The consistent theme in Rupert Murdoch’s ever expanding media empire is that he has never underestimated the power of content. And if he can’t create the most sought after content, he is willing to pay handsomely to get it.
However, the price is not always right and this week , 21st Century Fox announced that it has withdrawn its US$80 million proposal to acquire Time Warner Inc.
The surprise withdrawal comes after a “poorly received” view by Fox’s investors, and fears of media concentration by the industry. Not to mention Time Warner’s lacklustre response to the offer.
Fox chairman and CEO Rupert Murdoch said, “we viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands. Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly. However, Time Warner management and its Board refused to engage with us to explore an offer which was highly compelling.”
In the aggressive play for Time Warner, Murdoch clearly has its eyes on the last decade’s powerhouse of multi-screen content, HBO.
HBO, arguably the incubator of the renaissance of the TV industry, has developed and screened the most prolific run of high end content in recent years since it developed originally programming in the early 1990’s. Not only has it been the home of premium shows including, Sex and the City, the Sopranos, Entourage, True Blood, Game of Thrones and Boardwalk Empire but it has succeeded in leveraging the appeal of this content to a global audience.
Unlike rival content powerhouse Netflix, HBO actually owns the vast back catalogue of its programming and it has streaming arm HBO GO which is available to cable subscribers for an additional cost. HBO can also stream and air movies from Warner Bros., Comcast Corp.’s Universal Pictures and Murdoch’s Fox film studios for an exclusive window.
That is a big pool of content. The Netflix model, while still not translating to profits has proven that quality content drives IP traffic. Again, this is also what Murdoch is betting on. Streaming is now integral to the future viability of all TV networks.
In the Murdoch stable, network’s Fox, FX and Fox Sports now all have streaming apps for cable subscribers. For Murdoch having Time Warner’s future proof jewel in the crown, HBO, would magnify the opportunity for all of Fox channels and provide the strongest content powerhouse foundation for a potentially global streaming empire.
It is unlikely that Murdoch will give up on his consolidation plans and may have another strategy up his sleeve.
Meanwhile in Europe, Murdoch’s bid to seek full control of Sky is looking unlikely. BskyB has offered to pay up to £7.4bn to buy Sky Deutschland and Sky Italia from Rupert Murdoch’s 21st Century Fox. Under the plans Fox would sell its controlling 57% stake in Sky Deutschland to BSkyB for £2.9bn. Issues of media concentration are looking likely to thwart the bid on the regulation front, particularly with the Time Warner addition to the equation.
Murdoch says however, “21st Century Fox’s future has never been brighter. The strength of our leading franchises, combined with the power of our emerging growth businesses and the leadership positions of our international enterprises put us on a path for even greater success."
CombiTel
Specialist IPTV systems integrator focusing on service providers and enterprises. CombiTel offers unmatched value to its clients based on its unique mix of skills and many years of experience in both Telecommunications and Broadcasting. We have a proven track record and happy customers in Australia and New Zealand.
