Why Did Murdoch Back Down on 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 Jon Erlichman and Cory Johnson have more on "Bloomberg West." (Source: Bloomberg)

From the disney lot in burbank.

You have been speaking with the fox camp.

What do they had to say about this?

Over the last few hours, we have heard people ask the question -- is this gamesmanship?

Is fox making this announcement in part to put more pressure on time warner and ultimately do come back to the table and try to get a deal done with time warner?

My understanding is that is not the case.

Certainly, the decision to put a lot of money behind a buyback would speak to that.

Look, the reality is -- and you heard from rupert murdoch in that statement -- the stock price of fox felt pressure after they made this announcement.

Everyone was wondering if time warner would increase -- cn increased offer from fox, which potentially would have put more pressure on fox's own share price.

They believe in their own business, so they are walking away instead of getting into a potentially long battle to acquire a business.

Is it over, or it ain't over until it's over?

This is rupert murdoch we are talking about.

If you believe rupert murdoch has looked at the bigger strategic plan he has had in five years to change his company, made a single offer out there and said, "you know, nevermind.

I'm going to take my ball home." that certainly indicates a company that was taking all of its tools and taking away from a potential acquisition.

But as you said, $80 billion, $75 billion -- this was a bid that was largely to me about writing a stock check, levering up the combined entity in a greater fashion, so they are using some of their cash to shore up their balance sheet over an undetermined period.

They said it eventually stock buyback.

As we know, most do not happen when companies announced them in the same full way that companies announced them, so i'm not convinced this is not just one move in their bid to put pressure on time warner, and that pressure is felt by a falling stock price -- it's worth noting a falling stock price on the same day time warner announces earnings, and the ceo has to face off with investors, some of whom will be ticked off that the stock is down so much in after-hours.

Rupert murdoch not a guy who goes down quietly in any situation.

What about you -- could this be just another move towards the ultimate endgame?

Cory has an excellent point, and it may be true, but at the end of the day, you are still talking about very big doublet companies, who cannot get in the business of playing games.

Certainly, there's a possibility that time warner could report results that do not please investors.

You have seen the stock selloff in reaction to fox's decision to walk away, and indeed, the pressure will be on time warner, but it starts with the decision not to engage with fox.

They could have chosen language that suggested they would be willing to entertain an offer from fox at the right price, but they never said that.

I think fox is looking at what would eat an uphill battle, saying that they do not have time to waste on something like this, nor can they worry about if they were to walk away, someone else coming to the table.

Not that any names have surfaced in terms of who might be interested in time warner.

I think part of that is the potential other bidders are busy, so we did not have atypical bidding war where rupert murdoch announces his first bid, and others countered as comcast, dish, at&t. right, comcast involved in trying to board time warner cable.

Right, and they are dizzy with regulatory hurdles.

Comcast made the case that there acquisition of time warner cable will lead to more competition in the industry.

That is clearly not happening.

We are seeing big media companies gobble up other media companies, but they cannot go out and make a bid for time warner itself right now while they are trying to acquire time warner cable, and that changes the logic of the bidding war we might have seen in another era.

We will be listening to what

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


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