The Deal Is Off Between Fox and Time Warner

21st Century Fox withdraws offer to buy out TWX

That was abrupt: 21st Century Fox today withdrew its long-discussed bid to acquire a controlling interest in Time Warner Entertainment, a megamerger that would have made the resulting entity so big even noted takeover artist John Malone said the deal “just raises all kinds of consolidation, monopsony, and market power issues" at his company Liberty Media's annual meeting on Monday.

More than that, Time Warner itself rebuffed the bid yesterday, causing speculation that Fox would press its attack throughout this week.


"We viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands. Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly," said chairman and CEO Rupert Murdoch in a statement distributed to press. "However, Time Warner management and its Board refused to engage with us to explore an offer which was highly compelling. Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders. These factors, coupled with our commitment to be both disciplined in our approach to the combination and focused on delivering value for the Fox shareholders, has led us to withdraw our offer."

It's a big shift in the conversation around media consolidation and Time Warner in particular—publicy-traded media companies are looking more and more to buyouts as market shares stagnate, but this merger, which looked like it would be beneficial (too beneficial, in the opinion of Malone and many others) to both parties ended up running aground on issues of pricing and share price. The offer made by Fox was for $85 per share, or about $80 billion overall.

To be sure, the merger would have created some strange bedfellows—Time Warner owns CNN, Fox owns Fox News. Time Warner owns HBO, Fox owns FX. The competition between internal brands seems like a potential factor, but Fox did promise an overall annual cost savings of $1 billion annually—music to any shareholder's ears.

Predictably, Time Warner shares took a nosedive as the news hit the exchanges, just as the company's share price skyrocketed when the merger was first proposed in the middle of July.