Paramount a Prelude to Dealmania?

With the Paramount Communications takeover battle finally concluded and set to be immortalized in a TV movie called “The Deal From Hell,” people should be “dealed out” by now. But action-driven Wall Street and Hollywood executives regard Paramount as a prelude to any number of other possible alliances, especially with Barry Diller and John Malone on the prowl.

At the studio level, most of the remaining players have been linked to deals that could fundamentally change the structure of their companies. People are also spinning out merger, acquisition and strategic-alliance scenarios for the Big Three broadcast networks, especially CBS and NBC. Whether any of it comes to pass, the speculation will keep people hopping.

What follows is a shoppers’ guide to entertainment companies, both deal-ready and not.

Sony Pictures: The most openly solicitous of an alliance, so long as Sony retains management control. Michael P. Schulhof, president of Sony Corp. of America, has reportedly held discussions with everyone from the regional phone companies to Malone, chief executive of Tele-Communications Inc. Sony recently consolidated its movie operations under Mark Canton and Jonathan Dolgen. One intriguing scenario has the company selling off its TriStar Pictures division, which is regarded as a valuable stand-alone asset. Studio executives deny that’s in the cards near-term, however. On the investment front, sources say Schulhof optimistically values the Sony Pictures operation at about $7.5 billion. At current multiples, sources estimate TriStar’s movie assets could fetch $500 million to $1 billion.

MCA Inc.: Malone has also been linked to discussions with the Universal City-based company in the past, but no one’s talking imminent deal. Sources close to MCA say its parent, Matsushita Electric Industrial Co., is still open to taking on a minority partner, while also exploring the possibility of a public offering in the United States for 20% or more of MCA. The time is thought to be right for one deal or the other, with MCA coming off the $1-billion success of “Jurassic Park” and the acclaim of “Schindler’s List.” Company executives won’t comment on either scenario, though one high-level source says MCA values itself as highly as $12 billion since the $10-billion Paramount sale.

20th Century Fox: While Rupert Murdoch’s expressed no interest publicly in unloading the studio, knowledgeable sources insist he’s open to a full or partial deal. One reason: Murdoch doesn’t necessarily need the movie business to build his global TV empire. Sources say he could sell the movie assets of the studio outright and still negotiate long-running, favorable terms on Fox films for his TV outlets. Fox had the holiday season’s big hit in “Mrs. Doubtfire.” The ubiquitous Malone, who is personally close to Murdoch, pops up in conversation as a possible buyer. Fox would also make sense for Diller, though people think there’s too much bad blood between him and Murdoch. On the other hand, Fox may rank as a bargain. Analysts say the major movie assets could be had for perhaps $3 billion.

Walt Disney Co.: Everyone expects Disney to join the deal-making sweepstakes this year, though no one’s quite sure how. People close to the company deny that a CBS merger is in the cards, despite continuing speculation to that regard. Chairman Michael D. Eisner is said to be more interested in alliances involving cable, phone and video game companies, as Disney studios prepares to release as many as 60 films in the coming year. A few people contend that the Mouse could become a takeover target, but the price would be north of $30 billion.

Time Warner: Within hours of Diller’s defeat in the Paramount marathon, Wall Street started to swirl with rumors that he had set his sights on bigger game: Time Warner. Analysts and traders speculated that Diller would accomplish this through a “reverse merger” between QVC Network and the media giant. Under the scenario, Diller would sell QVC Network to Time Warner, then be installed as its chief executive with the backing of the Bronfman family (which now owns 11.8% of the media conglomerate). One source close to Diller describes that scenario as “nonsense.” Either way, look for the Bronfmans to continue accumulating stock in the powerful company, which boasts of Hollywood’s most consistent management at Warner Bros.

MGM: The battered studio is gradually regaining some luster, with Frank Mancuso in charge and its owner, Credit Lyonnais, providing more backing. Everyone from Diller to PolyGram Filmed Entertainment has been mentioned as possible suitors. But no one expects a sale to occur anytime soon, partly because much of MGM’s library is tied up for years.

CBS: Wall Street has considered CBS for sale since the day Laurence A. Tisch took control in 1987. A wildly successful strategy of wooing David Letterman has been offset by CBS losing NFL football to Fox, slippage in prime-time ratings and the anticipated exit of chief programmer Jeff Sagansky when his contract expires in May. With CBS no longer in the ascendancy--and no other assets to fall back on--Tisch may be looking for a taker.

NBC: NBC is a long way from its glory days of the mid-1980s under Grant Tinker and Brandon Tartikoff, but in recent months there has been noticeable improvement at the network. Thursday night ratings have come roaring back. A strategy to diversify into cable is paying off with CNBC and investments in networks such as Arts & Entertainment and Bravo. Jack Welch, the hard-driving chief executive of NBC parent General Electric, entertained offers from buyers last year, but he was unwilling to consider anything less than the $4 billion that the network was valued at on GE’s books. Welch is apparently keen on a “strategic deal,” and the global-minded GE boss may be looking to link NBC with some international media heavyweights.

Capital Cities/ABC: Now that Thomas Murphy has returned as chief executive in the wake of Dan Burke’s retirement, many observers expect him and Cap Cities’ largest shareholder, Warren Buffett, to take the company to the “next step” through a mega-merger. The company recently spent $700 million buying back its own stock. Considered to be the best-run broadcaster in the country--margins at Cap Cities’ TV stations are known to reach 50%--Murphy still has not spelled out who the heir apparent is, although most assume it’s Senior Vice President Robert Iger. A merger might be the answer to Cap Cities’ “succession problem” by, say, putting it in the hands of the Walt Disney Co. Murphy has reiterated several times that Cap Cities believes the future is in software and programming, which would rule out a deal with a telephone company.