Home Shopping Takeover Battle II : Television: Infomercial maker National Media tries to up the ante in the purchase offer by ValueVision.

On the heels of QVC’s failed run at Paramount, another home shopping takeover battle is escalating as infomercial maker National Media Corp. tries to thwart a bid from ValueVision International Inc.

The $140-million battle is tiny in scale compared to the $10-billion fight for Paramount Communications Inc., which home shopping giant QVC Network Inc. lost to cable programmer Viacom Inc.

But the deal comes complete with a proxy fight, high-priced Wall Street advisers, speculation over a “white knight” third buyer, and the avid participation of takeover stock specialists.

The deal is also being watched as a bellwether of the budding infomercial industry, which has an image as something of a gaudy souvenir stand but is closing in on $1 billion a year in revenues. Infomercials are program-length commercials that are used to inform an audience about a product.

“We’ll be watching with a lot of interest,” said spokesman David Savage of the National Infomercial Marketing Assn., an industry group. “There’s a lot of shakeout in the industry right now, and this is just a part of it.”

Savage said the outcome of the deal could help place a value on other infomercial firms. Such firms typically buy time on cable television channels and produce commercials selling products such as jewelry, electronics and knickknacks.

The commercials run during time leased from cable television channels, often late at night.

ValueVision, a Minneapolis-based television home shopping network run by veterans of a similar firm sold to QVC in 1989, made a cash and stock tender offer last month of $10.50 per share, or about $140 million, for National Media.

ValueVision’s network reaches 10 million homes, mainly via cable and satellite TV.

Philadelphia-based National Media rejected the bid Feb. 18, as it had an earlier, lower offer from ValueVision, as “financially inadequate.”

ValueVision then launched a proxy battle to elect a new board at National Media’s annual meeting March 21.

Nevertheless, National Media said this week that it was willing to be sold, at a price.

“There’s no question, if our investment bankers surface a relationship that makes sense at the right price, we would certainly sell the company,” Craig Streem, National Media investor relations vice president, said in an interview.

Streem said National Media had made contacts with other firms about a possible sale. He declined to say whether talks are under way and said there were no plans to meet with ValueVision unless it makes a better offer.

ValueVision Chairman Robert Johander said in a telephone interview Wednesday: “They clearly want us to bid against ourselves. We have no interest in bidding against ourselves. Their rhetoric isn’t going to get us to raise our bid.”

However, he said ValueVision might pay more if it learned new and compelling information about National Media.

Johander and other ValueVision officials were in Philadelphia Wednesday to meet with National Media shareholders as part of the proxy campaign.

Speculation over possible additional buyers includes King World Productions Inc., syndicator of television shows such as “Oprah Winfrey” and “Jeopardy!”

“If there’s somebody else out there (as a buyer), you can make a lot of money on this,” said one arbitrager, who estimated that 30% to 40% of National Media’s stock is now in the hands of arbitragers.

The value of National Media’s stock has nearly doubled since ValueVision made its first stock purchases in December. National Media stock closed Wednesday at $9.875, up 12.5 cents on Nasdaq.

ValueVision now holds 8.6% of National Media’s 13.5 million shares, compared to about 18% held by National Media officers and directors.

In a unique twist, ValueVision said last week that National Media may have swallowed its own poison pill takeover defense--thus enabling ValueVision or other outside shareholders to buy National Media stock at half-price--through stock purchases by officers and directors.

ValueVision will probably seek a Delaware court ruling on whether the pill was triggered, Johander said, but he said the issue was not a major obstacle to its bid.

The battle has also highlighted the emergence of the Philadelphia area as “the Hollywood of home shopping.”

The region serves as headquarters to three of the country’s top five infomercial firms, Savage said.

The industry is led by privately held American Telecast, in suburban Paoli, Pa., followed by National Media. Regal Communications Corp., also in the top five, is also based in suburban Philadelphia.

Furthermore, QVC, of West Chester, Pa., the nation’s largest cable home shopping network, announced last month that it will start its own infomercial operations.

Asked to explain the proliferation in Philadelphia, Savage was stumped. “I’ve been in this job for over a year, and I don’t know the answer to that question.”