Will They Reach the Altar?

By Jeffrey Ressner/Los Angeles and Jane Van Tassel/New York

At first glance the proposed nuptials of Viacom Inc. and Paramount Communications look like a marriage made in heaven. The merged company, to be called Paramount Viacom, would unite Paramount's film and television studios with Viacom's cable systems and its networks such as MTV and Nickelodeon. Result: a global giant primed to compete with heavyweights like Time Warner, Tele-Communications Inc. (TCI) and Rupert Murdoch's News Corp. in everything from making movies to building an interactive electronic highway into the home. "It's absolutely the best fit" of all the recent media mergers, says Frank Mancuso, former president of Paramount and now head of MGM.

But will some interloper top Viacom's $8.2 billion bid and try to make off with Paramount? The announcement was treated in Hollywood and on Wall Street like that moment when the minister says, Speak now or forever hold your peace. The first to clear his throat was Ted Turner, the freewheeling founder of CNN, who just last month struck a deal to buy two much smaller movie companies. On Friday he was given the go-ahead by his board -- which includes representatives from his big investors, TCI and Time Warner -- to explore a rival offer. Barry Diller, chairman of the QVC shopping network, is also interested, as is Blockbuster Entertainment. Further tangling the web: TCI chairman John Malone, who is Diller's equity partner as well as Turner's, could make a bid either alone or in conjunction with the other two. Such suitors could in part be attracted by the slippage in Viacom's stock, which fell 6 1/8 after the bid for Paramount to close at 59 7/8 last week, thus reducing the value of Redstone's stock-heavy offer.

If the Paramount-Viacom deal can be completed, it would enable the combined company to move into new ventures that neither firm would have the means to undertake separately. For example, Paramount chairman Martin Davis said last week that the new company might develop a music business to record and market compact discs under the MTV label. And since Viacom and Paramount together own a total of 12 TV stations, the two companies could combine them into a fifth broadcast network. "If it presents an opportunity, we will clearly seize it," Davis says.

But while such synergistic ideas sound good at the outset, they could prove difficult to engineer. For instance, Viacom plans to award rights to a film based on MTV characters Beavis and Butt-head to Paramount instead of Warner Bros., as originally planned. But impresario David Geffen spent a good part of last week fighting Viacom's Sumner Redstone to keep the film at Warner.

While there is little overlap in the Paramount and Viacom lines of business, there is plenty of redundancy in the executive suite, which could trigger a management shuffle. Davis, who would move from chairman and chief executive of Paramount to CEO of the new company under Redstone, told TIME last week, "Let's face it, I've taken a step down in title, and I do expect others to follow."

The new firm would battle rival giants across a vast range of entertainment and information markets at home and abroad. Viacom and AT&T are building an interactive cable-TV system in Castro Valley, California, that has similarities to one that Time Warner has under construction in Orlando, Florida. At the same time, MTV competes overseas with Rupert Murdoch's British Sky Broadcasting and Ted Turner's CNN. But industry watchers say such clashes of the titans don't have to be fatal. Says Christopher Dixon, an industry analyst for Paine, Webber: "There's room on the planet for all these guys."

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