Jeff Bewkes talks M&A—but not Murdoch

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Jeff Bewkes. (AP Photo/Lionel Cironneau)
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Time Warner's second-quarter earnings call this morning was a closely watched affair in the wake of yesterday's news that Rupert Murdoch's 21st Century Fox had withdrawn its bid to acquire the rival entertainment titan.

But there was little payoff for analysts and media watchers hoping to get some color about the failed proposal from Time Warner C.E.O. Jeff Bewkes, who's now under pressure to show shareholders that his strategy for Time Warner is as valuable as Murdoch's $80 billion play for the company.

At the very beginning of the call, Bewkes said he would not be commenting on the proposal or withdrawal, while noting that "the board and our senior management team appreciate very much the continued support of our shareholders."

Prior to the start of the Q&A portion, analysts were reminded that Time Warner executives would remain mum on matters pertaining to 21st Century Fox.

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But a couple of them managed to tip-toe around the giant elephant in the room.

In response to a question about M&A more generally, Bewkes said Time Warner has "leading scale in all of our businesses, we're not lacking something we need.

"Its not that it's ever a bad thing to add something that would bring complimentary fill-ins or more scale or the elimination of redundancies," he continued. "But when looking at any particular case, you have to look at what type of scale you'll be adding. ... I would encourage everybody to look at all sides of the issue when you're contemplating the benefits and risks of putting very large companies together."

Another participant suggested that Murdoch saw a Time Warner acquisition as "a way to launch an 'everything Fox,'" and he asked Bewkes whether Time Warner, whose assets include Warner Bros., HBO and Turner Broadcasting System, could do the same on its own.

"I think we could," said Bewkes. "We're trying to be best in class to have a platform that can not only deliver HBO networks, but also Turner networks and, frankly, other networks."

Time Warner has become slimmer since Bewkes' tenure as chief executive began in 2008, and today's financial results for the second quarter of 2014 were the first since Time Warner spun off the magazine publisher Time Inc. into a separate publicly traded entity.

Bewkes emphasized Time Warner's core repositioning as a video-content company. He touted the strength of Warner Bros., which saw its highest second-quarter profits in more than a decade, and HBO, which continues to churn out buzzy new shows like "The Leftovers."

He also gave a plug to CNN, which has been angling to mitigate a long-held slump in its primetime news programming with the addition of documentary-style shows like Anthony Bourdain's "Parts Unknown" and "The Hunt" with John Walsh.

"We're making significant progress on our original programming strategy," said Bewkes.

Time Warner's second-quarter earnings beat Wall Street estimates, coming in at 98 cents a share. Total revenues were up slightly to $6.8 billion, from $6.6 billion during the same quarter in 2013.

The company is expected to unveil details about its international growth plan at an investor event this fall.

In June, 21st Century Fox made an offer to acquire Time Warner for $85 a share. But it took the offer off the table yesterday afternoon, citing Time Warner management's refusal to engage and an undervaluing in its own share price.

“We viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands," Murdoch, the company's chairman and chief executive, said in a statement. "Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly."

Instead, 21st Century Fox's board has authorized a $6 billion stock repurchase program to maximize value for shareholders. The company will report its own quarterly earnings after the markets close later today.