Fox-Time Warner deal would help Murdoch in China

Rupert Murdoch's plan to buy Time Warner would help the Twenty-First Century Fox chairman make larger inroads in China, a fast-growing market that media moguls are finding hard to crack, Reuters reported Monday.

Time Warner's board rejected Murdoch's $80 billion offer, but the Fox chairman is expected to continue the chase.

A deal would create a giant with more than $37 billion a year in revenues in the US and Canada. It would also nearly double the revenues Fox generates from the emerging media markets.

"He sees 3 billion new consumers coming into the market and a rising middle class in China and India, and mobile devices and strong demand for content," said Mario Gabelli, the CEO of GAMCO Investors, in an interview with Reuters.

Gabelli owns shares of both Fox and Time Warner.

Last year, Fox generated 42 percent of its revenue outside the US and Canada. The company's Asian revenues, including those in Japan and China, grew by 40 percent, to $2.1 billion, over two years. Time Warner's collection of cable channels would compliment Fox's programming in key territories.

In China, with Time Warner in the fold, Murdoch would be able to focus more squarely on profiting from what movies and TV shows the government allows.

Currently, China limits to 34 the total number of movies foreign companies can import annually.

A merger would allow Murdoch to use the Warner Brothers studio to claim more quota slots. In 2013, seven Warner Brothers films were granted a release in Chinese theaters, and six for Fox, according to US box office revenue tracker Box Office Mojo.

Warner's movies generated $155.9 million from three of its films that ranked in China's top 20 in 2013.