IMPACT OF THE BELL ATLANTIC / TCI DEAL : ENTERTAINMENT : So Where Does the Deal Leave Hollywood?
- Share via
For Hollywood, the Bell Atlantic Corp./Tele-Communications Inc. deal is an unexpected plot twist that complicates the bidding for Paramount Communications Inc., while leaving the rest of the entertainment industry to ponder its role in a world of telephone and cable alliances.
Bell Atlantic’s acquisition agreement with TCI, the nation’s leading cable company, paves the way for other similar marriages geared to the high-tech future, when movies and other services will be delivered into the home. But in most cases those deals will put cable and telephone companies in the driver’s seat, with Hollywood as the passive partner.
Paramount is already one pawn in the game. Until Wednesday’s announcement of the Bell Atlantic/TCI deal, Barry Diller’s QVC Network was in discussions with BellSouth, the Atlanta-based Baby Bell, about investing in his $9.6-billion hostile Paramount bid. Now, because Diller counts TCI among his primary backers, those talks are said to have collapsed.
Sources say Diller, who is competing against Viacom Inc. for Paramount, may now have to find another financial backer. Cox Enterprises is seen as one possibility. Diller is also said to be in discussions with another possible partner.
“It’s not good for Barry,” one knowledgeable source said of the Bell Atlantic/TCI deal. “He had a deal with BellSouth, and now that deal is going to walk.”
However, a source close to QVC countered that Diller is just as strong as ever. “Malone is going to try and help (QVC) get Paramount,” the source said. “Bell Atlantic also doesn’t want Nynex (a Viacom backer) to get it. . . . Barry is calling the shots, and it’s his show.”
TCI maintained a distance from the Paramount discussions Wednesday. TCI spokesman Bob Thomson, in a conference call, said QVC’s bid for Paramount “has always been a Barry Diller play.” He said the proposed Bell Atlantic/TCI deal “did not play a crucial role one way or another” in QVC’s Paramount bid.
But Paramount probably will not be the only studio affected, since programming is sorely needed to fill the void that will be created when the 500-channel universe becomes a reality. Stocks in all of the major entertainment companies rose Wednesday following the announcement of the Bell Atlantic/TCI alliance, with CBS hitting an all-time high.
For their part, Malone and Diller have both expressed interest in buying part of Sony Pictures or MCA Inc. as a way to pump up programming, even if the Paramount deal goes through. Sources say that any one of the Baby Bells could also jump into the bidding for a piece of a movie studio or television network, especially after linking up with a cable partner.
Where the alliances or mergers will come no one can say. Sony and MCA are seen as likely targets because of their parent companies’ acquisition debt. But Rupert Murdoch’s Fox Inc., which has held informal discussions with Malone, is another possible candidate.
Due to their sheer size and strength, Time Warner and Walt Disney Co. are not seen as being involved in such a deal.
“This was the hardware merger,” said a senior studio executive, noting that technology was the driving force behind Bell Atlantic and TCI. “What they are missing now is a studio or network.”
Don Rudkin, managing partner in the communications group at Deloitte & Touche, says some telephone companies may begin pumping some sorely needed financing into the moribund independent production business.
Sources say Sony has already sent out signals that it’s open to partnership discussions with cable and telephone companies, which could create an enormous new revenue stream. MCA’s stance is said to be more passive. “But that doesn’t mean they’re not interested,” said one source.
“Everyone is going to be talking to everyone,” the source added. “It’s motivated by the fear of missing out on something. . . . These people will be bumping into walls.”
One difference over past experience, however, is that telephone companies are expected to play a primary role in acquisitions, after watching cable companies take the lead in past Hollywood deals, such as Diller’s bid for Paramount or Turner Broadcasting’s deals to acquire New Line Cinema and Castle Rock Entertainment.
“The telephone companies are going to be big players in Hollywood,” Rudkin said. “The cash flow of one telephone company alone is greater than all domestic box office receipts.”
More to Read
The biggest entertainment stories
Get our big stories about Hollywood, film, television, music, arts, culture and more right in your inbox as soon as they publish.
You may occasionally receive promotional content from the Los Angeles Times.