Murdoch still eyeing Time Warner after rejection

NEW YORK (AFP) – Rupert Murdoch’s
conglomerate said Wednesday it made an
unsuccessful bid for rival Time Warner which
could shake up the media-entertainment
world.
The bid by 21st Century Fox, which would
merge two of the world’s biggest media-
entertainment empires if allowed to proceed,
was for $80 billion, a source familiar with the
talks told AFP.
A statement from 21st Century Fox, said it
“made a formal proposal to Time Warner last
month to combine the two companies.”
The source said that despite the rejection,
Murdoch still wants a deal.
“He is determined to buy Time Warner,” the
source said.
The statement from 21st Century Fox, which
came after a New York Times report about the
offer, said the Time Warner board of directors
“declined to pursue our proposal,” and added
that “we are not currently in any discussions
with Time Warner.”
The source familiar with the talks told AFP
Murdoch’s group wanted to buy Time Warner
and then spin off CNN, which is the cable
news rival to his Fox News Channel.
Time Warner meanwhile issued a separate
statement confirming that it received, and
rejected, an offer of stock and cash from 21st
Century Fox.
The statement said the Time Warner board
“determined that it was not in the best
interests of Time Warner or its stockholders to
accept the proposal or to pursue any
discussions” with Murdoch’s firm.
“The board is confident that continuing to
execute its strategic plan will create
significantly 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,” the statement said.
The move comes amid a shifting media
landscape after both conglomerates spun off
their slow-growing publishing operations and
established companies focusing on film,
television and other high-growth segments.
Murdoch last year broke up his media empire
into two firms — 21st Century Fox and News
Corp, which operates The Wall Street Journal,
and newspapers in Britain and Australia.
Time Warner this year spun off its magazine
unit Time Inc., which publishes its flagship
news weekly and other titles including Sports
Illustrated and People.
The deal between the two giants would
combine the storied Hollywood studios of
Time Warner and 20th Century Fox, and
include Time Warner’s big cable channels
such as HBO and TBS that would join
Murdoch’s Fox sports, news and entertainment
channels.
Some analysts said HBO is the main driver of
the plan, because the premium pay-TV
channel offers a way to compete against the
successful streaming video firm Netflix.
“HBO is the crown jewel asset, but imagine
now you have to figure how to program TBS,
TNT, Cartoon, CNN, etc,” said Richard
Greenfield at BTIG Research. “Not to mention
that a merger of that size would face
integration and regulatory challenges.”
James Goss at Barrington research said a
takeover “would provide great complementary
value” and that “Fox would be getting a solid
deal if able to complete this takeover.”
Analyst David Bank at RBC Capital Markets
said the deal could offer some “synergies,” or
savings, by reducing costs and getting better
access to films and television programs.
In addition, Bank said that by marrying the
Time Warner television studios with the Fox
broadcast network, a combined company
“could own (and likely enhance) the entire
value chain of the prolific and already
successful Time Warner TV studio.”
Time Warner shares surged 17 percent on the
news to $80.13, while Fox dropped 6.2
percent to $33.00.