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Wall Street's Paramount Surprise

Media giant's $10.7 billion 11th-hour buyout bid for Time upsets merger plan with Warner. BUSINESS TAKEOVERS

PARAMOUNT'S $10.7 billion, hostile takeover bid for Time Inc. has sent shock waves through Wall Street and is triggering new concerns within Congress about overconcentration within the media-entertainment industry. Time, the giant publishing and media conglomerate, was about to merge happily with Warner Communications Inc., which is also in publishing, records, and films, when Paramount Communications Inc. entered the fray.

Time Inc. owns Time and Fortune magazines. It also controls Home Box Office and Cinemax on cable television, and 82 percent of ATC, a major US cable operator.

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Paramount, until recently Gulf & Western Inc., controls extensive publishing and cable operations, as well as Paramount Pictures.

Time says it will fight Paramount's takeover effort, while going forward with its proposed merger with Warner. Other media giants might also enter the contest for control of Time.

However the battle turns out - Paramount merging with Time or Time merging with Warner - the landscape of the communications-media world will have changed enormously.

Either linkup will create a multibillion-dollar vertically integrated media giant that, in terms of just broadcasting alone, will not only produce programming, but also be able to put it on its own cable television outlets and then syndicate the programming to television stations.

Vertical integration ``is now the strategy of every major media company in the world,'' says Ben Bagdikian, a well-known media analyst on leave from the University of California at Berkeley. ``Their goal is to have a huge series of closed circuits for their products, which they can control from production to release.''

Professor Bagdikian will be one of a number of experts questioning the implications of media concentration at a Senate hearing on communications policy scheduled for June 14.

``A Paramount and Time combination would be unencumbered by federal regulation while the [traditional] television networks would be,'' says Robert Mulholland, former president and chief operating officer of NBC and now director of the broadcast division of the Medill School of Journalism at Northwestern University.

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``The competitive situation [for broadcasting] has dramatically changed in the United States, while the regulatory environment has not,'' Mr. Mulholland says. The ``underlying issue is not money but access. Over half of all Americans now receive their television broadcasting through a wire [cable]. A vertically integrated company controlling production, cable, and syndication has an enormous advantage over broadcast operations that are essentially restricted, such as the networks.''

Says James Day: ``What I most fear is not that we'll be subjected to propaganda, but that these huge media giants are interested mainly in business, rather than the content of their products in terms of ideas. On one hand, there is the danger of blandness, while at the same time there could be a reduction in the opportunity for new voices to be heard.'' Mr. Day recently retired as a professor of journalism at Brooklyn College of the City University of New York. He is also a former broadcaster with public television.

``The US,'' Day says, ``should seriously examine its overall communications policy, just as the British do every 10 years or so.'' Washington, he contends, needs to take a hard look at media concentration - who owns which media outlets in the US - as well as the ability of divergent public policy groups to gain access to broadcasting and other publishing entities.

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