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| Rupert Murdoch's bid for Time Warner: the last great play of his career | Rupert Murdoch's bid for Time Warner: the last great play of his career |
| (35 minutes later) | |
| Rupert Murdoch, last of the great media moguls, has long been keen to secure a final mega-deal before handing the reins of his conglomerate to the next generation of his family. The power in media is shifting, cable companies and internet firms have regained their strength, and on Wednesday, it was revealed that Murdoch has made what may be his last great play: to make his massive empire even bigger. | |
| Time Warner confirmed rumours that have been circulating for weeks – that it had received a takeover bid from Murdoch’s 21st Century Fox. Together the two media behemoths would control a huge portfolio of assets including Warner Bros, producers of the Harry Potter and Batman movies; 21st Century Fox’s X-Men and Avatar; and Time Warner's lucrative cable channels, including HBO, home of Game of Thrones and Fox's FX, Fox News and the Fox broadcast network. | |
| But the deal will not be easy to pull off, even though Fox indicated that it would sell off Time Warner’s CNN, which competes directly with Fox News. (CBS and ABC would be likely suitors, the New York Times reported.) | But the deal will not be easy to pull off, even though Fox indicated that it would sell off Time Warner’s CNN, which competes directly with Fox News. (CBS and ABC would be likely suitors, the New York Times reported.) |
| Time Warner said on Wednesday that it had rebuffed the deal, as it stood. The company’s board balked at the $85-a-share cash and stock offer, a 25% premium on the company’s share price, because they feared regulators would reject it, and were worried that the offer would hand control of the company to the Murdochs, who run their empire almost like a family business through a two-tier system of stocks. | Time Warner said on Wednesday that it had rebuffed the deal, as it stood. The company’s board balked at the $85-a-share cash and stock offer, a 25% premium on the company’s share price, because they feared regulators would reject it, and were worried that the offer would hand control of the company to the Murdochs, who run their empire almost like a family business through a two-tier system of stocks. |
| “There is significant risk and uncertainty as to the valuation of 21st Century Fox’s non-voting stock and 21st Century Fox’s ability to govern and manage a combination of the size and scale of 21st Century Fox and Time Warner,” the company said. | “There is significant risk and uncertainty as to the valuation of 21st Century Fox’s non-voting stock and 21st Century Fox’s ability to govern and manage a combination of the size and scale of 21st Century Fox and Time Warner,” the company said. |
| Yet Murdoch, who made his usual star appearance last week at an annual meeting of the moguls hosted by Allen & Co’s investment bank in Sun Valley, Idaho, will not be put off so easily. | Yet Murdoch, who made his usual star appearance last week at an annual meeting of the moguls hosted by Allen & Co’s investment bank in Sun Valley, Idaho, will not be put off so easily. |
| In polo shirt and baggy chinos, the fit and tanned 83-year-old was snapped chatting with his eldest son Lachlan, current heir-apparent in the Murdoch clan’s own version of Game of Thrones, amid a crowd that included the new elite including Facebook’s Mark Zuckerberg, Google chairman Eric Schmidt and Amazon’s Jeff Bezos. | In polo shirt and baggy chinos, the fit and tanned 83-year-old was snapped chatting with his eldest son Lachlan, current heir-apparent in the Murdoch clan’s own version of Game of Thrones, amid a crowd that included the new elite including Facebook’s Mark Zuckerberg, Google chairman Eric Schmidt and Amazon’s Jeff Bezos. |
| Murdoch was in many ways the odd man out. Content is no longer king. The cable companies and internet firms that distributed the products his empire produces have amassed ever-greater control. Now the Murdoch appears to have hit upon a solution: create a content company big enough to shift the balance of power and hand his family control of a media empire ready for the battles ahead. | Murdoch was in many ways the odd man out. Content is no longer king. The cable companies and internet firms that distributed the products his empire produces have amassed ever-greater control. Now the Murdoch appears to have hit upon a solution: create a content company big enough to shift the balance of power and hand his family control of a media empire ready for the battles ahead. |
| A merger would come as Comcast, the US’s largest cable firm, tries to push through a takeover of Time Warner Cable, the second largest player that has consumer groups, and Murdoch, worrying about the power cable firms will soon exert over the media market. | A merger would come as Comcast, the US’s largest cable firm, tries to push through a takeover of Time Warner Cable, the second largest player that has consumer groups, and Murdoch, worrying about the power cable firms will soon exert over the media market. |
| Earlier this year Murdoch laid the groundwork for Lachlan to take the reigns after James Murdoch’s career was derailed by the newspaper hacking scandal in the UK. Lachlan, who walked away from the empire almost a decade ago to set up his own investment company in Australia, was named as non-executive co-chairman of the entertainment and publishing companies, alongside his father. | Earlier this year Murdoch laid the groundwork for Lachlan to take the reigns after James Murdoch’s career was derailed by the newspaper hacking scandal in the UK. Lachlan, who walked away from the empire almost a decade ago to set up his own investment company in Australia, was named as non-executive co-chairman of the entertainment and publishing companies, alongside his father. |
| James is still on hand as co-chief operating officer, with direct responsibility for developing Fox’s pay-TV aspirations globally. The 41-year-old moved to New York to consolidate his position within the company, but also to distance himself from intense criticism of his handling of phone hacking as executive chairman of News UK. | James is still on hand as co-chief operating officer, with direct responsibility for developing Fox’s pay-TV aspirations globally. The 41-year-old moved to New York to consolidate his position within the company, but also to distance himself from intense criticism of his handling of phone hacking as executive chairman of News UK. |
| Murdoch has been focused on building the scale of 21st Century Fox’s TV and film business, after freeing it from the drag of the publishing assets which were spun off into a separate listed company last year. Buying Time Warner would be the crowning achievement of Murdoch’s career as he looks to shake off the hacking scandal. | Murdoch has been focused on building the scale of 21st Century Fox’s TV and film business, after freeing it from the drag of the publishing assets which were spun off into a separate listed company last year. Buying Time Warner would be the crowning achievement of Murdoch’s career as he looks to shake off the hacking scandal. |
| But it seems that Time Warner is determined to put up a fight, particularly over the issue of control. | But it seems that Time Warner is determined to put up a fight, particularly over the issue of control. |
| Fox has two tiers of stock, voting and nonvoting. The Murdoch family owns less than a 20% of Fox’s shares but its Class B shares control 40% of the votes. With the support of Saudi prince Alwaleed bin Talal, Fox’s second largest shareholder, the Murdochs effectively have full control of the company. | Fox has two tiers of stock, voting and nonvoting. The Murdoch family owns less than a 20% of Fox’s shares but its Class B shares control 40% of the votes. With the support of Saudi prince Alwaleed bin Talal, Fox’s second largest shareholder, the Murdochs effectively have full control of the company. |
| That two-tiered structure, and the extent of Murdoch’s control, has annoyed some powerful investors including the California Public Employees' Retirement System (CALPERS), the largest US public pension fund. | That two-tiered structure, and the extent of Murdoch’s control, has annoyed some powerful investors including the California Public Employees' Retirement System (CALPERS), the largest US public pension fund. |
| Time Warner’s board said it was “confident” that its own strategic plan was “superior” to any offer Fox could make. | Time Warner’s board said it was “confident” that its own strategic plan was “superior” to any offer Fox could make. |
| That’s not likely to deter Murdoch from making a renewed bid. 21st Century Fox currently has more than $5bn cash on its balance sheet and could potentially add $10bn-plus more if BSkyB, in which Fox owns a 39% stake, successfully completes a buyout of Fox’s Italian and German pay-TV businesses to create Sky Europe. Money will not be an issue and nor will Time Warner's highlighting of Fox’s management issues. | That’s not likely to deter Murdoch from making a renewed bid. 21st Century Fox currently has more than $5bn cash on its balance sheet and could potentially add $10bn-plus more if BSkyB, in which Fox owns a 39% stake, successfully completes a buyout of Fox’s Italian and German pay-TV businesses to create Sky Europe. Money will not be an issue and nor will Time Warner's highlighting of Fox’s management issues. |
| Claire Enders, founder of media research firm Enders Analysis, said Time Warner had been asking for trouble. She said this would be a “colossal deal” for Fox but added: "Time Warner been real laggard in stock market terms for a long time with a lot of great assets that can now be plucked like a chicken.” | Claire Enders, founder of media research firm Enders Analysis, said Time Warner had been asking for trouble. She said this would be a “colossal deal” for Fox but added: "Time Warner been real laggard in stock market terms for a long time with a lot of great assets that can now be plucked like a chicken.” |
| On Wednesday as Time Warner’s share price continued to rise on the news Time Warner CEO Jeff Bewkes made a video address to staff reassuring them that the deal was off. But for Murdoch, Wednesday was likely to be just the opening salvo in what may be the last great deal of his career. | On Wednesday as Time Warner’s share price continued to rise on the news Time Warner CEO Jeff Bewkes made a video address to staff reassuring them that the deal was off. But for Murdoch, Wednesday was likely to be just the opening salvo in what may be the last great deal of his career. |