If Viacom’s Sumner Redstone still wants a shot at Paramount Communications, he had better come back with a higher bid by Jan. 21.

That was the message the Paramount board of directors sent out Wednesday with its unanimous rejection of Viacom’s revised tender offer and reaffirmation of its recommendation that Paramount shareholders should tender to QVC Network’s standing offer, which the board approved Dec. 22.

While Wall Street maintained that QVC’s was still the better offer, the board’s action should remove any lingering doubt in the minds of investors.

QVC chairman/CEO Barry Diller told Daily Variety, “We’re pleased with the board’s decision, but we think the process should be over. Auctions are not designed to accommodate successively lower bids.”

Diller has said that QVC has made its best offer and that it isunlikely the company would return to the negotiating table regardless of what Viacom does.

Sources close to the company said there is growing concern on the part of QVC that the studio and other assets are being hurt by the drawn-out auction process.

“This is very unhealthy for the Paramount studio,” said a source close to QVC. “The current management is not in a position to address the future. You can’t just write off an entire quarter; the studio needs a steady and firm hand guiding its future.”

QVC has petitioned the board to speed up the auction process and sources said it is now waiting for a “legal response” from the board. But QVC is said to be leery of taking further legal action against the board because it fears muddling the situation further.

The announcement released by the board Wednesday night seems to indicate that Par will stick to the procedures it adopted last month. In the release, Paramount chairman/CEO Martin Davis said: “Any future bids will continue to be rigorously reviewed with regard to their compliance with the bidding procedures. The board strongly encourages the bidders to submit their best and final bids at the earliest possible date. Nonetheless, the procedures were designed to preclude bids from being submitted after Feb. 1 and that deadline will not be extended.”

Even so, Wall Street applauded the fact that the end is in sight.

“The fact that the board stuck to the Feb. 1 deadline and has established a time frame for completing this deal is a big plus for Paramount going forward, regardless of who wins,” said Oppenheimer entertainment analyst Jessica Reif. “The company may now finally be able to once again concentrate on its core businesses and get everyone, including Wall Street, refocused on the basics.”

With both tender offers set to expire Jan. 21, Viacom has seven business days to come up with a better offer. As of Jan. 7, about $ 26.8 million shares had been tendered to QVC’s offer.

Sources said Viacom will have to at least match the overall value of QVC’s bid. That could be a big reach for Viacom, whose stock has plummeted since it announced an $ 8.4 billion merger with Blockbuster Entertainment last Friday. Based on Wednesday’s closing stock prices, the blended value of Viacom’s offer was $ 75.66 or $ 9 billion, compared to QVC’s, which stands at $ 83.34 or $ 9.9 billion.

Blockbuster limits

While Blockbuster has contributed $ 1.25 billion to Viacom’s offer, it’s not clear that the homevideo giant would again be willing to increase its stake. Backer Nynex is also considered a long shot for coughing up more money. since the company chose not to increase its stake in Viacom’s latest revised bid. ]

But as has been the case the last few weeks, the better chance a company appears to have of locking up a deal, the harder its stock is hit. Accordingly, arbitragers said they expected the stock of QVC to sink today. And such a drop would lessen the gap.

Since Viacom made its revised offer, there has been speculation that it was doing nothing more than buying additional time to come up with a better bid. If that is the case, Wednesday’s board decision may not be as big a defeat as it first appears.

In an interview with Daily Variety that took place before the board’s announcement, Viacom president Frank Biondi did not rule out the possibility of a higher bid. Viacom refused to comment.

The Paramount board meeting lasted less than three hours and the board’s rationale for coming to its decision appears clear-cut.

It said: “Although the per-share consideration offered in the revised Viacom offer ($ 105 cash for 50.1% of the Paramount shares) is higher than that offered in the QVC offer ($ 92 a share), the aggregate consideration offered and its second-step merger, taken together, represents the best value available to Paramount stockholders.”

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