In a surprise move that greatly benefits the customers of Time Warner, Rupert Murdoch withdrew his $80 billion bid to buy the company on Tuesday — a move that dashed his hopes to control nearly half of the cable TV market.
Fox had been expected to raise its offer by Wednesday from the original $85 per share to somewhere between $90 to $95 per share. Instead Murdoch announced that he was backing away from the deal due to the refusal of Time Warner’s management and board to discuss the takeover.
“Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly. However, Time Warner management and its board refused to engage with us to explore an offer which was highly compelling,” Murdoch said in a statement released after the market closed on Tuesday.
Murdoch also noted that since the offer was made public on July 16, Fox shares had lost 11 percent, making further pursuit of the deal “unattractive to Fox shareholders.”
Following his announcement, Fox shares gained 10.4 percent in after hours trading rising from $31.30 at closing to $34.56, while Time Warner shares fell a corresponding 10.7 percent falling from $85.19 to $75.55.
“This could easily be part of their negotiating strategy,” said Brett Hariss, an analyst with Gabelli & Co. Fox could still make another try at taking the company over he said.
If the Comcast-TWC merger becomes final, Fox’s acquisition of the company would make it extremely powerful when it comes to media distribution: two major studios, pay-to-view sports, premium entertainment networks — a scenario that could put the consumer at a distinct disadvantage with Rupert Murdoch in control of a huge chunk of options for television and internet access.
For now, the consumer is safe and Murdoch is keeping shareholders happy, but there is no guarantee that this deal will not be resurrected at a future date.