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Murdoch’s Obsession: Sky Italia and Deutschland sold for an imminent Time Warner bid

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Houston, TX – (StockNewsDesk) – 07/29/2014 — It seems as if Rupert Murdoch’s quest to acquire the Time Warner Company knows no bounds. The billionaire signed off on an agreement to sell its pay TV businesses in Italy and Germany, i.e. Sky Italia and Sky Deutschland, for 8.8 billion in cash plus assets, as he attempts to fund a multi-billion takeover bid for Time Warner. Last week, Time Warner rejected a suggested $80 billion takeover bid from Murdoch’s 21st Century Fox.

Under the sale terms, British Sky Broadcasting Group will acquire Fox’s Sky Italia unit for £2.07 billion and a stake in National Geographic Channel. Furthermore, British Sky Broadcasting Group will buy Fox’s 57.4 per cent stake in Sky Deutschland for £2.9 billion. This way, British Sky Broadcasting Group will become the sole owner of Sky operations in Italy and Germany. The transactions suggest the company’s policy towards having a unified European broadcasting system. It would lift BSkyB’s revenue from £7.6 billion to £11.2 billion and allow it to purchase European programming and bring quad-play services to the European audiences.


Earlier this week, there were reports suggesting that Fox was challenged by Time Warner, indicating that it would not be willing to consider anything less than $100 per share as a bid for takeover. Fox, on the other hand, while hell-bent on bent on showing its muscles under the influence of Murdoch’s fanatical obsession with Time Warner, will not be willing to offer more than $90-95 per share. His reticence towards such a high bidding stems from financial difficulties that Fox encountered in the 80s and 90s – which would leave his company having a close to junk financial rating.

One of the options that Time Warner can exercise is coercion of shareholders to plan out a stock price jump above and beyond Fox’s reach, i.e. close to $110 mark. Time Warner is actively seeking to fend off the big money move as it does not intend to sell. The company’s board changed its bylaws to remove the right of shareholders to call a special meeting. This would help in an indirect manner; it would act as a delaying tactic since it would negate any attempt by Fox to replace Time Warner’s board. Time Warner has won itself time until the next annual meeting, which, by tradition, is called in June.

Despite the negative publicity over the past year regarding phone tapping in England, Rupert Murdoch remains firm on making this big money move and to build his own media empire, which will aggrandize him through the annals of time. As things stand, Time Warner’s CEO Jeff Bewkes might just have to take the multi-billion offer sooner or later.

Jeff Bewkes took the reins at Time Warner in 2008 after the company lost significant valuation and dipped in performance measures under CEO Gerard Levin; at the time Levin joined; the company was valued at $186 billion, but by the time his ouster was announced, Time Warner was valued at $20 billion. During this time, Time Warner took the unhealthy award of reporting the largest loss ever reported at that time – $99 billion.

Bewkes started disposing of Time Warner’s non-core assets. In 2009, it surprisingly spun off Time Warner Cable and its much troubled AOL division. Furthermore, earlier in 2014, Time Warner finally completed its long drawn out public offering on Time, Inc., the magazine. While Bewkes was not particularly fond of disposing of assets that had made Time Warner what it had become today, it was of a grave concern to him that these assets were non-performing and did not deliver the same profit margin as film and television divisions.

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