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Time Warner Rejects 21st Century Fox's $75 Billion Merger Bid

16 Jul, 2014 By: Erik Gruenwedel

Megadeal would have consolidated film studios, including home entertainment, among other entertainment assets

Time Warner July 16 confirmed that it rejected a proposal from 21st Century Fox to acquire all of the outstanding shares of the media company in a deal worth more than $75 billion.

Time Warner, whose properties include Warner Bros. Home Entertainment Group, Warner Bros. Studios, and Warner Bros. Television, among others, said its board rejected the offer and further discussions because it was not in the best interests of Time Warner or its stockholders.

21st Century Fox properties include 20th Century Fox Home Entertainment, 20th Century Fox Studios and Fox Broadcasting Co., among others. The media giant is majority owned and operated by Rupert Murdoch.

The board said it believes Time Warner, under the guidance of a strategic plan outlined by CEO Jeff Bewkes, is in a better position to create significantly more value for the company and its stockholders than Fox.

Specifically, the board reiterated that TW’s portfolio of networks and its film studio and television production business is only going to increase in value. Indeed, Warner Home Video continues to rank No. 1 in home entertainment.

20th Century Fox was the first studio to top $1 billion at the box office in 2014 through July 13, followed by Warner Bros. at $960 million.

Time Warner also questioned the valuation of 21st Century Fox’s non-voting stock offered in the deal, its ability to manage two media companies, and whether the deal would pass regulatory muster. Fox also offered $32.42 in cash per TW share.

“Under its strategic plan, Time Warner has delivered a total shareholder return of more than 150% since 2008, almost tripling the return of the S&P 500 over the same period, as management has pursued a disciplined approach to position the company as a global leader in media and entertainment while managing its operations and capital structure to maximize shareholder returns,” the company said in a statement.

Meanwhile, Netflix shares fluctuated as Wall Street believed much of Murdoch’s interest in Time Warner revolved around HBO — the top premium TV channel in the world. Acquisition of HBO by Fox would have put the media company in a superior position leveraging content rights and HBO Go in the burgeoning subscription streaming market.

"The Googles, Amazons, Apples and Netflixs all suggest you have to be very big, very entrepreneurial, and more importantly, try to redefine your company,” former Time Warner boss Gerald Levin told CNBC. “So I think we’re going to see even more consolidation as everybody gets ready for … the next step.”


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