Paramount leads the race for Macmillan

PARAMOUNT, the object of a fierce takeover battle between US cable television groups, has emerged as the unlikely front-runner in the bidding for Macmillan, the US publishing group owned by creditors of the late Robert Maxwell.

Macmillan's buyer is to be announced today in New York, once the creditors' committee has reviewed final offers submitted to its banker, JP Morgan.

A New York bankruptcy court judge issued an order approving the auction yesterday, clearing the way for formal bids from four finalists. They are Paramount; Pearson; K- III Communications, a New York magazine group controlled by Kohlberg Kravis Roberts; and Harcourt General, the Boston-based cinema chain that owns the publisher Harcourt Brace Jovanovich.

Macmillan, considered the most valuable piece of the Maxwell empire, is expected to attract bids of between dollars 500m and dollars 600m, bringing the total proceeds from the sale of the former Maxwell properties to more than dollars 1.4bn.

Earlier this year, Reed Elsevier paid dollars 417m for Official Airline Guides, and last month McGraw Hill paid dollars 337.5m to buy Macmillan's 50 per cent share in their textbook-publishing joint venture.

Paramount, whose Simon & Schuster division is America's largest publisher, is considered able to pay the highest price. One publishing executive at Paramount said privately yesterday that dozens of departments could be merged if the two houses were combined, eliminating several tiers of management and cutting perhaps thousands of jobs.

The bid reportedly has the blessing of Viacom, whose dollars 10.4bn tender offer for Paramount has been recommended by directors of the entertainment conglomerate. However, analysts said the bid could face challenges from Viacom's rival, QVC Network, which is expected to increase its own hostile offer for Paramount this week.

Both Pearson - which owns Addison-Wesley, the college publisher, and Penguin's US arm - and Harcourt see Macmillan as an opportunity to broaden their existing publishing interests in the US. K-III, on the other hand, would probably keep the group largely intact.