Whatever Rupert Wants, Rupert Gets (and He Wants Time Warner)

A blog about business and economics.
July 16 2014 12:40 PM

Whatever Rupert Wants, Rupert Gets (and He Wants Time Warner)

173354427-media-mogul-rupert-murdoch-executive-chairman-of-news
Such a cuddly-looking media oligarch.

Photo by Kevork Djansezian/Getty Images

Rupert Murdoch is hunting again. The New York Times reports that Time Warner recently rejected an $80 billion takeover offer by 21st Century Fox, the media and entertainment conglomerate run by the world’s most feared Australian. If it were ever to happen, the deal would give rise to a beastly television and film business, with HBO, FX, TNT, TBS, Fox, 20th Century Fox, and Warner Bros. all suddenly crowded under one roof. To avoid antitrust issues, Time Warner would probably need to sell CNN to a potential bidder such as ABC or CBS, since the cable channel competes directly with Fox News. It’d be a small concession in the grand scheme of things.

At Business Insider, Jay Yarow argues that this bid is a response to consolidation in the cable and Internet industry, amid Comcast’s attempt to buy Time Warner Cable and AT&T’s acquisition of DirecTV.* Combining 21st Century Fox’s and Time Warner’s cable properties, the thinking goes, would give the merged company enough heft to bargain against the shrinking number of providers.

Advertisement

That said, I don’t think this move is completely defensive. Fears about cord-cutters aside, TV is still a handsomely profitable business, and a mega-merger of this sort could easily make it even more profitable. According to the Times, 21st Century Fox executives think the proposed tie-up would create about a $1 billion cost savings between the two companies, primarily by “cutting sales staff and back-office functions.” There's little reason to doubt that Murdoch and his team could find some efficiencies by firing people.

Beyond that, Murdoch is an empire builder, and a patient one. My guess is that, if he really desires Time Warner, he’ll eventually have it. It’s not as if Time Warner is controlled by a single, protective family as the Wall Street Journal was for many years—before Murdoch wooed the Bancrofts into selling. It is a normal public company, and as the Times notes, most of its shareholders already own stock in 21st Century Fox as well, so it seems unlikely that they'd object greatly to a management change. Meanwhile, 21st Century Fox is already offering Time Warner stockholders a reported 22 percent premium on their shares. If that’s the opening bid, at some point you might assume that the sheer volume of money being offered will pressure everybody into negotiating.

*Correction, July 16, 2014: This post originally misspelled DirecTV as DirectTV.

Jordan Weissmann is Slate's senior business and economics correspondent.

TODAY IN SLATE

Medical Examiner

The Most Terrifying Thing About Ebola 

The disease threatens humanity by preying on humanity.

I Bought the Huge iPhone. I’m Already Thinking of Returning It.

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

Students Aren’t Going to College Football Games as Much Anymore

And schools are getting worried.

Two Damn Good, Very Different Movies About Soldiers Returning From War

The XX Factor

Lifetime Didn’t Think the Steubenville Rape Case Was Dramatic Enough

So they added a little self-immolation.

Politics

Blacks Don’t Have a Corporal Punishment Problem

Americans do. But when blacks exhibit the same behaviors as others, it becomes part of a greater black pathology. 

Why a Sketch of Chelsea Manning Is Stirring Up Controversy

How Worried Should Poland, the Baltic States, and Georgia Be About a Russian Invasion?

Trending News Channel
Sept. 19 2014 1:11 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
Weigel
Sept. 20 2014 11:13 AM -30-
  Business
Business Insider
Sept. 20 2014 6:30 AM The Man Making Bill Gates Richer
  Life
Quora
Sept. 20 2014 7:27 AM How Do Plants Grow Aboard the International Space Station?
  Double X
The XX Factor
Sept. 19 2014 4:58 PM Steubenville Gets the Lifetime Treatment (And a Cheerleader Erupts Into Flames)
  Slate Plus
Slate Picks
Sept. 19 2014 12:00 PM What Happened at Slate This Week? The Slatest editor tells us to read well-informed skepticism, media criticism, and more.
  Arts
Brow Beat
Sept. 20 2014 3:21 PM “The More You Know (About Black People)” Uses Very Funny PSAs to Condemn Black Stereotypes
  Technology
Future Tense
Sept. 19 2014 6:31 PM The One Big Problem With the Enormous New iPhone
  Health & Science
Bad Astronomy
Sept. 20 2014 7:00 AM The Shaggy Sun
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.