Analysts have been responding to yesterday’s confirmation from Time Warner that it has received and rejected a takeover bid from Murdoch’s 21st Century Fox. Time Warner’s board balked at the $85-a-share cash and stock offer, a 25% premium on the company’s share price. The possibility of such a milestone merger, however, endures (albeit for different terms).
“A merger of 21st Century Fox and Time Warner would create a content powerhouse that would command huge clout on both sides of the pond,” Ted Hall, Senior Analyst, Ovum, told IP&TV News. “In the US, the proposed deal has to be seen in the context of consolidation among the major media players, with the likes of Fox needing to respond to the planned mergers of Comcast and Time Warner Cable and AT&T and DirecTV by becoming larger players themselves and strengthen their position in all-important carriage-fee negotiations.
“In Europe, meanwhile, where 21st Century Fox plays the dual role of platform operator and channel distributor and is seeking to merge its UK, Italian and German DTH assets, a Fox-Time Warner entity would certainly play to Sky’s established strengths – leveraging exclusive rights to provide TV-led services that aim to innovate ahead of the company’s cable and telco rivals.”
Hall additionally suggests that the prospective merger would leave Fox and Time Warner well positioned in the emergent OTT ecosystem,
“A merger of Fox and Time Warner would also leave the company in a good position to respond to the potential move towards a-la-carte OTT-video services. Strategic shifts in both the US and Europe have seen operators and content providers experiment with offering access to their services on an Internet-only basis without the need for a traditional TV subscription. Quite how far this trend will go remains to be seen but a combined Fox-Time Warner would be well-placed to offer highly competitive online services should an acceleration of this strategy be deemed necessary and viable.”