Since it was announced that Rupert Murdoch’s 21st Century Fox (FOXA) had made a bid to buy Time Warner (TWX), much of the talk has focused on how important it is for media companies to be really big.

“I don’t like the terms of the deal, but I like the idea of content providers combining,” says Mario Gabelli, whose Gabelli Asset Management owns shares of Time Warner. “Ten years from now, there are going to be many more screens worldwide and the cost of distribution is still too high.”

In fact, Time Warner and CEO Jeffrey Bewkes, which turned down Murdoch’s offer, offer the best argument that bigger might not always be better in the media business. Bewkes, who took the helm at Time Warner in 2008, has spent the past six years sliming down the company. Over that time, the company’s stock price has tripled. The divisions Bewkes has spun-off into standalone media companies have also performed well. Time Warner Cable (TWC) stock, for instance, is up 444% since it was split off in mid-2009. Shares of internet company AOL (AOL) are up 80% since its separation. Even old media Time Inc. (TIME), which is the owner of Fortune, is up 21% since it started trading on its own in May.

Ironically, it is now Bewkes’ strategy to slim down that may ultimately put his company in the hands of Murdoch or another rival. If he had not spun off those other divisions and they had done as well, the combined Time Warner would now be worth $153 billion, which would likely be too large for Murdoch’s Fox, which has a market cap of $46 billion.

Of course, that massive combined value may suggest that Bewkes shouldn’t have been sliming down in the first place. He does appear to have sold off some businesses at their low points. But the Bewkes camp would argue that splitting off those businesses helped create that additional value, and that the spun off businesses have grown better on their own.

According to a banker close to the deal, Bewkes and his team truly believe Time Warner is big enough, and they are not angling for a larger bid from Murdoch. The banker also said Time Warner is not pursuing its own acquisition to keep Murdoch at bay.

Time Warner does look plenty large. It is already the largest, or close to it, producer of video content in the world. The company generates around $26 billion in revenue from its video businesses, roughly the same as Disney (DIS), when you exclude the sales that company gets from its theme parks, toys, and other businesses. That’s about $3 billion more than Fox generates. And Time Warner’s HBO is a must-have for cable companies. So it is hard to argue that Time Warner will have a hard time cutting deals to distribute its video. Still, you could argue that if Time Warner was twice the size, it would have even more leverage to get better deals.

Over the past three years, shares of the largest media companies have performed better than their smaller peers. But Time Warner is the best performing stock of the bunch. Take it out, as well as the recent gains that Time Warner Cable and Direct TV (DTV) have received since their takeover bids, and shares of the largest companies—$20 billion in revenues and up—have not done that much better than mid-size media players—$5 billion to $20 billion in revenues— according to data from S&P Corporate IQ.

Shares of CBS Corp. (CBS) are up 120% in the past three years, nearly as much as Time Warner. Concert producer Live Nation’s stock (LYV) has more than doubled. CBS has an $18 billion market cap. Live Nation is just over $2 billion.

Like Bewkes, investors, it appears, don’t think size in the media business is the only thing that matters.