Lucrative Loss for Paramount’s Davis : Mergers: Career prospects are dim, but the entertainment chairman could receive millions in almost any buyout scenario.

As the battle for Paramount Communications Inc. rages on--in corporate boardrooms, investment banking suites and now in the courts as well--one of the only certainties is that Chairman Martin S. Davis will be among the wounded. Viacom Inc.’s friendly bid relegates him to a secondary role, and his career prospects are even worse if QVC Chairman Barry Diller prevails.

But don’t break out the hankies yet. Under almost any scenario, Davis scores exceptionally well financially. In the last week alone, as market speculation has driven Paramount stock up 12%, Davis’ holdings have gained $15.3 million.

The Paramount chairman owns 1,678,609 shares, with options on another 150,000, according to the company’s 1993 proxy statement. In addition, he receives a $950,000 salary plus bonuses, which have amounted to more than $7 million over the last three fiscal years.

Davis’ compensation isn’t outrageous by entertainment mogul standards, but it’s still a pretty comfortable cushion. And it gets more comfortable under the buyout scenarios.

At Thursday’s closing price of $76.875 a share, Davis’ Paramount stock is worth $140.6 million. If Viacom’s current offer of $8.2 billion holds and Viacom wins control of Paramount, Davis’ shares would be worth $64.85 apiece, based on Viacom’s current Class A and B share prices.

That deal, which leaves Davis’ stock value at $118.6 million, is the one he wants since it guarantees him some role in the company, but it’s not the most lucrative.

If QVC wins Paramount with Diller’s current $9.5-billion offer containing stock and cash, the value of Davis’ shares would rise to $85.14 each, or $155.7 million. That means that Diller’s unfriendly bid is worth $37 million more to Davis than Viacom’s friendly bid.

All that’s subject to change, of course, since Davis primarily ends up with stock in the acquiring company under either offer, and the ultimate value of his shares depends on what happens to the acquirer’s stock after the deal is done. But it’s not a bad way to go.

In a recent newsletter, compensation expert Graef Crystal pointed out that Davis, while spectacularly compensated, is still not the ultimate breadwinner among entertainment chiefs, not with executives such as Disney Chairman Michael D. Eisner in the running. Crystal estimated that Davis has earned about $106.1 million during his nine years as chairman.

Others, however, say money has never been the primary concern with Davis, who’s known to relish his role at the top of one of America’s most famous companies. “He’d care less whether you gave him $100 million or $5 million,� said one associate. “Marty’s life is his work.�

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The Check Was in the Mail: One of Barry Diller’s aces in the Paramount bidding is the backing of Allen & Co., the investment banking firm with a rich record of entertainment deals.

Now sources say Viacom tried to keep Herbert Allen Jr. out of the game early on by sending his company a $1-million check for vaguely defined past services rendered. According to those sources, Allen & Co. returned the check to prevent any conflict charges arising in its representation of Diller. Viacom is using Smith Barney Shearson as its investment banker.

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Has the American Assn. of Retired Persons Heard About This? Sources say ageism is at least partly responsible for Wall Street’s bias toward Barry Diller in the Paramount bidding.

To some, the 51-year-old Diller looks positively sprightly beside Viacom Chairman Sumner Redstone, 70, and the 66-year-old Davis. Even though Redstone and Davis are still running at full speed, many Wall Streeters worry that there’s no clear successor to the throne.

The merger plan establishes Redstone as chairman, with nearly 70% of the company, and Davis as chief executive. But the chain of command gets cloudier from there, with Paramount President Stanley Jaffe and Viacom President Frank Biondi Jr. assigned co-equal positions.

“We don’t see any leadership from anyone young,� a financial executive said.

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Pretty Woman II: Now that Paramount Communications is in play, practically everyone connected with entertainment and technology has been named as a possible bidder.

So why not Heidi Fleiss?

She’s tanned, rested and not particularly busy, now that the intense global news media interest in her drug and pandering case has subsided.

Wall Street may snicker. But published accounts suggest that the alleged former Hollywood madam’s annual profit margin far exceeded the entertainment industry’s. Plus, no one since the legendary Steve Ross, the late Time Warner Inc. chairman, has had closer ties to talent.

While money obviously poses a problem, a consortium of entertainment executives might anonymously pony up a few billion dollars in Paramount bidding money just to get her off the gossip circuit.

Times staff writer Tom Petruno contributed to this story.