QVC Network Inc duly launched a counter-bid for Paramount Communications Inc late on Monday, easily topping the agreed offer from Viacom Inc. Paramount, the movie and television studio operator, entertainment and publishing conglomerate, still stands by its agreement to sell out to Viacom and is rejecting the QVC bid. QVC is offering cash and shares that it says are worth $80 a share based on Monday’s closing price, 27% more than the value to which the cash-and-shares offer made by Viacom has sunk as the Viacom share price faded. Paramount noted that while it believes the Viacom deal is the right one, it will fulfill its responsibilities by evaluating the QVC proposal. QVC, based in West Chester, Pennsylvania, notes that its cable television backers Liberty Media Corp and Comcast Corp have agreed to buy $1,000m of new QVC shares, giving it the capital to finance the deal – and its investment banker assured QVC that financing for the deal was available. Viacom is expected to improve its offer for Paramount to counter the QVC bid, which is seen to be so high as to rule out the possibility that Turner Broadcasting System Inc in Atlanta might turn the affair into a three-way auction. QVC runs the largest home television shopping channel in the US and has annual turnover of about $1,100m, with over 47m households as subscribers. It is already in process of trying to acquire Home Shopping Network Inc of St Petersburg, Florida, to control the televised shopping market – that bid is being reviewed by a committee of the Home Shopping board. It owns of QVC of Thailand Inc and plans to launch European and Latin American televised shopping channels this autumn. The consensus yesterday was that the QVC bid would wither as its share price took fright at the sums involved, but that Viacom would have to increase the cash element of its bid to match or better the $30 a share cash QVC is offering. Viacom denigrated the QVC bid, saying the marriage of Paramount and a shopping service doesn’t offer to Paramount shareholders the benefits inherent in the combination with Viacom. The biggest downside for QVC is the perceived value of its shares: they rocketed from about $16 to $73 in less than a year; on Monday they were down at $56, and set to fall further. The frenzy reflects the sudden recognition of the scarcety of entertainment assets for the coming age of infotainment technology, telemedia or whatever.
