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Rupert Murdoch’s Increasing Empire

Murdoch has offered $80 billion for Time Warner and has been summarily turned down.

Stock Market Video

Rupert Murdoch’s Increasing Empire

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In Case You Missed It

In this week’s Stock Market Video, Mike Cintolo gives you all his latest advice on the volatile market-basically, he’s paring back, but with many stocks and indexes still holding support, he’s not running for the storm cellar. In fact, it’s actually easiest to spot strength in a bad market, and Mike lists his current crop of top ideas-stocks that have taken the recent selling in stride and are in position to tack on gains if earnings season goes well. Click below to watch the video.


Rupert Murdoch’s Increasing Empire

Before I get to Rupert, the media emperor behind 21st Century Fox, I feel a small rant coming on. Please stand by.

The financial press, whether it’s on paper, on air or online, is about as close to a virtual carnival midway as you can get. The competition for your time and attention is constant, and features every kind of sensational stimulus imaginable. Screamer headlines, teasers, dire predictions, phenomenal claims and offers and (occasionally) a few nuggets of good sense vie for your attention, enticing you to keep reading, keep watching or keep clicking on related links.

It’s hard to separate the wheat from the chaff in that kind of sensory chaos, which isn’t that surprising given the extremely high chaff/wheat ratio. After you’ve been baited-and-switched and teased and tempted and distracted and confused and enraged enough, you either develop a very accurate BS detector or you just give up and either leave or start clicking everything.

Slogging through the financial press in all its forms is a large part of what I do for a living as Chief Analyst of Cabot China & Emerging Markets Report, so it’s my job to find a way to manage. But it’s hard. I’m very good at focusing when I’m on deadline, but I’m by nature a distractible person who has had to develop the discipline to ignore all the cat pictures, scandals, bikini shots, gossip and wildly flashing ads that the financial media is shot through with. It’s very hard.

Personally, I prefer newspapers. They are quiet. They don’t flash and beep and require me to sit through commercials to see what I want to see. I don’t have to wade through swamps of click bait and a constant flow of “sponsored content.”

So, with that out of my system, I’ll get back to Rupert Murdoch, a man with a media empire that includes cable network programming like Fox News, National Geographic Channel, FX and the YES Network, filmed entertainment from Twentieth Century Fox and Twentieth Century Fox Television plus television (Fox Sports and other shows) and some German and Italian satellite TV. (It also includes The Wall Street Journal, one of those newspapers I was talking about.) All told, his combined company had almost $29 billion in revenue in 2013.

Mr. Murdoch is proposing to take over Time Warner, a slimmed down version of the once-enormous media conglomerate. (That company’s CEO has been spinning off non-core businesses at a great rate, including AOL years ago and the publisher Time, Inc., which left the building just last month. The remaining company has the Turner network, CNN and plus HBO and Warner Brothers, a focused broadcasting and production enterprise that generated over $27 billion in revenue last year.

Murdoch has offered $80 billion for Time Warner and has been summarily turned down. But that’s just the first step for a determined hunter like Rupert.

Discussions in the financial press about this possible deal have been pretty neutral in tone. Some commentators have noted that this would be the third big media merger of 2014, following Comcast’s $44.5 billion takeover of Time Warner Cable in May and AT&T’s buyout of DirecTV for $48.5 billion that just closed in May. They conclude that there’s little chance of any regulatory opposition to the deal, since Murdoch has already said he would get rid of CNN, which is a direct competitor to Fox News.

Now, I’m not the kind of investor who’s much interested in the stocks of any of these media companies involved in serial dog-eat-dog activity. As someone who recommends stocks for a living, I’m not likely to be green-lighting any of the participants in these mega-companies that come together and split apart like colossal lava lamps.

As a consumer, I have very deep doubts that Comcast, which has been making headlines in recent weeks as “the most-hated company in America,” has gulped down AT&T Broadband so it can lower my monthly bill.

My suspicion is that the companies doing all this merging are getting bigger for just two reasons. First, they want to control as much content (movies and TV shows) as they can, plus the means to produce more. They used to say that content was king on the Internet, and it looks like it’s still the case for media empires.

Second, these companies want to get bigger so some other company doesn’t come along and swallow them up. Apple, Google and even Netflix, all have very deep pockets and if any of them decided to get into the content game, being too-big-to-swallow would be a definite advantage. I’m reminded of the New Yorker cartoon showing three fishes, a small one on the left about to be swallowed by a bigger one in the middle, which is, in turn about to be swallowed by an even bigger fish on the right. The little fish is saying: “There is no justice in the world.” The middle fish says, “There is some justice in the world.” The biggest fish says, “The world is just.”

As an observer of the antics of multinational conglomerates over the years, I say, “Justice has nothing to do with it.” Except for Apple (AAPL) and Netflix (NFLX), who aren’t currently playing this game of thrones, I have no interest in the players. And that makes all the headlines about the emperor Rupert (and his son and heir) just another distraction.

If you’re tired of distractions and want useful, no-nonsense advice on growth stocks that you can buy right now, I would suggest a trial subscription to Cabot Market Letter. It’s been delivering profitable advice on strong stocks and market conditions for over 43 years. There are no animated ads, gossip items or puppy pictures to distract you. And we’re not likely to be taken over by Rupert Murdoch.

Click here for more details.


Here’s this week’s Fortune Cookie. Remember, you can always view all previous Fortune Cookies here and Contrary Opinion buttons here.

Tim’s Comment: Malone uttered these words in 1925, when he was acting as co-counsel for the defense (with Clarence Darrow) in the Scopes “Monkey Trial.” No doubt they had effect. Even though the quote is an exaggeration, it does ring true, and reminds us to keep our minds open to the opinions of others.

Paul’s Comment: I agree with Tim about the exaggeration part, but there is definitely a kernel of truth in this witty remark. It reminds me of one of my favorite bumper stickers, which advises: “Don’t Believe Everything You Think.” The core of Malone’s quotation is that by seeking out contrary opinions we usually emerge from the conversation stronger and (often) changed a little for the better.


In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.

Cabot Wealth Advisory 7/14/14-Facebook’s Evil Experiment

Tim Lutts, Chief Analyst for Cabot Stock of the Month, writes in this issue about revelations that Facebook experimented on its subscribers, discovering that good news made people happier. He asks whether it’s better to pay attention to all the bad news in the world or just to ignore it and be happy? Tim also gives the ninth in his series of Stocks to Buy and Hold Forever. Stock discussed: Baidu (BIDU).

Cabot Wealth Advisory 7/15/14-3 Reasons to Beware of Analyst Ratings

Nancy Zambell, editor of Investment Digest and Dividend Digest, looks at analyst ratings in this issue and finds that they are confusing, often represent conflicts of interest and just aren’t that useful to investors. She also shows how to get the best out of them.

Cabot Wealth Advisory 7/17/14-Two New Major Trends

Chief Analyst Mike Cintolo, who heads up Cabot Market Letter, writes about new trends in gold and housing that may represent big opportunities. Stocks discussed: Market Vectors Gold Miners Fund (GDX), American Homes 4 Rent (AMH) and Altisource Residential (RESI).


Paul Goodwin
Chief Analyst, Cabot China & Emerging Markets Report
And Editor of Cabot Wealth Advisory

P.S. Just a Few Spots Remain!

In just about a month, we’ll be meeting in Salem, Massachusetts for the Second Annual Cabot Investors Conference. All of our Cabot analysts will be there, discussing their favorite stocks of the moment, the state of the overall market, and lots of investing tips and techniques. You won’t want to miss it, and we’ve only got a few spots left, so register today by clicking here.

Paul Goodwin is a news writer for Cabot’s free e-newsletter, Wall Street’s Best Daily.