Tags: time warner | rupert murdoch | fox | media consolidation

Gabelli's Haverty: Murdoch's Time Warner Bid Is 'First Salvo of Media Consolidation'

By    |   Wednesday, 16 July 2014 01:31 PM

While Time Warner rejected 21st Century Fox's $80 billion bid for its competitor, the move may mark a seminal event in the evolution of media in the online/mobile age.

"This is basically the first salvo in a wave of media consolidation," Larry Haverty, associate portfolio manager of Gabelli Multimedia Trust, told CNBC. "The industry is ripe for consolidation."

Janney Montgomery analyst Tony Wible agrees. "It’s the ideal time" for content companies to merge, because "if you’re not buying now, there’s going to be fewer [companies] to buy in the future," he told MarketWatch.

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Haverty thinks a 21st Century Fox-Time Warner merger can get done. "I doubt there would be antitrust considerations," he said. Rupert Murdoch's 21st Century Fox said it would sell CNN to avoid anti-trust concerns about a hook-up between that network and Fox News.

Haverty's boss, Mario Gabelli, apparently is convinced that Time Warner will be bought, but not necessarily by 21st Century Fox. "Time Warner ....done deal ....question. Who will buyer be, price! Google Apple," he tweeted.

Hedge fund luminary Ken Griffin, CEO of Citadel, believes 21st Century Fox and Time Warner will likely join together. "We'll get to a yes," Griffin, who owns stakes in both companies, said at an investment conference in New York City Wednesday, MarketWatch reports.

The idea of a merger between the two companies didn't come as a complete surprise to industry analysts. "However improbable it may seem, one cannot overlook this megadeal given its immense financial benefits that dovetail with a number of strategic benefits," Wible said last month, according to The Wall Street Journal.

Meanwhile, former Time Warner CEO Gerald Levin told CNBC that Murdoch's move represents "part of the digital disruption" of media.

"Even though content is normally king, the new age of the Googles, the Amazons, the Apples, the Netflixes all suggest that you have to be very entrepreneurial, and most importantly, try and redefine your company," he said.

The issue comes down to management, Levin said. "The ability to manage a combination. It's not just about blue-chip assets. That's another lesson from AOL-Time Warner."

He was referring to the disastrous $164 billion merger between Time Warner and AOL in 2001.

Analysts agree that an acquisition of Time Warner would benefit 21st Century Fox. "[It] would be good deal for Fox if it goes through Washington [regulators] with CNN's sale," Wunderlich Securities analyst Matthew Harrigan told Reuters.

Brett Harriss, an analyst at Gabelli & Co., told Bloomberg, "Having more cable networks would give them more negotiating leverage with distributors." Murdoch's company would "get the Ebitda [earnings before interest, taxes, depreciation and amortization], they get the cash flow and business, they take billions of dollars of synergies," he said.

Viacom could be the next big media takeover target, Wible said. CBS is looking for a cable network, and a reunification with Viacom would be CBS' best move, he said. The two companies split in 2006.

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While Time Warner rejected Twenty-First Century Fox's $80 billion bid for its competitor, the move may mark a seminal event in the evolution of media in the online/mobile age.
time warner, rupert murdoch, fox, media consolidation
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2014-31-16
Wednesday, 16 July 2014 01:31 PM
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