Rupert Murdoch Is Rebuffed in Offer for Time Warner

By ANDREW ROSS SORKIN and MICHAEL J. DE LA MERCED

July 16, 2014 7:02 am

 The media giant 21st Century Fox, the empire run by Rupert Murdoch, made an $80 billion takeover bid in recent weeks for Time Warner Inc. but was rebuffed.

The bold approach could put Time Warner in play and might again ignite a reshaping of the media industry, prompting a new spate of mega-mergers among the nation’s largest entertainment companies.

Over nearly five decades, the 83-year-old deal-maker has built a global media juggernaut spanning studios, television channels and newspapers, in part, by pursuing bold deals that were often rebuffed at first by targets that would later acquiesce.

Time Warner on Wednesday confirmed that it had rejected a cash and stock offer from 21st Century Fox, saying that it was not in the company’s best interests.  The Time Warner statement said its own strategic plan would “create significantly more value.”  It also pointed to regulatory risks in a merger and what it said was “uncertainty” over the value of non-voting shares of 21st Century Fox. Unlike Time Warner, which has no controlling shareholder, 21st Century Fox is controlled by the Murdoch family, which has 39.4 percent of the voting rights of the Class B shares.

Time Warner said that  21st Century Fox  had offered 1.531 of its Class A non-voting common shares and $32.42 in cash for every Time Warner share — or a total of  nearly $86.30, a premium of roughly 22 percent to Time Warner’s closing price on Tuesday.

Earlier on Wednesday, 21st Century Fox also confirmed that it had made a formal offer to Time Warner last month.  ”The Time Warner board of directors declined to pursue our proposal,” the statement said. “We are not currently in any discussions with Time Warner.”

Together, 21st Century Fox and Time Warner would become a colossus with an array of television networks and channels like Fox, Fox News, FX, TNT and TBS; the premium subscription channel HBO, movie studios like 20th Century Fox, Warner Bros. and other prominent outlets. It would also combine Fox’s growing sports business with the broadcast rights that Time Warner owns for professional and college basketball and Major League Baseball, among other sports.

The combined company would have total revenue of $65 billion.

Shares of Time Warner were up more than 15 percent in midday trading on Wednesday.

Jeff Bewkes, chief of Time Warner, released a video explaining why the bid from 21st Century Fox was rejected.

As part of the proposal to buy Time Warner, people briefed on the proposal said, 21st Century Fox indicated that it would sell CNN to head off potential antitrust concerns since Fox News competes directly with CNN. Putting CNN on the auction block would likely stir up a bidding war for the news channel; both CBS and ABC, a unit of the Walt Disney Company, have long been viewed as interested suitors.

The takeover approach comes after Time Warner’s spinoff of its legacy print publications, a move that some analysts have said could spur the interest of potential bidders. Over the past several years, it has spun off AOL, Time Warner Cable and most recently publications like Time and Fortune, leaving an entertainment company that many analysts think would be an attractive asset. Mr. Murdoch’s empire has also  recently split,  with The Wall Street Journal, The New York Post,  the publisher HarperCollins and some other assets  forming News Corporation.