COLUMN ONE : Diller Scripts His Comeback : After leaving Fox to run a home shopping network, the ex-studio boss is starring in a Hollywood power struggle. He hopes his bid for Paramount will anchor his own mega-media empire.

Barry Diller recently attended an exclusive auction to indulge one of his passions--antique Oriental art. When a painting he desired was put up for bid, he joined in several rounds before dropping out with an offer that ultimately fell a few million dollars short.

“Unless you can lose with grace, you’re a fool,” Diller said from New York last week.

The former Hollywood studio boss is finding his grace put to the test these days. As his gamble to wrest control of entertainment giant Paramount Communications grinds toward a conclusion, Diller remains the tenacious underdog, scratching and clawing to gain advantage over a hostile board of directors and a formidable foe--Sumner Redstone, the septuagenarian chairman of Paramount’s favored partner, Viacom Inc.

But Diller, 51, a college dropout from Beverly Hills who began his career in the mail room of the William Morris talent agency, seems to be thriving in the role he has cast for himself.

“Barry’s a daredevil,” says author Fran Lebowitz, a Diller confidante. “I’ve never seen him happier. I told him, he’s glowing. He looks like he just got back from three weeks on the beach.”

The struggle for Paramount is Diller’s biggest test yet, an attempt to break away from the ranks of Hollywood’s insular elite of power agents and studio chiefs and onto the global stage of media moguls like Rupert Murdoch or the late Steven J. Ross of Time Warner.

It’s also a study in contrasts--pitting Diller’s brutish Hollywood negotiating style against the button-down gamesmanship of Wall Street. With a wrestler’s build and sometimes icy stare, Diller has even unnerved some of the lawyers and investment bankers on his side of the two-month takeover battle.

Diller’s gambit now is in the hands of the courts. A judge in Delaware is expected any day to issue a key ruling that either will breathe new life into Diller’s offensive or deflate his effort to defeat Redstone and stall his ambition to build a high-tech media conglomerate.

Whatever the outcome, it’s been an odyssey for the former Fox studio chief, who left that high-profile post two years ago to run the QVC home shopping network.

His hostile bid for Paramount has rocked the financial world, touching off a 1980s-style frenzy and a massive round of merger discussions among other media companies. It has triggered a civil war in the clubby entertainment and cable industries with lawsuits flying among many participants. And, not incidentally, it has turned Diller into the most-watched corporate executive in America.

He already has garnered star power from the high-stakes battle: At an industry forum in Washington two weeks ago, the QVC chief executive was hit up for autographs, leading one associate to quip that Diller has created a new genre of celebrity--”the businessman-as-rock star.”

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The quest for Paramount marks Diller’s plans for a high-profile comeback.

A marriage between Viacom and Paramount, with their rich assets of film, television and cable, fits conventional Wall Street wisdom. Diller, however, has portrayed his bid as casting a new mold for a coming age of interactive communications.

Viacom has repeatedly reached into its deep pockets and lined up well-heeled investors, like the Nynex Baby Bell company and Blockbuster Entertainment, to match Diller’s offers--which now top $10 billion.

But Diller has had to tap every ounce of charm--and occasionally resort to browbeating--to string together a shifting investor alliance of his own--from mega-media mogul John Malone to Atlanta’s giant BellSouth telephone company and a consortium of cable operators like Cox Enterprises and Advance Publications.

In typical fashion, Diller’s strategy has been to keep moving at a fevered pitch, dividing his time between his Malibu beachfront bungalow and his suite at the Waldorf Astoria. Much of the past two months, Diller has been alone in the cabin of his private Gulfstream-2 corporate jet, crisscrossing the country more than a half-dozen times, or helicoptering between Manhattan and QVC’s headquarters in West Chester, Pa. (He has only spent one night at the Grand Valley Sheraton next door in the 11 months he has run the shopping network).

Mornings, he works out, sometimes bicycling down Park Avenue to the apartment of his longtime friend, fashion designer Diane von Furstenberg, with whom he talks on the phone up to seven times a day. “Some days he’s really stressed out and some days he feels very good,” von Furstenberg says. “The temperature changes all the time.”

The phone has become Diller’s weapon of choice in the Paramount battle. One associate recalls getting three calls in 20 minutes late one night. Sometimes the associate would keep talking into dead air, not knowing that Diller had hung up and was on to his next call.

“He talks so much that sometimes he doesn’t want to talk to anyone, even me,” von Furstenberg says. “He’ll eat his dinner by himself, and try to find some time for silence. You have to make some space for yourself, otherwise you get eaten.”

Diller’s meetings with bankers and lawyers engaged in the takeover quest typically run to 3 a.m. He also has to run once-obscure QVC, which now is preparing to launch spinoffs in Mexico and Britain, and to start a second domestic shopping channel.

Amid the stress, Diller has kept up his social calendar. Over the last few weeks he’s been to parties on both coasts, including a New York Public Library reception for photographer Richard Avedon and the Santa Monica bar mitzvah of the eldest son of power agent Michael Ovitz--where Diller was one of the first guests to lunge for a ride on the anti-gravity machines.

Last Sunday, he attended a gathering at New York artist Ross Bleckner’s Tribeca home to celebrate the publication of Edmund White’s biography of Jean Genet. Wearing a cream cardigan and khaki slacks, Diller chatted about bike riding and his beagles, said Michael Goff, editor of Out magazine, which sponsored the bash. “He was totally relaxed and having a good time,” Goff said. “The man exudes incredible confidence.”

That may be because Diller genuinely enjoys the thrill of the chase. In rare moments when he’s not working, he still likes to go fast--in cars, on motorcycles, on jet skis. He broke his ankle on a motocross bike during a Fox executive retreat in Colorado. The frenetic pace of the Paramount battle appears to invigorate him more than it wears him down.

Diller says he is psychologically braced for dashed ambitions. “I never thought we had a more than 50% chance of getting Paramount,” he notes. “Any other way of looking at it is imprudent.”

Indeed, Diller points out that Paramount is not the only company QVC could acquire. “If we don’t get it, I’ll go back to West Chester. There will be other opportunities.”

Associates say QVC and its partners could eventually make a bid on a broadcast network, such as CBS, or on another studio, such as MGM. Either way, Diller has sent out a clear signal that he’s a player.

“Barry has just demonstrated that he can put global resources together to acquire a major asset,” observes Mario Gabelli, a Paramount institutional shareholder and heavy investor in media companies. “This is a win-win for Barry no matter what happens.”

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But winning will not come without a cost. Diller already has had to make compromises. As the stakes have risen in the Paramount battle, so have the number of partners he has had to bring aboard. And as the number of partners increases, so do concerns about his autonomy.

Nowhere has this been more sensitive than in the arrival of BellSouth Corp., a $1.5-billion backer in the deal. For more than a month, Diller and his advisers have been negotiating with the phone company, which will take the place of original backer Liberty Media, which had to withdraw over regulatory concerns.

Diller says he first thought about putting together an investor group to buy Paramount when he began making plans to step down as head of Fox. The idea did not resurface until early this year, after he was well-ensconsed at QVC. Diller had been persuaded to take over QVC by John Malone, the hard-charging chief executive of cable giant Tele-Communications Inc., and Brian Roberts, president of cable operator Comcast Corp.

“John Malone and Brian Roberts deferred to Barry and treated him as an equal,” said one observer with close ties to Liberty and QVC. “That’s not as clear with BellSouth.”

From the start, Roberts and Malone hoped Diller could transform QVC from a single shopping channel into an array of programming services, using it as a base to launch other shopping channels and cable TV networks. QVC’s hidden asset was the channel’s interactive technology, which could have a broad range of applications in a 500-channel television universe.

“Ted Turner didn’t stop with CNN,” Roberts told a visitor one day shortly after Diller arrived at QVC, hinting that the partnership had big ambitions. “Someday Barry may buy a studio.”

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What Roberts did not say is that the partners were already eyeing Paramount, last of the independent major Hollywood studios. Still, with so much on his plate at QVC, Diller notes, “it would have been better if Paramount happened next year. But we can’t control the timing on that.” When Viacom and Paramount announced their plans to merge on Sept. 12, Diller’s plans were suddenly accelerated.

Diller in part appears to be motivated by a personal attachment to the studio that he headed in the early 1980s until the death of his mentor, Gulf + Western chief Charles Bludhorn. Bludhorn’s successor, current Paramount Chief Executive Martin S. Davis, later forced him out.

“Does he have a sentimental relationship with Paramount? Absolutely,” says von Furstenberg. “He’d like to make Charlie Bludhorn smile from wherever he is. But it is not a vendetta of any kind.”

Diller’s chief strategists are New York investment banker Herbert Allen Jr. and takeover lawyer Martin Lipton. He originally hired the duo more than a year ago to investigate buying NBC from General Electric. Ironically, it was Lipton who invented the anti-takeover defenses employed by Viacom and Paramount that QVC is trying to defeat in Delaware.

In the court papers it was disclosed that, at a lunch meeting July 21 between Davis and Diller at Davis’ New York office, the Paramount chief executive told Diller he had “detailed information” that QVC was “readying a proposal to acquire Paramount.” QVC says that “Davis told Diller flatly that Paramount was not for sale.”

When Davis pressed Diller what he was up to, Diller allegedly told him: “When I have something to talk to you about regarding Paramount, I’ll get in touch with you.”

By the time Diller weighed in on Sept. 20 with QVC’s original $9.5-billion bid for Paramount, TCI affiliate Liberty Media Corp. and Comcast Corp. had already agreed to help back the deal. They were later joined by Cox and Advance Publications. BellSouth subsequently took Liberty’s place after government regulators forced the cable company to withdraw.

The BellSouth negotiations were frequently tense and Diller’s style could rankle already testy nerves, says Charles (Buddy) Miller, BellSouth’s vice president for strategic planning and the phone company’s point man in hashing out the deal with QVC.

“He’s very histrionic, very theatrical in the way he presents everything,” Miller says. After observing him for a while, for example, Miller began to notice that when Diller lost his temper--which is not an infrequent event--it usually served a purpose.

Diller’s uninhibited manner punctuated the tangled morass of the BellSouth-Liberty-QVC negotiations. He did not, participants note, pay much heed to the formality of the New York investment banker offices where many of the meetings were held.

During one meeting, where Liberty negotiators were haggling over terms of Liberty’s withdrawal, Diller shouted in front of 20 tense people around a law firm’s conference table: “I understand you won’t give me everything , but tell me one thing you will give me, just name one thing!”

Diller did get at least one thing--the $1.5-billion commitment from BellSouth.

Only a few weeks earlier the outlook was less certain. Fran Lebowitz remembers asking Diller if there was anything she could do.

“He said, ‘Yeah, could you do me a favor, I need $3.2 billion.’ So I wrote him a check,” she recalls, adding with a laugh, “But I told him, ‘Don’t cash it.’ ”