As we all know, Time Warner Cable is currently in the process of becoming part of Comcast in a deal that will have huge implications for the media landscape in the United States. Now, though, we're getting the view of a different future, one where an even bigger, and more disruptive deal, might have taken place.
It turns out that, in recent weeks, an offer was also proposed by 21st Century Fox, though Time Warner rejected the deal. Both companies, in separate press releases, confirmed the talks on Wednesday.
For its part, Fox did not go into much detail regarding the deal, regarding either why it wanted Time Warner or what it was planning to do with it, instead issuing only this short statement:
“21st Century Fox can confirm that we made a formal proposal to Time Warner last month to combine the two companies. The Time Warner Board of Directors declined to pursue our proposal. We are not currently in any discussions with Time Warner."
Time Warner, on the other hand, did go deeper, talking specifically about why it turned down the deal and how it would have adversely affected its future plans.
"The Time Warner Board, after consultation with its financial and legal advisors, determined that it was not in the best interests of Time Warner or its stockholders to accept the Proposal or to pursue any discussions with Twenty-First Century Fox," the company wrote.
"The Board is confident that continuing to execute its strategic plan will create significantly more value for the Company and its stockholders and is superior to any proposal that Twenty-First Century Fox is in a position to offer."
Some of the problems with the deal that it outlined included " the valuation of Twenty-First Century Fox’s non-voting stock and Twenty-First Century Fox’s ability to govern and manage a combination of the size and scale of Twenty-First Century Fox and Time Warner" and "strategic, operational, and regulatory risks to executing a combination with Twenty-First Century Fox."
Basically, Time Warner did not have confidence in the Fox's ability to actually handle a company whose combined revenue would have been $65 billion. Plus, the company realized that becoming part of Fox would not allow it to go ahead with its own strategy going forward.
It must have been hard to turn the deal down, though, considering that Fox was offering 1.531 Class A non-voting common shares and $32.42 in cash per share, which translated to roughly $80 billion, according to the New York Times. That's quite a bit of money.
Combined, the two companies would have overseen Fox, Fox News, FX, TNT, TBS, HBO, and movie studios like 20th Century Fox and Warner Bros. in essence, such a deal would have even further consolidated the number of companies choosing what media we consume.
Such a deal most likely would not have been allowed to go through for that very reason. There is no doubt that it would have faced heavy opposition from the Federal Communications Commission. Remember, the FCC rejected the merger between AT&T and T-Mobile in 2011, though it did approve Comcast's purchase of NBC Universal the same year.
There is no word on what would have happened to the deal for Comcast to buy Time Warner Cable if its parent company had accepted Fox's offer. In its deal with Comcast, Time Warner Cable was purchased for $159 per share, or $45 million, though the deal is still has to go through regulatory channels before it can be approved.
(Image source: curtismorley.com)