Investor Mario Gabelli said he could be swayed to support an increased bid for Time Warner Inc. (TWX) if Rupert Murdoch included board representation and convertible preferred stock in his offer.
Gabelli, the 72-year-old founder, chairman and chief executive officer of Gamco Investors Inc. (GBL), is a shareholder of both New York-based media companies, with 4 million Time Warner shares and 10 million voting and non-voting shares of Murdoch’s 21st Century Fox Inc. (FOXA)
The terms of a deal may be as important as how much investors receive for their Time Warner shares, Gabelli said in an interview. His clients would be happy with preferred stock that was convertible, even into non-voting common stock, if those investors received a couple of board seats at Fox, he said.
“There are a lot of financial techniques that are available beyond a superficial price number,” Gabelli said.
Murdoch’s 21st Century Fox, which offered $75 billion for Time Warner, is willing to pay more than $85 a share, people with knowledge of the matter said this week. A deal would reshape the media industry by giving the television programmers bargaining power in negotiations with cable operators such as Comcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC), which are in the process of their own merger.
Gabelli, who has been following Time Warner and its predecessors for more than 40 years, said this week the company could fetch more than $100 billion. He said he’d be averse to an attempt by CEO Jeffrey Bewkes, who rejected the Murdoch offer, to make a defensive acquisition.
“That might not be the best of all alternatives,” Gabelli said.
Dan Berger, a spokesman for Fox, declined to comment. Mallory Weinberg, a spokeswoman for Time Warner, didn’t respond to requests for comment.
Time Warner surged 17 percent on July 16, after Fox’s $75 billion offer became public. The stock added 1.3 percent yesterday to $87.23 in New York, bringing its year-to-date advance to 31 percent. Fox gained less than 1 percent to $33.01, and is down 6.1 percent this year.
As of yesterday, Time Warner stock has a market value of $76.9 billion, according to Bloomberg data. Fox was trading at a $75.1 billion valuation.
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