Possible Fox-Time Warner Deal Most About HBO: Bibb

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July 16 (Bloomberg) -- Twenty-First Century Fox Inc. is prepared to offer more than $85 a share for Time Warner Inc., according to a person with knowledge of the matter. Mediatech Capital Partners’ Porter Bibb and Sanford C. Bernstein Analyst Brad Hintz speak on “Bloomberg Surveillance.” (Source: Bloomberg)

Foxx can bring to time warner?

Global is the real issue, and you have to look at time warner as being almost a shadow of what it was 10 years ago.

It is really now hbo that is the driver.

I think that is the holy grail that rupert has its eye on.

Hbo, -- they will spin off cnn because of the conflict with foxx and his.

If they succeed come up rupert -- if they succeed, rupert will have hbo and warner bros., and that is it.

He does not need another movie studio right now as 20% three fox's doing great right now.

Hbo is a huge moneymaker.

How will walt disney react to this transaction?

There is not a lot they can do because there is too much conflict.

It will buoy the television and cable interests that disney has, but they cannot be a competitor.

The only real competitors are going to be private equity.

And the price that rupert has put on the table and his willingness to stay here and get this, no matter what it costs, is really a discouraging effect on anybody else.

He has got such a global distribution network that he can take advantage of all of the content.

And it is really about content.

That is where rupert can make the money.

It is surprising, though, that when he did not get all of the sky and lost a little bit of the leverage that he had in europe, he needed to turn somewhere.

He is turning to hbo.

He certainly is.

Porter, you mentioned distribution, and that is the key here.

Time warner is a content company.

Is this a victory lap for brian roberts and the comcast model that combines content with distribution?


It makes just puke is not look so smart.

He downsized time warner and -- it makes jeff buchus not look so smart because he downsized time warner and he is left with hbo.

To be honest, there is not a lot of innovative management at time warner right now.

And hbo realized a few years ago that netflix is going to run away for -- with the streaming market, which hbo owned for many years.

This is three times the calculation.

It is a monster price.

You effectively say it is the networks, hbo and perhaps turner that are the jewel in the crown, but a 20% of the revenues.

Why pay that kind of number for what is just 1/5 of the company?

He will be able to monetize cnn by spinning it out.

He will not be able to keep to news networks -- two news networks.

And cnn is still making money.

It is not going anywhere, and foxx news has killed it in terms of ratings.

What is cnn worth?

And forgive me for interrupting.

That is a good question.

It has got to have at least one quarter, maybe one third of the whole value of time warner.

There are a lot of people who would be very interested in cnn outside the u.s. wait a minute.

Repeat that.

If time warner -- this is a deal of what size potentially echo over $80 billion.

That is right.

And you think cnn is effectively worth a quarter of that, so $20 billion?

Maybe $20 billion, yes.

You've got to consider the franchise it has and the fact that despite the fact that it has no real audiences anymore in the u.s., it's still a global franchise and profit.

It is a reflection of how much rupert murdoch think hbo is worth.

It is.

I guess it is a game of thrones transaction.

Brad hintz is with us as well.

Is this what janet yellen is talking about?

What is decreed it and what is diluted?

If i am bringing my earnings-per-share down by an acquisition, essentially i am deluding the shareholders.

If i am increasing it, that is secreted.

-- secretive.

The reason the private equity people are -- cannot compete, his cat -- private equity looks to cash flow in terms of valuation.

And corporate entities can believe in a fictitious piece of entity -- of energy.

You can get the numbers to look a lot better if there is this synergy that is somehow bringing your management teams together.

Porter, can there be synergy in a foxx-time warner combination?

Well, sure.

A lot of redundant expenses.

If you fold warner bros.

Into 21st century foxx's film and television operations, that will be very accretive and synergistic mix.

Hbo, i keep saying, is really the plum in this deal.

And there is no synergy, because they don't have a pay-tv network at foxx.

Variety has reported earlier this week that google was also interested in buying time warner.

Judge nook is denied noting -- knowing anything about it at sun valley.

Where does this play in the major merck -- in the mega deals in the merger sector?

I would not be surprised if google did not snap up cnn.

It is a perfect complement to you too, which is growing and is going to be a major content network distribution system.


Porter bit, thank you so much.

A wonderful perspective this morning, this entire interview with porter and brad.

Brad, thank you as well.

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


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