It succeeded. Disney's shares have soared more than 250 percent
Now, Time Warner Inc Chief Executive Jeff Bewkes faces a similar
moment of reckoning after rejecting a bid for $85 a share from
Rupert Murdoch's Twenty-First Century Fox.
Bewkes and other top brass will be under pressure at a meeting with
analysts and investors next Wednesday to show they can repeat
"Disney pleaded the case to get its share price up on their own,"
said David Miller, an analyst with Topeka Capital Markets.
"We think that Mr. Bewkes will attempt to drive home the same
concept," he said, adding it remained to be seen if Bewkes would
manage to replicate Disney's sterling stock performance.
Time Warner is trading at around $73 - more than twice its price
since Bewkes took over as CEO in 2008, but still below Murdoch's
original $85 bid. Fox had considered boosting the offer to as high
as $95 a share, people familiar with the matter said.
Rejection has had its price. Time Warner shares have dropped 15
percent since Aug. 5, when Fox walked away from its offer. Fox
shares are up 5.7 percent over the same period.
"It's too simple to say that Bewkes has to get the stock price over
$85," said Gabelli & Co analyst Brett Harriss. "He has to tell us
why he said no to Fox. Time Warner has said nothing - only that at
no price would it combine with Fox."
Gabelli, an asset management firm, holds shares in Time Warner.
Harriss thought a combined Fox and Time Warner would benefit both
Bewkes, who last stood in front of investors during a similar
meeting four years ago, will lay out a long-term vision for the
company's Warner Bros movie studio, Turner Broadcasting cable
networks and pay TV channel HBO.
Those plans could include letting consumers buy HBO without a cable
subscription, given the popularity of the HBO GO mobile app, some
analysts have said.
Topeka's Miller said that a new broadband-only product similar to
Netflix could crack open new markets.
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Topeka estimates that there are approximately 9 million households
in the United States with Internet access but no pay TV and roughly
66 million households with pay TV but no HBO.
Indeed, Bewkes has slowly changed his tune about Netflix that he
once derided as a "200-pound chimp." He said Monday, at a conference
hosted by Hollywood website The Wrap, that he wished he personally
owned the streaming video service, given its market value of around
There are other signs of Time Warner's long-term plan that have
emerged over the past weeks.
Turner Broadcasting and Disney's ESPN more than doubled their annual
payments to the NBA under a new nine-year deal worth more than $22
billion. Collectively, TBS and ESPN will pay more than $2.5 billion,
starting in the 2016-17 season, to the basketball league. The
networks coughed up more to keep the rights out of the hands of Fox
- which started its own sports network - and those of other rivals.
The pricey content deal comes as Turner, which also operates the
24-hour news channel CNN, attempts to crack down on costs. The
company, which employs about 14,000 full-time staffers, is poised to
slash 10 percent of its workforce.
Focusing on internal operations is how Disney jolted it shares,
noted Topeka's Miller - a strategy likely to be embraced by Bewkes.
(Additional reporting by Lisa Richwine in Los Angeles; Editing by
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