The Talks Between Twenty-First Century Fox Inc (FOX) and Time Warner Inc (TWX) Bring Murdoch Back Into The Spotlight

In the Bloomberg show ‘“In The Loop,” the Chairman and CEO of GAMCO Investors, Mario Gabelli, spoke to Bloomberg’s Betty Liu about the recent offer by Twenty-First Century Fox Inc (NASDAQ:FOX) to buy Time Warner Inc (NYSE:TWX).

Mario Gabelli

GAMCO Investors owns 4.27 million shares of Twenty-First Century Fox Inc (NASDAQ:FOX) and 2.48 million shares of Time Warner Inc (NYSE:TWX).

Gabelli said that Rupert Murdoch of Twenty-First Century Fox Inc (NASDAQ:FOX), understands the content & media business well and that he is also aware of the fact that there is exponential growth the middle-class population of India and China and further that mobile devices are going to create a fresh demand for content going ahead.

Adding to his view on the industry, Gabelli said, “In terms of content, clearly the movie studios have to consolidate.”

On the offer made by Twenty-First Century Fox Inc (NASDAQ:FOX), Gabelli said that at $85 per share, the offer is only 13 times EBITDA and that company is not a highly leveraged company. He said that the deal is not expensive for Murdoch and that he has room to improve.

Assuming that he is a Time Warner Inc (NYSE:TWX) shareholder, Gabelli said that he would have to decide whether he would prefer a share with low-voting power in a Rupert Murdoch-controlled company. He added that Murdoch would also be aware of the fact that he would have to make the deal sweeter for Time Warner Inc (NYSE:TWX) shareholders.

On the CNN issue, Gabelli said that whether CNN is sold or not, should not make much of a difference, because, in today’s market where hundreds of channels operate, it is hard to get a monopoly with a single channel. He believes that the price of the deal is more important than anything else.

“Rupert is terrific, a great deal maker and has a great sense of how to make money for your share with a vision of where it will be in the next 10 years. He will clearly be in the hunt on this; he clearly kicked it off; he did it for a reason,” Gabelli said.

Gabelli further added that Murdoch well understands the need for consolidation of the distribution business as well as the rising dominance of companies like Google Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN).


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