MEDIA WORLD IN MOTION : . . . and on Diller : As Merger Fails, Mogul Returns to Square One

When QVC Inc. lost the brutal Paramount Communications takeover battle to Viacom earlier this year, Chairman Barry Diller issued the now classic line: “They won. We lost. Next.”

When “next” turned out to be his planned merger with CBS Inc., Diller again entered the spotlight as a major deal maker. But with that agreement derailed Tuesday by a rival QVC bid from cable’s Comcast Corp., Diller is essentially back to square one--a mogul without portfolio.

Industry speculation now has Diller, 52, leapfrogging into any number of new opportunities that will be his should he leave QVC. Associates say he will probably spend the next several days weighing Comcast’s $2.2-billion bid before deciding on his next move.

“He will concentrate on what is best for QVC and its shareholders, of which he is one of the biggest,” one knowledgeable source said. “He thought the deal with CBS was the best one at the time, but the world changes.”

Indeed, Comcast’s surprise bid not only killed the proposed CBS-QVC merger, it also sent a wave of depression through the ranks of CBS managers who had looked forward to Diller’s re-energizing the company the way he did Paramount Pictures and Fox Inc. in years past. The failed deal also left a scorched path on Wall Street, where Diller’s once-polished image has been tarnished.

“Diller has done very little to impact the core business of QVC,” said Peter J. Siris, an analyst with UBS Securities. in New York. “The stock price today would be higher if he hadn’t joined it and the company had gone on its own way.”

QVC stock skyrocketed from the low 30s in 1992 when Diller joined the company to more than $70 a share last year on the expectation that he would transform QVC into an interactive powerhouse. With the support of major shareholders Tele-Communications Inc. and Comcast, Diller had publicly announced plans to reshape QVC by adding an upscale shopping channel and international ventures in Mexico and Britain. There was even a hint of an eventual foray into Hollywood.

But the stock recently fell to its 1992 level as those ventures were slow to develop. In addition, analysts noted Wednesday, this is the third failed merger attempt in Diller’s relatively brief 18-month tenure. The others were for Paramount and the rival Home Shopping Network.

To some degree, Wall Street is responding to the rift that has developed between Diller and Brian Roberts, 35, the Comcast president who wooed Diller to the home shopping channel more than two years ago with the promise that the company would become a launching pad for high-tech cable programming ventures.

That relationship was a close one until QVC began talks with CBS last month.

Sources close to the past days’ events say Diller may have made a fatal miscalculation in not including Roberts in his merger talks with CBS Chief Executive Laurence A. Tisch. The merger, though it would have married the top-ranked broadcaster and a highly profitable shopping channel, would have forced Comcast into a background role because federal regulations severely limit “cross ownership” of TV networks and cable companies.

“Brian Roberts has worshiped at the feet of Barry Diller for two years,” said one person close to him. The QVC bid has “got to be political.”

Others Wednesday agreed that Roberts became infuriated when Diller jilted him and may have been seeking revenge in making the rival offer for QVC. Said one about Roberts: “He’s certainly a player now.”

Some question whether Comcast will actually proceed with its $44-a-share bid to acquire the part of QVC it does not already own, but analysts agree that the CBS-QVC merger, which would have put Diller in charge of CBS, is dead and has no chance of being revived.

Still, despite vows of mutual support, the comfort level between Diller and Roberts has clearly dropped, and many are now betting that Diller will collect his stock options--which will yield him a profit of about $100 million--and look for a new home.

Where that might be is not known.

Allen & Co., the New York investment bank, is said to already be preparing to solicit competing bids for QVC. Industry sources said Wednesday that TCI was looking at the possibility of making a bid for QVC and merging it with Home Shopping Network, in which it has a major stake.

TCI Chief Executive John Malone is known to be unhappy with the Comcast bid and to have favored the CBS-QVC merger on long-term strategic grounds. As the most powerful player in the cable TV industry and one with a growing interest in “content,” Malone could yet help Diller set his sights on a new target.

Available for Hire

* Barry Diller

* Age: 52

* Job objective: Running his own show as an equity player at a network or other major entertainment company.

* Qualifications: QVC chairman, 1992 to present; Fox Inc. CEO, 1985-92; Paramount Pictures chairman, 1974-84; ABC executive, 1971-74.

* Accomplishments: Invented “Movie of the Week”; headed Paramount Pictures at the tender age of 32; launched the fourth network at Fox; mounted a credible but unsuccessful $10-million bid for Paramount Communications.

* Assets: Among other things, $100 million from QVC stock if the sale of Comcast goes through.

* Hobbies: Occasionally seen bicycling down Park Avenue; once crossed country on motorcycle; socializes with the international jet set.

* Personality traits: Brilliant, caustic and exacting, but also known for possessing a strong sense of humor. He remarked at the end of the Paramount battle: “They won. We lost. Next.”

* References

Fran Lebowitz, author: “Barry’s a daredevil.”

Howard Rosenman, producers: “Barry is a visionary, like William Paley or David Sarnoff.”

Joe Roth, producer: “He’s one of the most forthright, brilliant, strong-headed person I’ve ever met in my life.”

Jeffrey Katzenberg, Walt Disney Studios chairman: “ ... Barry is in a league in which he really does not have any peers.”