Rupert Murdoch Bid $80 Billion for Time Warner

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variety.com/2014/biz/news/rupert-murdoch-bid-80-billion-for-time-warner-report-1201263326/

Rupert Murdoch’s 21st Century Fox made an unsolicited offer of $80 billion for Time Warner within the past few week, but the overture was rejected, the New York Times reported.

The combination of Fox with Time Warner — an entity that would have annual revenue of about $65 billion — would create a media powerhouse. Such a deal would bring under one roof assets that include movie studios 20th Century Fox and Warner Bros. and a portfolio of top-tier cable networks, including Fox News and FX, and Time Warner’s HBO, TNT and TBS.

Big media companies have been exploring mergers and acquisitions, in part to boost their leverage as large pay-TV operators combine. Comcast is in the process of acquiring Time Warner Cable, and AT&T has bid for DirecTV.

At the Allen & Co. media conference in Sun Valley last week, Time Warner CEO Jeff Bewkes was asked about Fox’s rumored interest in acquiring the conglom, and he responded, “I know nothing about it.”

Fox first approached Time Warner in early June, then made a formal offer of $85 per share in cash and stock for the company later in the month, according to the Times report. Under the proposed deal, Fox had said that it would sell CNN to “head off potential antitrust concerns” since Fox News Channel competes directly with CNN, the Times reported. CNN has been seen as a potential target for CBS and ABC.

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variety.com/2014/tv/news/murdochs-time-warner-bid-puts-spotlight-on-cnn-1201263551/

Analysis: If Murdoch prevails, could CNN end up under some other media company's umbrella?
CNN’s future path may not necessarily be the same as parent Time Warner’s.

Time Warner rebuffed an $80 billion offer from 21st Century Fox earlier this month, both companies disclosed Wednesday, that would have combined the owner of HBO, TNT and Warner Bros. with the owner of FX, Fox and Fox News. Under the terms of the deal, Time Warner’s venerable cable-news outlet CNN would likely have been sold off to appease regulators and maintain its competition with 21st’s Fox News Channel, according to a report in The New York Times.

Talk of a deal for now is moot, 21st Century Fox chairman and CEO Rupert Murdoch is known, however, to take the long view on getting deals done, and, as evidenced by a run up in Time Warner stock, Wall Street clearly believes he could make another try. With that in mind, it’s worth considering whether CNN would fit nicely under a rival’s roof.

The network is in rebuilding mode, with its ratings significantly down from the days when its always-on news went unchallenged not only by Fox News Channel and MSNBC, but a bevy of emerging players like Al Jazeera America and Fusion, the new network owned by Univision and ABC News.

In recent months, CNN has placed increasing emphasis on original non-fiction series, to some acclaim. A new show, “The Hunt,” led by John Walsh, the host best known from “America’s Most Wanted,” led its Sunday timeslot in viewership among the demographic most coveted by advertisers in news programing, people between 25 and 54. A series featuring Anthony Bourdain and an episode of documentary series “The Sixties,” have garnered Emmy nominations.

And CNN has pushed forward on the digital front, making efforts to place its journalism more firmly in the streaming and social realms that more consumers depend on for breaking news. The company recently expanded its CNNx product that makes various CNN reports available on demand via mobile tablet and video on demand, so that news aficionados can find CNN reports as they wish, not just when they are broadcast on the flagship network.

Even so, CNN is finding other terrain more difficult. Ad buyers, crusading in the recent TV-upfront market to secure lower costs, pushed back on CNN’s ad prices. For years, CNN has been able to secure a high rate of increase by touting itself as “the gold standard” because of its devotion to journalism. With a slate stocked more heavily with non-fiction programming and a consumer base drifting to new ways to access breaking news, ad buyers questioned the quality of CNN’s mettle.

In 2011, CNN secured approximately $347.8 million in ad revenue, according to data from SNL Kagan. In 2013, the network notched about $319.8 million, representing a dip of about 8%.

And there are also questions about HLN, the sister CNN cable outlet that is reportedly considering an alliance with Vice, the digital media outlet with youth appeal and a rebellious attitude. HLN recently revamped itself to focus on social media and the chatter it drives regarding current events.

Ripping CNN out of Time Warner would be like carving out a major organ from a living human being. That’s because CNN has long contributed a good chunk to Time Warner’s operating income (in 2010, analyst James Dix estimated that CNN accounted for about 12% of the figure). CNN not only brings in revenue from advertising, but also from subscriber fees from cable, satellite and telecom distributors; payments from international distribution; and money from local news outlets that pay for use of CNN content.

At an investor conference sponsored by Bernstein Research in May, Time Warner CEO Jeff Bewkes said he thought CNN could grow the fees it gets from distributors and could better monetize its digital-news efforts.

A tie-up with CNN could potentially make sense for a number of rival media players, though there does not appear to be any talk going on about the prospect at present.

CBS Corp. has on several occasions explored the idea of pairing its CBS News with CNN, but those efforts were thwarted by issues involving unions, corporate culture and control. CBS has a smaller cable-network portfolio than many of its peers, and putting CNN under its umbrella would help it amortize the costs incurred by CBS News, while letting it promote further the hard-news image and emphasis on foreign reportage it has used to guide shows like “CBS Evening News” and “CBS This Morning.” CBS has also been working on the launch of a streaming-video network for its news division, and partnering with CNN could lend that venture a boost.

Al Jazeera America might also find CNN to be a useful asset. The Qatar-backed cable-news outlet has deep pockets and getting hold of CNN might lend it more heft in its efforts to gain distribution from more cable systems. Disney’s ABC might also want to kick CNN’s tires. While ABC is a part owner of Fusion, a separate news network would give it more ways to use its ABC News, which has enjoyed new success with “Good Morning America” taking the ratings lead from NBC’s “Today” as well as a partnership with Yahoo.

CNN is still the broadcaster of “New Day,” “Reliable Sources” and “Crossfire”and will remain so for the present. If Murdoch should continue to covet Time Warner, however, CNN could look much different in the not-too-distant future.

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www.icv2.com/articles/news/29107.html

DC Parent Time Warner in Play
Rejects $80B Fox Offer

An earthquake struck the media company landscape today, as Time Warner revealed that it had rejected an $80+ billion takeover offer from Twenty-First Century Fox. In announcing the rejection, Time Warner pointed to its own strategic plan, which it said would “create significantly more value” for shareholders, and said that value was “superior to any proposal that Twenty-First Century Fox is in a position to offer.”

Time Warner also said that the value of its portfolio of businesses was likely to increase, that the non-voting stock which was offered as part of the purchase price had questionable valuation, that Fox’s ability to manage the combined companies created risk, and that there are strategic, operational, and regulatory risks to the combination of the companies.

The combined companies would include an array of TV channels, film studios, and other media and content businesses, including DC Comics.

It’s unlikely that this offer by Fox, which is controlled by Rupert Murdoch and his family, was not serious, or that the story is over with this rejection. Time Warner stock was up around 17% as of this writing, just before the close. That’s a lower price than Fox’s offer, but a lot higher than it was this morning.