Rupert Murdoch already tried to buy Time Warner Inc. (NYSE: TWX) in July 2014, via his Twenty-First Century Fox Inc. (NASDAQ: FOXA), for over $80 a share. Time Warner said no. However, his previous attempt has to put him on a short list of companies that might make a bid now that AT&T Inc. (NYSE: T) is close to a deal. Apple Inc. (NASDAQ: AAPL) is another, based on media reports of conversations early in the year. AT&T may not walk away with Time Warner unchallenged.
The Murdoch offer pushed Time Warner’s shares to $88. They have traded as high as $94 this week. Some analysts believe the offer from AT&T may need to be near $110 a share. Skeptics believe that deal would be too much for even AT&T to take on. It was a stretch for Murdoch, but he is a renowned gambler and could return, particularly if he could sell of some divisions of the combined company to finance a transaction.
The Wall Street Journal reported that Apple talked to Time Warner:
From Apple’s end, executives under Chief Executive Tim Cook were involved in the earlier talks. Apple has pursued plans to build an online TV service and has begun creating original programming of its own. Before its most recent approach, Eddy Cue, Apple’s senior vice president of internet software and services, brought up a potential combination in a meeting with Time Warner’s head of corporate strategy Olaf Olafsson last year, the people said, though the talks never went further than that. The Financial Times earlier reported last year’s approach.
What other companies does that leave? On a buyout basis, only Verizon Communications Inc. (NYSE: VZ), AT&T’s arch rival. Its buyouts of AOL, and perhaps Yahoo! Inc. (NASDAQ: YHOO), show its appetite for content companies. Although, with the AOL and Yahoo deals, Verizon may have taken on too much
The only other options are true mergers, although the strategic reasons would be different from those who want to own content. A merger of two media companies would need to be based on “synergy” between divisions and cost cuts. The only likely candidate for this, other than 21st Century Fox, is Walt Disney Co. (NYSE: DIS), which matches Time Warner in the studio and cable TV programming areas.
The Time Warner buyout may become a competition.