• Mogul’s 21st Century Fox likely to consider renewed offer for owner of CNN, HBO, Warner Bros and other media brandsRUPERT Murdoch’s 21st Century Fox has been rebuffed in an $80 billion (£46.7 billion) bid to buy rival United States media and entertainment giant, Time Warner.
Together Fox and Time Warner would own a huge range of assets including CNN, Fox News, HBO and movie studios 20th Century Fox and Warner Bros.
Time Warner rejected the $85-a-share cash and stock offer, a 25 per cent premium on the company’s share price, according to a source familiar with the negotiations. Murdoch is likely to consider a renewed bid, the New York Times reported.
The octogenarian has long been keen on securing a final mega-merger before handing the reins of his media empire to the next generation of the Murdoch family.
The bid, which would create a combined company with total revenues of $65 billion, could prompt a new spate of media consolidation.
Fox has indicated that to push the deal through regulatory scrutiny it would sell off Time Warner’s CNN, which competes directly with Fox News, with rivals CBS and Disney’s ABC likely suitors, according to the New York Times.
21st Century Fox said in a statement: “21st Century Fox can confirm that we made a formal proposal to Time Warner last month to combine the two companies. The Time Warner board of directors declined to pursue our proposal. We are not currently in any discussions with Time Warner.”
Time Warner issued a robust defence of its rejection of Murdoch’s offer, including questioning Fox’s ability to manage the enlarged business.
The company also questioned the value to shareholders of the non-voting stock portion of the deal – the cash part of Fox’s offer was $32.42 a share.
“There is significant risk and uncertainty as to the valuation of 21st Century Fox’s non-voting stock and 21st Century Fox’s ability to govern and manage a combination of the size and scale of 21st Century Fox and Time Warner,” the company said.
The company’s board said it was “confident” that its own strategic plan was “superior” to any offer Fox could make.
“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 21st Century Fox is in a position to offer,” it said. “The unique value of Time Warner’s industry-leading businesses including its portfolio of networks and its film studio and television production business is only going to increase.”
Claire Enders, founder of media research firm Enders Analysis, said: “Time Warner has been a real laggard in stock market terms for a long time with a lot of great assets that can be plucked like a chicken. Even for 21st Century Fox this is a colossal deal. They are making a big play for more content and Time Warner has some of the best global franchises you could hope to have – look at Harry Potter, Batman and HBO.”
Time Warner’s lucrative cable channel business includes TNT, TBS and HBO, home to shows including Game of Thrones.
Murdoch’s TV channel operations include FX and the Fox broadcast network, which airs programmes including The Simpsons and American Idol, until it was cancelled earlier this year.
Bringing Warner Bros – maker of films including The Hangover, the Batman and Harry Potter franchises, and one of the biggest hits of 2014 The Lego Movie – together with 20th Century Fox, home to Avatar, X-Men and Dawn of the Planet of the Apes, will create a Hollywood studio powerhouse.
21st Century Fox currently has more than $5billion cash on its balance sheet. The company could also potentially add $10billion-plus more if BSkyB, in which Fox owns a 39 per cent stake, successfully completes a buyout of Fox’s Italian and German pay-TV businesses to create Sky Europe.
Time Warner rejected the deal over issues that include the stock portion of 21st Century Fox’s offer would only be for non-voting shares, which would keep the enlarged business firmly controlled by the Murdoch family.
While Murdoch has made numerous audacious “bet the farm” moves to build his media empire over the years, the 83-year-old is determined that his last major deal is capped by a safe transition of power to his sons.
Earlier this year he laid the groundwork by bringing back eldest son Lachlan, the heir apparent who walked away from the empire almost a decade ago to set up his own investment company and move to Australia.
The 42-year-old was named as non-executive co-chairman of the entertainment and publishing companies, alongside his father.
At the same time, younger brother James was also elevated to co-chief operating officer, with direct responsibility for developing Fox’s pay-TV aspirations globally.
The 41-year-old moved to New York to consolidate his position within the company, but also to distance himself from intense criticism of his handling of phone hacking as executive chairman of News UK.
Murdoch has been focused on building the scale of 21st Century Fox’s TV and film business, after freeing it from the drag of the publishing assets which were spun off into a separate listed company last year.
The separation of the businesses has insulated the highly-profitable 21st Century Fox operation from the phone-hacking scandal that has dogged some of his publishing assets.
The publishing business, News Corp, primarily consists of newspaper assets such as the Sun, Times, Wall Street Journal and the Australian, book firm HarperCollins, and also Murdoch’s Australian pay-TV business.
Analysts and investors have been tipping wider consolidation among the major U.S. media players following Comcast’s move to take over Time Warner Cable.
Time Warner has spent years trimming its portfolio – including AOL, Time Warner Cable and, most recently magazine publishing division Time Inc – to focus on TV and film, which has made it an attractive target.
Time Inc, the largest magazine publisher in the U.S. with titles including Time, Sports Illustrated and Marie Claire, was spun off last month as a corporate manoeuvre to protect Time Warner from the continuing decline in the publishing sector.
Yet Murdoch, who made his usual star appearance last week at an annual meeting of the moguls hosted by Allen & Co’s investment bank in Sun Valley, Idaho, will not be put off so easily.
In polo shirt and baggy chinos, the fit and tanned 83-year-old was snapped chatting with his eldest son Lachlan, current heir-apparent in the Murdoch clan’s own version of Game of Thrones, amid a crowd that included the new elite including Facebook’s Mark Zuckerberg, Google chairman Eric Schmidt and Amazon’s Jeff Bezos.
Murdoch was in many ways the odd man out. Content is no longer king. The cable companies and Internet firms that distributed the products his empire produces have amassed ever-greater control. Now Murdoch appears to have hit upon a solution: create a content company big enough to shift the balance of power and hand his family control of a media empire ready for the battles ahead.
Time Warner confirms its rejection of the bid in a video to staff David Folkenflik, NPR media correspondent and author of the book Murdoch’s World. He said the deal was driven in part by business logic: Murdoch wants to secure his business as companies like Amazon and Netflix move further into creating content. “At the same time he wants to write enough of a final chapter to take him well beyond the court cases that have wrapped up in London.”
Folkenflik said the audacious move was also a bid by Murdoch to redefine his image after the hacking scandal, to demonstrate to the world he was “as relentless and as close to immortal as you can be.”
“He wants it to show that his empire is larger than ever, that he’s undaunted and that people think of him unceasingly growing the family empire and giving James and Lachlan more vineyards to play in,” he said.
A merger would come as Comcast, the U.S.’s largest cable firm, tries to push through a takeover of Time Warner Cable, the second largest player that has consumer groups, and Murdoch, worrying about the power cable firms will soon exert over the media market.
Murdoch has been focused on building the scale
Time Warner’s board said it was “confident” that its own strategic plan was “superior” to any offer Fox could make.
Keith Rupert Murdoch, born 11 March 1931, is an Australian American business magnate. Murdoch became managing director of Australia’s News Limited, inherited from his father, in 1952. He is the founder, Chairman and CEO of global media holding company News Corporation, the world’s second-largest media conglomerate, and its successors News Corp and 21st Century Fox after the conglomerate split on 28 June 2013.
In the 1950s and ‘60s, he acquired various newspapers in Australia and New Zealand, before expanding into the United Kingdom in 1969, taking over the News of the World followed closely by The Sun. He moved to New York in 1974 to expand into the US market, but retained interests in Australia and Britain. In 1981, he bought The Times, his first British broadsheet, and became a naturalised U.S. citizen in 1985.
In 1986, keen on adopting newer electronic publishing technologies, he consolidated his UK printing operations in Wapping, causing bitter industrial disputes. His News Corporation acquired Twentieth Century Fox (1985), HarperCollins (1989) and The Wall Street Journal (2007). He formed BSkyB in 1990 and during the 1990s expanded into Asian networks and South American television. By 2000, Murdoch’s News Corporation owned over 800 companies in more than 50 countries with a net worth of over $5 billion.
In July 2011, Murdoch faced allegations that his companies, including the News of the World, owned by News Corporation, had been regularly hacking the phones of celebrities, royalty and public citizens. He faces police and government investigations into bribery and corruption by the British government and FBI investigations in the U.S. On 21 July 2012, Murdoch resigned as a director of News International.
In 2014, Murdoch was inducted into the Television Hall of Fame for his contributions in the field of television.
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