Is Murdoch Prepping Balance Sheet for Time Warner?

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July 25 (Bloomberg) -- Bloomberg’s Alex Sherman and Paul Sweeney examine Twenty-First Century Fox’s $9B deal selling two European pay-TV services to BSkyB and how that sets up chairman Rupert Murdoch for a pursuit of Time Warner. They speak on “Market Makers.”

This deal is done, broken by bloomberg about 1.5 months ago.

What this means is that fox has more money to bid up their a five dollar per share offer for time warner, which was rejected.

The question will be, will they bid against themselves when there is no other bidder here?

Will they bump this up proactively to say, you rejected $85 -- we will go up to $95. what have they got?

The big issue here is how much they are willing to lever up.

Will they create debt rating, which is what they want to do?

They may be able to get up to $95 maximum.

Maybe not $100, which is what it will take.

Bloomberg intelligence.

$100 per share, i should say.

It would be close to $100 billion.

This is a guy who is pretty tenacious over the years.

He does not walk away.

He will put his best deal forward.

At the same time, they do care about the credit ratings.

They want to maintain their credit rating.

If they were to get to $100 per share or more, the rating would clearly be at risk.

So, we solve this deal for the european assets.

The divestiture posted deal of cnn, anywhere from six dollars --$6 billion to $10 billion.

You say i want cash.

Time warner said we are unwilling to do any business with fox east on their current situation.

In other words, it does not matter how much you bid.

Based on what we foresee, they will not be able to get -- the question is, what is the current situation?

Some sources tell me that what they interpreted to be was what fox's balance sheet looked like before this bskyb deal, which means minus the $9 billion in cash.

Much of which goes right into fox's balance sheet, which they could turn around and use for time warner.

Is time warner going to come up with a new statement to say that fox's situation has changed and now they have more money to offer to us?

Or does their situation mean we do not want to deal with fox, period.

And we will put the case to our shareholders and say our standalone plan is better than anything fox can offer?

What are big-time shareholders thinking?

They have spoken to their long-term shareholders and they say we're willing to give you a chance.

Of course time warner will say that.

They have been very good at returning capital for years.

Give him a chance to say what their plan is.

There has already been a 15% turnover in the shareholders.

They are hedge funds.

Those are not investors.

That is the bottom line.

There is no bankrupt family here.

There is no legacy that is going to keep them invested.

That is all they need is money.

The longer this deal goes on, the more the shareholder base will turnover.

That plays over into fox's hands.

We will wait as long as it takes.

This is the company that will take a decade and try to make their satellite business profitable.

They will buy the wall street journal.

This is a company with a long-term rsn.

You really have to go out right after labor day and see your big investors and say here's our plan and hear how we will create value.

If fox does not want to bid against itself, who else could come in and bid?

I do not think there's is anyone on the strategic side.

But, there is technology companies.

We have been talking about and writing about that.

The googles and the apples have been dipping their toes in the media business.

This is once in a generation type of asset.

If they want to get bigger, this may be an opportunity.

According to my sources, no one else is interested right now.

Maybe six months from now a tech company might decide they are ready.

From what i gather, no one else

This text has been automatically generated. It may not be 100% accurate.


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