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The two men will command a global empire with stakes in virtually every form of entertainment -- from the New York Rangers hockey team to MTV's Beavis and Butt-head to interactive video games and playgrounds for children. That permits a vast range of product combinations under a single corporate roof, with Beavis and Butt-head games popping up in Blockbuster stores, for instance, or Viacom transmitting Paramount films and TV series like I Love Lucy over its cable-TV systems. Perhaps most important, the new company will have a mother lode of movies and TV programming to send over electronic superhighways like the one Viacom is building with AT&T in Castro Valley, California. The deal will also put Blockbuster into new businesses that will lessen its reliance on video stores as the interactive superhighway comes of age in the U.S. in this decade.
While Redstone claims that he doesn't want -- or need -- to sell anything to lighten his debt burden, analysts say that some assets of the merged company will probably wind up on the block. They include Paramount's 50% share of the USA cable-TV network and the Lifetime channel, of which Viacom owns 33%. Also frequently mentioned is Paramount's huge publishing arm, including Simon & Schuster and Prentice Hall, which may not mesh well with the new Viacom film and TV units. When questioned, Redstone asserts that Viacom "absolutely" wants to hold on to the publishing unit. Biondi says he considers it "a crown jewel." However, he adds, "if someone wants to talk about assets, we'll talk to them."
As the smoke settles on the Paramount battle, the outcome bears an ironic resemblance to the aftermath of the 1989 fight in which a Davis-led Paramount made a run at Time Inc. as it was about to merge with Warner Communications to form Time Warner. Paramount's aborted bid forced Time to borrow heavily to complete the Warner deal and create the world's largest media company. In the same way, Diller's bid for Paramount forced Viacom to jack up its price and increase its debt load to play in the land of the giants. The need to recruit Huizenga to help pay for the deal effectively pushed Davis out the door.
As for Diller, he barely stood still after accepting defeat last week. Within days of his concession statement, he reorganized QVC to expand its electronic retailing operations and to develop new interactive services like an online computer shopping business. All the while, Hollywood buzzed with rumors of imminent new Diller bids for everything from Time Warner to Matsushita-owned Universal Studios. While Diller says he does expect to return to movies at some point in the future, he adds, "We're not going to talk, comment or hint about any future issue. When we've got something to say definitely, we'll say it."
And what was the big fight all about in the final analysis? What attracted Redstone and Diller to Paramount and drew them into the struggle? "They're dream machines," Biondi says of U.S. motion-picture studios. "They are the quintessential American dream machines." And everybody wants one.
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CREDIT: TIME Graphic by Steve Hart
CAPTION: CORPORATE CONNECTIONS
The addition of Paramount offers new ways to sell entertainment