Viacom is expected to announce — perhaps as early as today — an enhanced bid for Paramount Communications Inc., which has agreed to be acquired by hostile bidder QVC Network for about $ 9.7 billion.

While Viacom could not be reached for comment on its plans, sources close to the situation said the company spent the weekend hammering out terms of a new bid with backer Blockbuster Entertainment, which is expected to double its $ 600 million investment in Viacom in order to make possible a higher bid.

Blockbuster last week increased its revolving credit line to $ 1 billion (almost triple the old amount) and Wall Street sources said Blockbuster’s board met over the weekend and approved putting that money toward a higher offer.

Stiff terms

While Blockbuster could not be reached for comment, the burgeoning entertainment retailer is expected to extract a pound of flesh for any increased participation. In fact, speculation was strong over the weekend that Blockbuster intends to merge with or take over Viacom.

In the past year, the homevideo giant has expanded aggressively both in Hollywood and in music retailing and chairman Wayne Huizenga seems serious about cementing his company’s position as a major entertainment industry player.

While its present investment in Viacom is $ 600 million in preferred stock, which converts into non-voting Viacom B class stock, Blockbuster was said to be seeking new and tougher financial terms for its increased commitment, including more seats on the Viacom board — the original investment gave it one seat — and a stipulation that its equity interest be either direct or convertible into Viacom Class A common stock, which has voting rights.

Stock analysts said Viacom could make a direct private placement of new Viacom Class A stock to Blockbuster, with Viacom chairman Sumner Redstone retaining a majority stake in the company.

QVC’s current merger agreement with Paramount consists of $ 92 a share in cash for 51% of Paramount’s 124.5 million shares, and QVC common stock, convertible preferred stock and warrants for the balance.

Wanted: Another $ 600 mil

Analysts said that Viacom will need at leastan extra $ 600 million to top QVC’s terms by raising its present tender offer to $ 95 a share from $ 85 a share for 51% of Paramount.