It's Getting Awfully Complicated, Barry

Barry Diller is one guy who probably wouldn't object to the label "control freak." He left Fox Broadcasting Co. in 1992 at the apex of his career because he didn't want to answer to owner Rupert Murdoch. And he joined a home-shopping service rather than a more glamorous media company in part because it allowed him to be his own boss. But now, in the crucial waning days of the battle for Paramount Communications Inc., Diller may be jeopardizing the very control he so zealously sought in QVC Network Inc.

Executives close to Diller say he is on the verge of signing BellSouth Corp. as the latest investor in QVC's growing consortium. The deal, which could be announced as early as Nov. 11, calls for the regional Bell operating company to invest $1.5 billion in QVC. The cash will come in handy: Sources say Diller will use $1 billion of it to boost his bid for Paramount. On Nov. 6, archrival Viacom Inc. sweetened its offer to $10.2 billion, roughly $500 million more than QVC's current bid.

BellSouth's support comes at a price, though. As part of the deal, the Baby Bell will become one of three voting stockholders in QVC, with Diller and Comcast Corp. QVC's other voting shareholder, Liberty Media Corp., would revert to being a passive investor. Indeed, Diller would use the rest gf BellSouth's cash to buy out Liberty's $500 million investment in his takeover bid.

TURNER'S TROUBLE. The trouble is, BellSouth may not be as compliant a partner for Diller as Liberty and its powerful chairman, John C. Malone. For one thing, Malone and Comcast President Brian L. Roberts enticed Diller to join QVC by treating him as an equal partner--even though he bought into the company with less than a 3% equity stake. BellSouth may not countenance that arrangement for long: Executives close to the deal say BellSouth first approached Diller about buying QVC outright for up to $5 billion. "Any time you take on new partners, it makes business decisions more difficult," says Lisbeth R. Barron, a media analyst at S.G. Warburg & Co. "That's the problem Ted Turner has."

True, Diller had little choice but to distance himself from Malone. The Federal Trade Commission has been scrutinizing QVC's proposed acquisition for antitrust implications. And a senior FTC official says the government is most concerned with Malone's voting control of QVC. By relinquishing his one-third vote, Malone should help Diller clear a thorny regulatory hurdle.

Still, Diller's increasingly unwieldy coalition could pose other problems. In addition to Comcast and Liberty, QVC has lined up $500 million each from Advance Publications Inc. and Cox Enterprises Inc. Colleagues say Diller understands the risks of adding hard-charging BellSouth to such a tenuous mix. So he has worked to whittle down BellSouth's investment and role in QVC's future. That may be wise, since he shouldn't count on the phone company to remain a team player: BellSouth won't comment, but investment bankers point out that it held separate talks with Viacom and even explored its own bid for Paramount with bankers at Wasserstein, Perella & Co.

NERVY GUY. Diller can't take his other partners for granted, either. Cox Enterprises, for one, has always fretted about phone companies encroaching on its cable franchises, according to one former senior Cox executive. Sure enough, says another source familiar with the deal, Cox is now leery of BellSouth.

If that's not enough, Diller has to deal with Paramount's pending acquisition of Macmillan Publishing Co. On Nov. 10, Paramount won the prestigious book publisher in a court-ordered auction of British press lord Robert Maxwell's bankrupt holdings. Rival media executives say Paramount's aggressive bid of $553 million makes the company more pricey for both Diller and Viacom, since both could have used Paramount's $1 billion cash hoard as a way to finance their own deals.

Viacom has lost no time capitalizing on Diller's situation. Executives close to Viacom say Chairman Sumner M. Redstone decided to boost his bid to take advantage of QVC's perceived vulnerability. Diller will likely spring his counteroffer before Nov. 16, when the Delaware Chancery Court is set to rule on QVC's request that it throw out Redstone's original merger agreement with Paramount.

In the meantime, say his colleagues, Diller has kept QVC's coalition together with his strong personality and steely nerves. On Nov. 6, in the midst of tense talks with BellSouth, Diller took time off to attend a bar mitzvah for the son of Michael Ovitz. The Hollywood superagent had assembled several carnival rides for the occasion, and observers say Diller headed straight for the most gut-wrenching one. Good practice, perhaps, for the crazy roller-coaster ride that Paramount has become.