____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
SCHEDULE 14D-1
(Tender Offer Statement Pursuant to
Section 14(d)(1) of the Securities Exchange Act of 1934)
(Amendment No. 36)
PARAMOUNT COMMUNICATIONS INC.
(Name of Subject Company)
QVC NETWORK, INC.
COMCAST CORPORATION
BELLSOUTH CORPORATION
(Bidders)
Common Stock, Par Value $1.00 Per Share
(Including the Associated Common Stock Purchase Rights)
(Title of Class of Securities)
699216 10 7
(CUSIP Number of Class of Securities)
<TABLE>
<S> <C> <C>
Neal S. Grabell Stanley L. Wang Walter H. Alford
QVC Network, Inc. Comcast Corporation BellSouth Corporation
Goshen Corporate Park 1234 Market Street 1155 Peachtree Street, N.E.
West Chester, PA 19380 Philadelphia, PA 19107 Atlanta, GA 30367
(215) 430-1000 (215) 981-7510 (404) 249-2050
</TABLE>
(Names, Addresses and Telephone Numbers of Persons Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copy to:
<TABLE>
<S> <C> <C>
Pamela S. Seymon Dennis S. Hersch Alan Stephenson
Wachtell, Lipton, Rosen & Katz Davis Polk & Wardwell Cravath, Swaine & Moore
51 West 52nd Street 450 Lexington Avenue One Worldwide Plaza
New York, NY 10019 New York, NY 10017 825 Eighth Avenue
(212) 403-1000 (212) 450-4000 New York, NY 10022
(212) 474-1000
</TABLE>
<PAGE>
<PAGE>
This Statement amends and supplements the Tender Of-
fer Statement on Schedule 14D-1 filed with the Securities and
Exchange Commission (the "Commission") on October 27, 1993, as
previously amended and supplemented (the "Schedule 14D-1"), by
QVC Network, Inc., a Delaware corporation ("QVC"), Comcast Cor-
poration, a Pennsylvania corporation ("Comcast"), and BellSouth
Corporation, a Georgia corporation ("BellSouth"). This State-
ment relates to a tender offer to purchase 61,657,432 of the
outstanding shares of Common Stock, par value $1.00 per share
(the "Shares"), of Paramount Communications Inc., a Delaware
corporation ("Paramount"), or such greater number of Shares as
equals 50.1% of the Shares outstanding plus the Shares issuable
upon the exercise of the then exercisable stock options, as of
the expiration of the Offer, and the associated Rights, at a
price of $104 per Share (and associated Right), net to the
seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase,
dated October 27, 1993 (the "Offer to Purchase"), as amended
and supplemented by the Supplement thereto, dated November 12,
1993 (the "First Supplement"), the Second Supplement thereto,
dated December 23, 1993 (the "Second Supplement"), the Third
Supplement thereto, dated February 1, 1994 (the "Third Supple-
ment"), the amendments thereto and the related original and
revised Letters of Transmittal (which together constitute the
"Offer"), which have been annexed to and filed with the Sched-
ule 14D-1 as Exhibits (a)(1), (a)(17), (a)(46), (a)(67),
(a)(2), (a)(18), (a)(47) and (a)(68), respectively. Capital-
ized terms used and not defined herein shall have the meanings
assigned such terms in the Offer and the Schedule 14D-1.
Item 3. Past Contacts, Transactions or Negotiations With the
Subject Company.
(b) On February 3, 1994, QVC's financial advisor
delivered to Paramount's financial advisor a memorandum
regarding the Offer and the Second Viacom-Blockbuster Offer, as
revised on February 1, 1994 (the "Third Viacom-Blockbuster
Offer"). A copy of the memorandum is attached hereto as
Exhibit (a)(75), and the foregoing summary description is
qualified in its entirety by reference to such exhibit.
Item 11. Material to be Filed as Exhibits.
(a)(1) -- Offer to Purchase, dated October 27, 1993.*
(a)(2) -- Letter of Transmittal.*
(a)(3) -- Notice of Guaranteed Delivery.*
____________________
* Previously filed
<PAGE>
<PAGE>
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.*
(a)(5) -- Form of Letter to Clients for Use by Brokers,
Dealers, Commercial Banks, Trust Companies and
Nominees.*
(a)(6) -- Guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number
on Substitute Form W-9.*
(a)(7) -- Press release issued by QVC on October 21,
1993.*
(a)(8) -- Form of Summary Advertisement, dated October 27,
1993.*
(a)(9) -- Text of Letter from QVC to Paramount, dated Oc-
tober 29, 1993.*
(a)(10) -- Press release issued by QVC on October 29,
1993.*
(a)(11) -- Form of Letter to Participants in the Dividend
Reinvestment Plan of Paramount Communications
Inc.*
(a)(12) -- Text of Letter from Paramount to QVC, dated Oc-
tober 29, 1993.*
(a)(13) -- Text of Letter from Paramount to QVC advisor,
dated November 1, 1993.*
(a)(14) -- Text of Letter from QVC advisor to Paramount,
dated November 2, 1993.*
(a)(15) -- Press release issued by QVC on November 5,
1993.*
(a)(16) -- Press release issued by QVC on November 5,
1993.*
(a)(17) -- Supplement to the Offer to Purchase, dated No-
vember 12, 1993.*
(a)(18) -- Revised Letter of Transmittal.*
(a)(19) -- Revised Notice of Guaranteed Delivery.*
____________________
* Previously filed
-2-
<PAGE>
<PAGE>
(a)(20) -- Revised Form of Letter to Brokers, Dealers, Com-
mercial Banks, Trust Companies and Nominees.*
(a)(21) -- Revised Form of Letter to Clients for use by
Brokers, Dealers, Commercial Banks, Trust Compa-
nies and Nominees.*
(a)(22) -- Press release issued by QVC on November 11,
1993.*
(a)(23) -- Press release issued by QVC on November 12,
1993.*
(a)(24) -- Revised Form of Letter to Participants in the
Dividend Reinvestment Plan of Paramount Com-
munications, Inc.*
(a)(25) -- Press release issued by QVC on November 16,
1993.*
(a)(26) -- Amended Complaint in Viacom International Inc.
v. Tele-Communications, Inc., et al., dated No-
vember 9, 1993, and filed in the United States
District Court for the Southern District of New
York.*
(a)(27) -- Text of letter from QVC to Paramount, dated No-
vember 19, 1993.*
(a)(28) -- Press release issued by QVC on November 20,
1993.*
(a)(29) -- Press release issued by QVC on November 22,
1993.*
(a)(30) -- Press release issued by QVC on November 23,
1993.*
(a)(31) -- Press release issued by QVC on November 23,
1993.*
(a)(32) -- Press release issued by QVC on November 24,
1993.*
(a)(33) -- Press release issued by QVC on December 1,
1993.*
(a)(34) -- Press release issued by QVC on December 9,
1993.*
____________________
* Previously filed
-3-
<PAGE>
<PAGE>
(a)(35) -- Press release issued by QVC on December 10,
1993.*
(a)(36) -- Press release issued by QVC on December 14,
1993.*
(a)(37) -- Text of letter from Paramount advisor to QVC,
dated December 14, 1993.*
(a)(38) -- Text of letter from QVC advisor to Paramount
advisor, dated December 14, 1993.*
(a)(39) -- Press release issued by QVC on December 15,
1993.*
(a)(40) -- Press release issued by QVC on December 16,
1993.*
(a)(41) -- Text of letter from Paramount advisor to QVC
advisor, dated December 17, 1993.*
(a)(42) -- Text of letter from QVC advisor to Viacom advi-
sor, dated December 17, 1993.*
(a)(43) -- Text of letter from QVC to Paramount, dated De-
cember 20, 1993.*
(a)(44) -- Press release issued by QVC on December 20,
1993.*
(a)(45) -- Press release issued by QVC on December 20,
1993.*
(a)(46) -- Second Supplement to the Offer to Purchase,
dated December 23, 1993.*
(a)(47) -- Second Revised Letter of Transmittal.*
(a)(48) -- Second Revised Notice of Guaranteed Delivery.*
(a)(49) -- Second Revised Form of Letter to Brokers, Deal-
ers, Commercial Banks, Trust Companies and Nomi-
nees.*
(a)(50) -- Second Revised Form of Letter to Clients for use
by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.*
____________________
* Previously filed
-4-
<PAGE>
<PAGE>
(a)(51) -- Second Revised Form of Letter to Participants in
the Dividend Reinvestment Plan of Paramount Com-
munications Inc.*
(a)(52) -- Press release issued by QVC on December 22,
1993.*
(a)(53) -- Press release issued by QVC on December 27,
1993.*
(a)(54) -- Press release issued by QVC on January 7, 1994.*
(a)(55) -- Press release issued by QVC on January 10,
1994.*
(a)(56) -- Text of letter from QVC advisor to Paramount,
dated January 11, 1994.*
(a)(57) -- Text of letter from Paramount to QVC advisor,
dated January 13, 1994.*
(a)(58) -- Text of letter from Paramount advisor to QVC
advisor, dated January 13, 1994.*
(a)(59) -- Text of letter from QVC advisor to Paramount
advisor, dated January 14, 1994.
(a)(60) -- Text of letter from Paramount advisor to QVC
advisor, dated January 18, 1994.*
(a)(61) -- Text of letter from Paramount advisor to QVC
advisor, dated January 18, 1994.*
(a)(62) -- Press release issued by QVC on January 19,
1994.*
(a)(63) -- Text of letter from QVC advisor to Paramount,
dated January 20, 1994.*
(a)(64) -- Text of letter from Paramount to QVC, dated Jan-
uary 21, 1994.*
(a)(65) -- Text of letter from QVC advisor to Paramount,
dated January 24, 1994.*
(a)(66) -- Text of letter from Paramount advisor to QVC
advisor, dated January 27, 1994.*
(a)(67) -- Third Supplement to the Offer to Purchase, dated
February 1, 1994.*
____________________
* Previously filed
-5-
<PAGE>
<PAGE>
(a)(68) -- Third Revised Letter of Transmittal.*
(a)(69) -- Third Revised Notice of Guaranteed Delivery.*
(a)(70) -- Third Revised Form of Letter to Brokers, Deal-
ers, Commercial Banks, Trust Companies and Nomi-
nees.*
(a)(71) -- Third Revised Form of Letter to Clients for use
by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.*
(a)(72) -- Third Revised Form of Letter to Participants in
the Dividend Reinvestment Plan of Paramount Com-
munications Inc.*
(a)(73) -- Press release issued by QVC on February 1,
1994.*
(a)(74) -- Press release issued by QVC on February 1,
1994.*
(a)(75) -- Memorandum from QVC advisor to Paramount
advisor, dated February 3, 1994.
(b)(1) -- Commitment Letters, dated September 30, 1993, by
and between QVC and certain banks.*
(b)(2) -- Commitment Letters, dated November 19, 1993, by
and between QVC and certain banks.*
(b)(3) -- Bank Credit Agreement, dated as of January 7,
1994, by and between QVC and certain banks.*
(b)(4) -- Amendment to Bank Credit Agreement, dated as of
February 1, 1994, by and between QVC and certain
banks.*
(c)(1) -- Commitment Letter, dated October 15, 1993, by
and among QVC and certain investors named there-
in.*
(c)(2) -- Stockholders Agreement, dated July 16, 1993,
among Liberty Media Corporation, Comcast Cor-
poration, Arrow Investments, L.P. and certain
affiliates and subsidiaries of such parties.*
(c)(3) -- Agreement Among Stockholders, dated October 15,
1993.*
____________________
* Previously filed
-6-
<PAGE>
<PAGE>
(c)(4) -- Proposed form of merger agreement delivered by
QVC to Paramount.*
(c)(5) -- First Amended and Supplemental Complaint in QVC
Network, Inc. v. Paramount Communications Inc.
filed October 28, 1993 in the Delaware Chancery
Court.*
(c)(6) -- Voting Trust Agreement, dated as of October 28,
1993, between QVC and G. William Miller.*
(c)(7) -- Informational request from QVC to Paramount,
dated November 1, 1993.*
(c)(8) -- Fair bidding procedures delivered by QVC to Par-
amount on November 1, 1993.*
(c)(9) -- Proposed form of merger agreement delivered by
QVC to Paramount on November 1, 1993.*
(c)(10) -- Commitment Letter, dated November 11, 1993, by
and among QVC and certain investors named there-
in.*
(c)(11) -- Memorandum of Understanding, dated November 11,
1993, by and between QVC and BellSouth.*
(c)(12) -- Liberty-QVC Agreement, dated November 11, 1993,
by and between QVC and Liberty.*
(c)(13) -- Agreement Among Stockholders, dated November 11,
1993, among QVC, Advance, Arrow, BellSouth, Com-
cast and Cox.*
(c)(14) -- Understanding Among Stockholders, dated November
11, 1993, among Arrow, BellSouth, Comcast and
Liberty.*
(c)(15) -- Agreement Containing Consent Order and Interim
Agreement, dated November 12, 1993, among the
FTC, Liberty, and TCI.*
(c)(16) -- BellSouth Commitment Letter, dated November 19,
1993, by and between BellSouth and QVC.*
(c)(17) -- Memorandum Opinion and Preliminary Injunction
Order in QVC Network, Inc. v. Paramount Com-
munications, Inc., C.A. No. 13208, both dated
____________________
* Previously filed
-7-
<PAGE>
<PAGE>
November 24, 1993, entered by Delaware Chancery
Court.*
(c)(18) -- Revised Memorandum Opinion, dated November 26,
1993, in QVC Network, Inc. v. Paramount Communi-
cations, Inc., C.A. No. 13208, entered by Dela-
ware Chancery Court.*
(c)(19) -- Order, dated December 9, 1993, in Paramount Com-
munications Inc. v. QVC Network, Inc., C.A. No.
13208, entered by Delaware Supreme Court.*
(c)(20) -- Proposed form of merger agreement delivered by
Paramount to QVC on December 14, 1993.*
(c)(21) -- Text of letter from QVC advisor to Paramount
advisor, dated December 10, 1993.*
(c)(22) -- Text of letter from Paramount advisor to QVC
advisor, dated December 14, 1993.*
(c)(23) -- Agreement and Plan of Merger, between Paramount
and QVC, dated as of December 22, 1993.*
(c)(24) -- Exemption Agreement, between Paramount and QVC,
dated December 22, 1993.*
(c)(25) -- Voting Agreement, dated December 22, 1993, among
BellSouth, Comcast, Cox, Advance and Arrow.*
(c)(26) -- First Amendment, dated as of December 27, 1993,
to Agreement and Plan of Merger, between Para-
mount and QVC.*
(c)(27) -- Letter Agreement, dated as of December 20, 1993,
by and among QVC, Comcast, Cox, Advance and
BellSouth.*
(c)(28) -- Text of Letter, dated January 5, 1994, from
Paramount and agreed to by QVC.*
(c)(29) -- First Amendment, dated as of January 27, 1994,
to QVC Exemption Agreement.*
(c)(30) -- Proposed Form of Agreement and Plan of Merger
between QVC and Paramount, delivered by Para-
mount on January 27, 1994.*
____________________
* Previously filed
-8-
<PAGE>
<PAGE>
(c)(31) -- Letter Agreement, dated as of February 1, 1994,
by and among QVC, Comcast, Cox, Advance and
BellSouth.*
____________________
* Previously filed
-9-
<PAGE>
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.
QVC NETWORK, INC.
By: /s/ Neal S. Grabell
Neal S. Grabell
Senior Vice President,
General Counsel and
Corporate Secretary
Dated: February 4, 1994
-10-
<PAGE>
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.
COMCAST CORPORATION
By: /s/ Stanley L. Wang
Stanley L. Wang
Senior Vice President
Dated: February 4, 1994
-11-
<PAGE>
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.
BELLSOUTH CORPORATION
By: /s/ Charles C. Miller, III
Charles C. Miller, III
Vice President --
Strategic Planning and Corporate
Development
Dated: February 4, 1994
-12-
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
(a)(1) -- Offer to Purchase, dated October 27, 1993.*
(a)(2) -- Letter of Transmittal.*
(a)(3) -- Notice of Guaranteed Delivery.*
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.*
(a)(5) -- Form of Letter to Clients for Use by Brokers,
Dealers, Commercial Banks, Trust Companies and
Nominees.*
(a)(6) -- Guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number
on Substitute Form W-9.*
(a)(7) -- Press release issued by QVC on October 21,
1993.*
(a)(8) -- Form of Summary Advertisement, dated October 27,
1993.*
(a)(9) -- Text of Letter from QVC to Paramount, dated Oc-
tober 29, 1993.*
(a)(10) -- Press release issued by QVC on October 29,
1993.*
(a)(11) -- Form of Letter to Participants in the Dividend
Reinvestment Plan of Paramount Communications
Inc.*
(a)(12) -- Text of Letter from Paramount to QVC, dated Oc-
tober 29, 1993.*
(a)(13) -- Text of Letter from Paramount to QVC advisor,
dated November 1, 1993.*
(a)(14) -- Text of Letter from QVC advisor to Paramount,
dated November 2, 1993.*
(a)(15) -- Press release issued by QVC on November 5,
1993.*
____________________
* Previously filed
<PAGE>
<PAGE>
(a)(16) -- Press release issued by QVC on November 5,
1993.*
(a)(17) -- Supplement to the Offer to Purchase, dated No-
vember 12, 1993.*
(a)(18) -- Revised Letter of Transmittal.*
(a)(19) -- Revised Notice of Guaranteed Delivery.*
(a)(20) -- Revised Form of Letter to Brokers, Dealers, Com-
mercial Banks, Trust Companies and Nominees.*
(a)(21) -- Revised Form of Letter to Clients for use by
Brokers, Dealers, Commercial Banks, Trust Compa-
nies and Nominees.*
(a)(22) -- Press release issued by QVC on November 11,
1993.*
(a)(23) -- Press release issued by QVC on November 12,
1993.*
(a)(24) -- Revised Form of Letter to Participants in the
Dividend Reinvestment Plan of Paramount Com-
munications, Inc.*
(a)(25) -- Press release issued by QVC on November 16,
1993.*
(a)(26) -- Amended Complaint in Viacom International Inc.
v. Tele-Communications, Inc., et al., dated No-
vember 9, 1993, and filed in the United States
District Court for the Southern District of New
York.*
(a)(27) -- Text of letter from QVC to Paramount, dated No-
vember 19, 1993.*
(a)(28) -- Press release issued by QVC on November 20,
1993.*
(a)(29) -- Press release issued by QVC on November 22,
1993.*
(a)(30) -- Press release issued by QVC on November 23,
1993.*
(a)(31) -- Press release issued by QVC on November 23,
1993.*
____________________
* Previously filed
-2-
<PAGE>
<PAGE>
(a)(32) -- Press release issued by QVC on November 24,
1993.*
(a)(33) -- Press release issued by QVC on December 1,
1993.*
(a)(34) -- Press release issued by QVC on December 9,
1993.*
(a)(35) -- Press release issued by QVC on December 10,
1993.*
(a)(36) -- Press release issued by QVC on December 14,
1993.*
(a)(37) -- Text of letter from Paramount advisor to QVC,
dated December 14, 1993.*
(a)(38) -- Text of letter from QVC advisor to Paramount
advisor, dated December 14, 1993.*
(a)(39) -- Press release issued by QVC on December 15,
1993.*
(a)(40) -- Press release issued by QVC on December 16,
1993.*
(a)(41) -- Text of letter from Paramount advisor to QVC
advisor, dated December 17, 1993.*
(a)(42) -- Text of letter from QVC advisor to Viacom advi-
sor, dated December 17, 1993.*
(a)(43) -- Text of letter from QVC to Paramount, dated De-
cember 20, 1993.*
(a)(44) -- Press release issued by QVC on December 20,
1993.*
(a)(45) -- Press release issued by QVC on December 20,
1993.*
(a)(46) -- Second Supplement to the Offer to Purchase,
dated December 23, 1993.*
(a)(47) -- Second Revised Letter of Transmittal.*
(a)(48) -- Second Revised Notice of Guaranteed Delivery.*
____________________
* Previously filed
-3-
<PAGE>
<PAGE>
(a)(49) -- Second Revised Form of Letter to Brokers, Deal-
ers, Commercial Banks, Trust Companies and Nomi-
nees.*
(a)(50) -- Second Revised Form of Letter to Clients for use
by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.*
(a)(51) -- Second Revised Form of Letter to Participants in
the Dividend Reinvestment Plan of Paramount Com-
munications Inc.*
(a)(52) -- Press release issued by QVC on December 22,
1993.*
(a)(53) -- Press release issued by QVC on December 27,
1993.*
(a)(54) -- Press release issued by QVC on January 7, 1994.*
(a)(55) -- Press release issued by QVC on January 10,
1994.*
(a)(56) -- Text of letter from QVC advisor to Paramount,
dated January 11, 1994.*
(a)(57) -- Text of letter from Paramount to QVC advisor,
dated January 13, 1994.*
(a)(58) -- Text of letter from Paramount advisor to QVC
advisor, dated January 13, 1994.*
(a)(59) -- Text of letter from QVC advisor to Paramount
advisor, dated January 14, 1994.
(a)(60) -- Text of letter from Paramount advisor to QVC
advisor, dated January 18, 1994.*
(a)(61) -- Text of letter from Paramount advisor to QVC
advisor, dated January 18, 1994.*
(a)(62) -- Press release issued by QVC on January 19,
1994.*
(a)(63) -- Text of letter from QVC advisor to Paramount,
dated January 20, 1994.*
(a)(64) -- Text of letter from Paramount to QVC, dated
January 21, 1994.*
____________________
* Previously filed
-4-
<PAGE>
<PAGE>
(a)(65) -- Text of letter from QVC advisor to Paramount,
dated January 24, 1994.*
(a)(66) -- Text of letter from Paramount advisor to QVC
advisor, dated January 27, 1994.*
(a)(67) -- Third Supplement to the Offer to Purchase, dated
February 1, 1994.*
(a)(68) -- Third Revised Letter of Transmittal.*
(a)(69) -- Third Revised Notice of Guaranteed Delivery.*
(a)(70) -- Third Revised Form of Letter to Brokers, Deal-
ers, Commercial Banks, Trust Companies and Nomi-
nees.*
(a)(71) -- Third Revised Form of Letter to Clients for use
by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.*
(a)(72) -- Third Revised Form of Letter to Participants in
the Dividend Reinvestment Plan of Paramount Com-
munications Inc.*
(a)(73) -- Press release issued by QVC on February 1,
1994.*
(a)(74) -- Press release issued by QVC on February 1,
1994.*
(a)(75) -- Memorandum from QVC advisor to Paramount
advisor, dated February 3, 1994.
(b)(1) -- Commitment Letters, dated September 30, 1993, by
and between QVC and certain banks.*
(b)(2) -- Commitment Letters, dated November 19, 1993, by
and between QVC and certain banks.*
(b)(3) -- Bank Credit Agreement, dated as of January 7,
1994, by and between QVC and certain banks.*
(b)(4) -- Amendment to Bank Credit Agreement, dated as of
February 1, 1994, by and between QVC and certain
banks.*
(c)(1) -- Commitment Letter, dated October 15, 1993, by
and among QVC and certain investors named there-
in.*
____________________
* Previously filed
-5-
<PAGE>
<PAGE>
(c)(2) -- Stockholders Agreement, dated July 16, 1993,
among Liberty Media Corporation, Comcast Cor-
poration, Arrow Investments, L.P. and certain
affiliates and subsidiaries of such parties.*
(c)(3) -- Agreement Among Stockholders, dated October 15,
1993.*
(c)(4) -- Proposed form of merger agreement delivered by
QVC to Paramount.*
(c)(5) -- First Amended and Supplemental Complaint in QVC
Network, Inc. v. Paramount Communications Inc.
filed October 28, 1993 in the Delaware Chancery
Court.*
(c)(6) -- Voting Trust Agreement, dated as of October 28,
1993, between QVC and G. William Miller.*
(c)(7) -- Informational request from QVC to Paramount,
dated November 1, 1993.*
(c)(8) -- Fair bidding procedures delivered by QVC to Par-
amount on November 1, 1993.*
(c)(9) -- Proposed form of merger agreement delivered by
QVC to Paramount on November 1, 1993.*
(c)(10) -- Commitment Letter, dated November 11, 1993, by
and among QVC and certain investors named
therein.*
(c)(11) -- Memorandum of Understanding, dated November 11,
1993, by and between QVC and BellSouth.*
(c)(12) -- Liberty-QVC Agreement, dated November 11, 1993,
by and between QVC and Liberty.*
(c)(13) -- Agreement Among Stockholders, dated November 11,
1993, among QVC, Advance, Arrow, BellSouth, Com-
cast and Cox.*
(c)(14) -- Understanding Among Stockholders, dated November
11, 1993, among Arrow, BellSouth, Comcast and
Liberty.*
(c)(15) -- Agreement Containing Consent Order and Interim
Agreement, dated November 12, 1993, among the
FTC, Liberty, and TCI.*
____________________
* Previously filed
-6-
<PAGE>
<PAGE>
(c)(16) -- BellSouth Commitment Letter, dated November 19,
1993, by and between BellSouth and QVC.*
(c)(17) -- Memorandum Opinion and Preliminary Injunction
Order in QVC Network, Inc. v. Paramount Com-
munications, Inc., C.A. No. 13208, both dated
November 24, 1993, entered by Delaware Chancery
Court.*
(c)(18) -- Revised Memorandum Opinion, dated November 26,
1993, in QVC Network, Inc. v. Paramount Communi-
cations, Inc., C.A. No. 13208, entered by Dela-
ware Chancery Court.*
(c)(19) -- Order, dated December 9, 1993, in Paramount Com-
munications Inc. v. QVC Network, Inc., C.A. No.
13208, entered by Delaware Supreme Court.*
(c)(20) -- Proposed form of merger agreement delivered by
Paramount to QVC on December 14, 1993.*
(c)(21) -- Text of letter from QVC advisor to Paramount
advisor, dated December 10, 1993.*
(c)(22) -- Text of letter from Paramount advisor to QVC
advisor, dated December 14, 1993.*
(c)(23) -- Agreement and Plan of Merger, between Paramount
and QVC, dated as of December 22, 1993.*
(c)(24) -- Exemption Agreement, between Paramount and QVC,
dated December 22, 1993.*
(c)(25) -- Voting Agreement, dated December 22, 1993, among
BellSouth, Comcast, Cox, Advance and Arrow.*
(c)(26) -- First Amendment, dated as of December 27, 1993,
to Agreement and Plan of Merger, between Para-
mount and QVC.*
(c)(27) -- Letter Agreement, dated as of December 20, 1993,
by and among QVC, Comcast, Cox, Advance and
BellSouth.*
(c)(28) -- Text of Letter, dated January 5, 1994, from
Paramount and agreed to by QVC.*
(c)(29) -- First Amendment, dated as of January 27, 1994,
to QVC Exemption Agreement.*
____________________
* Previously filed
-7-
<PAGE>
<PAGE>
(c)(30) -- Proposed Form of Agreement and Plan of Merger
between QVC and Paramount, delivered by Para-
mount on January 27, 1994.*
(c)(31) -- Letter Agreement, dated as of February 1, 1994,
by and among QVC, Comcast, Cox, Advance and
BellSouth.*
____________________
* Previously filed
-8-
<PAGE>
Exhibit (a)(75)
MEMORANDUM
TO: Lazard Freres & Co.
FROM: Allen & Company Incorporated
DATE: February 3, 1994
The following analysis is being provided to assist you in com-
paring the QVC-Paramount merger to the Viacom-Paramount and
Viacom-Paramount-Blockbuster transactions.
We believe there are significant flaws in the package of secu-
rities which Viacom is offering. These defects include:
. Overleveraged capital structure
. Issuance of very large number of securities in two
separate merger transactions
. Illiquidity of securities to be issued given prior
trading history Viacom
. Additional overhang created from securities issued
from exercise of warrants, CVRs and VCRs
. Viacom cannot guarantee completion of Blockbuster
merger
What is Viacom Offering the Paramount Shareholders?
Is Viacom offering securities of a Viacom-Paramount combi-
nation or a Viacom-Blockbuster-Paramount combination? Are
Paramount shareholders to receive 8% junk bonds, which do
not pay current interest during the first year, or 5% pre-
ferred stock? When will this be determined, and how can
investors make an informed judgment without the certainty
of one or the other?
The new Viacom offer is confusing and to a certain extent
conditional. Shareholders are receiving a plethora of
securities with large potential dilution, they do not know
whether they get a preferred or junk bonds, nor whether
the resulting company includes Blockbuster.
<PAGE>
<PAGE>
Significant Uncertainty Regarding Blockbuster Merger
As the Blockbuster merger is subject to shareholder ap-
proval and numerous other conditions, its completion is
less than certain. Blockbuster's stock is trading at
$26 7/8 (a 3 1/2 month low) down from its high of $34 1/4
(a 22% decline). Viacom's Class B stock is down from
$42 3/4 to $33 1/2 (a 28% decline), since the day before
the announcement of the Blockbuster merger. Moreover,
several major Blockbuster shareholders have already voiced
their dissatisfaction at the proposed Viacom-Blockbuster
transaction. In light of this uncertainty, the Paramount
Board, its advisors and the Paramount shareholders have no
assurance as to the securities that will be issued or the
structure of the Company issuing them.
The Viacom Common Stock Lacks Integrity
The Viacom securities offered to the Paramount sharehold-
ers lack integrity for several reasons:
. There have been significant purchases by National
Amusements and WMS Industries, controlled by the
Chairman of Viacom, at crucial times during the past
nine months which have created an artificially in-
flated price for Viacom common stock
. There will be an avalanche of securities (as much as
290 million common shares) originating from the po-
tential Viacom-Blockbuster-Paramount merger into a
market that is thinly traded, versus 76 million com-
mon shares issued in the QVC transaction
. The CVRs and VCRs threaten to create tremendous fu-
ture dilution for Viacom shareholders. At a price of
$33 there would be an additional 55 million shares
issued, or about 14% of the pro forma shares out-
standing (assuming a Viacom/Blockbuster merger).
This overhang threatens to depress the future price
of Viacom common stock
. Blockbuster's lack of confidence in the integrity of
the Viacom common stock is evidenced by its require-
ment for voting common stock (Paramount shareholders
will only receive non-voting stock and warrants for
non-voting stock) and a VCR to protect its sharehold-
ers against price deterioration
-2-
<PAGE>
<PAGE>
. Viacom's financing is highly leveraged and composed
of short maturities which would create an unstable
financial structure in the event of a disruption in
the capital markets
The Viacom CVRs Provide No Downside Protection
Since the Viacom common stock has continued its downward
spiral, and now trades at $33 1/2, the CVR with its lower
limit of $36 is totally ineffective in providing protec-
tion from further price deterioration which is probable
upon issuance of these securities.
Structure of Viacom Package is Contradictory and a Portion of
its Value is Illusory
Paramount shareholders will receive securities (VCRS,
CVRS, Warrants) from which they can never receive full
value. The securities are structured so that as one secu-
rity rises in value, the other declines in value: at the
last expiration date, the CVR will only have value if the
common stock trades below $55, in which case the three
year warrant will expire without any value. Conversely,
in the unlikely event that Viacom Common Stock trades
above $55 the CVRs will be worthless and the warrants will
have some value.
This structure further undermines and decreases the real
value of the package of Viacom securities.
Structure of QVC Proposal is Clear and Protects the Integrity
of its Securities
. The QVC offer is simple, it includes cash, voting
common stock, preferred stock, and ten year warrants
for voting common stock
. There is no uncertainty regarding the type of securi-
ties, nor the issuer of the securities, in the QVC
offer
. QVC equity securities have been freely traded in
large volumes (4.5x daily volume of Viacom) without
manipulation or influence for an extended period of
time
-3-
<PAGE>
<PAGE>
. The financing for the QVC proposal is conservatively
leveraged, structured with long term debt maturities
and includes $2.25 billion in common equity and $1.25
billion in preferred equity from outside investors
Post Merger Purchasers of QVC Securities
We recognize there will be a redistribution of post merger
securities, because a certain percentage of Paramount
stock is presently owned by arbitrageurs and hedge funds.
It will be long term investors who will provide liquidity
for sellers in the post merger market, and will accord-
ingly determine the market prices for the securities re-
sulting from either business combination with Paramount.
We believe that the QVC securities offered to the Para-
mount shareholders, and in particular QVC's common stock,
will be the securities of choice for long-term investors
in the media industry. This will not only be a reflection
of QVC's management and business growth potential, but
also of the clarity and financial strength of the result-
ing company.
The QVC Offer is Superior to that of Viacom
. QVC Stock can drop more than $8.75, to $38, and still
by superior in value to the Viacom offer
. Per share value of QVC offer is $6.27 greater than
that of Viacom (total QVC offer approximately $770
million greater than that of Viacom)
. Per share value of QVC offer is $5.40 greater than
that of Viacom-Blockbuster (total QVC offer ap-
proximately $664 million greater than that of Viacom/
Blockbuster)
-4-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
QVC vs. Viacom Offer
(Based on closing price 2/2/94)
QVC Offer Viacom Offer
<S> <C> <C> <C> <C> <C>
Blended Blended
Per Share Per Share Per Share Per Share
Cash 50.1% $104.00 $52.10 $107.00 $53.61
Stock 49.9% 57.79 28.84 31.18 15.56
Preferred 9.54 4.76 14.00 6.99
Warrant (10 yr) 3.77 1.88 -- --
Warrant (5 yr) -- -- 0.92 0.46
Warrant (3 yr) -- -- 1.00 0.50
CVR -- -- 8.42 4.20
$71.10 $35.48 $55.52 $27.70
Total $87.58 $81.31
</TABLE>
<TABLE>
<CAPTION>
QVC vs. Viacom-Blockbuster Offer
(Based on closing price 2/2/94)
QVC Offer Viacom/Blockbuster
<S> <C> <C> <C> <C> <C>
Blended Blended
Per Share Per Share Per Share Per Share
Cash 50.1% $104.00 $52.10 $107.00 $53.61
Stock 49.9% 57.79 28.84 31.18 15.56
Preferred 9.54 4.76 -- --
Debenture -- -- 15.75 7.86
Warrant (10 yr) 3.77 1.88 -- --
Warrant (5 yr) -- -- 0.92 0.46
Warrant (3 yr) -- -- 1.00 0.50
CVR -- -- 8.42 4.20
$71.10 $35.48 $57.27 $28.58
Total $87.58 $82.18
</TABLE>
-5-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Comparison of Value of Offers
(Based on Common Stock Closing Prices Since September 13, 1993)
<S> <C> <C> <C> <C>
Market Lowest Implied Price Implied Price
Common Based on with CVRs
Stock Consensus
Close Price EBITDA
QVC $87.58 $81.28 $83.46 $83.46
VIA $81.31 81.31 79.85 78.56
VIA/BV 82.18 81.18 80.30 79.43
</TABLE>
Viacom's Attempt at Downside Protection Decreases Value for
Long Term Investors
Paramount has been concentrating on downside protection
for current shareholders, while ignoring the more impor-
tant issue of upside potential for long term investors.
QVC's offer provides the potential for growth of
Paramount's businesses through experienced management, but
also promises a secure and clear capital structure for
existing Paramount shareholders and new long term inves-
tors who will buy securities in the post merger market.
Viacom has created the potential for a post merger envi-
ronment in which securities of the Viacom-Paramount or
Viacom-Blockbuster-Paramount will be heavily discounted,
not only because of a weak capital structure, but also
because of confusion surrounding the potential concurrent
mergers, management uncertainties and multiple securities
of uncertain quality and value.
<TABLE>
<CAPTION>
Value of Offers in Three Years
(Based on Assumed Increases and Decreases from 2/2/94 Closing
Price)
<S> <C> <C> <C>
No Change 25% Less 50% Greater
QVC $86.72 $80.54 $103.17
Viacom 81.79 78.63 86.71
Viacom/Blockbuster 82.67 79.50 87.58
</TABLE>
-6-
<PAGE>
<PAGE>
QVC Offer Provides Full Upside Appreciation Potential to Para-
mount Shareholders
Because of the nature of Viacom's CVRS, if the common
stock of Viacom appreciates, the CVR decreases in value,
reducing the appreciation potential of the whole package
being offered to the Paramount shareholders.
[Line graph comparing the Bid Values of
the Viacom-Blockbuster Offer to the
QVC Offer as the Common Stock of each
bidder appreciates. Graph shows the
QVC Bid Value to be consistently higher.]
The QVC/Paramount Combination has a Sounder Financial Structure
Than Either the Viacom or Viacom/Blockbuster Combination with
Paramount
The QVC structure continues to be more conservative than
Viacom's with regard to (i) the terms of its financing,
(ii) the maturity of its debt, and (iii) its pro forma
coverages.
-7-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Terms of Financing for Tender Offer
(In Millions)
<S> <C> <C> <C>
QVC VIA VIA/BV
Common Equity $2,250 1,250 none
Preferred 1,250 1,800 1,200
Short Term Debt -- 3,550 4,850
Long Term Debt 2,900 0 600
Total Debt $2,900 $3,550 $5,465
</TABLE>
<TABLE>
<CAPTION>
Maturity of Debt
(In Millions)
<S> <C> <C> <C>
QVC/PCI VIA/PCI VIA/BV/PCI
Short Term Debt due 1994 -- $3,600 $4,900
Debt or Preferred due
1995-2000 1,400 2,100 2,720
Debt or Preferred
1995-2000 $1,400 $5,700 7,620
Debt or Preferred due after
2000 4,340 4,140 3,540
Total Debt and Preferred $5,740 $9,840 $11,160
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Interest Coverages
(Calendar Year 1994)
<S> <C> <C> <C>
QVC/PCI VIA/PCI VIA/BV/PCI
EBITDA/Interest 2.6 x 2.0 x 2.4 x
EBITDA/Fixed Charges (a) 2.6 x 2.0 x 2.1 x
EBITDA/Interest with 2.6 x 1.9 x 2.3 x
CVR (b)
EBITDA/Fixed Charges 2.6 x 1.9 x 2.1 x
with CVR (b)
-8-
<PAGE>
<PAGE>
(a) Blockbuster has heavy lease obligations which are not reflected on the
balance sheet as capitalized leases. During 1994 payments under non-
cancelable operating leases will be, at a minimum, $155 million. Se-
curity analysts have recognized these lease obligations as a form of
debt, which makes Blockbuster's capital structure more leveraged than
it appears.
(b) Reflects additional interest costs if Viacom pays for Paramount CVRs
in notes at end of first year.
</TABLE>
Consensus Trading Prices for Post Merger Securities of QVC and
Viacom
The consensus opinion is that the combination of QVC's
management team, its partners, and its increasingly prof-
itable operations in the interactive world with Paramount
offer a more compelling vision than the Viacom-Paramount
or the Viacom-Blockbuster-Paramount combination.
<TABLE>
<S> <C> <C> <C>
QVC VIA/BV/ VIA/
Expected 1994 EBITDA Multiple PCI PCI PCI
Oppenheimer 14-15x 13x 12x
Kidder Peabody 13x 12x
UBS Securities -- 11x-12x 12x
Salomon Brothers -- Not 13x
comfortable
with 12.5x -
13.5x (Hold)
SG Warburg 15x -- 13x
</TABLE>
-9-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Stock Price
<S> <C> <C> <C>
1994 EBITDA (a) $790 $1,670 $1,160
estimates
Expected EBITDA
multiple (a) 15x 13x 13x
Net Firm Value $11,850 $21,710 $15,080
Less Net Debt 4,890 10,473 8,926
Equity Value $6,960 $11,237 $6,154
Implied Price Per Share $41 $29 (b) $30 (b)
Implied Price Per Share with
CVRs $28 (b) $27 (b)
____________________
(a) Based on Wall Street analyst estimates
(b) Represents weighted price for Viacom A and B shares. The non-voting B
shares, which Paramount holders are receiving, will trade at a dis-
count to the voting A shares
</TABLE>
Necessary Increase in Market Capitalization to Provide Equity
Value in Warrants
. For Paramount shareholders to realize even minimal
value from the Viacom three or five year warrants,
the combined company's market capitalization must
increase from its current pro forma $13.4 billion by
$10.4 and $14.3 billion, respectively
[Bar graph representing the combined company's
market capitalization levels at current pro forma
and projected increases at 3 years and
at 5 years, respectively.]
-10-
<PAGE>
<PAGE>
. The Viacom three year warrant requires a compound
annual growth rate of 2l.0% in the price of Viacom
Common Stock to reach its strike price at expiration
. The Viacom five year warrant requires a compound an-
nual growth rate of 15.6% in the price of Viacom Com-
mon Stock to reach its strike price at expiration
. The QVC ten year warrant requires a compound annual
growth rate of only 4.2% in the price of the QVC Com-
mon Stock to reach its strike price at expiration
Viacom Shares Have Limited Liquidity
. Current prices of Viacom Common Stock are supported
by a relatively thin market for its securities. The
issuance of 290 million shares of Common stock will
require a significant redistribution of stock and is
likely to create a severe downward adjustment on its
price
<TABLE>
<S> <C> <C>
QVC Viacom
Average Weekly Volume 3,374,095 753,555
Average Daily Volume 674,819 150,711
New Shares Issued to
Public 76,500,000 281,500,000
Trading Days Needed to 113 days 1,868 days
Trade
All Newly Issued Shares
</TABLE>
. Even assuming the artificially high trading volumes
of the stocks since the deal was announced, it would
take over 5 years to trade the new Viacom shares is-
sued to the market and less than six months to trade
the new QVC shares issued to the market
. Smith, Barney stated in its January 21, 1994 memoran-
dum, "...recent trading volumes (for VIA) are based
on a number that is 15% of the proforma public shares
outstanding." We agree with their calculation, which
supports our contention that Viacom will be flooding
the market by issuing at least 6.6 times the number
of shares presently outstanding
-11-
<PAGE>
<PAGE>
-12-
<PAGE>
<PAGE>
"Vibrancy of Viacom Businesses"
Several of Viacom's businesses face difficulties in the
future:
. MTV's international operations are under attack by a
new televised music video joint venture formed by
Sony, Time Warner, Thorn EMI and Philips Electronics
which will be broadcast internationally as early as
next fall
-- This venture will significantly limit and directly
challenge international growth potential for MTV, its
most significant growth market
-- The joint venture partners control over 70% of world-
wide music
-- While their product will continue to be available to
MTV in the domestic market, there is no assurance
that will be the case in all the international mar-
kets where antitrust laws differ significantly from
those in the US
-- Since distribution of Nickelodeon is tied to MTV; its
future growth may also be affected
-- The venture highlights MTV's vulnerability as a dis-
tributor, rather than an owner or creator of product,
because it threatens future pricing and availability
of product
. Showtime is a declining asset under pressure
-- Showtime has always been a poorly performing channel
compared to HBO and has survived because cable opera-
tors wanted a second pay channel to balance the power
of HBO
-- Encore, the newly formed, well capitalized and ex-
tremely aggressive pay channel, has signed both
Disney and MCA to long-term contracts and is sup-
ported by cable operators
-- Contrary to Smith, Barney's assertion that Showtime
has "managed to secure attractive programming for
many years to come", it has lost Disney after 1997;
Warners, MCA, Columbia, Paramount and Savoy are tied
to HBO or Encore; and only Tri-Star and MGM are tied
to Showtime
. Viacom's aggressive litigation against the largest
operators in the cable industry leaves the company in
a vulnerable position with regard to distribution of
new programming
. Viacom's cable television operations will command
large capital expenditures in order to compete in the
interactive world with well capitalized telephone
companies
-13-
<PAGE>
<PAGE>
. Viacom's cable operations, which accounted for 39% of
1992 cash flow, are subject to further rate regula-
tion which will restrict future growth and may de-
crease cash flow
Potential Viacom-Blockbuster Combination
. Viacom intends to combine with a low technology,
capital intensive video rental business with a lim-
ited lifetime
. As Smith, Barney stated in its memo of January 21,
1994, Mr. Schneider of our firm did approach Viacom
regarding a merger, at the request of Blockbuster
management, who was anxious to find a business part-
ner in the entertainment industry to support its own
precarious long term future.
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<PAGE>
