UPDATE. 6:46 AM: Time Warner confirms that it rejected 21st Century Fox‘s acquisition offer saying its board concluded that remaining independent “will create significantly more value for the Company and its stockholders and is superior to any proposal that Twenty-First Century Fox is in a position to offer.” Fox said it would pay $32.42 in cash plus 1.531 of its own non-voting shares for each Time Warner share. Directors don’t like the plan, in part because it involves “significant risk and uncertainty as to the valuation of Twenty-First Century Fox’s non-voting stock and Twenty-First Century Fox’s ability to govern and manage a combination of the size and scale of Twenty-First Century Fox and Time Warner.” The board also notes that there would be “considerable strategic, operational, and regulatory risks” to a deal.

21stcenturyfox1__131014203730-275x122PREVIOUS, 4:39 AM: Time Warner’s up nearly 20% in pre-market trading after The New York Times and CNBC reported that the media giant recently rejected an $80B takeover proposal by Rupert Murdoch‘s 21st Century Fox. The bid could “put Time Warner in play and might again ignite a reshaping of the media industry,” the Times says. Fox COO Chase Carey met with Time Warner chief Jeff Bewkes in early June offering $85 a share — 40% of it in cash — a 25% premium at the time. The proposal said that the combined companies could save at least $1B by TimeWarnerlogoblueeliminating duplication. Fox, which owns Fox News, offered to sell CNN to avoid antitrust problems, and indicated that it would maintain Time Warner’s studio and cable network operations, as well as most of its best execs, according to the reports. The Time Warner board seriously considered the proposal but rejected it, in part because the offer included nonvoting shares. Nonetheless, “Rupert Murdoch is ‘determined’ to buy Time Warner,” CNBC reports, citing unnamed sources. Murdoch is said to have enlisted Goldman Sachs and Centerview Partners to advise him while Time Warner has Citigroup.

Fox says that it “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.”

Murdoch has long lusted after Time Warner, which he first offered to buy in 1984. He’s intoxicated by the possibility of running a combined company that would have by far the biggest collection of top-rated cable networks, and unparalleled clout in TV and film production.  What’s more, the Fox chief is itching to get back into the deal-making fray says Michael Wolff who wrote a biography of him, The Man Who Owns The News. “For the past few years, Murdoch’s troubles with the hacking scandal in London and his fractious family issues have been among the big subjects there. He surely doesn’t mind getting the subject back to his business acumen and fearsomeness,” Wolff wrote this week in USA Today. Time Warner is considered vulnerable because it is not family controlled, and — after unloading AOL, cable systems, music, and publishing — would be affordable.

But many on Wall Street have dismissed the idea of a Fox-Time Warner merger as fanciful — a mismatch of corporate cultures that probably would be rejected in Washington on antitrust grounds, or as dangerous to the public interest in media diversity and independence.

Warner Bros and Fox together accounted for 27% of last year’s domestic box office, $2.9B,well ahead of Disney’s 16%, Guggenheim Partners’ Michael Morris observes. The companies’ cable networks, without CNN, would account for 30% of domestic cable network ad revenues ($15B) and 40% of  pay TV affiliate fees ($16B).

Others also remain wary of media mega mergers after debacles led by AOL Time Warner — and as traditional film and TV producers see their prospects decline in an era dominated by digital titans including Google, Apple, and Amazon. “Executives will likely not admit to it publicly for years to come, but fears of changing consumer behavior are driving interest in consolidation,” BTIG’s Rich Greenfield said yesterday. “Investors should be wary of programming mergers and acquisitions simply to add scale.”