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Time Warner CEO Jeff Bewkes: Fox Deal Just Didn’t Make Sense

Exec dismisses speculation that media conglom may spin off HBO as separate company or tracking stock

Time Warner chairman and CEO Jeff Bewkes said the company carefully evaluated the $80 billion bid from Rupert Murdoch’s 21st Century Fox before concluding that “we just didn’t think it made sense” given Time Warner’s potential growth trajectory.

“We do think there was a fair amount of risk in taking on that size of combination,” said Bewkes, speaking at Goldman Sachs’ Communacopia conference Wednesday in New York. He said that Time Warner, on its own, will be able to deliver “very attractive” earnings-per-share growth “as we have done for the last six years.”

Fox in June made an unsolicited overture for Time Warner — whose board rejected the offer — before 21st Century Fox said it was withdrawing the bid last month.

The combination of Fox and Time Warner would have created a media powerhouse with annual revenue of around $65 billion. The proposed deal would have brought together assets including movie studios 20th Century Fox and Warner Bros. and a portfolio of top cable networks, including Fox News, FX, HBO, TNT and TBS, as well as Fox Broadcasting and its sports networks, as well as each company’s international businesses.

Also at the conference, Bewkes dismissed speculation that Time Warner might spin off HBO as a separate company or tracking stock. Asked whether the company would ever launch HBO direct-to-consumer — in a way that would compete directly with Netflix — he reiterated that the media conglom constantly reviews the opportunity about doing that.

While the possibility of an over-the-top HBO service has become “more viable and more interesting” as broadband speeds have accelerated, Bewkes said, “We don’t want to do anything that is not done at a very high quality.”

And for now, HBO is doing well — and growing subs — through existing pay-TV distributors. The premium cabler has deals with cable, satellite and telco providers that include incentives for them to promote HBO signups, Bewkes said, adding that “if you’re an underperforming affiliate, you need to do better.”

Bewkes did not address (and wasn’t asked about) recently announced plans for layoffs at Warner Bros. and Turner Broadcasting System.

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