Is Jeff Bewkes really going to fend off Rupert Murdoch’s advances? Or is a Time Warner/21st Century Fox deal inevitable, and the only question is price?

The way the Time Warner CEO responds to a single question this week may tell us the answer.

Since its blockbuster opening last month, the Time Warner/Fox saga has been relatively subdued. Bewkes rejected Murdoch’s $80 billion offer, and nothing has formally changed. All of the jousting has been happening behind the scenes.

That changes on Wednesday, when he’ll talk publicly to Wall Street, during the company’s Q2 earnings call.

A key question analysts and investors will be intensely interested in: Is Time Warner really willing to argue that it can’t sell to Fox because of antitrust concerns?

Bewkes and company raised the notion when they first rejected Rupert Murdoch’s answer on July 16, citing “regulatory risk” as one of the “considerable” reasons a deal wouldn’t work.

But since then they haven’t talked publicly about the perils of getting the deal through Washington, and haven’t pushed the notion very hard through proxies.

James Stewart grappled with the idea at length in the New York Times last week, but beyond that the idea hasn’t gotten much press play, either.

Time Warner has an obvious reason for not pushing the regulatory angle, at least out loud. If it does eventually end up taking Murdoch’s offer, it will want regulators to bless the deal, after all. Alternately, it may want the ability to take someone else’s offer, either now or in a couple of years, without having to walk back comments about the evils of media consolidation.

But Wall Street observers I’ve talked to say Bewkes is very likely to get a query about regulation and antitrust on Wednesday, and they’re very interested to see how he handles it.

If Bewkes, who is very good at talking around questions, talks around the question, investors may conclude that he’s still leaving the door slightly ajar for Murdoch. In that case, Time Warner’s stock may well continue to hover around the $84 mark, where it has been since the Murdoch offer became public.

But if he takes the bait and argues that merging with Fox really would cause all kinds of problems in Washington, then investors may well decide that Bewkes really doesn’t want to sell to Murdoch, or anyone else in the near future. And TWX could trade down quite quickly.




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