Fox’s Pursuit of Time Warner May Awaken Other Suitors

Jul 23, 2014  •  Post A Comment

Efforts by Rupert Murdoch's 21st Century Fox to bring Time Warner into the tent may spark acquisition interest among other would-be buyers, the Los Angeles Times reports.

Even after TW rejected Murdoch's initial $80 billion offer, and after the company amended its bylaws to help fend off a hostile takeover, as we reported this week, no one expects Murdoch to give up easily. Industry insiders are bracing for another bid from Fox, which is likely to top $90 billion.

This week's moves, however — notably blocking dissident shareholders from calling a special meeting in an effort to install sale-friendly board members — buy time for other would-be buyers to get their bids lined up.

Additionally, "the next meeting of shareholders will be in July 2015 — providing the company time to make its case that Chief Executive Jeff Bewkes has the best strategy for running Time Warner," the Times reports. "Now the question is whether anyone else will make a run at the entertainment giant whose assets include the Warner Bros. movie and television studios, premium channel HBO and cable channels TNT, TBS, CNN and Cartoon Network."

In a report Monday, Moody Investors Service Senior Vice President Neil Begley said: "We believe that other potential suitors will sniff around."

Echoing that sentiment was a Time Warner executive, speaking anonymously, who is quoted in the report saying: "These things have the tendency of bringing out other bidders."

The Times adds: "No friendly suitors have appeared yet. But that hasn't stopped investors, analysts and others from drafting a wish list that includes Walt Disney Co., Google Inc., Apple Inc., Amazon.com Inc. and Verizon Communications Inc."

The report quotes Janney Capital Markets analyst Tony Wible, credited as the first person to predict Fox's offer to Time Warner, saying: "This is more entertaining than some of the stuff these people put on TV."

The Times story notes: "For Disney, owning Time Warner would cement its status as the world's leading entertainment company. For Silicon Valley companies, a deal would make them instant players in the content business. For Verizon, access to Time Warner could boost its pay-TV and broadband platforms."

At least one observer is downplaying the possibility of a rival bid.

Said analyst Michael Nathanson of the research firm Moffett/Nathanson: "This is 21st Century Fox's to win." Nathanson says Fox is likely to up the bid to $100 a share — from the initial $85-per-share offer — if that's what it takes.

"There also is speculation that Time Warner could make a defensive acquisition to keep Fox at bay," the Times adds. "Merging with CBS Corp. would effectively stop Fox in its tracks. Government regulations prevent one company from owning two major broadcast networks, and Fox already owns Fox Broadcasting."

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