Time Warner turns down bold £90bn bid from Rupert Murdoch
The offer was made last month and quickly rejected but shares have rocketed amid hopes of a bidding war
Rupert Murdoch has stunned the media industry with an audacious bid for the Harry Potter film-maker Time Warner, which would create a near-£90bn global TV and movie behemoth to rival technology and cable TV giants.
Time Warner’s boss, Jeff Bewkes, rejected the approach but its stock rocketed as much as 18 per cent in New York, as analysts reckoned Mr Murdoch’s 21st Century Fox could return with a fresh offer and other bidders might emerge.
Fox said: “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.”
Shares in Fox fell more than 6 per cent as Wall Street fretted that a deal could be a distraction and face competition hurdles, especially in Europe. But Mr Murdoch, 83, has a track record of successfully pursuing takeover targets such as the Wall Street Journal owner Dow Jones and The Times newspaper in London. He is said to be working closely with his son James, who quit the UK because of the phone-hacking scandal but has been rehabilitated in America by his father.
Time Warner dismissed the Murdochs’ overtures, saying it was “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”.
A deal would create the world’s biggest media and entertainment content company, with revenues of $65bn (£38bn) and a stock market capitalisation of about $150bn.
Toby Syfret of Enders Analysis in London said: “It would be a seismic event if the deal happens and there could be competition concerns.”
Fox, which is worth about $75bn, owns the TV channels behind hit comedies The Simpsons and Modern Family and Fox News, while its Hollywood studio has made films such as Avatar and Ice Age. Time Warner, valued at $73bn, has the Potter and Batman movie franchises, plus drama channel HBO and news outfit CNN.
Mr Murdoch reportedly offered to sell CNN to assuage concerns. Owning more sports rights is thought to be a key attraction, as Fox Sports could acquire professional and college basketball and Major League Baseball by buying Time Warner. Fox-Time Warner would still be dwarfed by Apple, worth $575bn, and Google, valued at $400bn.
Fox is understood to have offered $85 a share for Time Warner in stock and cash, or $80bn. It was pitched at a 25 per cent premium to Time Warner’s share price. The stock yesterday shot up as much as $13, to touch $84.
One stumbling block is thought to be Mr Murdoch’s wish to maintain control by offering “non-voting” shares to Time Warner. His family owns only around 12 per cent of Fox but has around 40 per cent control because of its bloc of “voting” shares. Most Fox investors have “non-voting” shares, with no direct say over the running of the company.
However, about 70 per cent of shareholders are invested in both companies.
The Murdochs’ attempt to buy Time Warner is the third major deal they have planned in as many months.
Fox wants to merge all its European TV assets by getting Britain’s BSkyB to buy Sky Italia and Sky Deutschland to create a regional giant. Meanwhile, Fox’s TV production arm, Shine, founded by Mr Murdoch’s daughter Elisabeth, is looking to unite with Big Brother producer Endemol and Core Media Group.
All three deals would give Fox greater global scale in its negotiations with rights holders and online platforms, from Apple to Netflix.
The merger move comes after Fox and Time Warner streamlined their businesses by jettisoning print assets. Mr Murdoch spun off News Corporation, owner of The Sun and The Times, while Time Warner separated from Time Inc, owner of Britain’s IPC, publisher of NME and Country Life.
Time Warner was previously involved in a disastrous $164bn merger with AOL in 2000.
Media giants: How they compare
Market value: $73bn
Chairman + CEO: Jeff Bewkes
TV: Cartoon Network, CNN, TBS and TNT, HBO and Cinemax
Studios: Warner Bros Pictures, New Line Cinema
Broadcast rights: for US basketball and baseball
21st Century Fox
Market value: $75bn
Chairman + CEO: Rupert Murdoch
TV: Fox, FX, Fox News, Fox Sports, National Geographic, Star TV, stake in BSkyB
Studios: Twentieth Century Fox, Shine
Broadcasting rights: for major golf and football tournaments
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