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Fox-Time Warner cultural divide erects hurdles to takeover plan

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Rupert Murdoch’s 21st Century Fox Inc. and Jeff Bewkes’s Time Warner Inc. couldn’t be more different. One is essentially family-owned, the other purely public. One likes to contribute to Republican candidates, the other to Democrats. And of course there’s Fox News versus CNN.

Those vast philosophical and cultural differences aren’t just talking points. They played a big role in the decision by Chief Executive Officer Bewkes and Time Warner’s board to spurn Murdoch’s $75 billion bid last month to buy the company, according to several people familiar with the deal who asked not to be named.

The rejection wasn’t simply a matter of money, said the people, who weren’t authorized to speak publicly. Differing views on corporate governance and succession planning also played into Time Warner’s dismissal, said the people. Should the two companies combine, the gulf could easily produce sharp clashes of style and policy, said Claire Enders, CEO of research firm Enders Analysis Ltd.

“These are not natural bedfellows at all,” she said. “Time Warner is traditionally a liberal organization with liberal values. This isn’t just about CNN versus Fox News — the two companies altogether are like chalk and cheese, vinegar and oil.”

Dinner Meeting

Murdoch has recently tried to cross that chasm by inviting Bewkes to dinner to discuss the merger, said a person familiar with the matter. Bewkes has so far declined, in part feeling any dinner would become public and look like he was supportive of a deal, the person said. What could smooth the way are the few social connections between the two, including Time Warner Executive Vice President Gary Ginsberg, who once worked for Murdoch.

Both Fox and Time Warner declined to comment.

Time Warner was borne out of New York-Hollywood media circles, a corporate culture used to lavish expense accounts, now tamped down under Bewkes, 62. Fox still evinces the boot- strapped sensibility of its 83-year-old, self-made-billionaire CEO.

Murdoch favors self-taught executives, while Bewkes, a 1974 Yale University graduate, prefers to mine talent from top-flight schools, according to several people familiar with both. Time Warner executives are known to sit on the boards of arts organizations and attend fundraisers for liberal institutions, such as the national advisory board for the Hutchins Center for African and African American Research at Harvard University.

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Classic Bewkes

Murdoch and many of his executives circulate in the Republican sphere, most notably Roger Ailes, the head of Fox News, who has long wielded influence in the party. Murdoch has donated to the National Republican Senatorial Committee and backed campaigns of George W. Bush and former Senator Rick Santorum of Pennsylvania, though Democrats including Hillary Clinton have also received his support, according to campaign- finance records.

Time Warner tends to take a more Democratic bent. Bewkes has given money to Democrats including President Barack Obama, former Connecticut Senator Christopher Dodd and Chicago Mayor Rahm Emanuel, according to federal election records.

Both companies have political action committees, and Fox has contributed about 58 percent of its funds to Republican candidates in the last federal election cycle, according to data from Open Secrets, a research group that tracks political spending. Time Warner gave about 83 percent to Democrats, according to the data.

Washington Ties

Richard Plepler, the CEO of Time Warner’s HBO, has strong ties to Washington, where he was once an aide to Dodd. The network he runs has produced popular, liberally oriented programming, such as “Real Time with Bill Maher” and “Last Week Tonight with John Oliver.”

Plepler, 55, is seen as a classic Bewkes executive — scholarly and active in elite power circles, according to several people who have worked with the CEO. Plepler is an active member of the Council on Foreign Relations, he’s usually the center of attention at awards shows and he reads widely, as evidenced by publications arrayed in his office that include the New York Times, the Financial Times, the New York Review of Books, Bloomberg Businessweek and the New Yorker — all fodder for programming ideas.

Bill Maher

The distinct cultures could cause Time Warner executives to flee in a merger, Doug Creutz, a media analyst with Cowen & Co., wrote in a research note this week.

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“Much of Time Warner’s value comes from the employees who work there,” he said. “In our view, a talent exodus would significantly reduce the value of Time Warner’s assets.”

In a column this week in the Hollywood Reporter, HBO’s Maher said a Murdoch takeover would exact a “terrible price,” and joked, “(I mean besides the terrible price I personally will pay when Rupert takes over HBO and my show becomes ‘Paste- Eating Time With Steve Doocy.’)”

Notwithstanding Fox’s conservative credentials, its head of filmed entertainment, Jim Gianopulos, is a Democratic contributor as are many other of its Los Angeles-based executives, and many of the shows it produces are considered boundary-breaking programs, such as “Modern Family,” which features a gay married couple.

The two companies employ radically different corporate- governance structures that may play an even more crucial role in whether the deal happens.

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