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

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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