank commitments.

“We have sufficient funds to complete the transaction we are interested in completing,” QVC Chief Executive Barry Diller said in a telephone interview.

Wall Street traders say QVC might improve its 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 agreement.

Despite Diller’s moves Thursday, analysts said there’s still no clear leader.

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

Paramount stock jumped $2 per share 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 Class A shares eased 37.5 cents to end at $55, and Viacom Class 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 will be 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 would form a joint venture with QVC to create and distribute interactive TV services worldwide.

According to Diller, the joint venture would create an interactive system to carry programming from a variety of suppliers, but it would not control Paramount. “It will own no entertainment programming, in the classic definition of the word,” Diller said.

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

QVC could not have launched its Paramount bid without Malone, but the entanglements became severe after TCI announced its plan to merge with Bell Atlantic. That caused BellSouth to back away temporarily from talks with QVC.

On Thursday, Diller said: “I’m grateful to Dr. Malone because he kept his word. He said . . . if Liberty and TCI became an impediment, he would step aside.”

In a telephone interview, BellSouth Chief Executive John Clendenin called Paramount “a gem” whose programming would help differentiate the Baby Bell’s services from rivals. But he said he was equally interested in QVC, which will help his firm become an interactive communications leader. That’s one reason he fought so hard for three QVC board seats.

“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.

Times staff writer Amy Harmon contributed to this story.