Rupert Murdoch could "push himself to the limit" to try to buy rival Time Warner but is likely to face stiff resistance from the company's board, it was claimed today. An initial 80 billion US dollar (£47 billion) cash and shares offer by Mr Murdoch's 21st Century Fox was spurned but some experts believe he could afford to up this to more than 94 billion US dollars (£55 billion).
Time Warner, owner of CNN as well as the Harry Potter franchise, has said it had no further interest in talks. Claire Enders, of Enders Analysis, said the rejection was "unequivocal" and contained no tell-tale language regarding the value of the proposal that could be seen as inviting an increased attempt.
She said any deal was "not going to be easy" but suggested Mr Murdoch, 83, was not likely to back down. When he gets a bee in his bonnet, he'll go through with it. He is going to push himself to the limit to get this company. The more they disengage, the more he is going to be keen to get them."
Mrs Enders also suggested there was a deep divide in cultures between Mr Murdoch's company and the "profoundly liberal" Time Warner. It was likely to baulk at the idea of having to dispense with its "crown jewel" of CNN if acquired by the owner of its combative rival Fox News, she said. The initial offer for Time Warner reportedly valued it at 85 US dollars (£50) per share.
But Nomura analyst Anthony DiClemente said 21st Century Fox could afford to borrow more money to fund a deal at more than 100 US dollars (£58) and still see the transaction add to profits next year. Part of the rationale behind the bid is thought to be to counter consolidation among US TV distributors. The more that key channels are assembled under the same company umbrella, the stronger its bargaining position in demanding licence fees from the distributors, no matter how large they become.
Time Warner's holdings include cable channel HBO, maker of True Blood and Game Of Thrones, as well as news broadcaster CNN and Warner Bros, owner of Harry Potter, Batman and The Hangover. 21st Century Fox includes Fox News and the Fox network behind The Simpsons and Family Guy, as well as Hollywood studio Twentieth Century Fox, maker of the X-Men and Ice Age films. It also owns a large chunk of BSkyB.
Much of the value in the proposed deal comes from the TV channels because of the increasing fees they are able to charge cable and satellite TV providers. Disputes over such fees have resulted in temporary blackouts of some popular channels. There would also be advantages in merging the companies' TV and film studios - the top two in the industry. In film, the two would combine for a market share of 25%-30%, Mr DiClemente said.
Janney analyst Tony Wible said: "Simply put, Fox has the capacity to pay more but would likely target a mix of stock and cash." Time Warner's rejection of the deal pointed among other things to concern over the "significant risk and uncertainty" over the valuation of the 21st Century Fox shares.
Mr Wible added: "While others may express interest in a deal we cannot think of a better match than Fox, given the synergies, brand compatibility, and lack of regulatory hurdles. Politicians will not like having two of the three major news outlets under one owner but that can easily be addressed by the sale of CNN."