This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

What Wall Street's Saying About Fox's Pursuit of Time Warner

NEW YORK ( TheStreet) -- Time Warner (TWX - Get Report) may have initially rejected 21st Century Fox's (FOXA - Get Report) takeover bid but Wall Street hardly views a deal for the owner of HBO and Warner Bros. Studios to be over.

Time Warner CEO Jeff Bewkes took to the airwaves of Google's (GOOG) YouTube to declare that he and his board of directors weren't interested in Fox Chairman Rupert Murdoch's $80 stock-and-cash offer. The board judged the offer too low, while Bewkes insisted that his Time Warner in its streamlined post-AOL/TimeWarnerCable/TimeInc condition is just fine, thank you. Now, please go away.

Unlikely.

The initial offer, a cash-and-stock deal which amounted to around $85 a share, represented an approximate 25% premium to Time Warner's average price at the time of the offer in early July. Shares rallied on the news, and Thursday was moving another 2.85 to $85.45.

Analysts are generally viewing the deal, though rebuffed, as a sign that a deal for Time Warner eventually gets done as media companies' make aggressive moves to get bigger, acquire more content and more subscribers, regulators be damned.

Time Warner's Rupert Murdoch Defense Could Mirror Sale of Time Warner Cable

Why Sports May be the Key to Rupert Murdoch's Bid for Time Warner

Time Warner Skyrockets as 21st Century Fox Confirms Rejected Bid

Here's what Wall Street's saying about a possible Time Warner takeout:

Bank of America

Bank of America analysts Jessica Reif Cohen, Bryan Goldberg and Peter Henderson argued Fox could stand to raise its bid without taking too much of a hit.

"We estimate FOXA could pay up to $95-100 per TWX share without incurring material dilution on an EPS basis holding synergies constant and assuming a 62:38 stock vs. cash mix. Should synergies prove to be 100% larger ($2bn), we estimate FOXA could theoretically tolerate a $110 per share offer," they wrote.

"To the extent rights contracts permit-the potential consolidation of Turner's NBA, NCAA, MLB and Golf sports rights with FOXA's NFL, MLB, NASCAR, PAC 12, Big East, UFC, Champions League, FIFA and regional sports nets could yield a more scaled/competitive sports offering vs. ESPN, driving affil. fee and adv. upside."

Credit Suisse

Research analysts Omar Sheikh, Joseph Barnet-Lamb, Nick Bertolotti, Sophie Bell speculated on Fox's strategy to concentrate on content-creation assets.

"If a deal to buy Time Warner were to proceed, Fox would reduce its exposure to distribution relative to content. This in itself suggests to us that Fox's long-term priorities may be shifting away from ownership of distribution assets," analysts wrote.

Also, a consolidation of two of the largest TV/movie companies in the U.S. would have a knock-on effect internationally, reducing global media buyers' bargaining power.

"A Fox/Time Warner transaction concentrates ownership of key US broadcast and cable networks, which includes some of the most attractive content sold into international markets. This will reduce the bargaining power of international customers of this content, unless these customers themselves get bigger. Moreover, it is possible US downstream (distribution) consolidation may not be over. If so, this would drive a search for scale upstream, for any studio or network selling content into the US market."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
FOXA $33.60 -1.06%
TWX $84.48 -0.35%
AAPL $130.28 -1.14%
FB $79.19 -1.19%
GOOG $532.11 -1.42%

Markets

DOW 18,010.68 -115.44 -0.64%
S&P 500 2,107.39 -13.40 -0.63%
NASDAQ 5,070.0260 -27.95 -0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs