Not surprisingly, Time Warner told analysts not to ask it about Fox’s now-dormant $80 billion bid on its earnings call today. Also not surprisingly, analysts asked about it anyway, even though they never said they were asking about it.

Instead, analysts asked CEO Jeff Bewkes, in several different ways, to explain why he rejected the deal. One analyst, for instance, asked him to point out why he thought Time Warner was undervalued — that is, why he thought Rupert Murdoch’s $85-a-share bid was too low.

Another asked him about his take on big media mergers in general. Here’s Bewkes’s response in full. If you like succinct versions, try my translation: There’s really no point in us buying a bigco or being bought by a bigco, because we’re really big, and those deals are a mess. But never say never!

“I think we’ve said, and I think it’s pretty clear, we’ve got leading scale in all of our businesses. So we’re not sub-scale. We’re not lacking something that we need. And the next question is — not that it’s ever a bad thing, necessarily — what would bring either complementary fill-ins, maybe more scale in a given case, maybe more efficiencies and elimination of redundancies. Those things are all fine.

But when you’re looking at any particular case, you have to look at what kind of scale you’re adding. Let’s look at Time Warner. On the studio side, we’re the biggest movie producer and distributor in the world. We’re the biggest producer and distributor of series in the world. We have the biggest supply relations with American broadcast networks of anybody in the world. So if you take that, and you consider any number of other companies that do the same thing, you’d have to ask, “Is it a good idea, does it add operating benefits, or doesn’t it?”

[On] the network side: You’ve got the biggest network group — we’re second to nobody in the world. And we’ve got very strong networks. If you look at the Turner networks — four of them are 85 percent of our business. Basically, the Turner networks don’t have any weak sisters in the group. If you look at HBO, together with Turner, it’s an extremely strong network group.

If you then say, well alright, let’s look at other networks around the world — which ones would improve the operating capabilities, or the leverage, or the programming capability, or the distribution and marketing capability, in an already strong group of networks?

You can make cases, depending on the hypothetical, of which networks would help. You can also look at networks which are not so strong, which would not help. So you basically look at it that way.

And if you take a big combination — and I’m not speaking of any particular one — there are always a number of issues. There are benefits, and there are risks to making any kind of combination like that. There’s also the factor of business interruption, regulatory scrutiny and timing that comes into play.

So I would just encourage everybody, because you’re all looking at these kind of things, in more than one case, to look at all sides of the issue, when you’re contemplating the benefits and the risks of putting very large companies together.”




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