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Haim Saban, the multibillionaire media mogul who is chairman of Univision Communications, said he isn’t surprised by Rupert Murdoch‘s attempt to acquire Time Warner because CEO Jeffrey Bewkes has been grooming the company for a takeover.
Speaking on Bloomberg TV Tuesday, Saban said Bewkes has “trimmed the company to the point where he’s prepared it for a takeover” and that, in doing so, he may eventually prove himself to be more clever than competing chief executives like Murdoch at 21st Century Fox, Bob Iger at Walt Disney and Brian Roberts at Comcast.
“You have companies like Comcast acquiring assets like NBC, you have Disney acquiring Marvel and Pixar and Star Wars … Jeff Bewkes’ philosophy is to sell assets,” Saban said. “Time will tell whether this was the right strategy or not. Clearly his stock is doing well, his company is doing well, so he might know something that Bob Iger, Rupert Murdoch and Brian Roberts don’t know.”
Shares of Time Warner have risen 18 percent in the past two weeks because it was learned that 21st Century Fox had offered $80 billion, or $85 per share for the company. On Tuesday, Time Warner shares were at about $84.
Time Warner has rejected the offer as insufficient, especially given that it included just 40 percent cash and 60 percent in Class-A, non-voting stock. Bloomberg reported on July 25, though, that the offer also includes some board seats, a maneuver that did not impress Bewkes and the other Time Warner directors.
“There is significant risk and uncertainty as to the valuation of 21st Century Fox’s non-voting stock,” Time Warner said when it rejected the merger proposal two weeks ago. The company also said at the time that it “was not in the best interests of Time Warner or its stockholders to accept the proposal or to pursue any discussions with 21st Century Fox.”
Regardless, many analysts expect that Murdoch will not give up. He has sold his Italian and German pay-TV businesses to BSkyB for more than $9 billion in order to raise cash, and 21st Century Fox still owns 39 percent of BSkyB, which it could sell if need be. Murdoch has also signaled that if Time Warner merges with 21st Century Fox, the combined entity could sell CNN for roughly $5 billion or more.
Murdoch doesn’t want to assume so much debt that it negatively impacts his credit rating, which means he could go as high as $93 a share for Time Warner, Standard & Poors has estimated, according to Bloomberg. Moody’s Investors, though, sees a way for 21st Century Fox to borrow as much as $21 billion and raise its offer to $105 per share.
While many on Wall Street figure a deal will get done in the neighborhood of $100 per share, MoffettNathanson analyst Michael Nathanson told his clients Monday that he is skeptical, in part because Time Warner board members, executives and shareholders have the debacle known as AOL Time Warner still fresh in their collective memories.
“Call us cynics, please. We don’t think Time Warner, having been badly burned more than a decade ago by the worst, biggest media deal in history, will so willingly accept a non-cash bid unless it is wildly generous,” Nathanson wrote in a research note.
Nathanson added that Murdoch intends to be prudent. “Walking away above $100 is a good start,” he wrote.
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