NEW YORK -- Wall Street gushed last week over the announcement that CBS and QVC were engaged to be merged, but it was not because anyone was convinced the two intendeds were necessarily a perfect match.
As John Reidy, a media analyst at Smith Barney, put it: "Forget all the QVC stuff. Barry Diller is the reason this is an awesome deal."
That theme was echoed throughout the television industry in the wake of the news that Mr. Diller, the chairman of the home-shopping channel QVC, would become the chief executive CBS after completion of the merger.
The prospect that CBS might finally gain some stake in the cable end of the television business seemed almost an afterthought. The focus was on Mr.Diller and the dynamic leadership he was expected to bring to the broadcasting company.
"It makes perfect strategic sense for CBS to add a top-notch manager like Diller," said Jessica Reif, who analyzes media companies for Oppenheimer & Co.
But where exactly does QVC fit into that strategy? Mr. Diller said in an interview last week that there were "absolutely natural advantages" for the two companies to interact. He said QVC might follow up certain CBS programs with sales pitches for products related to those programs, but he indicated that he could not be specific.
"Just the stance in both worlds gives advantages to develop various opportunities," Mr. Diller said.
Those advantages apparently will be allowed to emerge naturally -- to use Mr. Diller's term. They were not the motivation behind the deal.
Indeed, before the deal was announced last week, CBS never seemed to be in the market for a cable partner. On the contrary, as the bastion of "pure broadcasting," CBS sent its executives out in public to poke holes in what they called the myth of cable's strength.
When CBS did make an approach to the cable industry last fall, during negotiations over retransmission rights, it tried to start its own channel, based on CBS news programming. CBS never showed interest in home shopping as a program concept.
Mr. Diller argued last week that QVC was really much more than a shopping channel, and that it offered "some very primitive steps into interactivity" among various media. He promised to explore those possibilities in the combined entity.
Laurence A. Tisch, who would relinquish day-to-day control of the company to Mr. Diller under the proposed merger, said he had never disdained owning cable interests, but had only failed to find the "right niche" at the right cost.
Some industry analysts have argued that CBS had to diversify, even if diversification had to be thrust upon it. They suggested that any cable partner would be a good one for CBS, which has never explored the possibilities of the cable industry.
But others see QVC as the ideal partner. "I think QVC brings tremendous upside for CBS," Ms. Reif said. "Beyond how they can complement each other in things like cross-promotion, QVC is already international, with outlets in Mexico and Europe."
Mr. Reidy, the Smith Barney analyst, said QVC would generate more cash flow than any other cable channel this year. He said a combined CBS-QVC might rival Capital Cities, the corporate parent of ABC, in attaining a more favorable revenue-to-earnings ratio.
"On top of that, they may be able to create new services," he
But QVC's most immediate gift to CBS may be leverage in retransmission negotiations with cable systems.
More than any other network, CBS pursued the right to seek compensation from cable operators for the retransmission of its stations' signals. After cable operators refused to pay that compensation in cash, the other networks created new cable channels and persuaded the operators to carry them. CBS had no such cable channel and was forced to defer a deal on retransmission rights for one year.
Ms. Reif said CBS could use its link with QVC to win concessions from cable operators, either for increased distribution of that company's second channel, Q2, or perhaps a brand-new channel.
"And it certainly helps to have some of the biggest cable owners inside the company now," Ms. Reif said. She was referring to the Comcast Corp. and Tele-Communications Inc., two of the largest cable operators, who are the most significant shareholders in QVC. They would become significant shareholders in the new, combined company, but would not exert any direct power because federal regulations bar cross-ownership of a cable system and a television station in the same market.
So far, only one CBS employee has figured out a way to capitalize directly on the link to QVC. David Letterman, during his program on Thursday night, offered for sale commemorative plates depicting his face and that of his band leader, Paul Shaffer.
Around the margin of the screen, Mr. Letterman placed a frame, like those used on QVC, featuring the price, $49.95, and the phone number to call.
The number actually belonged to the program's head writer, Rob Burnett. Within an hour, he had 64 calls.