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Fox's TWX Play Could Add Fuel to Consolidation Hearing

WASHINGTON -- Look for 21st Century Fox's confirmation that it made an offer to buy Time Warner Inc. to add some fuel to today's Senate hearing on the state of the video programming marketplace and consolidation.

Both 21st Century Fox and Time Warner confirmed that the former had made a play for the latter. Time Warner's board rejected the bid, but it represents one of the concerns expressed on Capitol Hill about the proposed mergers of Comcast and Time Warner Cable (a separate company) and AT&T and DirecTV, both of which are the subjects of the hearing in the Senate Communications Subcommittee.

Consolidation critics are concerned that the merging of distributors will force programmers to heavy up in what they have suggested would be an unvirtuous cycle.

In explaining why it did not accept the offer, which has been pegged at about $80 billion, Time Warner cited the "regulatory risks to executing a combination" as one of the factors.

But Wells Fargo analyst Marci Ryvicker suggested that TWC's initial rejection may not be the end of the story, though both sides say there are no current discussions.

"Based on recent history (a.k.a. Time Warner Cable), we would say, no [it isn't over],” Ryvicker said in a research note. “What we know right now is that there are no current talks between Fox and Time Warner [Inc.]. But we wouldn't be surprised should Fox come in with a different offer (either in price or in structure -- or both). Or perhaps other companies start to view Time Warner as a potential takeover target.”