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Fox ‘will bid again for Time Warner’

Rupert Murdoch’s 21st Century Fox is expected to make an improved offer to buy out Time Warner after it emerged that its first bid, of US$80bn, was rejected earlier this month.

The mega-deal would have created an enormous media powerhouse made up of the Warner Bros and 20th Century Fox film studios as well as the respective companies’ TV networks, such as Fox, Fox News, FX, HBO, TNT, TBS and Cartoon Network.

However, both parties confirmed yesterday that on July 8 Time Warner had rejected the offer made by Fox in June.

Time Warner CEO Jeff Bewkes said yesterday that its board had decided such a deal would not be in the “best interests” of Time Warner or its shareholders.

“Continuing to execute our strategic plan and our business plans will create significantly more value for the company and our shareholders, and that’s superior to any proposal that Fox is in a position to offer,” Bewkes said.

Nevertheless, numerous commentators believe that despite Time Warner’s rebuttal and Fox’s emphasis that it is “not currently in any discussions with Time Warner,” Murdoch will inevitably make an improved offer.

“When Rupert moves, he usually moves successfully,” Sir Martin Sorrell, CEO and founder of global agency WPP, told Bloomberg Television yesterday.

“It would be very foolish to bet against him. So I would say the deal has a lot to offer. It creates a very powerful combination,” Sorrell added, pointing to the potential media company’s heady mix of US cable, sports rights, TV and film assets.

Moreover, Murdoch is open to improving the bid and “willing to go the extra mile to get deals done that are important to him,” Ken Griffin, CEO of hedge fund firm Citadel, which owns shares in Time Warner, told an investors’ conference yesterday.

Investors have said Fox will not only need to increase its bid above US$80bn but also improve its ratio of cash to stock in order to secure Time Warner, Reuters reported today.

The New York Times reported yesterday that the deal would have been made up of 40% cash and 60% stock, with Time Warner’s cable news network CNN being sold off to avoid a clash with Fox News.

The news comes at a time when Fox is already involved in two potentially massive consolidations: the takeover of Sky Italia and Sky Deutschland by BSkyB and a joint venture between Fox TV production subsidiary Shine Group, Endemol and Core Media Group.

Murdoch’s company is currently involved in talks to form a joint venture with Apollo Global Management that will bring Shine, Core and Endemol together to form one of the biggest production outfits in the world.

Tim Westcott, principal TV analyst at IHS Technology, said that although a Fox/Time Warner entity would have a “powerful library” of scripted and non-scripted formats, including 24, The Big Bang Theory, The Simpsons and MasterChef, there would also be a huge amount of duplication, given the competition between Endemol, Shine and Warner Bros’ production companies.

Last month Time Warner was reportedly close to finalising the purchase of a major stake in youth-skewing multimedia outfit Vice Media, in which 21st Century Fox took a 5% stake last year.

In Europe, UK satcaster BSkyB – 39% of which belongs to 21st Century Fox – is bidding to buy out 21st Century Fox’s stakes in Sky Deutschland and Sky Italia to create a pan-European pay TV business.

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