NEW YORK -- As the midnight deadline neared last night in the long-running takeover battle for Paramount Communications, even executives close to QVC Network conceded that Viacom had apparently won.
But even if Viacom has succeeded in its five-month struggle with QVC, there were indications yesterday that the merged Viacom-Paramount might face even greater financial pressures than have been expected.
The problems involve Viacom's plan to strengthen its hand by also acquiring Blockbuster Entertainment, the leader in video rentals.
Yesterday, there was a growing chorus of criticism from Blockbuster analysts and some institutional shareholders, who said that Viacom was spending too much for Paramount and that Blockbuster's chairman, H. Wayne Huizenga, made a mistake in agreeing to sell control of his company to Viacom's chairman, Sumner Redstone.
"As a Blockbuster shareholder, I don't think it is the smartest thing the management has ever done to merge with Viacom and then acquiesce to buying Paramount, which is ridiculously overpriced," said Larry Haverty of State Street Research, which owns more than 3 million Blockbuster shares.
And Craig Bibb, a Paine Webber media analyst, predicted that Blockbuster shareholders may vote against the merger with Viacom.
Although analysts said any problems with the Viacom-Blockbuster deal would not derail Viacom's bid for Paramount, the criticisms underscored the challenges that would give Mr. Redstone scant time for celebration even if he does win.
Viacom is expected to win Paramount by getting at least 50.1 percent of the Paramount shares tendered, but by late last night no figures had been released by either side as proxy solicitors were counting votes. If neither side received 50.1 percent, the bidding would start all over.
If Viacom succeeds in acquiring both Paramount and Blockbuster, it faces a real challenge in reshaping Paramount while carrying a substantial debt load.
For sure, the earnings of the combined companies will be badly hit. But Viacom will be able to manage its interest payments handily. It will have $10.2 billion in debt, and cash flow, depending on whose estimates one uses, of $1.7 billion. Interest and preferred dividends payments would be about $600 million.
David Londoner, who follows Viacom for Wertheim Schroder, said the cash flow appeared sufficient to make interest payments, fund film development and provide for other normal expenses.
"But it is still an uncomfortable debt load going forward," he added. Noting that $3.6 billion of debt comes due in a year, he said, "It looks like Viacom will be all right, but there is no way to forecast where interest rates will be in a year."