Rupert Murdoch’s 21st Century Fox has been rebuffed in an $80bn (£46.7bn) bid to buy rival US media and entertainment giant Time Warner.

Together Fox and Time Warner would own a huge range of assets including CNN, Fox News, HBO and movie studios 20th Century Fox and Warner Bros.

Time Warner rejected the $85-a-share cash and stock offer, a 25% premium on the company’s share price, according to a source familiar with the negotiations. Murdoch is likely to consider a renewed bid, the New York Times reported.

The octogenerian has long been keen to secure a final mega-merger before handing the reins of his media empire to the next generation of the Murdoch family.

The bid, which would create a combined company with total revenues of $65bn, could prompt a new spate of media consolidation.

Fox has indicated that to push the deal through regulatory scrutiny it would sell off Time Warner’s CNN, which competes directly with Fox News, with rivals CBS and Disney’s ABC likely suitors, according to the New York Times.

21st Century Fox said in a statement: “21st Century Fox can confirm that we made a formal proposal to Time Warner last month to combine the two companies. The Time Warner board of directors declined to pursue our proposal. We are not currently in any discussions with Time Warner.”

Time Warner issued a robust defence of its rejection of Murdoch’s offer, including questioning Fox’s ability to manage the enlarged business.

The company also questioned the value to shareholders of the non-voting stock portion of the deal – the cash part of Fox’s offer was $32.42 a share.

“There is significant risk and uncertainty as to the valuation of 21st Century Fox’s non-voting stock and 21st Century Fox’s ability to govern and manage a combination of the size and scale of 21st Century Fox and Time Warner,” the company said.

The company’s board said it was “confident” that its own strategic plan was “superior” to any offer Fox could make.

“The board is confident that continuing to execute its strategic plan will create significantly more value for the company and its stockholders and is superior to any proposal that 21st Century Fox is in a position to offer,” it said. “The unique value of Time Warner’s industry-leading businesses including its portfolio of networks and its film studio and television production business is only going to increase.”

Claire Enders, founder of media research firm Enders Analysis, said: “Time Warner been a real laggard in stock market terms for a long time with a lot of great assets that can be plucked like a chicken. Even for 21st Century Fox this is a colossal deal. They are making a big play for more content and Time Warner has some of the best global franchises you could hope to have – look at Harry Potter, Batman and HBO.”

Time Warner’s lucrative cable channel business includes TNT, TBS and HBO, home to shows including Game of Thrones.

Murdoch’s TV channel operations include FX and the Fox broadcast network, which airs programming including The Simpsons and American Idol, until it was cancelled earlier this year.

Bringing Warner Bros – maker of films including The Hangover, the Batman and Harry Potter franchises, and one of the biggest hits of 2014 The Lego Movie – together with 20th Century Fox, home to Avatar, X-Men and Dawn of the Planet of the Apes, will create a Hollywood studio powerhouse.

21st Century Fox currently has more than $5bn cash on its balance sheet. The company could also potentially add $10bn-plus more if BSkyB, in which Fox owns a 39% stake, successfully completes a buyout of Fox’s Italian and German pay-TV businesses to create Sky Europe.

Time Warner rejected the deal over issues that include the stock portion of 21st Century Fox’s offer would only be for non-voting shares, which would keep the enlarged business firmly controlled by the Murdoch family.

While Murdoch has made numerous audacious “bet the farm” moves to build his media empire over the years, the 83-year-old is determined that his last major deal is capped by a safe transition of power to his sons.

Earlier this year he laid the groundwork by bringing back eldest son Lachlan, the heir apparent who walked away from the empire almost a decade ago to set up his own investment company and move to Australia.

The 42-year-old was named as non-executive co-chairman of the entertainment and publishing companies, alongside his father.

At the same time, younger brother James was also elevated to co-chief operating officer, with direct responsibility for developing Fox’s pay-TV aspirations globally.

The 41-year-old moved to New York to consolidate his position within the company, but also to distance himself from intense criticism of his handling of phone hacking as executive chairman of News UK.

Murdoch has been focused on building the scale of 21st Century Fox’s TV and film business, after freeing it from the drag of the publishing assets which were spun off into a separate listed company last year.

The separation of the businesses has insulated the highly-profitable 21st Century Fox operation from the phone-hacking scandal that has dogged some of his publishing assets.

The publishing business, News Corp, primarily consists of newspaper assets such as the Sun, Times, Wall Street Journal and the Australian, book firm HarperCollins, and also Murdoch’s Australian pay-TV business.

Analysts and investors have been tipping wider consolidation among the major US media players following Comcast’s move to take over Time Warner Cable.

Time Warner has spent years trimming its portfolio – including AOL, Time Warner Cable and, most recently magazine publishing division Time Inc – to focus on TV and film, which has made it an attractive target.

Time Inc, the largest magazine publisher in the US with titles including Time, Sports Illustrated and Marie Claire, was spun off last month as a corporate manoeuvre to protect Time Warner from the continuing decline in the publishing sector.

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