The insatiable Rupert Murdoch
July 16, 2014 7:41 AM   Subscribe

Twenty-First Century Fox Inc. is willing to pay more than $85 a share for Time Warner Inc., reports Bloomberg News, which deems it "a sign Rupert Murdoch is undeterred after being rebuffed in an initial offer... To appease antitrust regulators, the companies would sell CNN...since Fox already has Fox News." Murdoch's rationale: "A Fox-Time Warner deal should be allowed to go through given consolidation in the cable industry, including the proposed deal to combine Comcast and Time Warner Cable."

The first approach was in early June of this year. The $85/share offer represented "a roughly 25 percent premium to Time Warner's stock price... While the talks between Fox and Time Warner have thus far been considered friendly, people involved in the discussions said that Mr. Murdoch is determined to buy Time Warner and is unlikely to walk away."

NYT: "Together, 21st Century Fox and Time Warner would become a colossus with an array of television networks and channels like Fox, Fox News, FX, TNT and TBS; the premium subscription channel HBO, movie studios like 20th Century Fox, Warner Bros. and other prominent outlets. It would also combine Fox’s growing sports business with the broadcast rights that Time Warner owns for professional and college basketball and Major League Baseball, among other sports. The combined company would have total revenue of $65 billion."

It's certainly not the first time Murdoch has tried to duck antitrust regulation. He previously received FCC waivers in 1995 and 2001. Later, in 2007, "News Corporation paid $5.6 billion for Dow Jones & Company, publisher of The Wall Street Journal. That deal was not subject to F.C.C. cross-ownership rules because The Journal is considered a national newspaper."
posted by GrammarMoses (67 comments total) 12 users marked this as a favorite
 
To appease antitrust regulators, the companies would sell CNN...since Fox already has Fox News.

That's big of them.
posted by Iridic at 7:46 AM on July 16, 2014 [4 favorites]


moguls gonna mogul
posted by (Arsenio) Hall and (Warren) Oates at 7:47 AM on July 16, 2014 [5 favorites]


I love how they're citing the outrageous Comcast/TWC deal as justification.
posted by GrammarMoses at 7:48 AM on July 16, 2014


When the merger frenzy is complete and the world is down to three corporations, they will be renamed Eurasia, Eastasia and Oceania.
posted by delfin at 7:50 AM on July 16, 2014 [35 favorites]


Eventually the company will be renamed Warner Time Fox.
posted by blue_beetle at 7:51 AM on July 16, 2014 [29 favorites]


The cyberpunk dystopia progresses as the zaibatsu continue to take over.
posted by RobotVoodooPower at 7:55 AM on July 16, 2014 [3 favorites]


It would be interesting to know the total viewership share the TV biz would have post merger.

Course this could just be two garbage fires poured into one dumpster.
posted by JPD at 7:58 AM on July 16, 2014 [2 favorites]


Can we please freaking rename either Time Warner, Inc or Time Warner Cable, FFS?
posted by Rock Steady at 7:59 AM on July 16, 2014 [2 favorites]


Hey, remember when there used to be laws against monopolies?

Of course you don't.
posted by tommasz at 7:59 AM on July 16, 2014 [21 favorites]


Can we please freaking rename either Time Warner, Inc or Time Warner Cable, FFS?

Not to mention the unrelated corporate giant Warner Music Group.
posted by Sys Rq at 8:05 AM on July 16, 2014 [1 favorite]


Can we please freaking rename either Time Warner, Inc or Time Warner Cable, FFS?

That's in progress as we speak.
posted by Talez at 8:05 AM on July 16, 2014


(Which brings up the issue of the recent 21st Century Fox/News Corporation 'split'...)
posted by Sys Rq at 8:06 AM on July 16, 2014


When the merger frenzy is complete and the world is down to three corporations, they will be renamed Eurasia, Eastasia and Oceania.

We have always gotten our news from ComFoxWarTim Service Co!
posted by GenjiandProust at 8:06 AM on July 16, 2014


And in the future, the time travellers will be coming back to kill Murdoch.
posted by Catblack at 8:07 AM on July 16, 2014 [2 favorites]


"consolidation"

For you, the American public:
.
posted by Big_B at 8:09 AM on July 16, 2014 [2 favorites]


ComFoxWarTim Service Co

I would approve if Tim Hortons bought Time Warner.
posted by goethean at 8:09 AM on July 16, 2014 [4 favorites]


No thank you.
posted by boo_radley at 8:13 AM on July 16, 2014 [1 favorite]


Time Warner Fox?

Warm Free Toxin
posted by griphus at 8:14 AM on July 16, 2014 [5 favorites]


TimeFox sounds a bit like a third-string platformer from the early 90s.
posted by GenjiandProust at 8:18 AM on July 16, 2014 [12 favorites]


Oh, dear god, no.

No no no no no no no no no no no.

I don't have enough nos.
posted by feckless fecal fear mongering at 8:19 AM on July 16, 2014 [5 favorites]


I don't understand these big mergers and aquisitions at all. Do investors really think they'll make money on this deal? Has any investor ever made any money by merging with Warner? Is this any reason for this deal other than Murdoch's meglomaniacal desire for power and empire building? Why do investors keep supporting him?
posted by 1970s Antihero at 8:19 AM on July 16, 2014


Excellent use of the fuckthisguy tag!
posted by tonycpsu at 8:19 AM on July 16, 2014 [4 favorites]


Together, 21st Century Fox and Time Warner would become a colossus with an array of television networks and channels

Lol. Way to invest in the future, Rupe.

Honestly, I'm kind of rooting for this merger and successive mergers if it means Rupert Murdoch ends up owning a worthless monopoly in a dead industry.
posted by Sys Rq at 8:22 AM on July 16, 2014 [4 favorites]


Talez: That's in progress as we speak.

They'll probably name the merged company WarnerCast just to continue their confusing BS.
posted by Rock Steady at 8:26 AM on July 16, 2014


TV is faaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaar from dead. It's not even on life support. It's not in the ER.

Maybe it's been sneezing and coughing a bit lately, but the death of TV is a generation away, at least.
posted by feckless fecal fear mongering at 8:26 AM on July 16, 2014 [3 favorites]


Its not dead but the audience is fragmenting at the drop of a hat - which means the economics of cable channels are getting worse. Not only that but because Sports is like the one thing that keeps people tuned in to big channels, rights fees are going through the roof - clawing some of that money to the sports leagues.
posted by JPD at 8:29 AM on July 16, 2014 [1 favorite]


I think you mean the internet-savvy part of the audience is fragmenting. Middle America (and much of Canada, for that matter) isn't fragmenting at all. They're the people still watching reruns of HIMYM and Everybody Loves Raymond and fucking Honey Boo Boo and StoreShippingWars etc.

But we're getting off the main topic, which is Fuck Rupert Murdoch In The Ear Because He Is The Midas Of Shit.
posted by feckless fecal fear mongering at 8:32 AM on July 16, 2014 [6 favorites]


Is this something I'd need to own a television monopoly to understand?
posted by Celsius1414 at 8:36 AM on July 16, 2014 [6 favorites]


I think you mean the internet-savvy part of the audience is fragmenting. Middle America (and much of Canada, for that matter) isn't fragmenting at all. They're the people still watching reruns of HIMYM and Everybody Loves Raymond and fucking Honey Boo Boo and StoreShippingWars etc.

Nope. Look at the ratings. And the internet savviness of the audience is only increasing.
posted by JPD at 8:41 AM on July 16, 2014 [1 favorite]


We should reject this merger because of the proposed job cuts. Destroying thousands of jobs so a handful of news corp execs can pad their bonuses is not in the public interest.
posted by humanfont at 8:41 AM on July 16, 2014 [1 favorite]


We should reject this merger because of the proposed job cuts. Destroying thousands of jobs so a handful of news corp execs can pad their bonuses is not in the public interest.

You do know that legally the government can't do this right?
posted by JPD at 8:42 AM on July 16, 2014 [1 favorite]


Ratings have dropped somewhat, yes. But, well, reality disagrees with you.
posted by feckless fecal fear mongering at 8:44 AM on July 16, 2014


You do know that legally the government can't do this right?

Why? If Nixon can issue an executive order freezing all retail prices in the nation, why can't the government reject a merger it has explicit authority to approve?
posted by saulgoodman at 8:46 AM on July 16, 2014


I think you mean the internet-savvy part of the audience is fragmenting. Middle America (and much of Canada, for that matter) isn't fragmenting at all. They're the people still watching reruns of HIMYM and Everybody Loves Raymond and fucking Honey Boo Boo and StoreShippingWars etc.

As I noted in my FPP about an old Seinfeld thing last week, in 1991, an episode pulled in 13 million viewers, which was low enough for NBC to put the show on an immediate two-month hiatus. Pulling in 13 million viewers in the 2013-14 season would put a show in the Top Ten. There are 70 million more people in the U.S. now than there were in 1991. If the audience isn't fragmenting, then it's just disappearing. Middle America gets pretty much the same cable package as the coasts these days, and the same Internet.
posted by Etrigan at 8:46 AM on July 16, 2014 [9 favorites]


I know these things. /derail.
posted by feckless fecal fear mongering at 8:48 AM on July 16, 2014


Splitting all these merged companies up again is going to be such a hassle in ten years.
posted by Slackermagee at 8:50 AM on July 16, 2014 [4 favorites]


The US government has a variety of legsl options it can pursue should it decide to block any merger of this scalem. They might not prevail in court but they can tie things up for decades if they want to. Economic impact and the national interest are valid reasons used in the past to block mergers.
posted by humanfont at 8:52 AM on July 16, 2014 [1 favorite]


Why? If Nixon can issue an executive order freezing all retail prices in the nation, why can't the government reject a merger it has explicit authority to approve?

He explicitly had the authority to create price controls from a law passed in 1970.
posted by JPD at 8:53 AM on July 16, 2014 [1 favorite]


Economic impact and the national interest are valid reasons used in the past to block mergers.

national interest is interpreted as a security interest - and yeah that can be used very broadly - but this broadly? I can't think of a deal shot down for economic impact. The FTC and the FCC have always had the ability to shoot down a deal like this of course.

And any of those things would be open to the courts for a challenge. And you don't have legal grounds for "they are going to fire a lot of people" as a reason to block a deal.
posted by JPD at 8:55 AM on July 16, 2014 [1 favorite]


He explicitly had the authority to create price controls from a law passed in 1970.

The FTC explicitly (meaning, in this case, as defined in the original legislation that created it) has all sorts of broad authority for dealing with monopolies and anti-competitive practices, but the courts have constrained and limited those powers through a patchwork of decisions that limit their authority. I consider those decisions legal errors, so from my POV, the legal authority's still there, just obstructed.
posted by saulgoodman at 9:00 AM on July 16, 2014


Yeah - read what I said. The FTC can absolutely shoot the deal down for anti-competitive reasons. But never could shoot down a deal because of job losses even at its peak.
posted by JPD at 9:03 AM on July 16, 2014


This deal is more than anything about making HBOgo into a key player in what is now the Netflix - Amazon - Hulu streaming triopoly with the addition of the Fox and Warner libraries when their NFLZ, AMZN and Hulu deals expire, and providing a sufficient base of sports and event content to make live programming a meaningful addition to it.

Murdoch may be old be he knows that linear television is going away and intends to be a survivor.
posted by MattD at 9:03 AM on July 16, 2014 [1 favorite]


Well, why not? We have too many players anyways.

/hamburger.
posted by nubs at 9:05 AM on July 16, 2014 [1 favorite]


And this previously seems relevant.
posted by nubs at 9:08 AM on July 16, 2014 [1 favorite]


But never could shoot down a deal because of job losses even at its peak.

I disagree because I believe there's an inherent power to regulate in the public interest, and because corporations are purely a species of legal formality whose existence is at the pleasure of the state, and I think there have even been some supreme courts that would have agreed in the past, but I concede that the law as currently formulated and interpreted by the courts doesn't explicitly empower the FTC to take common sense steps to protect the public interest like denying a merger because it would be too economically harmful to the public.
posted by saulgoodman at 9:14 AM on July 16, 2014 [1 favorite]


This deal is more than anything about making HBOgo into a key player in what is now the Netflix - Amazon - Hulu streaming triopoly

I don't think so. If that's what they're going for, they could buy out Amazon or Netflix for 1/1000th of the price.
posted by Sys Rq at 9:14 AM on July 16, 2014


God why won't he just hurry up and DIE already?
posted by sexyrobot at 9:19 AM on July 16, 2014


I never thought I'd say this, but I miss Ted Turner.
posted by valkane at 9:22 AM on July 16, 2014 [4 favorites]


Let's just have one giant combined cable/internet provider company in America, that way everyone will have the exact same shitty service at Fast Speeds (TM), which will lead to huge innovations in profit margins, which are great for consumers because reasons and Robert Bork said so. And remember when everyone loved Bell Telephone, they gave perfectly great service, with the most cutting edge innovations at perfectly reasonable prices, and nothing bad ever happened at all? Time Cable Company will be just like that, only wildly more profitable for its benevolent billiontrillionare owner.
posted by T.D. Strange at 9:24 AM on July 16, 2014


I disagree because I believe there's an inherent power....

There's not. Congress could, if it wanted, make job loss grounds for rejection of a merger, but it has not done so. The FTC etal are Congressional creations and can do only what Congress has said it can do.
posted by jpe at 9:37 AM on July 16, 2014


Just a couple years ago I was thinking "Boy aren't I lucky to move into an area where I don't have Comcast! I just hope nothing bad happens to Time-Warner!"

...
posted by RobotVoodooPower at 9:38 AM on July 16, 2014


Pulling in 13 million viewers in the 2013-14 season would put a show in the Top Ten.

For reference's sake, Pewdiepie, the top video maker on Youtube, does about 14m views per day, just about every day of the year.

This is on three or four 1/2 hour segments, with a world-wide audience, but still. Minecraft and COD videos have huge reach now, and are among the fastest growing channels on the 'Tubes.
posted by bonehead at 9:50 AM on July 16, 2014 [1 favorite]


There's not. Congress could, if it wanted, make job loss grounds for rejection of a merger, but it has not done so. The FTC etal are Congressional creations and can do only what Congress has said it can do.

Yes, but it's how the courts have interpreted what congress authorized them to do that's the sticking point for me. The whole big point of anti-trust regulations was to empower the federal government to weigh the potential economic harm to the public interest of corporate consolidation. Since this is the overarching principle under which the FTC was established, my own view is that they're authorized to do whatever's necessary to achieve their mission and the courts should be extremely reluctant to limit or constrain that authority. I personally believe in principles based legal reasoning, not rules based legal reasoning (see here for a discussion of the distinction between the two approaches as applied in accounting). So to me, if a higher-level statement of authority in law logically implies a lower-level power, then that power is already implied. But I'll admit that's not the view of legal reasoning preferred in the US at this point in time, so it doesn't really matter in practice what I think.
posted by saulgoodman at 10:07 AM on July 16, 2014


I don't understand these big mergers and aquisitions at all. Do investors really think they'll make money on this deal? Has any investor ever made any money by merging with Warner? Is this any reason for this deal other than Murdoch's meglomaniacal desire for power and empire building? Why do investors keep supporting him?

Largely, these deals are about owning brands and "customer goodwill". A lot of money changes hands; the takeover target is reassured that their company will be nicely nurtured by the buyer, but within 12-24 months redundant employees (in a merger this large, often in the many thousands) are terminated. Also, the efficiencies and advantages pushed by PR teams who promote the merger almost never materialize.

And, as always, people at the top - both in the buying organization and the target - are handsomely rewarded.
posted by Vibrissae at 10:44 AM on July 16, 2014 [2 favorites]


It's okay as long as Murdoch really promised this time not to interfere with editorial content.
posted by dances_with_sneetches at 10:55 AM on July 16, 2014 [2 favorites]


I think you mean the internet-savvy part of the audience is fragmenting.

On NPR yesterday, Tim Kurkijian was in the Twin Cities for the Major League Baseball All-Star Game. The newscaster asked him about the decline in the audience for the game, and Kurkjian agreed.

He said that maybe half of the 30- to 40 million people in the TV audience have fallen away over the past "thirty or forty years," and then blamed it on the disappearance of player loyalty to AL/NL, and to the availability of so much baseball to watch now.

I think that his first point is debatable as a prime mover, but the cornucopia of programming choices really has shrunk the per-show viewership even as it broadened the pool of viewing that's going on.

tl;dr This might be the old "Sorry about your business model" line.
posted by wenestvedt at 11:15 AM on July 16, 2014


Probably the best M&A deal of all time was in merging with Time Warner -- when AOL shareholders got a stake in Time Warner and Time Inc. worth about $45 billion today by contributing assets that are worth about $3 billion today, and that's disregarding their 55% share of 14 years of dividends virtually of which were funded from the legacy Time Warner assets.

Murdoch doesn't want to buy Netflix or Amazon because being one of the Big 3 or Big 4 in streaming when it all settles down is going to be about about content. The technology platform is fairly trivial.

Each of the Big 3 or 4 will have a large block of exclusive archival entertainment and new entertainment and sports content, and you will have to subscribe to each, along with two providers of broadband (one wireline, one wireless). The libraries of the Fox and Warner Brothers studios (features and TV shows whose streaming rights weren't not sold to other networks), the HBO and Fox television networks, and the sports assets and new shows of Fox and Warner -- is more than enough to be one of the new Big 3 / Big 4.

Netflix and Amazon will get into the Big 3 or Big 4 by merging with content themselves -- Paramount, CBS (or Paramount/CBS if you assume still under common control), Sony/Columbia, Disney/ESPN/ABC, Universal/NBC, and the little guys who are driving a lot of the streaming viewership -- Lion's Gate, AMC, BBC, etc.
posted by MattD at 11:22 AM on July 16, 2014 [2 favorites]


I don't understand these big mergers and aquisitions at all. Do investors really think they'll make money on this deal? ... Is this any reason for this deal other than Murdoch's meglomaniacal desire for power and empire building?

Actually, there have been a number of big deals lately where an American firm and a foreign firm merge, in a deal called an "inversion," in order to move the U.S. company offshore.

The recent Medtronic/Covidien deal [NPR] lets the American firm, Medtronic, now pay the lower Irish corporate taxes that its Dublin-based partner is subject to. (Whether you think they will do so any more willingly than they did when they were in Minnesota is your own thing.) Sometimes the American firm is bigger, but it "turns itself inside out" so that the smaller firm "survives" the deal.

FTFA:
The move is a tax-saving strategy called an inversion and it's growing more common in the corporate world.

U.S. companies make huge amounts of money overseas every year and much of it stays there, stashed away in foreign accounts.

"They have billions and billions of dollars offshore and they're generating billions and billions more each year," says Martin Sullivan, chief economist at the nonprofit firm Tax Analysts.

He says the problem is a quirk in the tax code. American companies can make all the money they want overseas, but once they bring the money back home they have to pay U.S. taxes. And the official U.S. corporate tax rate, before deductions and exemptions, is high compared with other industrialized countries.

"We've created this crazy system where instead of taxing profits when they are earned we only tax them when they are brought back home," Sullivan says. "Therefore, there's a tremendous disincentive to bring the money back home."
posted by wenestvedt at 11:24 AM on July 16, 2014 [1 favorite]


One more step closer to the monoculture.




I never thought I'd say this, but I miss Ted Turner.

CAPTAIN PLANET!!!!
posted by daq at 11:44 AM on July 16, 2014


Murdoch doesn't want to buy Netflix or Amazon

Could Murdoch buy Amazon? Like is enough voting stock available that he could obtain a controlling interest somehow? I thought Bezos had that shit locked up.
posted by Lentrohamsanin at 12:02 PM on July 16, 2014


American companies can make all the money they want overseas, but once they bring the money back home they have to pay U.S. taxes.

So there's a damned if you do/damned if you don't thing here? Seems to me that if American firms weren't allowed to do this, as in make money overseas essentially tax free, they'd just move overseas, yeah? Am I understanding this rock and hard place correctly?
posted by feckless fecal fear mongering at 1:30 PM on July 16, 2014


Yeah - that's basically what happens - but you can't just move. If you just move it creates a taxable gain for your shareholders - usually a very big one related to arcane accounting rules that makes it generally not worth it.

What these inversion deals are is guys have figured out how to structure a reverse takeover that allows them move out of the country w/o triggering the capital gains thing. The is especially attractive for Pharma because they can move the IP outside of the US and make the US ops look like the generate very little to no profit.

The other issue is US domiciled companies that generate lots of profits outside of the US - if they try to repatriate the money to pay dividends and I think buy back stock that would also trigger taxes.
posted by JPD at 2:03 PM on July 16, 2014


One silly question, TimeWarner just split off its publishing entities as Time Inc. (just like NewsCorp split off 21stCenturyFox). So why is it still called TimeWarner? To make it easier to just paste "Fox" over the first part of the name when changing signs?

Still, there are too few surviving Big Movie Studios already (Columbia, Disney, Fox, Paramount, Universal, Warner). And Warner's only Broadcast presence (as opposed to cable TV) is half of the CW, shared with CBS... this would make for some deeply strange bedfellows at the home of "Supernatural" (and just make CBS sorrier it split with Viacom a few years back). Not a merger made in anyone's heaven, especially with the recent UN-mergers in the Entertainment sector (noted above). Leave World Domination to Comcast, please.
posted by oneswellfoop at 3:26 PM on July 16, 2014


Has any investor ever made any money by merging with Warner?

Don't know about M&A but TWX was up enough on the news that it's a steak night around here.

Thanks Rupert!
posted by spitbull at 6:12 PM on July 16, 2014


One silly question, TimeWarner just split off its publishing entities as Time Inc. (just like NewsCorp split off 21stCenturyFox). So why is it still called TimeWarner?

I think they probably just don't want to pay for new letterhead.

Adding to the confusion is that Time Warner also spun off Time Life (which includes neither Time nor Life) in 2003.

There's very nearly as much "Time Warner" outside of Time Warner as inside it. I almost wonder if Murdoch might have an inflated sense of what he's trying to buy into.
posted by Sys Rq at 6:50 PM on July 16, 2014


Viacom and CBS are subsidiaries of National Amusements. They are seperate companies, but the control is all in the hands of the Redstones.
posted by humanfont at 7:21 PM on July 16, 2014


To appease antitrust regulators, the companies would sell CNN...since Fox already has Fox News.

Well, since CNN is trying to be Fox Lite, that would make them kind of redundant...
posted by SisterHavana at 9:55 PM on July 16, 2014


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