Sun Valley: Would a Google, Fox Deal for Time Warner Make Sense?

Jeff Bewkes Allen and Co Sun
Scott Olson/Getty Images

If Google or 21st Century Fox is interested in buying Time Warner, it’s news to Jeff Bewkes.

“I know nothing about it,” the media conglomerate’s chairman and CEO told Variety at the Allen & Co. media conference in Sun Valley, Idaho, on Wednesday when queried about reports that the two companies were eying Time Warner.

“We’re just going to get a coffee,” a genial Bewkes said, pointing to a fellow conference-goer.

Speculation that the company behind Warner Bros., HBO, CNN and TNT might be an acquisition target loomed over the mountainside gathering this week, although a top executive at a rival media company was more blunt than Bewkes in assessing the probability of a move, telling Variety, “it ain’t happening.”

Analysts are divided about whether a deal for Time Warner by either Fox or Google would make sense at this juncture.

“I don’t think the time is right for it at this moment, but I could be wrong,” said Hal Vogel, CEO of Vogel Capital Management.

Were a deal to happen, Vogel said buying Time Warner would be a more logical move for Google to make than Fox.

“For Google at least it would represent diversification and a reach into the content and consumer products business,” he said. “For Fox, I don’t know that it adds anything. It’s just duplicative.”

However, Laura Martin of Needham & Co., argued that regardless if Time Warner finds itself a target, this kind of a merger makes sense.

For content companies facing a world in which distribution platforms are gaining the upper hand, consolidation makes sense to “maintain leverage,” she said.

Likewise, for an internet player like Google that is flush with cash, Time Warner could be an attractive target. Moreover, unlike Fox or Liberty Media, it is not controlled by a founder or a founder’s family and with a market cap of $63.9 billion it is a relative bargain compared to the Walt Disney Co. and its $151 billion market cap.

“[Time Warner] is potentially the best option to buy because it can be bought,” said Martin. “It’s only a question of time until an Internet company buys a media company.”

Representatives for the three companies declined to comment.

All this talk of mergers and acquisitions has only enhanced Time Warner’s standing on Wall Street. Shares of the company closed up 2.35% Wednesday at $72.41. This bauble just got pricier.

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  1. I think it would make perfect sense for someone like Google; for Fox it would just be horizontal integration, not that that’s a bad thing (for them). Market consolidation is happening right now on a number of fronts, and frankly I wouldn’t be surprised to see continued mergers between IT/Internet, Telecom, and Media into, effectively, a single market…with the eventual three big players. Seeing as how we’re in global markets now, the ‘rule of three’ may not apply; I imagine the giants like Google, Apple, and Microsoft will dominate, but alongside Samsung and…following a recovery, Sony, among others. Whether any of this is good for anyone but investors is open to question, but, it seems effectively inevitable at this point that such consolidation will take place.

  2. macnut222 says:

    “It’s only a question of time until an Internet company buys a media company.”

    I don’t think Time Warner is selling to an internet company ever. AOL, anyone??

  3. Think it would make sense for Yahoo – which is looking to create more of a presence in the media market to buy Time Warner, than Google. Unless that is, Google would be somehow looking to seriously create major disruption in the cable market..

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