Wall St. likes Viacom’s bid

Wall Street investors are hunkering down to sort matters out after Viacom and QVC Network put in their final bids Tuesday for Paramount Communications.

The clearest proof that Viacom is favored to get Par showed up in Wednesday’s stock swings. Traders have sold shares of the predicted winner on the theory that the costly deal will dent growth, and they’re buying the predicted loser’s stock. Viacom Class B shares closed 50 cents lower at $ 33.50 and QVC shares finished up $ 2 at $ 46.75.

QVC’s bid was valued at $ 86.53 per share and Viacom’s at $ 82.71 per share because of those moves. Yet while traders agreed that the real values of the two offers were quite close, they said Viacom’s $ 3 more cash per share and stock price guarantee gave that bid a big advantage.

“Clearly Viacom is a better bid, a safer bid,” a big Par investor said.

Both tender offers expire midnight EST on Feb. 14. At that point, the offer that has received 50.1% of Paramount’s outstanding common stock will be declared the winner. As of Monday, Viacom had received approximately 21.66 million shares and QVC had received about 19.04 million.

Par’s board of directors is expected to meet by Friday to recommend one bid to investors.

Paramount shares ended the day down $ 1.86 at $ 78.

In related news, Paramount Wednesday forecast a net loss of about $ 35 million to $ 40 million or 29 cents to 33 cents per share for the third quarter ended Jan. 31, vs. last year’s comparable net loss of $ 66.8 million or 56 cents per share after one-time charges of $ 66.9 million.

The studio attributed the loss to writedowns on programming including “Major Dad” at USA Network and the feature film “Addams Family Values,” which turned in an unexpectedly poor holiday B.O. performance.

At USA, which is co-owned by Par and MCA, “less-than-hoped-for ratings have led to make-goods on the advertising front and/or some sort of writedown adjustment to program value,” said Prudential Securities analyst Sharon Williams.

Paramount also said it sees increased network program production cutting into operating income from its TV programming biz.

Viacom said it is moving ahead with its merger with Blockbuster Entertainment.

Viacom said Wednesday it elected Nynex vice chairman Frederic Salerno to its board of directors, which already includes Nynex chairman William Ferguson. Nynex had received two board seats as part of Viacom and Blockbuster’s merger.

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