Viacom, QVC Expected to Launch a PR Blitz This Week

Viacom and QVC Network executives, engaged in a high-stakes takeover battle for Paramount Communications, are expected to work the phones feverishly this week in all-out efforts to persuade investors of the merits of their respective offers.

All eyes today will be on Wall Street’s reaction to Viacom’s extraordinary 11th-hour gambit Friday to merge with Blockbuster Entertainment, the home video retail giant, and sweeten the cash portion of its bid to $105 per share for 50.1% of Paramount’s stock.

During the weekend, some analysts said they expected QVC to launch another court battle, claiming that Viacom had violated bidding procedures that all parties had agreed to, but a source close to QVC cautioned against such speculation.

Analysts reacted negatively to Viacom’s new bid, saying it was still worth less than QVC’s.

Viacom, facing a Friday deadline to top QVC’s bid, offered cash and stock for Paramount that analysts valued at a total of $9.7 billion. That compares to $9.9 billion offered by QVC.

Many analysts and traders are expecting Viacom to revise the non-cash component of its offer for the movie studio and book publisher, perhaps by the end of the week.

“There is nothing to prevent them from raising the back-end portion of their offer,” said Lisbeth Baron, an analyst with S.G. Warburg Securities. “They could spend the next few days polling their largest shareholders about what to do.”

QVC appeared to be taking a wait-and-see attitude, hoping that once the dust settled early this week shareholders would begin tendering their shares to it.

A source close to QVC said that in the wake of the Viacom-Blockbuster announcement “the entire community froze and no one will tender their shares.”

But the source expressed confidence that “next week they’ll start the process.”