In a statement, 21st Century Fox said it pulled the plug on the bid – worth a reported $80bn (£48bn) – after Time Warner's management and board "refused to engage" with the possibility of "an offer which was highly compelling".
The Murdoch-owned corporation has now said that it'll be buying back $6bn (£3.6bn) worth of its own shares, a move that it aims to complete within the next 12 months.
Murdoch said: "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.
"This significant return of capital underscores the Company’s ongoing commitment to disciplined capital allocation and returning value to shareholders in a meaningful way."
Time Warner responded with its own statement, saying: "Time Warner’s Board and management team are committed to enhancing long-term value and we look forward to continuing to deliver substantial and sustainable returns for all stockholders.
"Time Warner is well positioned for success with our iconic assets, including the world’s leading premium television brand, the world’s strongest ad-supported cable network group, and the world’s largest film and television studio."
The announcement comes a couple of weeks after UK-based BSkyB confirmed it had agreed to buy 21st Century Fox's entire stake in Sky Italia, as well as its 57.4 per cent controlling stake in fellow pay TV operator Sky Deutschland.
It's thought the deal could be worth as much as £7bn once complete, and is set to lead to the creation of a pan-European broadcasting firm that will be the largest operator in three of Europe's four largest markets with 20 million customers.