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July 20th, 2014
09:30 AM ET

David Carr, Henry Blodget on Rupert Murdoch's bid for Time Warner

In this Web-exclusive video, Brian Stelter talks with New York Times media columnist David Carr and Business Insider co-founder and editor in chief Henry Blodget about Rupert Murdoch's bid for Time Warner. On Wednesday Time Warner said it had rebuffed Murdoch - but what might happen next?

Transcript of the conversation:

STELTER What is the likelihood of Time Warner being sold, in some way, in some form?

CARR: Well Henry's better at this stuff, but usually once something gets kicked into play, it doesn't get kicked back out of play. What you end up talking about is, 'What is the number?' Not 'Is it going to happen,' but 'When is it going to happen.'

STELTER: Or 'How it’s going to happen.'

CARR: Right.

BLODGET: I think it happens. Talking to shareholders - getting a sense for that - the two sides are not that far apart. My sources on both sides said, 'Oh, we’d be very unhappy with a $100 number, no way we can go there.' But you talk to shareholders, and they say 'Well, [that's a] ballpark [number].' So we’re not, it's not like somebody is saying 'We need 2 or 3 times what you offered to take it out.' There aren’t hallucinations of grandeur here.

STELTER: So you guys are saying that it’s when it’s going to happen, it’s how it’s going to happen–

BLODGET: –It seems likely, no guarantees. But it seems likely.

STELTER: But why should it happen? David, you wrote in the Times on Thursday, “beyond bigness, there’s no compelling logic driving a merger between Time Warner and 21st Century Fox.”

CARR: Well, apart from Rupert Murdoch waking up one day and saying 'I want that…'

You have two equal-size companies. They're in similar size business. It is true, there are some differences - in terms of sports holdings, Fox has a network, Time Warner doesn’t - but in general, it's sort of an orange and an orange getting together, making a bigger orange. I mean, some people would say scale is enough of a rationale for a merger, but it’s not one of these strategic things where you go, 'Well, we’re missing X, Y and Z, so we've got to either build it or buy it.

BLODGET: I think it's leverage. It’s additional leverage against the distribution side of the video content business, especially. You now have Comcast and NBC coming together, they can control their destiny–

STELTER: –And Comcast and Time Warner Cable… hoping to merge with government approval.

BLODGET: Right, exactly. So it’s becoming a waltz of elephants. The more stuff you can control, the more you say, 'Oh, you want this particular set of content? Great, you’re going to also pay us for this particular bit,' the stronger you are.

CARR: There’s a saying that when the elephants dance, the grass gets trampled. You don’t want to be the grass - that you want the leverage. When I spoke to Rich Greenfield, who’s a pretty smart analyst on these matters, he said 'Don’t think of Mr. Murdoch buying a bunch of cable networks.' He’s seeing the value of content rising, as more and more windows open up, meaning opportunities for people to watch stuff - whether it’s Hulu, whether it’s Netflix, whether it’s Apple. There's this big sort of land grab for content, and he thinks to himself, 'Content will be a lot more valuable, I want to get as much of it under control.' You have HBO, which is kind of a factory of excellence, how much more valuable will that be as time goes by? He said, 'Think of it as the content play and less as kind of a strategic play.'

STELTER: And if it’s not Time Warner and Fox - if it’s not Murdoch who tries to buy Time Warner, or rather, keeps trying, could it be someone else, or somebody else?

CARR: Well the thing that would be deeply thrilling to people like Henry and me, and you, for that matter, Brian, would be if the moment came when a Silicon Valley player - who is really the giant amongst giants - that’s why Comcast is doing what they’re doing, that’s why people are doing, because–

STELTER: You’re talking about Google–

CARR: –Google, Apple, given their market caps, given their penetration...

STELTER: They have the cash.

CARR: …and given their reputation with the consumers: they've played around the edges of content. What if they said 'What the heck. The pipes are either going up into the sky or becoming ubiquitous, let’s make sure we have plenty of stuff for the pipes. Let’s just buy one of these' - for what's pocket change, for them. And that would be a super-exciting time for those of us in the media. I don’t know if it would be good for consumers, I just know it would be good for media reporters.

BLODGET: It might also be a disaster, just like the last big combination we had like this, with AOL and Time Warner. But interestingly enough, one of Time Warner’s pieces of logic in saying 'No thanks' to the original offer is that two to three down the road, they think there will be many other potential acquirers. Comcast will have finished digesting Time Warner Cable and be ready for the next thing; AT&T will be done with DirecTV; and they are hoping that, yes, somebody like Google, Verizon or Apple - some new behemoth - will suddenly decide, 'You know what? We want to be in the content business.' I think it’s unlikely with Google and Apple, I think [Time Warner is] waiting for Godot if they're hoping for that day. But that is part of the logic - that give us another 2 or 3 years - suddenly we are going to be at the center of a dance floor with a lot of people around.


Filed under: Reliable Sources • Rupert Murdoch • Time Warner
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