Stop me if you’ve heard this before, but another major media player is looking to merge with an equally powerful media player. At risk of being left out from the dance, 21st Century Fox chairman Rupert Murdoch made news this week by delivering an unsolicited $80 billion bid to Time Warner’s front doorstep.
Time Warner rejected the Aussie’s billion dollar advances, but analysts suggest Murdoch – who has a track record of chasing companies persistently until they give in – has every intention to continue his bold pursuit.
With a wink and a nod (and of course regulatory approval), a marriage between Fox and Time Warner would mark the biggest media deal in over a decade and the arrival of a sports giant that could finally unseat the long reign of ESPN as the worldwide leader in sports.
A NEW KING OF SPORTS?
Sports is at the forefront of a Fox-Time Warner pairing as it customarily has been with recent deals that involve cable, satellite or broadcasting companies.
In the purchase, Fox would gain the broadcasting rights to the NBA and NCAA basketball tournament – the prime assets of Time Warner properties TNT and TBS. Fox would also receive Time Warner’s rights to Major League Baseball and the PGA Championship.
Add that to the expansive menu of Fox’s current sport offerings – NFL, Major League Baseball, Nascar, College Football, College Basketball – and you’ve got a colossal monster that can command higher premiums for its networks and create a certifiable headache for cable/satellite operators overnight.
And for a guy who got his start in news, the kicker for Murdoch would be the acquisition of Bleacher Report – the second most popular sports site in America behind ESPN and a Time Warner property.
SLIM DOWN, BULK UP
Last year, Murdoch’s media empire News Corp spun off its publishing unit from its entertainment business in an effort to unpackage the company’s diverse offerings and consolidate value. The publishing unit retained the original name News Corp and today holds a market value of approximately $10.4 billion.
The new company, 21st Century Fox, is the entirety of News Corp’s entertainment business and includes the 20th Century Fox film studio, the Fox Broadcast network, Fox Sports regional broadcast networks, Fox Sports and Fox Deportes offerings – including its own ESPN rival Fox Sports 1 – and the Fox News Channel.
Just as soon as he shed assets, the opportunistic Murdoch went back into the ring to bulk up and bid for a company eight times the size of its old publishing arm.
MEDIA MERGER QUEUE
Maybe its blood in the water, the availability of cheap credit, or a “keeping up with the Joneses” paranoia that has compelled the media merger announcements of the past year. Regardless, it’s important to note that nothing is final – even if shareholders approve the deal – until regulators say its final.
Time Warner’s utilitarian cousin Time Warner Cable knows this concept all too well as the company awaits its $45.2 billion deal with Comcast to be approved by regulators before the two companies can merge and operate as one.
If you throw in the proposed $48.5 billion deal between AT&T and DirecTV, a $40 billion deal with Sprint and T-Mobile US, and net neutrality rules that are sure to shock the digital landscape, we could be looking at years before regulators can wrap their bureaucratic heads around this media backlog and give any sort of Fox-Time Warner deal the go-ahead.
Still, its fun to see an intrepid character like Murdoch join the party with an $80 billion entrance of his own – one that carries a nice, whole number that is no doubt impressive but just not enough to buy the biggest bundle of tulips this time around.