Tomahawk, WI 08/07/2014 (Basicsmedia) – The effects of resisting Twenty-First Century Fox Inc. (NASDAQ:FOXA)’s $75 billion takeover bid have come to haunt Time Warner Inc. (NYSE:TWX) whose stock was a massive loser on Wednesday trading session, going down by 12.85%. Wedbush Securities analyst, James Dix in an interview on CNBC said it was high time that Time Warner returned to the levels it was trading on, before Murdoch tried to make a push to acquire it.
“As soon as you get somebody out there in the market who is credible like Fox biding for the control premium for a company like Time Warner Inc. (NYSE:TWX). That’s how the stock is going to trade until the investors find out that, that bidder is not interested and then you start going back to status quo where the stock was trading before Rupert Murdoch got interested,” said Mr. Dix.
Despite coming up with better than expected quarterly results, Wall Street hammered the stock on Wednesday as the stock plummeted by levels only experienced during the financial crisis in 2008. Dix is of the opinion that Time Warner Inc. (NYSE:TWX) is better off on its own; taking into consideration its HBO business that is the largest integrated film in the TV studio space in the world.
“No, I don’t think they needed to do the deal, again if you look across the major businesses right, HBO is the largest premium cable TV company in the world. Warner Brother is the largest integrated film and TV studio in the world. So this is a company, which has scale already. They have the people in charge at operating units that they like, so I think that was really a big part of their basic response to Fox,” said Mr. Dix.
A debate was already raging that CNN was to be sold to other players like CBS Corporation (NYSE:CBS) as it would not have merged with Fox’s Fox news that is thought to be extremely profitable compared to other cable news networks in the world. Fox news commands over a billion dollar in cash flow in a year, way above CNN and for some reason the two companies don’t work well together in the same portfolio.