Murdoch ups the ante to more than $75B in bid for Time Warner

Willing to pay more than $85 a share; undeterred by earlier rejection.
JUN 03, 2014
By  ntappan
Twenty-First Century Fox Inc. (FOXA) is willing to pay more than $75 billion for Time Warner Inc. (TWX), according to people with knowledge of the matter, a sign Rupert Murdoch is undeterred after being rebuffed in an initial offer for the media company. Time Warner shares soared. Fox's willingness to raise its offer higher than $85 a share is contingent on Time Warner engaging in talks and opening its books to Fox, according to one of the people, who said Murdoch hasn't been directly involved in discussions. A deal would reshape the media industry by giving the TV-and-film companies bargaining power in negotiations with cable operators such as Comcast Corp. and Time Warner Cable Inc., which are in the process of their own merger. Fox calculates the combined company could achieve more than $1 billion in cost savings, including through the elimination of overlapping back office, human resources, sales and information technology operations, said one of the people, who asked not to be identified because the information is private. Fox estimates that figure could go higher once it's able to conduct due diligence on Time Warner, the person said. “Having more cable networks would give them more negotiating leverage with distributors.” said Brett Harriss, an analyst at Gabelli & Co. “They get the Ebitda, they get the cash flow and business, they take billions of dollars of synergies,” he said, referring to earnings before interest, tax, depreciation and amortization. TARGETING HBO By making a higher offer, Fox would seek to pull in Time Warner assets such as the TNT and TBS cable networks and premium channel HBO to add to its own stable of media properties, including the Fox movie studio, broadcast network and 24-hour news channel. While TBS is alluring to Fox, HBO is seen as a major attraction and is being valued at $20 billion, according to one of the people with knowledge of the matter. Fox views Time Warner's revenue growth potential in HBO and international properties, the person said. Time Warner leapt 18 percent to $83.86 at 10:14 a.m. in New York. It had gained 21 percent in the past year through yesterday. New York-based Fox fell 2.2 percent to $34.43. The proposal Time Warner rejected included 1.531 Fox shares and $32.42 in cash, Time Warner said today in a statement. The transaction would be risky for regulatory and operational reasons, and Time Warner's assets will increase in value if the company continues on its own, it said. ANTITRUST APPEASEMENT “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 Twenty-First Century Fox is in a position to offer,” Time Warner said. In a separate statement, Fox confirmed it made a formal proposal and said it's not in current talks with Time Warner. To appease antitrust regulators, the companies would sell CNN, according to a person with knowledge of the matter, since Fox already has Fox News. CNN could fetch about $6 billion in a sale, the person said. Fox and its advisers would also tell regulators that a Fox-Time Warner deal should be allowed to go through given consolidation in the cable industry, including the proposed deal to combine Comcast and Time Warner Cable, the person said. Goldman Sachs Group Inc. and Centerview Partners LLC are advising Fox, the person said. Time Warner said it was being advised by Citigroup Inc. and Cravath, Swaine & Moore LLP was providing legal counsel. The New York Times reported Fox's cash-and-stock proposal earlier. Fox first approached Time Warner in early June, when Chase Carey, the president of Fox and a longtime top lieutenant to Murdoch, met privately with Time Warner's chief executive officer, Jeff Bewkes, one of the people familiar with the matter said. While the companies have had a couple of meetings and calls since, there hasn't been a robust two-way conversation, the person said. Fox delivered its formal takeover proposal of $85 a share later in June.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.