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July 16, 2014 5:29 pm
For some buyers, shedding a brand like CNN to persuade regulators you can have its parent company would feel like a painful sacrifice. Rupert Murdoch probably had a good laugh at the idea that this might be all he would have to do to get his hands on Time Warner.
Few things better illustrate the way the 83-year-old has transformed the global media landscape than the manner in which his liberal-baiting Fox News has outplayed (outfoxed, you might say) the channel that invented cable news but has since lost its way.
When he and Roger Ailes were building Fox, CNN founder Ted Turner was seen as an equal, another in the large cast of moguls that directed our news and entertainment and shaped how we consumed it. Now, with Mr Turner retired, Sumner Redstone ageing and companies like Comcast, Walt Disney and even Time Warner run by more sober characters, Mr Murdoch and John Malone look like the last moguls standing.
Fashions have changed, and Time Warner’s disastrous sale to AOL just as the dotcom bubble was ready to pop left investors disenchanted with the megadeals that were once the mark of such moguls. Jeff Bewkes, a veteran of HBO’s Sopranos-era early days, made his name by being among the first Time Warner executives to warn that the AOL deal would end in tears.
He was right, and the experience left him acutely aware of the value most media mergers have destroyed. Having instead trimmed down his portfolio by shedding AOL, Time Warner Cable and – just this summer – Time Inc’s magazines, he has made Time Warner a digestible target for someone with Mr Murdoch’s appetite.
Mr Bewkes has been an outspoken critic of big media mergers, but Mr Murdoch must have calculated that Time Warner’s chairman and chief executive will ultimately take an unemotional view of whatever proposal is put in front of him and, if he cannot find a better deal of his own, sell if the terms are right.
Mr Murdoch has also split his empire, separating the News Corp newspaper business from 21st Century Fox’s television and film powerhouse. But that move has only increased the empire’s value, and emboldened its chairman. With Rebekah Brooks cleared of phone-hacking charges, the once real threat of the London scandal consuming the US headquarters has now receded.
Mr Murdoch did his own big deal before another bubble burst, buying Dow Jones for $5.7bn in 2007 just before the financial markets on which the Wall Street Journal publisher depended turned south. He wrote off half its value within 18 months. Many thought that was his “legacy deal”, the crowning achievement of an Adelaide press baron’s son who was weaned on newspaper ink. They underestimated his relentless ambition.
Potential mega-merger is all about legacy
His latest move would create a giant television company, with the power to negotiate with ever stronger distributors from Latin America to Europe (where Mr Murdoch and his son James want to strengthen their own distribution clout by combining BSkyB, Sky Italia and Sky Deutschland). It would also combine two of Hollywood’s largest studios.
The proposal is audacious enough that every one of Mr Murdoch’s media rivals, from CBS to Disney, must be asking whether they will need to rediscover their dealmaking appetite in response. Mr Murdoch has struck first, though. If he wins his prize, he will feel he has outfoxed his rivals again. They would be unwise to assume, however, that the last mogul has done his last deal.
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