News hit Wall Street Wednesday of 21st Century Fox media magnate Rupert Murdoch’s failed $80 billion bid to buy Time Warner Inc., and gurus are declaring open season on the world’s largest media conglomerate, and third-largest broadcasting and cable company.
Time Warner confirmed Wednesday its rejection of Murdoch’s cash and stock offer, and said it was not in the company’s best interest, due to “uncertainty” over 21st Century Fox’s stock worth and regulatory risks.
“The Time Warner board of directors declined to pursue our proposal,” a statement from Fox said in a New York Times report. “We are not currently in any discussions with Time Warner.”
Fox reportedly offered to pick up all of Time Warner’s outstanding shares for a combined 1.531 of common, non-voting Fox shares, and $32.42 in cash per share — a total of almost $86.30 per share.
Had the deal gone through, the company would have sported a combined $65 billion in total revenue, and brought networks, channels and movie studios including HBO, Fox, Fox News, FX, TNT, TBS, 20th Century Fox and Warner Bros. all under one roof. Sources briefed on the deal said 21st Century Fox would sell CNN to avoid potential antitrust violations.
Time Warner shares were up 20 percent prior to the opening bell in response to the news.
“It seems as though Time Warner has moved from ‘in play conceptually’ to ‘in play for real,’” Nuveen Investments’ Bob Doll told Business Insider Wednesday. “Anyone who has had a passing or long term interest now has to decide whether to entertain getting involved, or potentially pass forever.”
Gurus on Wall Street speculate the mega offer could set off a round of major-media mergers that would reshape the media and entertainment industry, fostering strong growth after the years of economic stagnation resulting from the housing and financial crisis that began in 2007.
“This talk buttressses the view that our ‘less fear, more confidence’ theme for 2014 is correct,” Doll said.
Hedge fund billionaire Ken Griffin of the Citadel Investment Group told the CNBC Delivering Alpha Conference Wednesday that a deal between the two “makes a lot of sense,” in that both companies have “great assets” that would benefit each another. Citadel’s portfolio includes both 21st Century Fox and Time Warner.
“I think we’ll get to ‘yes,’” Griffin said.
Andrew Ross Sorkin, who reported the story for CNBC Wednesday, reportedly said Time Warner would be looking for something in the range of $100 per share, or about $94 billion, to entertain an offer.
Other media stocks including Discovery, NBC-owner Comcast and ABC-owner Disney were all up this morning in trading.