Murdoch is pouncing on Time Warner while rivals are distracted

Fri Jul 18, 2014 5:23pm EDT
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By Liana B. Baker

NEW YORK (Reuters) - Rupert Murdoch looks to have been canny in his $80 billion takeover approach to Time Warner Inc, cornering the media giant at a time when potential "white knight" bidders are busy absorbing their own large deals.

The absence of potential counter-bidders leaves Time Warner's investors with a dilemma. They can either engage with Murdoch's Twenty-First Century Fox Inc to negotiate a higher price, or play for time and wait until there are more potential buyers available.

Time Warner, owner of many highly-prized assets from HBO to Warner Bros, has rejected Fox's initial cash-and-stock proposal of $85 per share. An eventual deal would transform the U.S. media landscape and cement Murdoch's status as the most powerful magnate in U.S. media and entertainment.

When Time Warner's board rebuffed the approach it indicated it believes now is the wrong time to sell because the environment isn't conducive to getting the best price, people familiar with Time Warner's thinking said on Wednesday. That is mainly because a range of major media, telecom and technology companies are for various reasons not in a position to make a rival offer.

Verizon Communications Inc, which last year paid $130 billion to buy Vodafone out of its U.S. wireless business Verizon Wireless, is hampered by the $140 billion debt load that it took on as a result.

Comcast Corp, which completed the acquisition of NBC Universal last year, has its hands tied while waiting for the government to approve its proposed $45 billion takeover of Time Warner Cable. Bidding for Time Warner while that is going on could scuttle the chances of getting the cable deal approved.

Elsewhere, AT&T Inc, another large telecom company that hardly produces any programming, is trying to close its $48.5 billion takeover of satellite TV company DirecTV, which is also awaiting regulatory approval.

As the media industry landscape evolves, technology companies such as Google, Apple or Amazon could also be tempted into bidding for Time Warner as opposed to trying to produce video content on their own, people familiar with Time Warner's thinking said.   Continued...

News Corporation CEO Rupert Murdoch waits to testify before the House Immigration, Citizenship, Refugees, Border Security and International Law Subcommittee on Capitol Hill in Washington September 30, 2010. REUTERS/Richard Clement