Murdoch's 21st Century Fox rebuffed in $80bn bid for Time Warner
Rupert Murdoch’s media giant 21st Century Fox last month made an $80bn takeover bid for Time Warner - but was rebuffed, the New York Times reports today.
Murdoch: Huge bid for Time Warner
Don’t think the idea has gone away. The Times points out that Murdoch has built a global media juggernaut over 50 years, in part “by pursuing bold deals that were often rebuffed at first by the targets of his overtures, only to later acquiesce.”
That trend started when he outbid Robert Maxwell for the News of the World in the UK.
The bold approach 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.
Together, 21st Century Fox and Time Warner would become a colossus with an array of television networks and channels like Fox, Fox News, FX, TNT and TBS; the premium subscription channel HBO, movie studios like 20th Century Fox, Warner Bros and other prominent outlets.
It would also combine Fox’s growing sports business with the broadcast rights that Time Warner owns for professional and college basketball and Major League Baseball, among other sports.
As part of the proposal to buy Time Warner, which would see total revenues of $65bn for the company, people briefed on the proposal told the NYT that 21st Century Fox indicated it would sell CNN to head off potential antitrust concerns since Fox News competes directly with CNN.
Putting CNN on the auction block would likely stir up a bidding war for the news channel; both CBS and ABC, a unit of the Walt Disney Company, have long been viewed as interested suitors.
Chase Carey, the president of 21st Century Fox and a longtime top lieutenant of Murdoch, was said to have met privately with Time Warner’s chief executive, Jeff Bewkes, in June to broach the topic.
Later that month, the company delivered a formal takeover proposal worth $85 in stock and cash for each Time Warner share.
That was roughly 25 per cent premium to Time Warner’s stock price, with 21st Century Fox indicating it would pay 60 per cent of the price in stock and 40 per cent in cash. The media giant said it would raise $24bn to help pay for the deal and stressed that its bid was not dependent on financing. At $85 a share, 21st Century Fox would be paying about 12.6 times the company’s earnings before interest, taxes, depreciation and amortization last year.
Time Warner’s board discussed the proposal at length, the people briefed said, and early this month it sent a terse letter rejecting the offer, saying the company was better off remaining independent.
The NYT said one big objection was the stock portion of 21st Century Fox’s offer, which would be made using nonvoting shares. Unlike Time Warner, which has no controlling shareholder, 21st Century Fox is controlled by the Murdoch family and has two tiers of stock, voting and nonvoting.
With the disclosure of the takeover approach, pressure from Time Warner shareholders could mount on the company's CEO Bewkes to begin talks. About 70 per cent of Time Warner shareholders, including many big mutual funds, also own shares in 21st Century Fox.
While the talks between the two companies have thus far been considered friendly, people involved in the discussions said that Murdoch is determined to buy Time Warner and is unlikely to walk away.
Murdoch is said to have has been planning the deal with his inner circle, including Carey, his son James, and the company’s chief financial officer, John Nallen.
Already, a team of Wall Street advisers have been hired on both sides: 21st Century Fox is being advised by Goldman Sachs and Centerview Partners, while Time Warner has hired Citigroup and other advisers.
For Murdoch, an acquisition of Time Warner might be "a capstone to his long career," said the NYT, who added that "people close to him have said that he sees such a combination as a natural part of a consolidating entertainment industry".
Time Warner itself has been part of several of the biggest mergers of the past few decades, including the merger of Time and Warner in the 1980s and the disastrous $165bn sale to America Online at the height of the dot-com boom.
Representatives for 21st Century Fox and Time Warner could not be immediately reached for comment.