Time Warner Rejects Rupert Murdock Takeover Bid

The cable company rejected an $80 billion merger offer.
4:26 | 07/16/14

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Transcript for Time Warner Rejects Rupert Murdock Takeover Bid
I'm Michelle Franzen in New York -- the New York financial markets closed for Wednesday July 16 that the story -- And shares soaring today up a whopping 17%. How come -- investors are applauding the board's decision to smack down Rupert Murdoch's massive merger proposal. Worth some eighty billion dollars to shareholders think a bigger offers on the table. Let's bring in Rick Newman and ask him from Yahoo! finance is all over the story Rick how about it why did shareholders -- Murdoch's. Eighty billion dollar offer. I think series is probably the fit the stated reason is that. The Time Warner director said we think our companies better off independent we think we can create more value eyes are on company -- if we were purchased by. I giants such as 21 century fox. But they may also be very aware that there could be a much higher offer coming -- -- some speculation today. Murdoch offered about 85 dollars a share their speculation. He could raise his bid well over 85 and -- there could even be a bidding war for this company. Among some other technology companies I would like to have it while -- -- that could push the price -- high as a 120 dollars so suddenly it looks like at Time Warner. It could be in play and that Rupert Murdoch is probably gonna make another -- -- the company. So Time Warner still in play what are the biggest concerns dealt with any sort of make -- archer. The first -- a regulatory concern obviously. There would be a lot of media properties concentrated in one company there's a long list of properties. We all know sort of the marquee properties. The studios Warner Bros. studio for instance in 20th Century Fox pressure that would be a problem. The cable network's prime would be a problem 21 century fox zones Fox News Time Warner and CNN and Murdoch's company said they would probably be willing to just divest CNN right off the bat but they're still could it would be regulatory concerns. Among. And all the other property so that's one thing in just you know Murdoch tends to pay a lot for the companies he buys so. -- shares of his company were actually down today that's pretty normal for. For a company looking to acquire and other. And I think there's a question of whether he might push the price too high and maybe end up paying more than he has 24. 4%. To be sort of build out his empire -- -- well. So what is it about this that investors like why are they applauding the board's decision. There's a whole wave of consolidation it may -- is just getting started we know about the merger between Time Warner Cable which is a separate and now independent company that was spun off a few years ago. Between Time Warner Cable and Comcast. So the distributors are consolidating their becoming. There are going to be fewer bigger distributors that distribute all that content we -- and consumed. And so on the content side of the people who create programming are kind of think -- we need to get bigger to. And ordered sort of ring green retain our ability to make good guy you know strong deals and our leverage with these -- sugars we have to deal it. So we could be -- companies such as AT&T and Verizon are already making some acquisitions we could see them showing interest in Time Warner. So there's a lot -- could still happen here this might just be the first inning. And Rick could we be seeing you know anything other offers course but what about a hostile takeover. Well it. -- this is a hostile takeover occurs when the company basically says over my dead body you're gonna take our the company in the situation of Time Warner there's not really. A single controlling shareholder so that seems sort of unlikely to happen I mean in this case. There's no dominant personality such as Rupert Murdoch for instance. To say you know I really didn't panic panic general overrule the board on this or Dee -- fact overrule the -- -- shareholders. It really is gonna come down to what seems to be the best deal for shareholders -- the board at Time Warner obviously we'll have a say. But is an instance where the best deal shareholders are gonna get is is pretty important. Rick Newman of Yahoo! finance thank you for joining us certain. And even watching -- story stocks David abcnews.com. For your latest headlines I'm Michelle Franzen -- New York.

This transcript has been automatically generated and may not be 100% accurate.

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