Rupert Murdoch's Twenty-First Century Fox Inc is expected to
make an aggressive case for merging with Time Warner Inc during its
quarterly earnings call on Wednesday, though people familiar with the
company's plans have said it would not use that forum to raise its bid.
Time Warner is due to report its financial results on
Wednesday as well, marking the first time executives from both companies will
publicly speak since the offer was first revealed on July 16. It will be an
opportunity for Time Warner's Chief Executive to defend his record for
shareholder value. Fox's Chief Operating Officers will have the chance to
discuss the more than $1 billion in cost savings and powerful combination of
cable networks and sports programming.
Fox has offered to buy Time Warner for about $80 billion, or
about $85 per share, in a mix of cash and stock. Time Warner turned it down,
saying its plan to go it alone "is superior to any proposal" from
Though Fox is expected to raise its offer it will not rise
beyond the range of $90 to $95 per share. The timing of another offer is
unclear. Some analysts have said that an even higher bid would be needed to win
over Time Warner management and shareholders.
A potential tie-up would create one of the world's largest
media conglomerates, dominating content production with two major studios, a
stable of cable networks like Fox News and TNT, broadcast networks and pay-TV
Faced with a rash of media distribution mergers, such as
Comcast Corp's proposed $45 billion takeover of Time Warner Cable and
AT&T's $48.5 billion deal to buy DirecTV, programming creators are
responding with their own potential deals to add clout for negotiations with
cable and satellite distributors and new entrants like Netflix and
Analysts believe it would be in the interest of both
companies to ink a deal. With a backdrop of a rebuffed deal, Time Warner will be
on the hook to explain why it is better off going solo.
According to Thomson Reuters data, Time Warner has outpaced
its peers with 15.2 percent earnings per share growth for the past 5
years, nearly double the median for its competitors. For now, there does not
seem to be an alternative bidder.
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