For Martin Davis, the embattled chairman of Paramount Communications, these are soul-trying times. Just four months ago, Davis engineered a merger agreement with MTV-owner Viacom Inc. that would have made him chief executive of one of the world's media giants. But Hollywood wizard Barry Diller, who now chairs the QVC home-shopping network, crashed in with a hostile bid for Paramount that triggered the first major takeover battle of the 1990s. Paramount directors spurned Diller at first but endorsed his bid in December after Delaware court rulings compelled them to entertain all offers. The board last week reaffirmed support for Diller's bid, worth about $9.9 billion, vs. Viacom's offer, worth some $9.4 billion. That made him the heavy favorite to win the company unless Viacom chairman Sumner Redstone can top the rival bid.
No matter whether Diller or Redstone prevails, Davis, 66, will soon leave the company he has run successfully since 1983. There would be no place for Davis under Diller. And two weeks ago, Viacom announced an $8.4 billion merger with home-video retailer Blockbuster Entertainment. That deal enabled Viacom to sweeten the cash portion of its bid for Paramount but left little in the way of a role for Davis. With the bidding war now in its final phase -- a winner is expected to emerge in early February -- Davis met last week with TIME Boston bureau chief Sam Allis and business editor Sam Gwynne for the Paramount chairman's first major interview since fall.
Q. TIME: Why did you change your initial position and endorse the QVC bid this week?
A. Davis: I didn't change anything. The change came about because of the court ruling in Delaware. We started off with a merger in September of Paramount and Viacom, and that merger is not going to take place along the lines we envisioned. The court, with which we respectfully disagreed, mandated that we auction off the company, and that is exactly what we have been doing. The latest QVC bid is a superior offer.
Q. TIME: Considering that you set out to merge with Viacom on your own terms, why isn't this a failure for your strategy?
A. Davis: I don't think it's a failure in the long term. If you go back to what we started to do in 1983, we've been consistent in what we've done. We have built shareholder value. We built a superb company, as evidenced by the fact that we have an auction going on. Somebody wants it and is willing to pay a steep price.
Q. TIME: Do you see yourself being part of the management of the new company, whatever the acquiring entity is?
A. Davis: Let me tell you what I told Diller, with whom I have a merger agreement. I told him I will stay on as long as necessary to insure a smooth transition. I have spent most of my professional career here, so I'm not prepared to just leave tomorrow. I will stay on as long as I can. But that is not a permanent assignment.
Q. TIME: Let's say the acquiring company is a merged Viacom/Blockbuster. We noticed that when they announced their merger, they did not include you in their future management plans.
A. Davis: Which was correct. And they should not have. Because I can't make a commitment to anybody, other than to make sure we have a smooth transition. Otherwise I would be tilting, and I won't tilt.
Q. TIME: What might you have done differently? This has been a wild ride.