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 WEST CHESTER, Pa., Jan. 12 /PRNewswire/ -- The attached letter was

delivered yesterday to the Board of Directors of Paramount Communications Inc. (NYSE: PCI) from Mr. Martin Lipton, of Wachtell, Lipton, Rosen & Katz, QVC's (NASDAQ-NMS: QVCN) legal advisor:
 The eleventh-hour offer by Blockbuster/Viacom announced Friday afternoon blatantly violates the terms of the bidding procedures established by the Paramount Board and agreed to by QVC and Viacom. It is incumbent upon the Paramount Board to take appropriate action, consistent with its agreements with QVC and Viacom, to enforce the bidding procedures. Both QVC and the Paramount stockholders are entitled to such action by the Board.
 It is evident, and indeed Viacom has in effect admitted, that the new Blockbuster/Viacom offer was announced -- not as a bona fide competitive offer -- but primarily to extend QVC's offer and to prevent QVC from receiving at least 50.1 percent of the Paramount common stock before the expiration of its offer on Friday, January 7. Such action is expressly prohibited by the agreements entered into by the parties, see Viacom-Paramount Exemption Agreement, Section 2.01(a), and represents a bad faith, cynical and manipulative scheme to abuse the bidding process. Thus:
 1. Blockbuster and Viacom announced their new offer only minutes
 before the close of the market on Friday, January 7, only hours
 before QVC's offer was set to expire.
 2. The purposeful, grossly front-and-loaded nature of the
 Blockbuster/Viacom offer at that late hour created inevitable
 confusion in the market. Moreover, Viacom compounded the confusion
 by causing the premature cessation of trading in its own shares and
 falsely representing to the marketplace that "QVC would also be
 required to extend its offer to expire no earlier than" January 21.
 By virtue of the fact that Viacom's offer was in breach of the
 parties' agreements, QVC was not so obligated. See QVC-Paramount
 Merger Agreement, Section 2.1(d) and (e). As described yesterday in
 The New York Times, Viacom's tactic of a last-minute announcement
 and the heavily front-and-loaded offer produced "the power of a
 misleading headline" for an offer whose blended value "was clearly
 less than the value of the QVC offer." It is plain that Viacom's
 abusive and misleading tactics deterred stockholders from tendering
 into QVC's superior offer before the midnight deadline and was
 expressly intended to do so.
 3. Indeed, in a teleconference with analysts, Viacom was obliged to
 concede that the then -- $79.23 blended value of its offer (by
 Viacom's own estimate) was substantially lower than the approximate
 $84.66 value of QVC's bid as of the market close on that day.
 Market activity since then has confirmed QVC's recognition that not
 only is the new offer lower than QVC's (by, as of close of market
 today, approximately $720 million or $5.88 per Paramount share), but
 it is not even worth more than Viacom's own prior offer.
 4. According to published reports, on Saturday, January 8, the
 President and Chief Executive Officer of Viacom admitted the true
 purpose of the new offer when he stated to Reuters that the
 Blockbuster/Viacom offer was nothing more than "essentially a
 re-jigging of Viacom's previous bid"; that the Blockbuster/Viacom
 offer reflects Paramount's "full value"; and that "Paramount was not
 worth more than current bid levels."
 The bidding procedures agreed upon by the parties were designed to obtain higher -- not lower -- values for Paramount stockholders, while assuring fairness between the competing bidders. Viacom's conduct makes a mockery of these procedures: on the first deadline, December 20, 1993, Viacom declined to raise noticeably its earlier offer -- albeit that offer was plainly lower than QVC's outstanding offer; on the second deadline, Viacom bid lower, not higher. Viacom's tactics have been designed solely to prolong the bidding process, forestall QVC's rightful victory and delay the receipt of value by Paramount stockholders. Neither Paramount, QVC nor Paramount's public stockholders obtain any benefit from the "re-jigging" of an already-inferior offer, and the costs and risks of delay in consummating the QVC-Paramount merger are significant.
 In stark contrast to Viacom's conduct, throughout this bidding process QVC has consistently complied with both the letter and spirit of the bidding procedures -- by submitting a substantially increased bid on December 20 and, now, by further extending its offer so that the Minimum Condition may be met.
 Viacom is in breach of its contract with Paramount and its conduct is wrongful both to QVC and to the Paramount stockholders. QVC requests that the Paramount Board at its meeting tomorrow take appropriate action:
 1. Confirming the Board's unanimous recommendations to Paramount
 stockholders that the QVC offer and second-step merger are fair
 to and in the best interests of Paramount stockholders and that
 Paramount stockholders accept QVC's offer;
 2. Declaring that the new Viacom offer is in breach of the
 Exemption Agreement between Paramount and Viacom and disentitles
 Viacom to the rights it otherwise would have under that
 3. Confirming -- at a minimum -- that Viacom will not be permitted
 to gain an improper advantage from having wrongfully made an
 offer "primarily to extend the expiration date" of QVC's offer;
 that no new Viacom offer during this extension period will
 operate to place any obligation on QVC to further extend its
 offer prior to receiving 50.1 percent of Paramount stock; and
 that the Paramount stockholders are assured that, if by
 midnight, January 21, 1994, they choose to tender 50.1 percent
 or more of Paramount shares into the QVC offer, that offer will
 be successful and stockholders will not be further delayed in
 obtaining value; and
 4. In light of the cynical massive front-end loading of Viacom's
 current offer and to protect Paramount stockholders from further
 exacerbation of the improper front-end loading, declaring that
 the Paramount Board will not consider any further Viacom offer
 unless such offer redresses the imbalance.
 QVC expressly reserves all of its rights under the circumstances, including the right to seek judicial redress and to withdraw its offer pursuant to its terms and the terms of the merger agreement. QVC and its advisors remain available to discuss any of the foregoing with the Paramount Board or its advisors.
 -0- 1/12/94 R
 /CONTACT: (Media) Michael Rourke, 212-371-5999, or Donald Van de Mark, 212-371-5999, both of QVC, or (Investors), William F. Costello of QVC, 215-430-8948, or Diana Brainerd of Abernathy/MacGregor/Scanlon, 212-371-5999/

CO: Paramount Communications; QVC Network, Inc.; Viacom; Blockbuster ST: New York, Pennsylvania IN: ENT SU: TNM

TR -- NY097X -- 1784 01/13/94 10:47 EST
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Publication:PR Newswire
Date:Jan 13, 1994

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