Next Viacom Move Still Under Wraps : Mergers: The comparative values of QVC and Viacom stock will play a pivotal role when Paramount shareholders cast their votes.

Sources close to Viacom Inc. Chairman Sumner Redstone on Wednesday insisted that he has not decided whether to raise his bid for Paramount Communications Inc., despite news reports that Viacom’s partners are prepared to help it best an offer from rival QVC Network Inc.

Sources close to Viacom confirmed that the entertainment company continues to discuss its strategy with Blockbuster Entertainment Corp., which has already invested $600 million, but one source flatly denied reports that Blockbuster will double its investment. “That’s not the conversation,” the source said.

Nevertheless, such news reports had the effect of dampening Viacom’s stock and boosting the price of QVC, which has dropped in the week since Paramount’s board voted to recommend QVC’s offer to its shareholders.

The values of Viacom and QVC shares will play a pivotal role when Paramount shareholders ultimately determine the company’s fate by tendering their stock to one of the two companies. Both have made cash tender offers for 51% of Paramount and propose using their own securities for the remaining 49%.

At the close of trading Wednesday, for example, the companies’ bids were $450 million apart--compared to about $200 million the day before.

“The market is definitely telling you that it expects Viacom will come back with another bid,” said Jessica Reif, an analyst with Oppenheimer in New York. “But there’s no way Viacom will get increased financial input without having to give up more managerial control.”

Reif said that given the most recent offer, QVC stock is not likely to drop below the $38 level it has been trading at the last few days.

“From a shareholder’s perspective, with QVC, what you see is what you get, whereas with Viacom, it probably has a way to go down if it succeeds,” she said.

QVC jumped $1.875 to close at $39.75, while Viacom Class A lost 75 cents to close at $49.25 and Viacom Class B dropped $1.25 to $45.25. Paramount closed unchanged at $77.875.

The current offers are set to expire Jan. 7, though any change in Viacom’s bid would require a 10-day extension. Still, Wall Street looks hopefully to Redstone to initiate another round of bidding.

“I personally think it’s going to go another round,” said one investment banker, who said he believes ego and revenge will play a role in Redstone’s next move. Redstone is pitted against QVC Chairman Barry Diller, who was a longtime friend until he made the bid that broke up Paramount’s friendly merger agreement with Viacom.

Although the banker expressed the view that Diller will ultimately win by using other investors’ money, Redstone is “so smart, he wants to see Diller win it at such a high level that he gets hurt.”

One source close to Redstone insisted that the Viacom chairman is still mulling whether to make another bid. “He wants to do the right thing,” the source said.

In a brief telephone interview last week, Redstone said Viacom has the wherewithal to make another bid but was still pondering the decision because of the price. He and other Viacom executives have refused to comment on a report that Viacom might be considering a merger with Blockbuster as one of its alternatives.

On Wednesday, the Wall Street Journal reported that Viacom’s other investor, Nynex Corp., is also seeking “tough new terms” in return for a bigger cash investment. Nynex invested $1.2 billion and, like Blockbuster, accepted shares of preferred Viacom stock, convertible into non-voting Class B shares at $70 a share.

“Blockbuster is in the driver’s seat here, and they’re in a position to exact from Mr. Redstone a very tough bargain, including something like Showtime. . . . I think they want either assets or votes and a significant restructuring of the terms of the first deal,” said Larry Haverty of Boston-based State Street Research.

But two sources insisted that Blockbuster has never broached the subject of renegotiating its $600-million investment in Viacom, which was completed in October.