Murdoch Backs Down: Fox Won't Buy Time Warner

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Aug. 5 (Bloomberg) -- Rupert Murdoch’s 21st Century Fox withdrew its $75 billion takeover offer for Time Warner Inc., the owner of HBO and Warner Bros. Bloomberg's Trish Regan, Julie Hyman, Jon Erlichman, Cory Johnson and Bloomberg View's Barry Ritholtz have more on "Street Smart." (Source: Bloomberg)

The numbers for us.

21st century fox has just withdrawn its proposal to buy fire i. -- fireeye.

That me read from the statement we are just getting here from the chairman and ceo, were rupert murdoch.

Each with celebrated content and brands.

The proposal has significant strategic merit and compelling financial rationale for our approach.

Time warner management and its board refused to engage with us to explore and offer which was highly compelling.

The reaction in our share price since our proposal was made undervalued is our stock and makes the transaction unattractive to fox shareholders.

It goes on to say we are disciplined in our approach and focused on delivering value for our shareholders has led us to withdraw our offer.

So this news crossing right now, 21st century fox is withdrawing its offer on buying back $6 billion in shares.

So pretty significant news.

Think of what this means.

They are not just saying this is a negotiating technique, were taking our money off the table and putting it into a share buyback.

You might have expected this to be in the category of you can't fire me, i quit.

They are doing this -- i spoke to dick parsons who used to run time warner.

I asked him whether or not he thought a deal to get done.

He said i think the market is way ahead of itself.

Investors are way ahead of themselves.

I know the board, i know the management team, on the one who put most of them in place.

He said i really think it's going to take a whole lot more.

He didn't like the currency, referring to the nonvoting shares.

He didn't think it was enough of a price to get a deal done.

Think were all the other cards are falling right now.

Disney, we are waiting on earnings from disney any minute.

It doesn't matter now because time warner today is going to be time warner tomorrow without fox in the middle of it.

I wonder if this was just her teaching gamesmanship.

Guess what, murdoch has left with a competitor that is wounded without a suitor.

That seems to be a little bit but krakow want to bring jon erlichman into the conversation because he has been following this -- investors got a taste of something and they liked the idea of time warner being sold.

We saw that reaction in the share price where it just really hung up near that level.

Does this just effectively whet their appetite?

My we see another company come along?

You see the immediate reaction in the stock price at time warner.

The ball once again falls into time warner's court to explain what exactly its strategy is going to be.

Fox from the beginning of this process was going to be reluctant to raise its offer.

Certainly the expectation was for many investors that that's what we would see.

But the language that time warner use from the outset of the process, not language that would suggest were holding out for a higher offer, but to take further action essentially through regulatory filings to maybe make life more difficult for fox.

I think as clearly as that statement from rupert murdoch from fox is, they weren't ready for all the potential questions i would have to answer on this story of where this goes next and how much they might have to pay.

In response, fox shares surge after hours.

I don't know if it's the last chapter.

We will see.

Let me ask you this.

We talked at length about the strategy for how this was all leak and there was a lot of commentary surrounding that in terms of this being very much a murdoch move, the way the deal was first broken to the public.

What is your sense of how that actually effectively went down.

Did it ultimately hurt him?

To have this news leaked the way it did.

We can quarterback all we want.

They still got up with cents on what the reaction was to this deal and clearly they're dealing with the company in time warner that didn't want to engage with them.

Through that relatively public process, you are able to see what kind of struggles you might have to go through to get a deal done.

I don't think the story changes in terms of fox's interest in a whole host of businesses that time warner owns, including the cable networks where they felt there was underperformance and thought there'd be an opportunity for them to grow those businesses internationally.

But at the end of the day, there are a lot of different businesses out there for them to potentially consider acquiring.

And they like to be liked by shareholders.

Let me go back to cory johnson.

Mike there be another player out there, as you were just talking about.

Anybody else waiting in the wings?

Their appetites are being dashed right now.

The buyback is a crucial thing.

It takes fox off the table as a potential bidder.

The other potential big bidders, comcast most notably, but you've got the potential with att or verizon, those guys are all really busy with their own acquisition deals going on right now.

They wouldn't be able to hustle something like this through the fcc and the ftc anytime soon.

Fox was really kind of alone out there as a bitter and i think they recognize that on some level.

But this buyback is not just a short-term deal.

A buyback right now, in terms of the b shares, that only got $5.5 billion in cash.

What about the money they got from the sale of the european asset?

You're right, they do have that extra cash if it isn't already dedicated to paying down debt.

They also didn't put a timeframe on the buyback.

It shows that they're going to shore up the capital structure of fox right now.

Rupert murdoch is going to be in the weeds thinking about the next big deal.

We see a notion of where he might take the company.

I do want to get your reaction to what did arsons had to say when i sat down with him just a week ago today.

The former chairman and ceo of time warner.

I asked if he thought her merger would actually happen.

Here's what he said in response.

I think they know what they're doing.

Have a plan going forward.

With respect just looking at it from the outside.

I have no inside knowledge whatsoever.

The price that was offered was way off the mark and the form of

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

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