July 17, 2014
Time Warner Confirms That It Rejected Fox’s June Takeover Attempt
redOrbit Staff & Wire Reports - Your Universe Online
Time Warner rejected an $80 billion takeover attempt by 21st Century Fox in June, but rumors persist that the Rupert Murdoch-owned conglomerate could return with a higher offer, various media outlets reported Wednesday.The rejected bid was unsolicited, but according to New York Times reporters Andrew Ross Sorkin and Michael J. De La Merced “The bold move could put Time Warner in play and might again ignite a reshaping of the media industry, prompting a new spate of mega-mergers among the nation’s largest entertainment companies.”
Time Warner confirmed the takeover attempt in a statement Wednesday, revealing that Fox had attempted to acquire all outstanding shares for a combination of cash and stock.
However, after consulting with financial and legal advisors, the company’s board said it had determined that it was “not in the best interest of Time Warner or its stockholders” to accept Murdoch’s offer.
According to Aaron Souppouris of The Verge, Fox officials indicated that, had the acquisition attempt been successful, the multimedia company would have sold off Fox News competitor CNN in order to avoid potential antitrust implications.
Even without the popular cable news channel, however, a Time Warner buyout would have given Murdoch control of HBO, and Warner Bros. and Turner television stations TBS and TNT (which include MLB and NBA broadcast rights). While the initial offer was rejected, industry insiders do not expect Fox to throw in the towel.
As Mediatech Capital Partners managing partner Porter Bibb told CNN Money’s Chris Isidore and Brian Stelter, “Rupert Murdoch is not going away. He’s going to keep upping the price until he gets it.” However, a source close to Time Warner noted that company plans to maintain its independence and that Murdoch will have to launch a hostile takeover to be successful.
In explaining its decision, Time Warner pointed to the potential strategic and regulatory risks involved with a potential merger with Fox, as well as uncertainty over the valuation of the non-voting stock involved in the transaction. Furthermore, the board expressed concern over Fox’s ability to manage a company as large as the combined entity, and confidence that Time Warner’s strategic plan will continue to provide sustainable value for its stockholders.
“The takeover approach comes after Time Warner’s spinoff of its legacy print publications, a move that some analysts have said could spur the interest of potential bidders,” the New York Times said. “Over the past several years, it has spun off AOL, Time Warner Cable and most recently publications like Time and Fortune, leaving an entertainment company that many analysts think would be an attractive asset.”
“Mr. Murdoch’s empire has also recently split, with The Wall Street Journal, The New York Post, the publisher HarperCollins and some other assets forming News Corporation,” added Sorkin and De La Merced. Even so, the combined company would have a reported value of $65 billion. News of the takeover attempt caused Time Warner’s shares to spike by nearly 17 percent in mid-afternoon tradition, according to various media reports.