At 4:07 pm Tuesday, the chief executive of Time Warner, Jeffrey L. Bewkes, received an unexpected email. ?On behalf of our board and senior management team, I am writing to inform you that we are withdrawing our offer to acquire Time Warner, effective immediately. Sincerely, Rupert Murdoch.?
A hand-delivered letter bearing the same message arrived soon after.
Thus ended, for the time being, anyway, what was shaping up as the biggest media merger in a decade, a $150 billion union of two giant conglomerates. Together, Mr. Murdoch?s 21st Century Fox and Time Warner would have created a colossus that loomed over the industry, combining the two biggest movie and television studios in Hollywood and enabling Fox to try to challenge ESPN?s sports broadcasting dominance. It also would have melded two vastly different corporate cultures: the generally liberal Time Warner, home of HBO, and the more conservative Fox, home to Fox News.
Ultimately, though, Mr. Murdoch decided to walk away. He was put off both by Time Warner?s apparent hostility to the prospect of the deal and by the response of his own shareholders, who have been driving the price of Fox?s stock down since news of the offer broke, fearing he would overpay to secure victory.
In addition to Time Warner?s entertainment and sports properties, Fox wanted to add size, and thus leverage, as distributors like Comcast and AT&T undertook megamergers of their own, threatening greater negotiating power over content
producers.
Discussions about whether to withdraw the $80 billion offer had arisen periodically since 21st Century Fox first went public with its interest in mid-July, and gained momentum in recent days. Mr. Murdoch and his senior leadership team made the call to pull the plug on Monday, according to people briefed on the matter, who declined to be identified. Mr. Murdoch brought the decision to 21st Century Fox?s board on Tuesday.
?Time Warner management and its board refused to engage with us to explore an offer which was highly compelling,? Mr. Murdoch said in a statement. ?Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders.?
The burden will now be on Time Warner to prove to its investors that it can grow the company faster without Fox, and also that it did not miss a chance to make them a lot of money.