There are six billion reasons why 21st Century Fox surprised the media world on Tuesday by withdrawing its $85 a share bid for Time Warner, sources tell The Post.
Fox’s market cap had fallen by $6 billion since the July 15 offer — which would have been one of the biggest media mergers of all time.
That decline — plus the unexpectedly cool response from Time Warner CEO Jeff Bewkes and the rest of his board — led to the decision to withdraw the offer, sources told The Post.
Fox Chairman and Chief Executive Rupert Murdoch said he thought the combination of the two media giants was a “unique opportunity” to be pursued.
Bankers and other intermediaries had led Fox brass to believe that Bewkes would be receptive to at least a conversation about how the two would fit together, sources said.
However, Bewkes and the board refused to even entertain a conversation with Fox, according to sources.
Murdoch, in a statement, also mentioned “the reaction in our stock price” since the bid.
Fox shares fell 12 percent since the bid. They rallied 8.6 percent in after- hours trading Tuesday, to $34, following the news of the withdrawal — and the announcement by Fox that its board had approved a $6 billion stock buyback. They closed July 14, a day before the bid, at $35.54.
Time Warner shares fell as much as 12 percent in extended trading on Tuesday, to $75. They were trading at $71 a day before the Fox bid.
The surprise move by Fox, whose assets include film and TV studios, Fox News, broadcast TV channels and the newly created Fox Sports 1 cable channel, came just a day before both companies’ quarterly earnings reports — and sent Time Warner’s investor-relations script writers back to the drawing board.
Doug Kass, the chief of alternative asset management firm, SeaBreeze Partners, who isn’t tied to either Time Warner or Fox stock, told The Post this failed acquisition attempt feels like Comcast’s $54 billion bid for Disney in 2004.
“The aborted deal has surprised the markets because [Murdoch] typically has paid top dollar,” Kass said. “He may have just got religion.”
Indeed, sources say that from the outset, Fox had maintained it would be disciplined about its approach.
While much has been said about the reasons to merge, some Fox executives felt they didn’t need Time Warner to expand and could do just as well without it, sources said.
“[Murdoch] made the decision to bid and the decision to walk away,” another source familiar with the situation said. “He thought it was the right bid, and it was also clear it was the right thing to walk.”
Time Warner, in a statement, said it is “well-positioned for success” with its assets — including HBO, TBS, TNT, CNN and Warner Bros. studio.
Few see Fox returning with a sweeter bid, but such a move is possible.