In the latest validation that content is king- Rupert Murdoch's Twenty-First Century Fox proposed takeover of Time Warner goes after premium content and the billions of viewers that come with it. Bobbi Rebell reports.
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Rupert Murdoch's Twenty First Century Fox's proposed takeover of Time Warner signals his plans to expand his content kingdom and tap new markets, and billion of consumers. While the offer was initially rejected by the Time Warner board, it is expected that the 83-year old media mogul will pursue the merger.
Mario Gabelli runs GAMCO Investors- one of many investors who have stakes in both Time Warner and Twenty First Century Fox:
SOUNDBITE- AUDIO WITH GRAPHIC: MARIO GABELLI, CEO, GAMCO INVESTORS (ENGLISH) SAYING:
"What Rupert's vision is is fairly obvious. He sees, you know, three billion new consumers coming into the market place in the rising middle class in China, and India, and mobile devices, and its going to have a strong demand for content, and he is going to be able to create you know Netflix's on his own. So I don't think he is walking away. I think this is his first bid. "
Rupert's prize? Time Warner owns lucrative properties like HBO, Turner broadcasting, Warner Brothers movie studio and CNN - though the latter would in theory be sold as part of a deal, to avoid regulatory conflict with Fox News. If the deal goes through, they would join Fox properties such as FX and Fox Business, and movie studio 20th Century Fox.
The benefits of the deal could yield over $1 billion in savings, according to Fox estimates
And by adding to Murdoch's content arsenal, Fox would have more leverage against cable companies, which have been in heavy dealmaking mode.
But for Time Warner CEO Jeff Bewkes and the board they need to move carefully.
Wedbush Securities James Dix:
SOUNDBITE: JAMES DIX, SENIOR RESEARCH ANALYST, WEDBUSH SECURITIES (ENGLISH) SAYING:
"There are certain things which a Fox deal presents which makes them re-examine. Time Warner's strategy in light of what is your next best option, and they go back to him, and they say, ok, here are some potential things which a Fox deal could present. Is there any other ways we could get that in the context of your strategy, whether it's staying independent and pursuing it without a deal, or maybe getting together with somebody. And there is a couple other players who they could get together potentially, CBS, for example, another big content player."
Dix also says Disney is another possible player in all this, and while there has been talk about non-content companies like Apple and Google taking a look- he does not think that is likely.