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If Time Warner doesn’t want to sell to Fox, then Fox isn’t going to buy Time Warner.
So says Fox, announcing that it has withdrawn its $80 billion bid for the TV and movie conglomerate. In a statement, 21st Century Fox CEO Rupert Murdoch says what people around his company have been saying for a couple weeks: That Time Warner CEO Jeff Bewkes wouldn’t sit down and negotiate with them, and that they weren’t going to negotiate with themselves.
Instead of spending money on Time Warner, Murdoch says, he’s going to spend another $6 billion buying back his own stock.
The big question is whether Time Warner is truly out of play now, or if Murdoch, who had been eyeing the company for a long time, has another move.
For now, Wall Street is taking Murdoch at his word, and Time Warner shares, which had inflated after Murdoch’s offer became public, are tanking. Which is what Murdoch would have expected, and may be the start of a longer game.
Money graph from Murdoch and company:
“We viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands. Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly. However, Time Warner management and its Board refused to engage with us to explore an offer which was highly compelling. Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders. These factors, coupled with our commitment to be both disciplined in our approach to the combination and focused on delivering value for the Fox shareholders, has led us to withdraw our offer.”
The near-term impact of Murdoch’s announcement is that Time Warner’s and Fox’s earnings calls, both scheduled for tomorrow, are going to be considerably less dramatic. Both companies were expected to make their pro- and anti-merger case to investors — or at a minimum, signal their real intentions — and now that is moot, at least temporarily.
Instead, Bewkes will need to convince investors that he did the right thing by rejecting Murdoch’s cash, and that he can build up the value of his company on his own. And Murdoch and his lieutenants, who have been relatively disciplined in recent years, will need to convince investors that they’re not going to lurch after another deal because they couldn’t land this one.
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