For some time now the US markets have given strong hints that the eventual victor in the struggle for control of Paramount, be it Viacom or QVC Network, will be paying far too much for this treasure trove of 'entertainment software'. Whenever one or the other appears to have had an edge in the battle, for instance, its share price has suffered badly.
But the cynicism about the heralded convergence of television, the telephone and the computer has been running deeper than that in recent weeks.
For one thing, the endless 'information superhighway' metaphors have turned decidedly nasty, with increasingly frequent comparisons with the Santa Monica Freeway - pre- and post-quake - and talk of multi-media pile-ups, potholes and speed traps.
For another, John Sculley - the former Apple Computer chairman who was one of the prophets of 'digital convergence' - himself became an info-tech fatality last week when his multimillion-dollar deal with a wireless start-up firm called Spectrum Information Technologies collapsed amid mutual recriminations and allegations.
Much of the pessimism appears to stem from the rather bleak vision of the multi-media future that has emerged out of the competing proposals for Paramount - a sense that hundreds of billions of shareholder dollars are being wagered on a notion of Americans as couch potatoes willing to pay stiff subscriber fees for access to home shopping, virtual sex, remote-control pizza delivery and pay-per-view reruns.
Indeed, one US cable channel last week offered Witness for the Execution, a docu-drama about a network producer negotiating for the rights to broadcast live from the electric chair.
'Will life after television mean a pornucopia of 900 numbers, video cold-calls from sultry sisters at Lehman Brothers and real-time murders by superstar serial killers?' asks economist George Gilder in the current issue of Forbes magazine.
Media analysts are also increasingly worried about the apparent failure of the many interactive pilot projects and market tests that have been attempted to date by pioneers like GTE, Tele-Communications and Time Warner. Even the president of Paramount's suitor Viacom, Frank Biondi, admits that pay-per- view movies - the 'killer application' that is meant to jump-start this new market - have still to make cable operators any money.
Time Warner, in its 150-channel experiment in New York, offers residents of Queens 60 pay-movie channels instead of the five standard elsewhere in the city, but reports monthly revenues little changed.
Then there are the disappointing sales for the CD-ROM multiplayers already on the market - notably 3DO's much-publicised machines and Philips' CD-1 players - and for many of the most promising TV-top devices. The Japanese consumer electronics industry, others note, is in crisis.
'If people don't want to interact with video, how can the world move beyond television?' asks one industry critic.
Mergers, one financial analyst points out, tend to be lagging indicators of an industry's promise. The big telephone companies that will foot much of the bill for the current billion-dollar deals - Bell Atlantic, USWest with Time Warner, BellSouth and Nynex on opposite sides of the Paramount battle - are all recently deregulated monopolies with poor track records at innovation.
On the other hand, he notes, many of their media partners and targets - Tele-Communications, Viacom, McCaw Cellular, MCI, Time Warner, Turner - are coincidentally all former clients of Michael Milken and beneficiaries of billions worth of his junk bond financings. It's no mistake that the 'information entrepreneurs' of the 1980s 'are now all in harvest mode', he suggests. 'Even if the digital revolution does come to something, there's going to be a horrible shake-out across the industry.'
What has gone largely unnoticed amid the 'convergence' merger frenzy - at least outside Silicon Valley - is the phantom third party in all these multimedia deals.
Big, rich computer companies such as Microsoft, Intel and Compaq have shunned these so- called strategic alliances, apparently unmoved by suggestions that time is running out in the race to secure unique programming assets such as Paramount or Disney. Indeed, Bill Gates, chief executive of Microsoft and America's wealthiest individual, is proud of the fact that he doesn't own a television set.
TV AS 'PERIPHERAL'
Either Microsoft or Intel, with market capitalisations of dollars 27bn, could easily swallow a dollars 10bn Hollywood studio or broadcast television network. But the computer industry has never bought into the vertically-integrated multimedia model embraced by Wall Street, Hollywood, the Japanese and the big media conglomerates.
The 'mega-industry' vision of the future focuses on a television with a set-top control box, while Silicon Valley believes the revolution will take place via the personal computer. 'TV,' says Intel chief executive Andy Grove, 'will be a mere PC peripheral.'
More than 30 per cent of American households now own a PC, and 60 per cent of those are already tied in with some type of data network, Mr Grove points out. Set-top cable boxes will take years to popularise.
By then any 'user-friendly' advantages currently enjoyed by television will have been overcome by the sheer pace of progress in computer technology. The computer industry in the US already outsells the filmed entertainment industry and offers considerably more attractive demographics.
While cable TV experiments falter, on-line computer gateway services such as Compuserve, Prodigy and America Online are booming. Subscriptions now total more than four million and are growing at 30 per cent annually. More encyclopaedias were sold last year on computer discs than were published on paper.
The fatal flaw of companies wrapped up in Wall Street's version of the multimedia revolution - from QVC and 3DO to Silicon Graphics and other set-top makers - is that they are trying to solve the problems of the telephone, television, video game and consumer appliance industries, says Mr Gilder.
The reality is that the PC will not be married with any of these archaic products. It is going to usurp them.
'The real action today - the source of wealth and power - is not at Nintendo or Sega, Hollywood or QVC,' he argues.
'The reason Mr Gates and Mr Grove aren't interested in Paramount is that they already command faster-growing, more creative and more promising vehicles for their capital.'Reuse content