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Business Analysis & Features

Did Rupert Murdoch meet his match? He failed in his bid for Time Warner, but liberals may be celebrating too soon


Has the “Dirty Digger” really come a cropper, or has that sly old dog Rupert Murdoch simply retreated to his lair to scheme and plan in much more ruthless detail a mega-takeover that will define his storied career?

On the face of things,  Mr Murdoch has withdrawn 21st Century Fox’s $80bn (£48bn) bid for Time Warner that has left the  83-year-old media titan’s legacy takeover move in tatters.

The Time Warner deal would have doubled the size of Mr Murdoch’s empire that he could then leave to his offspring when he goes to meet his maker.

But did Mr Murdoch eventually meet his match in Time Warner’s chief executive,  Jeff Bewkes? Mr Bewkes changed the company’s rules to make it harder for Time Warner shareholders to arrange a special meeting, which could have delayed Mr Murdoch’s move had he launched a “proxy war” to convince investors.

He also had the support of many powerful liberals in the US news and entertainment industries outraged at the prospect of Mr Murdoch owning even more of their media.

Further, Mr Bewkes claimed that many Time Warner shareholders supported him in his rebuttal of Mr Murdoch.

“The board and our senior management team appreciate very much the continued support of our shareholders,” he said in a conference call to discuss Time Warner’s earnings with investors and analysts, adding that he would not comment on Mr Murdoch’s withdrawn offer.

In a statement, the company said: “Time Warner’s board and management team are committed to enhancing long-term value and we look forward to continuing to deliver substantial and sustainable returns for all stockholders.

“Time Warner is well positioned for success with our iconic assets, including the world’s leading premium television brand, the world’s strongest ad-supported cable-network group, and the world’s largest film and television studio.”

There is no doubt, though, that Mr Bewkes will have to prove to his shareholders that he was correct in turning down an opening bid of $85 a share – which would likely have risen – for a company that traded between $60 and $70 for much of the past year.

That process started at lunchtime yesterday when Time Warner announced quarterly earnings that beat analysts’ estimates and plans to buy back $5bn of its stock.  Mr Bewkes will need to do more than that. The shares have fallen from around $85 to around $75 since Mr Murdoch withdrew his proposal.

So does this go down as one of Mr Murdoch’s biggest defeats? Have the liberal luvvies at Time Warner really repelled for good the king of the conservatives?

Rupert Murdoch's 21st Century Fox group has withdrawn its bid for Time Warner (Getty)


This is Rupert Murdoch we are talking about. To many, it seems extraordinary that he is going to walk away, defeated by a bunch of liberals.

RBC Capital Markets analyst David Bank argues that Mr Murdoch is being a sensible businessman in knowing when a deal is dead. The prospect of having to increase the offer to as high as $100 a sharewas getting too scary for even the biggest media mogul of them all.

“I think this is the new and improved Rupert Murdoch, who has a strategic vision but is better aligned with the interests of public shareholders, and is willing to exercise price discipline,” Mr Bank says. “It wasn’t worth the cost. I think he saw that.”

Another analyst, Tony Wible of Janney Capital Markets, however, suspects this could be a ruse to boost his share price so he can revisit the deal later: “There could be sincerity... or it could be a bluff.”

He says the timing of Mr Murdoch’s withdrawal just hours before Time Warner announced earnings and held a call with investors and analysts was making him “suspicious”.

“It does help pressure the Time Warner shareholders. I don’t think this thing is done just yet.”

 Another investment analyst, Barry Ritholtz, adds: “I’m fascinated by the game theory that goes on with Rupert Murdoch, who has always been a crafty deal maker.”

Mr Murdoch’s advisers suggest not only is the Time Warner deal unlikely to be revived, but that 21st Century Fox will not chase another big deal for the sake of it.

Listen to the man himself: “We viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands.

“Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly.  However, Time Warner management and its board refused to engage with us to explore an offer which was highly compelling.

“Additionally, the (negative) reaction in our share price... undervalues our stock and makes the transaction unattractive to Fox shareholders.”

Shares of 21st Century Fox had fallen since Mr Murdoch announced his move, but they bounced back up after he withdrew the plan on Tuesday night. 21st Century Fox also now plans to buy back up to $6bn of its stock.

Liberals in the US are jumping for joy at Mr Murdoch’s apparent failure, led by watchdog Media Matters, which calls itself a “progressive research and information centre dedicated to comprehensively monitoring, analysing, and correcting conservative misinformation in the US media”.

Media Matters’ vice-president Angelo Carusone said: “The prospect of Rupert Murdoch buying Time Warner presented real harms to the US and global-media landscape. It would have given him control of 40 per cent of the cable market and 30 per cent of the movie market.

“No one should hold that much influence but Murdoch, in particular, has demonstrated that he is far too irresponsible for that amount of power. Today’s decision was a victory for the thousands of people who signed our petition urging shareholders to oppose the sale as well as media consumers across the country.”

So has Mr Murdoch found humility? Is his appetite satisfied enough for him to shuffle off the global-media stage, leaving his empire in its current shape to his sons?

History suggests not, but then, perhaps even Mr Murdoch gets old eventually.