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Deals and IPOs

Gabelli says media mergers are in the air: 'Scale up' is new mantra

Key Points
  • Disney and Rupert Murdoch's 21 Century Fox have discussed a deal for the studio and television production assets, but Gabelli suggests an IPO.
  • It could also be a solution for Viacom, he said.
Gabelli on media M&A: The challenge is to distribute our content globally

Billionaire value investor Mario Gabelli's love of media stocks is well-known, but on Monday he took to his Twitter account to test an idea.

CNBC has been reporting that Disney had held talks with Rupert Murdoch's 21 Century Fox about acquiring its studio and television production assets and hadn't given up on striking some sort of deal. That would leave Fox to focus largely on its news and sports assets.

On Twitter, Gabelli floated this alternative idea: "don't discount possibility of Rupert doing iPo and and subsequent spin (orshare exchange)of its highly valued non US assets." He also suggested this as a solution for Viacom. "Do the analysis!"

On CNBC's "Closing Bell" on Monday, he talked about this idea, saying media companies have to figure out how to pair mobile delivery with content in a way that captures younger audiences. Deregulation and a pro-business administration in Washington is fueling a merger boom. "There's a lot of mergers going on and it's time to do it," he said, "Scale up."

But for Murdoch, an IPO could be another way to unlock the value of overseas assets while reducing the tax hit, Gabelli said.

Murdoch has plenty of experience with media deals. In 2013 News Corp. and 21st Century Fox split into two companies, the first housing most of the news publishing assets like The Wall Street Journal, and the latter with the studios and Fox television. "When you have done a spin off like the Murdoch family has done with News Corp. you're ready to do another one," Gabelli said.

Last month, Gabelli told CNBC's Halftime Report that he likes shares of companies that control media content, whether that be movies, television or music. Gabelli funds own shares of AT&T, Time Warner, Disney and 21st Century Fox, among other companies.

AT&T struck a deal to buy Time Warner last year but finalizing the transaction stalled during a prolonged government antitrust review that has culminated in a law suit to block the deal.