That’s (Not) All Folks!
Time Warner’s board may be saying no, but some of its shareholders are already signaling interest in a takeover approach from Rupert Murdoch’s 21st Century Fox.
Fox confirmed Wednesday that Time Warner had rejected an $80 billion bid for the owner of Warner Brothers studios, HBO and CNN — a combination that would reshape much of the US media landscape.
While Jeff Bewkes’ Time Warner turned aside the $85 a share offer, Fox may be forced to regroup and sweeten the offer to appeal to the media company’s institutional shareholders, sources said.
Time Warner shares jumped 17 percent on Wednesday, to $83.13, while Fox shares fell 4.6 percent to $32.57. The stock movements gave both Time Warner and Fox market caps of roughly $73 billion.
“They’ll start working on the common shareholders to appeal to the Time Warner board,” said one executive familiar with Fox’s thinking. “I’m sure they have a very sophisticated plan.”
Fox and Time Warner have 11 major shareholders in common. Together they account for 38.4 percent of Time Warner’s outstanding shares and 42.7 percent of Fox’s. Among them are Capital Group, BlackRock, JPMorgan Chase and Vanguard.
“The question is how do these people want to do this trade? They are trading into themselves. At what price do these guys feel they got a good trade?” said one person familiar with discussions.
“We have no problem taking Rupert’s offer,” said Mario Gabelli, chief executive of Gamco. “Essentially his vision over the next 10 years is about the growth of the middle class in China. Smartphones are giving them access to content.”
Gamco, formerly known as Gabelli Asset Management Co., holds 10 million Fox shares and 3.5 million to 4 million shares in Time Warner, Gabelli told The Post.
Ken Griffin, founder and CEO of Citadel, a $15 billion hedge fund, likes the idea, telling CNBC: “It’s going to get tough to say no.”
While few speculated at how much sweeter a bid would need to be to win over Time Warner, some media executives did say Fox may have to ante up more cash.
That might mean that Fox would have to bring in a partner to fund a bigger bid, other observers said.
There are no current talks between the two media giants, sources said.
The blockbuster news puts Time Warner and a host of other media companies into play, industry insiders agree.
It also had a positive effect on other firms likely to be part of a consolidation phase kicked off by John Malone’s Liberty Media’s failed pursuit of Time Warner Cable.
Among them, Discovery Communications rose 6.3 percent; Scripps Networks Interactive jumped 4.8 percent; AMC Networks gained 4.5 percent while CBS and Viacom increased 2.3 percent and 3.4 percent, respectively.
Many industry sources believe Bewkes has been prepping the company for a sale for some time given its decision to spin off TWC, AOL and Time Inc.