Sorry, $80 billion isn't enough

[Bob Of Burleson]

Media Squeeze Fuels Fox Bid for Time Warner
Company Rejects $80 Billion Offer by Murdoch's 21st Century Fox;
Web Competition Weighs on Entertainment Firms

By Amol Sharma,
Dana Cimilluca
and Martin Peers
The Wall Street Journal

21st Century Fox FOX made a bold bid to acquire Time Warner Inc., a takeover that would put some of the world's best-known media brands under one roof—but which also faces formidable obstacles.

Fox made an $80 billion cash-and-stock offer that Time Warner rejected last week for reasons that included the price, said people familiar with the matter. The companies on Wednesday confirmed the offer.

The bid is likely more than a means for Fox to gain scale at a time when pay-TV distributors such as Comcast Corp. and AT&T Inc. are getting much bigger through their own acquisitions. Media moguls like Fox Chief Executive Rupert Murdoch are contemplating a more nuanced problem: How to assemble the right mix of assets—from broadcast channels and sports-television rights to international properties—to stay relevant as the media landscape undergoes tectonic shifts.

All big media companies are trying to find the magic formula that will inoculate them from the pressures that could come, for example, from customers cutting their pay-TV connections in greater numbers. And they are trying to position themselves to exploit, rather than be buffeted by, the growing viewership of content online and on mobile devices.

Fox offered 1.531 of its nonvoting shares and $32.42 in cash for each Time Warner share, Time Warner said in a statement. The deal initially valued Time Warner at $85 a share, according to people familiar with the matter, a premium of more than 20% to Time Warner's stock price at the time. Time Warner said that the offer isn't in its best interests and that its strategic plan "is superior to any proposal that Twenty-First Century Fox is in a position to offer."

The deal would reshape the media industry by adding Time Warner's lucrative cable channels—including HBO, TNT and TBS—to Fox's broadcast network and its highly profitable cable portfolio that includes Fox News channel.

MORE