As the dust settled following word of Time Warner, Inc.'s rejection of 21st Century Fox's $80-billion takeover bid, the general postgame conclusion has been that Fox chief Rupert Murdoch will undoubtedly circle back with a follow-up offer.
And that could go as high as $91 billion, based on the reaction of the respective company's stock prices Wednesday, July 16, the day the rejected proposal was publicly revealed and confirmed.
Investors drove up Time Warner stock 17 percent to $83.13 after Fox confirmed that it had made an offer for Time Warner, which owns key cable assets including HBO, TNT, TBS, Cartoon Network and CNN, as well as the powerful Warner Bros. TV and Warner Bros. Pictures studios.
"We believe this transaction makes strategic and financial sense--even at $100 a share," Marci Ryvicker, a senior media analyst with Wells Fargo Securities, wrote in a research note.
At $100 a share, the purchase price of Time Warner Inc. would approach $91 billion.
Shares for 21st Century Fox, meanwhile, only cratered 6 percent to $33, a sign, analyst say that investors are willing to go along with Murdoch's acquisition plan.
Evaluating the practical concerns of such a corporate marriage as they relate to regulatory approval, the combined asset would be of staggering size, particularly as it relates to cable TV programming. Time Warner would probably have to divest itself of CNN (a competitor of Fox News), as well as its 50 percent stake in the CW broadcast network (a competitor with Fox Broadcasting), but there are surprisingly few FCC roadblocks in the way (i.e., something like the 30 percent pay TV penetration rule currently facing Comcast/Time Warner Cable).
As the media and stock analysts continued to digest news of the proposed merger, The New York Times concluded that it was Time Warner Inc. CEO Jeff Bewkes' effective streamlining of the company's assets and operations that made it vulnerable to Murdoch--the old no-good-deed-goes-unpunished theory.
"While the offer from Fox may have been unsolicited and even unwanted, it represented a validation of Mr. Bewkes' stewardship of the company," the Times wrote. "Since taking over a struggling Time Warner at the start of 2008, he has carried out an ambitious turnaround strategy, methodically shedding Time Warner's noncore assets to transform the company from a sprawling media conglomerate into a pure entertainment entity."
Meanwhile, USA Today noted Murdoch's comeback from the infamous U.K. phone-hacking scandal that threatened to dismantle is empire just three years ago.
"It's also evidence of a stunning turnaround in Murdoch's fortunes since the summer of 2011, when a phone-hacking scandal involving one of his British newspapers threatened to topple the powerful media giant. And it's a reflection of the indomitable will that has characterized his remarkable career," the paper wrote.
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