Bankers, lawyers big winners in fight for Paramount


NEW YORK -- The five-month battle for Paramount Communications Inc. may have been hell for bidders and the news-weary public. But it was heaven for the investment bankers and the lawyers, judging by the fees they pulled down.

Investment bankers and investors estimate that Paramount Communications Inc., Viacom Inc. and QVC Network Inc. may end up paying as much as $150 million total for their army of advisers.

Investment advisers worked around-the-clock for months as QVC and Viacom rehashed the terms of their bids and lobbied Paramount's board and investors. The rivals took their battle to the Delaware Supreme Court, where their attorneys made lengthy -- and expensive -- arguments. And armies of public relations people argued their clients' cases to the media.

Some investment bankers hope the Paramount saga is a harbinger of other major corporate transactions.

"We've said for the last two years that we thought we'd see a pickup in mergers and acquisitions activity," said Alan Schwartz, a managing director at Bear Stearns & Co., which helped advise victorious bidder Viacom. "And that's exactly what we're beginning to see."

The hands-down fee winner in the Paramount battle is chief Viacom adviser Smith Barney Shearson Inc. Investment bankers estimate the firm will earn more than $20 million from the merger. And Robert Greenhill, who left Morgan Stanley Inc. to head Shearson last year, will end up with much of the credit.

Some investment bankers say that Viacom could have saved itself some grief, though, if its advisers had put a higher price on Paramount at the start. That could have discouraged any rival bids.

Mr. Schwartz declined to say how much Bear Stearns or Smith Barney Shearson earned. Other investment bankers put Bear Stearns' share at several million dollars. Merrill Lynch & Co. advised Blockbuster Entertainment Corp., which has agreed to merge with Viacom.

All advisers involved in the Paramount transaction declined to comment or couldn't be reached.

Other investment bankers say Lazard Freres & Co., which advised Paramount, will pocket about $12.5 million in fees.

Steve Rattner, who headed Lazard's effort on behalf of Paramount, will win most of the credit -- and possibly a ticket to succeed Lazard senior partner Felix Rohatyn.

On the face of it, Allen & Co., which advised losing bidder QVC, emerges the big loser.

"If I know [President] Herb Allen, he's not going to charge a fee for a deal that didn't happen," said an investment banker close to the transaction.

Still, investment bankers note that Allen will probably have a devoted client in QVC Chairman Barry Diller, who is widely expected to seek other mergers and acquisition prospects in the months to come.

Then there are the lawyers. One investment banker who followed the transaction estimated that the total legal fees for Paramount, QVC and Viacom could approach $30 million.

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