FBR Capital and TAG discuss media M&A after FOXA pulls TWX bid
- FBR Capital sees a dimming of merger fever in content stocks. Not just for the TWX pairing. But the broader concept of a big consolidation wave among TV content suppliers. Consolidation is at times a follow-the-leader exercise. And the combination of two of the biggest players would have motivated other TV content cos -- many of which are family controlled -- to focus more on the need for mergers to gain scale, even though that argument was never part of Fox's case for Time Warner. Lacking that example, content cos will tend to shift back to business as usual.
- TAG notes FOXA's withdrawal of its bid for TWX may have reflected Rupert Murdoch's realization that getting a deal done would have cost FOXA a ratings downgrade. Furthermore, with no other bidders coming forward, FOXA was effectively bidding against itself and had no other player to split up the assets. That said, other possible M&A for FOXA include STRZA and AMCX, which trade at a tenth of what FOXA offered for TWX. There is likely, no other TWX bidder. They see industrial logic for the combining of VIAB and CBS which would create a company that looks like FOXA.