Rupert Murdoch Makes It Official: Media Stocks Are About to Explode

Three Fools take to the Internet to discuss what Fox’s failed $80 billion bid for Time Warner means for the rest of Hollywood’s elite media stocks.

Jul 21, 2014 at 10:19PM

Many have rebuffed Rupert Murdoch's initial overtures only to give in eventually. Will Time Warner (NYSE:TWX) join a list that includes Dow Jones and the U.K.'s now-defunct News of the World? Guest host Alison Southwick puts this question to Fool analysts Nathan Alderman and Tim Beyers in this episode of 1-Up on Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite technology, movies, toys, video games, comics, and more.

Last week, Murdoch's Twenty-First Century Fox (NASDAQ:FOXA) offered $80 billion to acquire Warner, which refused the overture. The stock has soared in the days since yet trades for only $77 billion in market cap as of this writing:

TWX Price Chart

TWX Price data by YCharts

What does Murdoch see that common investors don't? Apparently, he and the Fox team value HBO at $20 billion, or fully one-quarter of what Murdoch was willing to pay for Warner's vast media empire. Bloomberg says that Fox had planned to expand the pay network's reach internationally and via mobile devices while bringing more of its own content to HBO subscribers.

Tim says that Murdoch isn't wrong about HBO's potential, but Time Warner has also been undervalued for some time. Investors are taking notice now because it was only last month that Time's (NYSE: TIME) profit-draining magazine operation became a separate entity, leaving Warner to reap unencumbered profits from its biggest movie and TV hits -- a sweet arrangement that chief Jeff Bewkes apparently values enough to refuse Murdoch's rich overture.

Nathan says Warner also expressed concerns over how control Murdoch and his family would exert over Warner. He's already established supermajorities of the voting shares for both Fox and News Corp. (NASDAQ: NWSA), giving him unchallenged control of both companies. It's a fair bet he'd treat Warner similarly.

That's a legitimate concern for investors. According to Institutional Shareholder Services (ISS), stocks of  public companies that use a dual-class structure where one family controls the majority of voting shares tend to underperform their peers. (Click here for the report.) There's no reason to believe Fox-Warner would perform differently, Nathan says.

Now it's your turn. Click the video to watch as Alison puts Nathan and Tim on the spot, and then leave a comment to let us know what media stocks you find most attractive right now. You can also follow us on Twitter for more segments and regular geek news updates!

Warren Buffett: This new technology is a "real threat"
Another billionaire is under assault, offering you an amazing opportunity to profit. At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash cow. Yet only a few investors are embracing this new market which experts say will be worth over $2 trillion. To find out how you can cash in on this breakthrough before the crowd catches on, click here to access a free investor alert on the company we're calling the "brains behind" the technology.

Alison Southwick owns no shares in any stocks mentioned. Nathan Alderman owns shares of Berkshire Hathaway. Tim Beyers owns shares of Berkshire Hathaway, Time, and Time Warner. The Motley Fool recommends and owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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