Time Warner Changes Bylaws to Guard Against Fox Acquisition

Time Warner is strengthening its defenses in preparation for Rupert Murdoch’s next play.

The media company’s board approved a measure Monday to temporarily prevent a fraction of shareholders, some 15%, from forcing a vote on 21st Century Fox’s $85 per-share offer, according to public filings. The so-called special meeting provision may be re-instated at the company’s 2015 shareholders meeting.

“They want to keep tighter control of the flow of the process so they are not overwhelmed if something happens that they don’t like,” said Hal Vogel, CEO of Vogel Capital Management.

Time Warner’s management believes the move will prevent a hostile takeover, while allowing it more time to make its case that it has a plan to unlock more shareholder value and grow as an independent company, according to an insider. It may also raise questions about Fox’s history of hitting its earnings projections.

Unlike Fox or Viacom, Time Warner is not controlled by a family, leaving it more vulnerable to takeover attempts.

Last Wednesday, Time Warner confirmed it saw Fox’s initial bid as too low. Many analysts believe that Murdoch will return with a higher figure, though that is not expected to happen this week.  Fox is mulling selling Sky Italia and its holdings in Sky Deutschland, which could be used to bolster the cash portion of another Time Warner bid.

Analysts have positioned Murdoch’s interest as part of a coming wave of media consolidation. Companies in the content business are under pricing pressure from cable providers and digital distributors, so they must band together to improve their leverage in negotiations, the thinking goes.

Spokesmen for Time Warner and Fox declined comment.

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