Comcast Gains Partner, Loses Rival, in QVC Bid : Television: Liberty Media will participate in the $2.2-billion offer for the home shopping network.

Comcast Corp. on Thursday bolstered its $2.2-billion bid for cable home shopping network QVC Inc. by enlisting a potential rival, Liberty Media Corp., as a minority partner.

With a single stroke, Comcast reduced its own financial exposure and ensured that the shopping network will retain its largest customer, because Liberty Media is in the process of merging with Tele-Communications Inc., the nation’s largest cable TV operator.

Wall Street sources speculated that a rival QVC offer may yet surface from a telephone company or retail firm. But those odds lengthened with Liberty’s decision to join the Comcast bid. QVC’s stock sank $1.75 in Nasdaq trading to close at $44.25.

“No one’s going to take on both these guys, because they’re very formidable,” said one entertainment industry executive.

Comcast and QVC said they will jointly offer $44 in cash for the QVC shares they don’t already own. If all the outstanding shares are tendered, Comcast will emerge owning 57% of QVC, while Liberty Media will own 43%.

In its initial offer last week, Comcast offered $44 a share, but it had planned to issue convertible preferred stock for $7 of that amount. The Comcast bid torpedoed plans by QVC Chairman Barry Diller to merge the company with CBS Inc., where he would have become chief executive. CBS Chairman Laurence A. Tisch abandoned the deal, saying he wouldn’t be drawn into a bidding contest for QVC.

Diller would be welcome to stay on at QVC, according to Comcast executives. But Diller--who quit Fox Inc. two years ago to run his own company--has made it clear to friends that he won’t settle for running a subsidiary.

Reached by telephone in New York, Diller declined to comment beyond the company’s formal promise to review the latest offer “and continue to explore alternatives in order to maximize shareholder value.”

With their announcement, Comcast and Liberty laid to rest rumors that Liberty’s controlling shareholder, TCI Chief Executive John C. Malone, was “furious” over Comcast’s disruption of the QVC-CBS deal. The deal was hammered out in just four days.

“I was disappointed about that CBS deal going off track,” Liberty President and Chief Executive Peter R. Barton conceded in a telephone interview. “But I’m not grumpy. People have to do what they have to do. We came out of this big, big fans of both Barry and Comcast.”

Barton said his company has previously cleared an antitrust agency’s review for owning between 25% and 49% of QVC’s stock.

But analysts predicted that Liberty will be forced to leave QVC’s management to Comcast in order to not rile antitrust regulators. Liberty already controls Home Shopping Network, QVC’s major competitor.

Comcast, founded 31 years ago by Philadelphia businessman Ralph J. Roberts, is the nation’s third-largest cable TV operator and has holdings in the wireless and cellular telephone businesses.

Comcast was a founding shareholder of QVC and hoped to push more aggressively into cable TV programming by recruiting Diller to run the network in 1992.

Comcast backed Diller’s unsuccessful bid for Paramount Communications but was upset by the QVC decision to merge with CBS. Federal rules severely restrict cross ownership of broadcast and cable properties, so Comcast would have had little voting power in a merged CBS-QVC.

Despite its reported displeasure, Comcast’s bold move last week stunned Wall Street--and initially worried Comcast investors who thought the company might incur too much debt with the QVC bid.

But Comcast explained that banks had already promised to loan $1 billion because QVC is virtually debt-free, and QVC could bear an additional $200 million in debt securities. Comcast said it could raise an additional $300 million by selling a 20% stake in Heritage Media, and it said it would sell some assets if necessary.

Now, with Liberty’s participation in the bid, Comcast President Brian L. Roberts said the company won’t need to sell convertible preferred shares or other assets because it already has more than enough cash to cover its outlay. By Roberts’ calculation, Comcast will spend just $225 million of its own money for the acquisition, since it already owns 8.6 million QVC shares and Liberty controls 10.5 million shares.

Wall Street reacted favorably to the news that Comcast and Liberty won’t go head-to-head in a bidding contest. Comcast shares gained 87.5 cents to close at $16.75, while Liberty rose 81 cents to close at $21.06. TCI rose $1.125 to close at $22.