Time Warner Inc. has turned down an $80-billion (U.S.) takeover bid from Rupert Murdoch’s Twenty-First Century Fox Inc. that would have joined two of the world’s most powerful media conglomerates, but there is reason to believe Time Warner could still field further offers in the near future.
Both companies confirmed that Fox tabled a formal offer last month, responding to a Wednesday story from The New York Times. The bid was worth $85 a share with 60 per cent in stock and the remainder in cash, according to Reuters, and Mr. Murdoch predicted $1-billion in cost savings. He also planned to sell the CNN network to avoid regulatory concerns over competition.
The news sent Time Warner’s share price soaring higher, closing up 17 per cent at $83.13 on the New York Stock Exchange, even as a statement from Fox said its proposal failed and the two cable powerhouses “are not currently in any discussions.”
That did little to dampen speculation that the deal-making Mr. Murdoch, 83, may yet come up with another offer or that other bidders could decide to join the fray. Sources familiar with the matter told Reuters that Mr. Murdoch and his advisers are unlikely to give up on their ambition to consolidate their leverage in media and entertainment by purchasing Time Warner, especially if prized assets such as HBO and valuable sports rights are in play.
“I think there has to be consolidation amongst content companies to counter the consolidation amongst the distribution companies – that is, Comcast, Time Warner Cable and AT&T and DirecTV,” Tony Wible, senior media and entertainment analyst at Janney Capital Markets, said in an interview.
Time Warner, which owns cable channels such as CNN, HBO and TNT, as well as the Warner Bros. movie studio, tried to dampen speculation. Its board said in a statement that it is “confident that continuing to execute its strategic plan will create more value for the company and its stockholders and is superior to any proposal that Twenty-First Century Fox is in a position to offer.”
And in a video address circulated to Time Warner employees, chief executive officer Jeff Bewkes stressed that the offer from Fox was “unsolicited” and said it is not in the company’s interests “to pursue any discussions with Fox.”
Time Warner’s refusal stems partly from concerns that its shareholders’ voting power would be diminished within Twenty-First Century Fox, which is controlled by the Murdoch family through a two-tier stock structure. But some observers maintain a more lucrative bid could still win board members over.
There has also been speculation that a handful of other potential suitors might consider making offers to buy Time Warner, including deep-pocketed technology giants Google Inc. and Apple Inc. Mr. Wible called Google “a wild card,” but doubts “there’s a lot of substance to that,” while a Google spokesman said “we're always talking to various people about various things, and don't comment on rumours or speculation.”
Other possible buyers might include CBS Corp., Viacom Inc. or Walt Disney Co. A spokesperson for CBS declined comment.
Yet a Fox-Time Warner deal would make more financial and strategic sense, according to Mr. Wible, who believes Time Warner said no “because they know that Fox can pay considerably more for it.” He expects Mr. Murdoch will soon make a new offer at $100 or more per share.
Mr. Murdoch’s empire already includes the Fox News cable channel, Fox Sports Networks, the Twentieth Century Fox film studio and satellite broadcasters such as BSkyB. But the media magnate is said to covet HBO, the crown jewel of pay channels, as well as NBA and MLB sports rights held by Time Warner.
“HBO and Fox networks are the first stop for show producers and show ideas,” Mr. Wible said. “So you'd be combining those along with the Fox … and the Warner Bros. TV production capabilities.”
The combined company’s annual revenue would be more than $60-billion.
With files from Reuters.