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Jeff Bewkes Flexes Muscles as Rupert Murdoch Tries to Save Face

Stocks in this article: TWX FOXA NFLX CMCSA DTV

NEW YORK (TheStreet) -- Rupert Murdoch, the media mogul who controls 21st Century Fox (FOXA), sought Wednesday to put a positive spin on Time Warner's refusal to negotiate his $80 billion offer to merge the two companies that compete in television, film and even politics.

Murdoch, 83, who has won many more corporate battles than he's lost, told investors in a conference call that Fox is content with its current size and isn't scouring the media landscape to buy companies.

"We're not going to buy anything that's around," he said. "We have no plans to go out on the acquisition trail." Murdoch did add that when it comes to buying companies "I wouldn't say never" but future targets are more likely to be "small."

Read More: Time Warner Tumbles as Fox Withdraws Bid With Investor Support

That vision, of course, stands in stark contrast to Murodch's eager efforts made public on July 16 to acquire Time Warner for $85 a share, an offer that would have produced a company that would been anything but small. The proposed merger, which Time Warner's board resolutely rejected and refused to discuss, would have combined a slew of cable-TV stations, large movie studios, a vast array of international holdings along with the news rivals CNN and Fox News.

Murdoch coveted Time Warner both for its extensive sports contracts, its lineup of profitable channels and the very successful premium channel HBO, a property that Fox is said to have envisioned as a platform to challenge Netflix's  (NFLX) domination in over-the-top content streaming. Fox's eagerness to acquire a platform such as HBO comes as Netflix has stepped-up its own international expansion plans.

While Murdoch may have been licking his wounds or simply moving on, Time Warner  (TWX) CEO Jeff Bewkes was contemplating what he might do with HBO GO, the popular app and whether it could be expanded to yes, become a more serious competitor to Netflix (NFLX). Bewkes, in his own investor conference call tied to the company's second-quarter earnings report, said the platform could be expanded to include other content produced by the company or even content that Time Warner might acquire or license.

"HBO Go," Bewkes, 62, said, "could eventually include Time Warner's other TV and movie assets - and other companies' too."

An expanded HBO GO would be a dramatic change to a business model that is essential to the current premium channel packages sold by pay-TV providers such as Comcast (CMCSA), Time Warner Cable TWC and DirecTV (DTV). All three, pay Time Warner handsomely to carry HBO. If HBO were to become a competitor to pay-TV, such fees might decline, though presumably, Time Warner would instead have secured subscriptions in the manner of Netflix.

Clearly, Bewkes is contemplating bigger plans for HBO. And that, along with simply wanting to continue to run his own major media company, which might explain his firm opposition to be swallowed by 21st Century Fox. that is, why let Murdoch build a competitor to Netflix when Time Warner can do it.

For Fox, the Time Warner dust-up, revealed a contradiction that the company is likely to have a hard time downplaying: If you're willing to acquire a company as large as Time Warner, why not pursue smaller media companies such as Discovery Communications (DISCA), Scripps Networks Interactive (SNI) or AMC Networks (AMCX).

To that, Murdoch said that 21st Century Fox is a "strategically complete company," adding that the decision not to pursue Time Warner was "resolute." Chief Operating Officer Chase Carey echoed his boss by saying "We don't need more scale."

That is, until Mr. Murdoch says they do.

Read More: Fox's Murdoch Is Playing Chicken With Time Warner to Force a Merger

--Written by Leon Lazaroff in New York.

>Contact by Email.

Leon Lazaroff is TheStreet's deputy managing editor.

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