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A tie-up between Fox and Time Warner, the owner of HBO and Warner Bros., would have reshaped the media industry by giving the TV-and-film companies bargaining power in negotiations with cable operators such as Comcast Corp. and Time Warner Cable Inc., which are in the process of their own merger.

Cable Combo

Shares of Fox rose as much as 11% to US$34.71 in late trading. Time Warner dropped as much as 14% to US$72.85.

Keith Cocozza, a spokesman for Time Warner, didn’t immediately respond to a phone call or e-mail seeking comment. A representative for Fox had no immediate comment.

The combined company would have concentrated some of the top cable networks under one roof, joining Fox News and FX with Time Warner’s TNT, TBS and HBO. It would have ended up receiving 40% of the licensing payments that pay-TV companies pay to both the broadcast and cable networks, according to Michael Nathanson, an analyst with MoffettNathanson Research LLC.

The board at Time Warner determined Murdoch wouldn’t be able to raise enough money to increase his bid to the US$100 a share or more that it would take to interest investors, people familiar with the matter said last month.

Fox had previously calculated the combined company could achieve more than US$1 billion in cost savings, including through the elimination of overlapping back office, human resources, sales and information technology operations, a person familiar with the matter had said.

Both companies plan to report earnings results tomorrow.

“21st Century Fox’s future has never been brighter,” Murdoch said in the statement. “The strength of our leading franchises, combined with the power of our emerging growth businesses and the leadership positions of our international enterprises put us on a path for even greater success.”

Bloomberg.com