NEW YORK -- In what could be the final chapter in a long-running and nasty corporate takeover fight, the board of Paramount Communications Inc. agreed yesterday to merge with the partner it had resisted for months: QVC Network Inc.
The endorsement of the $10.2 billion takeover offer was particularly bitter medicine for Paramount's chairman, Martin S. Davis, 64, who since September had led his board in rejecting QVC in favor of a friendly bid from Viacom Inc.
The reversal by Paramount's board, which followed a court showdown with QVC and several bidding rounds, appeared to be a victory for Mr. Davis' archrival, Barry S. Diller, the chairman of QVC, who left Paramount a decade ago amid fiery disputes with Mr. Davis.
Over the months, the battle has attracted enormous attention. It is one of the few hostile-takeover battles in the media industry, fought by powerful men, against a backdrop of changing technologies that have already made some businesses obsolete even as new ones are born.
Mr. Diller, aware that Viacom could return with a higher offer, was savvy enough not to claim victory. "All this is is the bell at the end of a round," he said in a telephone interview. "It is not definitive, but speaking for QVC, I doubt there will be another full round."
Indeed, speculation was rampant about whether the four-month-old drama could yet open another chapter. Under the bidding process drawn up by the Paramount board under orders from a Delaware Supreme court, Viacom's chairman, Sumner M. Redstone, has until Jan. 7 to top Mr. Diller's bid.
Mr. Redstone, in fact, was negotiating yesterday with his investors, Nynex Corp. and Blockbuster Entertainment, about putting more money into his war chest. Rumors even surfaced that he was considering a merger with Blockbuster.
Yet several people close to Mr. Redstone agreed that he was, as one put it, "pretty disgusted with the whole process. Sumner is not stupid. I don't believe he will do a deal that compromises his company."
If Mr. Redstone raised the bid, Mr. Diller suggested, QVC would be reluctant to increase its offer again.
Although the board's reversal was a personal defeat for Mr. Davis, it was a financial victory for him and his shareholders. When Viacom and Paramount first announced a merger, the offer was for $69.14 a share for Paramount stock. Yesterday, QVC's bid was worth $83.72 a share. Paramount's stock closed yesterday at $79.625, down 62.5 cents.
Under Mr. Diller, Paramount would be in the hands of a man determined to advance it in the technological revolution in which viewers would be able to order and get from their television sets a wide range of services and entertainment.
Mr. Diller also has grand plans to reshape Paramount's entertainment division, which includes film and television. Although his expertise in television is proven, his track record in the film business is spottier.
The stage was set for QVC's victory after the Delaware Supreme Court said Paramount could not continue to favor a lower offer from Viacom given a higher bid from QVC.
That forced the board to put Paramount up for sale. Until then, it had hoped to convince the courts that Paramount was seeking a merger with Viacom that had been in the works for years and that thus Paramount's future did not need to be determined by a sale to the highest bidder.
But the Delaware Court also severely criticized Paramount's board for favoring Viacom, without properly examining QVC's bids. The legal scolding left the board with a tainted reputation and put pressure on it to act fairly.