Rupert Murdoch Loves HBO As Much As You Do (But Time Warner Won't Let Him Buy It)
These days, the real question is what doesn't media mogul Rupert Murdoch own? Murdoch and his empire, 21st Century Fox, made a merger offer to Time Warner in a deal valued at $80 billion. Time Warner, which owns HBO, Turner Broadcasting and Warner Bros., reportedly rejected the offer because it was "not in the best interests" of the company.
In a statement released Wednesday about the potential merger, Fox officials said:
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.
Not long after Fox made its statement, Time Warner execs explained why they turned down the massive deal, which would have combined both companies and created the mother of all media conglomerates.
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 21st Century Fox. 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 21st Century Fox is in a position to offer.
Basically, Time Warner really, truly, deeply wants to be an independent company and has very little-to-no interest in consciously coupling with Rupert Murdoch's empire.
OK, so why is this a big deal? Well, at lot of this has to deal with TV and — you guessed it — its distributors. According to The Los Angeles Times, Comcast Corp. is in the process of buying Time Warner Cable, while AT&T is acquiring satellite broadcaster DirecTV. As these distributors merge, Fox may lose its clout when it comes to negotiating carrier fees. It's worth mentioning that Fox, as well as other TV companies, greatly rely on these distributors — and its these distributors that have the control.
As Business Insider reports:
Fox News, which is owned by 21st Century Fox, gets almost $1 per subscriber from Comcast and other cable companies. That $1 causes tension between the two companies. For Fox, it's the lifeblood of its operations. It gets ad revenue, too, but the ad business comes and goes; subscriber fees don't. They remain steady and are steadily growing.
There's also some speculation that Murdoch has HBO-envy. According to Deadline Hollywood, Murdoch has been coveting HBO for awhile, especially since Fox lacks its own subscriber-based channel — which, as we all know, brings in a ton of money for these media companies. But the negotiating fees also come into play here: A channel like HBO protects itself by blocking its content from being distributed on websites such as Netflix, where non-HBO subscribers can watch its shows for a discounted price.
Although Time Warner seems dead-set on remaining independent, we can't deny that these free TV vs. pay TV battles aren't the way of the future. As Deadline speculates, a media merger is bound to happen soon — just maybe not between Fox and Time Warner per se.
But if Fox and Time Warner were to merge, it most likely wouldn't affect you, the ordinary TV consumer, that much. It's unlikely that subscriber prices would rise, as cable competition is already low as it is. This is more about where you're hard-earned cash is going when you pay for your bundle of channels every month. And in this case, Rupert Murdoch wants it all.
Images: HBO/Game Of Thrones