Rupert Murdoch attempted to add another brand to his massive collection of media companies. Murdoch offered $80 billion for a takeover of Time Warner Inc. However, Time Warner was not interested. They rejected the offer, and further negotiations do not appear to be happening.
Over the last fifty years, Murdoch has made it a mission to purchase the largest media companies in the world. Between News Corp. and 21st Century Fox, he owns a large portion of the most important publications, television programs, movies, and magazines in the world, including shining stars The Wall Street Journal, HarperCollins, and Dow Jones.
Had Murdoch been successful in purchasing Time Warner, the merger of 21st Century Fox and Time Warner would produce an entertainment giant with a revenue of $65 billion. As part of the proposal, the company would sell CNN, as CNN and Fox News are direct competitors.
Murdoch first began talks with Time Warner in early June, with a formal takeover offer coming in late June. The bid was about a 25 percent premium on Time Warner's stock price, although, pre-market trading boomed when this takeover attempt became public. The offer was 60 percent stock and 40 percent cash.
Time Warner's board did carefully consider the bid, discussing it at length, however the sent a "terse" rejection letter. Part of the issue was the type of stock offered. Murdoch's offer was made in nonvoting shares of 21st Century Fox. Fox is controlled by the Murdoch family, so there are two tiers of stock: voting and nonvoting. Nonvoting, of course, is less desirable.
While the board has initially rejected the offer, and negotiations are not ongoing, shareholders may now put pressure on the board to reconsider. Seventy percent of Time Warner shareholders are also 21st Century Fox shareholders. Murdoch also seems dead set on owning Time Warner. Goldman Sachs has been hired to advise 21st Century Fox in the deal, and Citigroup is advising Time Warner.
This article is from the archive of our partner The Wire.