The European Deal Shoring Up Murdoch's War Chest

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July 25 (Bloomberg) -- Rupert Murdoch and his son James have spent years cobbling together a pay-TV empire stretching from Manchester to Munich to Milan, but the family’s ambition of bringing it all under one roof foundered after a 2011 phone-hacking scandal that tarnished the Murdoch name. Today the deal was done -- with a non-Murdoch at the helm. Bloomberg's Paul Sweeney and Jon Erlichman have more on "Street Smart." (Source: Bloomberg)

Little money in their pockets, right, to help sweeten the deal?

I think he is going to need it.

Right now, the deal is about $80 billion.

A lot of investors would like to see something closer to 100 ilion dollars.

Out.

Rupert has an investment-grade balance sheet, and i think he would like to maintain his investment-grade rating.

If he does have to increase his bid and that has to be in cash, he has to figure out some creative ways to finance that.

This is one of them.

What we are seeing in the media landscape just in the last couple of months with the consolidation on the media side with comcast and at&t both getting bigger, i think a lot of media companies took a step back and thought a needed to do something from a competitive standpoint.

This is a major deal for rupert, arguably, his last crowning deal, so i think this is one he will go after.

It seems as though size really does matter.

Indeed.

When fox or when rupert murdoch tried to acquire full control of b-sky-b and that was derailed and there was the whole phone hacking scandal, in a lot of ways, that became a secondary story.

Given all the attention now on this changing landscape paul just talked about, the fact that you have consolidation with pay-tv players and the ability for rupert murdoch if successful to have that much more leverage when negotiating these high fees that they get for all those cable channels, that seems like potentially the better opportunity for them if they've still got a minority stake in b-sky-b. speaking of international, i should highlight there are so many parts of that time warner empire.

You could make an argument for any of them being the raisin -- the reason why rupert murdoch wants to do the deal.

Certainly the international opportunity they've got is one of the biggest reasons or them wanting to do this deal.

They get all of the cable access, but they also get hbo.

Is that not a big player in all of this?

It is.

Hbo is one of the crown jewels, arguably, of time warner.

It's extraordinary business, but a lot of folks in the market said that business could be even bigger.

Right now, distribution is tied to core satellite and cable distributors around the world.

If you look at netflix and the growth netflix has seen over the internet, a lot of time warner investors are saying that this might be an investment time warner or perhaps rupert murdoch to think about restructuring a little bit and think that take advantage of some of the over-the-top opportunities -- so you make hbo a new netflix or competitor to netflix?

Is definitely a school of thought out there that says if for no other reason than evaluation netflix gets in the marketplace that maybe there is a better distribution model, certainly outside of the u.s. for somebody to do with hbo, and there's a school of thought out there that says rupert might be the better management team at 21st century fox to think about the different types of business models.

Ok, let's call a spade a spade -- he is getting a little up there, too.

One of the issues with him taking so much news corp.

Stock is having to think about the succession plan in news corp., but they're so much overlap between shareholder bases that probably, if you own news corp.

And own time warner, you're probably pretty comfortable with the story that 21st century fox, rupert murdoch -- and all of this is how they would deal with some of the antitrust issues.

Could you really own fox news and cnn at the same time?

It has been made clear they would be willing to selloff cnn.

We did, of course, here that cbs might be an interested buyer.

Any other talk or rumblings about who might potentially be coming forward as a buyer?

We are making the calls.

You could expect a potentially long list because it's not every day that all of a sudden there's a conversation around assets like hbo becoming available.

Similarly, assets like cnn.

Say all you want, and critics certainly have, about cnn's coverage and strategy, but you're talking about a business that financially is very interesting, and it is such a powerful brand.

You could expect that there will be a potentially interesting list of people that would want to line up for cnn.

The question kind of becomes -- are they in a position to work something out before they have even finished negotiating with time warner so that you could have two deals happen simultaneously?

You would have to think it is more likely that there's maybe some casual private conversations taking place on where the future home of cnn could be, and something more officially takes place after a deal is done, but we are all trying to find out.

Let's not forget that these things have been looked at before.

The bs and cnn have talked about doing some kind of strategic joint venture partnership years ago.

What about abc-disney and all of this?

It is possible.

One of the few assets that disney lacks is a cable news network, number one.

That right there may make some sense.

Same thing with cbs.

Cbs has early been talking about over the last couple of years that in the corporate world, they would like to own more cable networks.

They own showtime and cbs sports network, but they are really light on the cable network side.

When they split off with viacom, viacom got the cable network side.

These are very, very shrewd business man -- businessman.

Do you think the numbers make sense?

I have heard anywhere from its million dollars to $10 million for cnn.

These are some pretty big multiples people are talking about.

If i am a buyer, i know my seller is a motivated seller, probably driven by the regulatory process, so i think i have a little bit of leverage coming up against rupert murdoch bidding for cnn.

Unless, of course, there's

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

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