Up the c suite with ceo dan has he been replaced. Hessy being replaced. And Goldman Sachs and j. P. Morgan, according to regulate us, have not shown that they can collapse without causing Severe Damage to the economy. They are still too big to fail. And as i just mentioned, a morning of failed deals, both in telecom and media. Is someone who has had one of the most successful 10 years of any media company. Bob wright is the former chairman and cto of nbc universal. He is also the cofounder of his company. Make you for being with us. Is anything happening here . The last time you are on, there was lots of media news. You always find the perfect day to come on our show. Off, what do you make of Rupert Murdochs nondeal . Speaks forhat itself. He got out there with a very attractive offer, and offer i hope nobody would talk, top, which appears to be the case. Maybe they had some expectation it would move a bit and i felt like and maybe he felt like it was negatively affecting his stock. They would return to shareholders. Yes, but that may be over a certain time frame. In which case, the stock back, if they had to use it, it would certainly help their Balance Sheet for purposes of borrowing money. You dont give all of that money to shareholders from day one. That is true. Hang on, because i want to bring in jeff mccracken, a Bloomberg News reporter, who has been working on this story for us. The big question people were asking last night is whether murdoch was really done with time warner. But i dont think this is a ploy. I dont think this is a ploy. He is frustrated. In some respects, his reputation for being aggressive, which generally helps him when doing a deal, i think it worked against him. Because candidly, no one believed him or his advisors or anyone who worked for him when he said they would be fiscally disciplined and would not overspend. He shareholders expected would spend too much, which made the deal harder to do. And time warner shares kept going up and up, even though the message was fiscal discipline and we will not overpay. Not going to work for him. Rightnow when you look at the cold, hard numbers, it is hard to justify that to the shareholders. Some of the advisors to murdoch last night, there is some pretty strong ill will toward jeff bewkes and the board. I dont know if jeff bewkes will be able to get that stock price up. His job might be on the line. Hes very confident. Hes done a great job in breaking up the company and selling it piece by piece to begin with. Weve got to give him credit for that. The thing that strikes me is time warner is three different companies. Table theld turner table properties, which is cnn, cbs, and tnt. , which is ae is hbo completely different entity. And the third one is warner bros. Studios. Both television and films. Two of these three groups generally do not trade in dont trade a double judges multiples. We are talking about film and film does not trade at those levels. The question is, they are running almost a 20 multiple. He was at 85, maybe 90. Out there by yourself now, maintaining that multiple with those kinds of his mrs. , as good as they are. Businesses, as good as they are. I just think it is a very full bed. That stake will be there for a long time. Stay with me as you will be for the hour. This week, this morning, wall street went back to the drawing board and took immediate action to simplify their living wills. Without damaging the wider Financial System. Erik schatzker joins us now with more on the reassessment. I want you to play with this analogy. The Financial System is akin to an airplane. If the captain comes over the pa in an airplane and tells you we have got a serious problem, one of the engines went out, we have an electrical failure and it wont come down, what do you do as a passenger . You reach in and pull out the one pager that says what to do in the event of a an emergency. No, i will panic. 450 pages long. That is the problem with these living wills. Elizabeth warren pointed it out to janet yellen in the recent banking testimony. Isjpmorgans is living well four will is four pages long, how can this be wound down in an orderly fashion . That is the key. If a Financial System will be collapse, the next these things have to be able to fail. Be too big to fail. That is effectively what the fed is saying. Youre living will is your resolution plan. Do not dissuade me that you can be wound down in a orderly fashion. If you cant, that means the Financial System is still at risk. Ok. What are the banks going to do . The fed of the sec has ordered the best to go back to the drawing board and come back to regulators with a revised proposal by july 1, 2015. The big question is, how do they do that . The only conclusion you might be able to draw from this is that the fed is trying in it back your fashion to force these banks to break up or at least sell businesses. Was put in Pretty Simple terms. They made up their minds. Big institutions are a major risk and need to be split up. Some are pursuing explicit legislation. Others want to burn the big institutions so much that they simply cannot operate effectively. That is the subtext here. Thank you so much. Moving and shaking this hour, the aol ceo, Tim Armstrong armstrong. Figures easily Beat Estimates to a one percent drop in profit. He says he is open to partnerships and deals but one thing hes not interested in is acquiring a company to save money on taxes. It is not something i spend any time thinking about. Is, once you Start Talking about taxes, for a company like ours focused on a marketplace, our job has to be to focus on consumers and customers. Our business at our stage right now, the thing we are focused on is providing Great Services to consumers and customers. We will hear more from Tim Armstrong in just a few moments on what he thinks of Rupert Murdoch walking away from that bid for time warner. One company decided against moving its headquarters overseas , planning to buy for 15 15 billion. The company says it will not move its address abroad. Scarlet fu has the details. Scarlett, what happened here . Blame it on politics. Wall street came under a lot of political pressure. A democrat from illinois sending a letter to the wall street ceo informing him it would be a very bad moves in terms of optics to do just that. He said management would be turning our backs on the very people who allowed walgreens to thrive and prosper. That was one pressure point. Do not forget the u. S. Treasury yesterday said it is examining whether it has the authority to stop from moving overseas while it is waiting for congress to pass a tax reform. Walgreens dropping this idea of a tax aversion. What it does is and this twoyear journey of its alliance with alliance boost. Back in june of 2012, walgreens purchased 45 of the chain for just under 47 billion and then retained it for options of a full purchase. Todays announcement, it is purchasing 55 stake, just over 15 billion. Analysts expect a negative reaction in wall street shares. You are seeing that in the market already. Down 11 now. The most actively traded stock in the free market. If the aversion had been gone forward and approved, it would have given earnings per share a boost of . 64. Walgreens was just not confident the aversion move would have withstood an irs review. That is all playing out right now as investors reassessed where they want to see walgreen shares trading. Thank you. Banker to from homeless. The former pimco managing director tested for a week to see what it is like to be broke, all in his bid to win the governors race in california. He joins us in a moment. A republican is facing an uphill battle in his race for californias governor against a favored incumbent, jerry brown. The former Goldman Sachs and treasury decided to take his campaign on the streets, literally by going undercover as a homeless person to expose economic challenges in his state. He said in an oped following his stunt, californias most vulnerable citizens deserve leaders who will fight for them. It is a fight republicans should lead. He joins me now. Also here with us is bob wright, my guest host this hour. Neil, your critics said, what is the point . Why did you do this . Jerry brown calls it the california comeback. We are back and yet the data says 24 of californians live in poverty. Who is right . I went to fresno with 40 in my pocket, a backpack and a change of clothes, and i spent 70 days looking for a job. I said i would watch wash dishes. A few times, i was recognized, but none of the stores i applied. I could not get a job. For seven days come i lived homeless on the streets, i ran out of money, had to turn for a homeless shelter for food. 24 of californians live in poverty and we have one of the worst unemployment rates in the country, i think it rings file hollow. I wanted to bring poverty, homelessness, unemployment, to the forefront. Not just the unemployment debate but the national debate. We have done it. Admit, i admire what neil did and i admire his positions as i understand them. On a personal basis, but seeing what he has been saying, whos a moderate republican is perfectly willing to take on issues and take positions that other republicans more extreme dont. The tea party . It is just group spear there are so many people that are in extreme positions and he is not there. I think that is traffic where it i just hope the Republican Party in california is able to support him economically. They have not shown their ability to do that in recent years. That is true. Republicans are not known for really identifying with the lower middleclass or the povertystricken in this country. So neil, that is who you are trying to touch in your campaign . Ok. Let me put you on the spot. I expect nothing else. Your opponent, very cynical about this. They called it a political stunt. The San Francisco chronicle wrote, a former treasury 200 y, picked up a 20,000 donation while sleeping on the streets. He also scored a host of other big contributions from business leaders. They say this is just a fundraiser stunt. Jerry brown has 23 million in the bank and is taking money from high trade vendors. There is no room in this conversation for the democrats to criticize me over modest Campaign Funding we have been doing relative to brown. Neil, they say you are being a hypocrite. You are here talking about how it is hard to be homeless. Here you are banking all this money. Not me personally. We need money to have a campaign. Jerry brown thinks he is entitled to the governorship. He does not talk about poverty or unemployment. Do you know the california courts ruled california schools are violating the civil rights of poor minority kids, robbing them of their futures . Hasou know a jerry brown said about that . Not one word. He has not said anything . Not at all. Yes it he has a choice to appeal or not and he is hiding under his desk because the Teacher Union bosses own him. They funded campaigns and he does their bidding. I am fighting for working californians. He is living large in the shadow of his father. Bob, you are smiling here. It is just that i hope you families to understand your positions as it then theo them, and party can pull itself together. In the early 80s, when i was the president of cost communications, we were the largest cable operator by far, especially in san diego. That was republican country. There was no issue between republicans and immigration. In 1984 andnged 1985. The people to cold of the Republican Party and changed it forever. Tremendous voting strength. They have got harder and harder on immigration. It brings me to another point. We spoke with the chicago mayor. What ron said to us on immigration. The goal we had is to make sure every person in every neighborhood has the skills and education to participate and join the middleclass. That is our economic strategy. The children are part of that because of a get educated, there a newscaster, in that thousand. Someone who will achieve what we want. My bed is not just some of them, but many of them. Republicans say, send the children back. I am the son of immigrants, proimmigration. I think immigrants have tremendous value in our country. If you look at the ways of kids coming here, it is heartbreaking for them and for everyone. The only way we stopped the next wave and nextwave is we send the kids back home to send a message to the next wave of kids that you should not make this dangerous journey. How do you peel with hispanic voters with a stance like that . Sameesident obama has the stance. Hillary clinton has the same stance. They all say yes, we have to return these kids home. They approach kids with passion and respect and care. Hispanics i meet, they want their kids to get a good education, they want good jobs. That is where our current leadership in california is failing. To the issues i am focused on, they are not unique to any party or race. You can unite people and lift everyone up. Great to see you. Thank you for stopping by. Sorry we ran out of time. Republican candidate for the governor of california. Theng up, murdoch and collapse of the time warner deal. We will hear from someone whose company was once to named a partner in that deal. Armstrong from aol joins me in a moment here it moments. Moment. Good morning. I am betty liu. Here is a look at our top headlines this morning. Apple is the latest u. S. Tech company to be excluded from Chinese Government purchases. 10 apple products, including the ipad and the laptop, were left off a final procurement list. Concerned about security according to officials familiar with the matter. Wall Street Company taking over the Biggest Department street chain. Boosts not already owned. The new company to be named the , and notet alliance pursue the tax inversion strategy. An aversion to crisler may be at risk. A significant number of shareholders oppose the merger and exercised their exit right. Exceed 600 70 million, it made make the deal ineffective. The hour,inutes past which means Bloomberg Television is on the markets. We are about an hour away from opening bell. Futures again in decline. Number ofke any considerations to worry about and sell stocks, whether it is earnings with the job market in the u. S. And perhaps what is going on in the overseas and ukraine and elsewhere. Were are on the markets again in 30 minutes. We just mentioned this. The intraparty battle that has been waging inside the Republican Party in the 2014 election cycle. The winners all are are already emerging. So mattingly has been following this every step of the way. Bob wright is staying with me as well. Is there one single winner to come out of the struggle within the gop . Probably Republican Campaign consultants. So much money has been spent over the last 812 months. It has been incredible. Both byl amount spent the probusiness side of the fight and buy the tea party side, it ends up around 135 million. That is just for primary spirit we are not even talking about the general election. Businesses at 100 million. Were talking about the u. S. Chamber of commerce, and super pac flick american crossroads. Aboutrty groups put in 35 million. Freedom works, the conservatives fund, right now it is a split between the two sides. A great slate of candidates they are happy they pushed through. The tea party most importantly took out House Majority leader erik cantor. The key thing is republicans on both sides of the fight feel like theyre are bringing in their best general election candidates they have had in mold election cycles. Are democrats dancing in the streets because of this . Are thrilled to see any dollar go into a republican on republican fight, let alone 135 million. If you look at what has happened , the map has really started to expand. Seats the democrats did not think they had to defend, anding about michigan oregon, good republican challengers and republican money, they might be thrilled republicans have been going after one another, but they have major problems going into november. Stay with me. Bob, you are a republican. You are trying to get through in congress. How do you feel about this infighting . The difficulty were having more the senate. You can have bills and i will talk about couples i am involved with. Bills have tremendous support across the aisle. If you cannot get the bill to vote on the floor, if the leader will not let the bill get down, it could get submerged. A lot of this is about the process of legislation, getting it on the floor so the voter can take place. It is much tougher in the senate than in the house. Even if the republicans had 60, 59 senators, they will be in the same position democrats are now. Cannot get their will that get better if the gop takes control of the senate . They might. It is not a given because of the nature of the rules of the senate. They will be able to get bills to the floor better but they still have the issue of procedural delays. The houses different pair the house is different. Billpeaker can stop the from going to the floor. The house is representative of population. You are getting a clean vote in the senate. You have a substantial bloc of people that only represent less than 20 of the population. But they dominate the dialogue. Stay with me. Mattingly, our white house correspondent. Thank you for bringing us that story. The big political headline from london this morning is from a london mayor. In an event at bloomberg headquarters, he announced he will run for parliament, ending speculation about his political ambitions. Guy johnson spoke to him today. Him up as aet successor to David Cameron as leader of the conservative party. That is certainly what Boris Johnson would like. Politicalall about ambition for him. He came here to talk extensively in or out of the european union. He then dropped the bombshell, he will be running in next years general election. He will be back in parliament. He could be the successor to David Cameron. What he also had to do today was positioned himself in the skeptic wing of the conservative party. He certainly did that. We had not had a referendum on europe for 40 years, or 39 years, or whatever it is. People of my generation have not had the chance to vote explicitly on europe. If we get that point, i would campaign for a yes. If we cannot, and alternative future. For theif we look today global economy, he can be just as great. Boris johnson has a sharp lyrical mind. Sharp elliptical mind. It looks very clear he has his eyes on the main prize. Back to you. Thank you so much. We have breaking news. As we mentioned, sprint is not pursuing tmobile. Dan is stepping down. They are can confirming the newis going to be president and ceo of sprint. Is going to be the new ceo of sprint and we will see what is the next chapter in the company. We will be back with much more on that breaking news and more with Tim Armstrong. Aol this morning reported earnings. Less than one percent drop in profit or they just matched wall street estimates on earnings. The ceoTim Armstrong, of aol, what he made of Rupert Murdoch pulling its bid for time warner. I think it points to one specific thing, which is how valuable content and brands will be in the future. While everyone else is looking at whether or not the deal will come together, the thing pointed out for me and aol is brands will translate across streams and you do not see deals of that size going down with those type of forwardlooking people involved in it. A very exciting signal. It sounds like Rupert Murdoch and his team are saying, content is getting more valuable but there is a price to be paid and that is it. I think the bottom line is they know their businesses better than i do. The value of the meme content is and if you look at the internet 20 years ago to where it is today, a couple threads have really moved quickly. And networkss everywhere for consumers to connect and the second piece is content quality. On the web, it has significant we gone up. At quality has gone up there it that would make the transition for the future much more powerful. Wall street analysts had all come out after the deal had been revealed a few weeks ago, this will usher in another accelerated ace of m a in media. The fact we will not see a deal, at least right now, does that delay any acquisitions in the media world, including for yourself . There is really a case of her company is are getting at and where they are not. One of the things we concentrated on was making sure our results, our results are future looking. We set this clutch or years ago. The companies will do well whether they are independent or consolidated. The companies will begin a digital and high quality content, good at programmatic content, good at global media brands. The fuel,be independent or consolidated, for people to move forward. Advertising is big for you guys. Our ad pricing overall is up. It means we are doing a good job. Our advertising has gone from single digit, roughly five percent, to 35 of our revenue up to one year. That tells us how powerful the marketplaces in terms of automation of advertising and using digital to automate where consumers are with advertising. Our Programmatic Advertising grew 20 yearoveryear. There is very powerful signals and ourarketplace entire industry is headed on a real transformational move now. You mentioned premium content and how that will be much more valuable Going Forward. A lot of the content on your popular website like Huffington Post or tech crunch or gadget, you have a lot of viewers every month on those websites. That content is replicated in other places, like was feet. Isnt your kind of content getting commoditized . You can represent replicate the content but not the brand. It is an important aspect of our business. Of it and post was 20 million unique visitors on our blog. Today, it is roughly 97 Million People in 11 countries. 47 of the traffic is international. 200 growth in mobile yearoveryear. Brand with aerful powerful content. Everyone is chasing Huffington Post on that side. If you look at tech crunch and the hbo series, silicon valley, tech crunch and disrupt were essential parts of the show. You see people replicating our strategy. Our job is to stay at the forefront of that, stay in front of everyone which we are doing. Speculating. Maybe Tim Armstrong wants to consolidate all the eyeballs. What about potential mergers or acquisitions . Whether it is the seed or maybe even yahoo . Strategy,look at our we have been specific and precise in the last clutter years. Turning to aol, building global content properties, and getting into the advertising staff business for the future of programmatic, our acquisitions have been focused recently on advertising, which is a 500 trillion industry that will transform. When you think about us as acquirer or operator, our focus is on operations to really scale those three strategies and to partner and do deals very specific to those areas. With our results you see at a well, it is an excellent operating company. That is step one. Step two is how we do partners. We are doing both those things. We are the Largest Partnership company in terms of being able to partner with all the traditional companies. I would bet we actually have the fullest platform of partnerships of anyone in our state. They may, but i want to bring wright, my guest host this hour. Joining us from bloomberg intelligence. Just so you know, it provides Realtime Research and all the marketing factors that impact business. As you are watching this, both of you had mentioned, a large chunk of revenue comes from dialup. Yes. About all of their profits come from dialup. Their business has been declined for 10 years now. What tim has done very well is yearsd the street clutter ago he had to work on his brand and build his product and build his audience and that the revenue would eventually come. Buteholders got skittish this is the sixth quarter in a row where aol has been able to grow with advertising revenue. Bigoes not sound like a deal compared to yahoo , which still has not figured it out. What is the difference four difference distance . Advertising electronically. It is one of the fastestgrowing areas of internet ad spend. A well planted their stake several years ago, investing their business. Aol is benefiting. Tim has done a great job. Front always been at the of the clasp. To me, aol is sort of just like yahoo without alibaba. He would take issue with that, i am sure. They are very similar when you take alibaba away from yahoo . Is probablyat difficult is they have very sophisticated ad technology, which they bought an implement. I probably need to bring to the to show how the income is coming, just from that part of the business, and how it grows so it can be monitored. It is hard to understand. Hey are so tech savvy how it is actually bringing in money then. Right. Income from the tech savvy side of the business, which is all the advertising pieces, and how is it growing and is it on track and whatever. It is very sophisticated. We talk about the tech valuations, i recently read an article about buzz feed, one of their competitors being valued at 1 billion their income on. We talk about the valuations in silicon valley, i start with facebook a 19 billion for whatsapp. The whole Application Side of the business is not about what , it is reallye about what apple are you bring to the market and how many eyeballs you have . Can you bring in an app that has a billion user network . If so, advertisers and users will flock. Yahoo ,k about aol and theyre almost the old School Internet and it lets us have a big website aggregate and they hope to sell aggregate against it. Those valuations are fractions of what the at community is charging in silicon valley. Buzz feed is founded by the founders of the have imposed. The Huffington Post. They sold that to aol and went somewhat and created a competitive. All right. Thank you so much for joining us. Bob wright is staying with me as well. Staying with media, an exclusive interview with the Liberty Media ceo. He will weigh in on his own on foxs decision for time warner. He will talk more about consolidation. Explain exactly what is happening at this subway platform. The entire state of people just helped a passenger struck by this train. We will be back. Here is a story of a whole group of americans. His like its stuck between a platform and a train. He is in literally a tights but. While driving a train away is not an option, so it looks like there is only one to do. People get out of the train and try to free the man by pushing it forward, as you see here. All they needed was five centimeters. They could not do it right away but eventually they push hard enough to free the man. With a little help, he walked away and presumably stayed off the subway the rest of the day. That is one way to start your day. We are back with my guest host with final thoughts, bob right, the cofounder of autism speaks. Your take in our ripped from the headlines segment where there was a New York Times headline over the weekend about the kids who beat autism. Did you read that story . I did. Thought it was a very good story. Were you skeptical . No. We are dealing with millions of kids. Those kids, that is an exceptionally positive story. Is possible to be autism . If you have early diagnosis, the whole nature of why we got created, and you have early diagnosis and early treatment, andting at two years old, Behavioral Analysis is critical. If you look in that story, that is what they did. The winners were the kids who did that. They got an early diagnosis and had the therapies available. They had a pretty good success story. If you do not do that, the control group does not have a level of success. Had had nick they extraordinary success. A very positive story. You announced a partnership earlier this year with google. How is that going . Going along spectacularly. We really hope to announce by the end of the year when we will have a portal on google cloud where scientists and medical researchers can come and examine the material as we produce it. We have over 200 2000 done and this is an incredible project. I am so proud of it. When we get to 2000 and 15, we will unleash enormous opportunities. We also just passed the bill in congress. Goes principally to nih. Abel is a 529 College Tuition preferred tax program. Including autism. Taken a huge role in this and i have been involved for several years. Why should people not list is why shouldnt people with disabilities have a savings . Ccount. Hey have an enormous tax why not give them tax savings . We have all the votes in the house and senate. We just have to get it in the floor in september. I am confident that will happen. Thank you for staying with us. One last comment, in the state of north carolina, we have a bill for insurance. 82 of the population is in favor of this. We had a 90 vote in the house for it. It went through in the second. Andsenate majority leader the neighbor refuses to bring it to the floor for a vote. This is what will happen. It is an enormously popular issue. Someone can stonewall it. On that note, thank you so much, the former chairman and ceo speaks with us as our guest host this hour. We will be back in two minutes. Bloomberg television is on the markets. Equity futures are lower. It could be a day of deals not done. Rupert murdoch rock walking away from time warner and sprint saying, no more to tmobile. We are on the marked again in 30 minutes. Covers up stolen passers passwords. I speak exclusively with the Liberty Media ceo on what may have gone on behind the scenes as the time warnerfox deal unravels. Plus, aipac show today. We will hear from the former new york giants running back for the big announcement he will make on our show about his twoyearold company. You are watching in the loop. Equity futures. Here is a were working on. 13 on freemarket trade. A 75 billion takeover bid for time warner. Regulators have not shown they can collapse without susie hurting the economy. Plan, theyuptcy cannot be too big to fail. Sprint is dropping takeover talks for tmobile and shaking being replaced. That was Just Announced a few moments ago. The retailer lowered its sales guidance. The company also said the operating margin in the quarter will be lower than last year. About 250 basis points. I want to bring in bloombergs olivia sterns, Digging Deeper into retailers numbers. Lauren . Us about ralph sales are expected to grow by about seven percent. That is good. It has been an issue for the past year. The stock has been an issue today. Margins will continue falling further. Think aboutback and why margins are falling. In the Bigger Picture of the past couple of years, this is a staple of department stores. We know nobody is going to the mall anymore. Department stores are struggling to what ralph lauren has been trying to do is shift the balance in the revenue stream. From ave been going majority wholesale business to a majority retail business. In a couple of years, he thinks that portion will be 60 of their business. That is better because you get much better margins than selling directly to consumers. They do toe will fatten the margins up . They are actually trying to price up. Theyre trying to push further in the higher end. Raising prices and in particular, they are taking a cue here and trying to push forward into luxury accessories and handbags. They now have a bag, the ricky, named after ralph lauren slow Ralph Laurens wife. Of the stapleve back. The trouble is, it is not exactly the hottest item on the street. Bag that sells for a lot less. They might try to markup their backs 20,000, but it will be a big question of who will actually find them. I now have my Shopping List olivia. Thank you. We would like to turn again to the big news of the day. 20th century fox withdrawing its bid for time warner. Jon erlichman has exclusive background on how exactly the deal fell apart. A lot of people were surprised to see murdoch walk away after showing a progressive pursuit. In the initial press release, there were key highway highlights where the story comes together. A lack of engagement on the part of time warner and the ceo, and then the stock of foss, which at the end of the day is the main currency for that company. Meant to create shareholder value. What we initially saw as the pursuit became public was a weakness in the share price of fox. There is no doubt, if there had been a continued pursuit, especially at a higher price take for time warner, which time warner would have been interested in, that may have put more pressures on the shares of fox. Would shifteal that the business of foss . No, it would have more leverage in the world of pay tv. At the end of the day, they go back to the drawing board. Is this a game, a chess move by Rupert Murdoch . My understanding is it is not. They move on. Looking not necessarily for other cable assets out there to swallow up. Their decision to announce a plan to buy back some more stock and get more business. That is what they say. The advisors to murdoch were very serious about saying they will not go back to the table. It puts a lot of pressure on jeff. How will he get his stock up . About have been talking time warners earnings today and their own shareholder Value Creation through buying back more of their stock. Youll be his focus hearing a lot more from time warner. The biggest question is, if time warner cannot deliver on that, a few months down the road, does that potentially open the door for foss to come back to the table . A lot of people will feel like foss is keeping its i am a situation. Probably something worth doing. Right. They were not willing to pay the higher price that time warner had wanted. They were not even going to budge or negotiate with murdoch for anything lower than that. Thank you so much. Our senior west coast correspondent. To bring inwant someone who knows a lot about making these deals and when those deals fall apart. On the phone with me. You are on with me a few weeks ago, when this whole story had leaked out that murdoch will go after time warner. You had clear doubts. It reminded you of the time warner aol deal. Did not surprise you at fell apart . It is not a surprise. Trying to punish a case where in this instance, rupert was trying to use stock and not a lot of cash. And was doing something not in the best interest of shareholders. The strategy was illtimed and time warner was obviously resistant. What it means, i think, is that thes time to tidy up companies, to have a Clear Strategy to make sure management is in place, get back to the fundamentals. To how this all played out. Centuryed to the 21st fox people. He did not serve the best for his shareholders by not even entertaining or negotiating with them about a possible deal. I dont think that is the case at all. Aware of the fundamental values of the assets of time warner. It requested earnings this morning and the Growth Opportunities for hbo, warner bros. , and those networks. I do not think jeff is under any obligation. Shareholders recently announced stock buyback. Also, why get into a discussion when the bid was incomplete. Was not enough cash. It was at a low multiple. Is look ate to do the individual businesses of time warner to see the bid was nowhere near what the company will ultimately be valued at. You think the company is worth 100 per share . It is clearly worth more. Take one example, hbo. What is the value of hbo . A crown jewel. When you look around for lookrable evaluations, and at the subscription on demand hbo manufactured outstanding provisional programming. Superiorement is far to anything out there. Thankful we will take a rest. Ere 1990s, wherely there was major merging mania. Will what i would call street credibility. By withdrawing and having the new Share Buyback program, it is essentially saying we have got to stick to our knitting here. Clearly, he is saying that. We will get a behind the scenes look more on m a in the media industry. Liberty media missed profit estimates. The ceo noted in yesterday positive Earnings Call that there would be much more driving in the cable industry in m a. We are joined now exclusively. Great to see you again. Nice to see you. Talk to me about Rupert Murdoch walking away from time warner. Give me your take . I think rupert saw an attractive opportunity in time warner and he pursued it. The market, to some degree, did not endorse his bid. The stock was week. Weak. Rupert has shown a lot more. Iscipline in recent years i think jeff saw he had a growth trend Going Forward that was very strong. He did not want to not capture that for the benefit of shareholders fully. To provethe hot seat he can continue to grow as he has in the last few years. He will be challenged and he will have to show he can continue time warner Going Forward. Do you think he can grow time warner . Tion mark option to compensate other roads on the table. I do not think he has eliminated the option in the future. You are a guy who does deals all the time. Overencil deals in and has number sin, is this a good value or not . Do you think murdoch made a legitimate credible a bid that was interesting but probably was not note, whend. I would charter and charter pursued Time Warner Cable, one of the things that was strong for us was, frankly, the market responded very well in charter stock every time we made a bid. That was an endorsement of the accommodation and of our efforts. In a way that was not happening here with fox. That was a limitation on is his ability to hire. You mentioned charter. I fell apart when comcast came in. When you look back on that, do you feel like you might have overplayed your hand in that deal . We ended up with a pretty attractive consolation prize. We were always looking at a where it would probably be sold to comcast. Comcast selling or spinning with us partly managing. When you look at how it turned out, it is a good result for charter. But it is not the result you wanted area life changes. Sometimes, what you get, and what we got here, can be as good or better. You mentioned your Earnings Call. You are looking for m a. There will be more consolidation in the cable industry. If there were going to the m a, it would come via charter communications. What are you looking at . What is your next goal here . Washat i was talking about that really misses on the ms o side. Cableoperators, not the networks. There will be more consolidation and charter, particularly where comcast stands, charter copies charters Management Team acquires new Cable Systems as they come on the marketplace. Comcast and Time Warner Cable have not yet gotten their ok from regulators. Ok, willy get that that prevent charter for making any did out right . Lot of people are watching the outcome of that. I would be the potential for things to happen. It is clearly an overarching issue that needs to get resolved, when that will close. Imagine there is a lot of talking right now. A lot of discussions, or maybe just observations. It sounds like, unless the deal is ok with regulators, we will not see any big deals in the cable operating space. When you say big deals, it is all relative. That deal is so much bigger than anything else that will get done. Pale in comparison. On a final note, we know john malone hates paying taxes. There has been a huge trend at m a on a version deals to lower the tax rate. I am curious, from europe interview. Your point of view. How do you feel about these m a deals done just to save money on taxes . N. O. I. Couple of things. This idea of a versions has been going on for a long time. The original was a company done 20 years ago. On ourly has not been radar because, if you have, as we do, primarily domestic source income, it is a nonissue. Rhetoric around this, recognizing these companies which have domestic operations, u. S. Operations will pay u. S. Taxes anyway. Some of the rhetoric has gotten overheated. It is a larger issue about what u. S. Corporate taxes form looks like. Great to see this morning. Thank you for joining us. The Liberty Media ceo. Willie back in two minutes we will be back in two minutes. Moving and shaking this hour, the next ceo of sprint. He was named about a halfhour ago to replace sprints current ceo. Both are controlled by japansoftbank. Sprint is giving up its pursuits largest carrier, tmobile. Welcome back. It is 26 minutes past the hour. Bloomberg television is on the markets. I will check on the futures in the final moments before the opening bell. Equity futures are lower, as you can see, tracked down by earnings concerns. Also, two deals that have fallen apart. And 21std tmobile century foss and time warner. We are on the markets again in 30 minutes. A scat lets count down to the opening bell. Julie hyman joining in on the top 10. Lets start with number 10 and take two interactive. The maker of the grand theft auto video games posted firstquarter earnings that beat wall street estimates. It announced its new game will theelayed until allimportant christmas season. Number nine, dish network, the secondlargest satellitetv provider provided almost 16 , in line with analysts estimates. Just posting a report. He says when it comes to the stock price, the finances are a sideshow compared to the companys m a. Number eight, shares are falling. The biggest solar panel in the u. S. Reported secondquarter earnings that missed analyst estimates by 80 . A wide margin. Delays in some of its projects. The company said it would not impact its fullyear projects profits. The data business sells for 1. 3 billion. It provides Electronic Medical records wants to tap into the rising spending by software. The Obama Administration has paid doctors and hospitals 25 billion to install these systems since 2011. Number six, groupon. Shares are plunging in the premarket, down almost 17 after the Company Reported secondquarter sales that missed analyst estimates. Its top and bottomline forecast for this quarter also trailing the consensus. Groupon struggling to transition to an ecommerce retailer. Recentlyy husband bought one and i thought, people still use it . Foress it is a problem them. Number five is long grain. A u. S. Pharmacy chain taking over europes biggest pharmacy chain. They will buy all of limes foods for 15 billion. Unlike a lot of speculation who and like what was discussed, walgreens will not move headquarters. Them in chicago and not pursue a tax aversion strategy. There is an employment among investors because of that. Aol at number four. The Digital Media giant secondquarter revenue topped wall street estimates by a 60 jump in ad sales. I was told he spoke of building global poppies and strengthening a well for so interesting people no longer talk about their operations at all. Do you know anyone with an aol address . I do. It is very rare. Number three, 21st century fox. The ceo Rupert Murdoch, the 75 million takeover for time warner. Toe warners board refused engage in talks. Stock prices fall about 11 since the offer became public. Fost reports Quarterly Earnings today. There will be a lot of questions. Yes indeed. This all brings us to number two, time warner, following foxs bid. Earnings thated beat analyst estimates. It announced plans for 5 billion of shares, overshadowed. Revenue grew 17 . And another failed bid. The company is dropping takeover talks for tmobile and shaking is stepping down, being replaced by Marcelo Clara a. Stocks, as they start to trade midweek, we still have our names but they are trickling in now. Jim biondo is joining us, the founder and president of beyond research. Bianco you were not impressed with Economic Growth and with what the fed has been doing. At all withssed valuations and earnings. How about now . Are you any more bullish or more bearish . I have been all year looking for the stock market to be between zero and 5 return for the year. The dow is unchanged and the s p is up four and i will stick with their forecast. Of all those things you mentioned, probably the earnings , the brightest spot that we have right now, they look much better than we thought three weeks ago or four weeks ago. 9. 5 year over year again. But i would caution that eight decent earnings quarter this quarter does not mean that we will get a decent earnings quarter next quarter. No real followthrough on that. Yes, i am still not impressed with the economy, growing less than 1 in the first half of the year. Escapeot see the philosophy economists have been calling for for about five years now and it still is not happening. I am not impressed with the fed. I think they just want to and asset purchases and they have no idea when they want to raise rates after that . I want to get back to the earnings idea. One analyst said because of increasing estimates for earnings, because of the increasing e in the pe equation, that she that should provide a floor under stocks. It is indeed going to be the coming quarters where we see earnings that come in and continue to slow growth. Will that provide a cushion or a floor so that we will not see much more of a decline . You are calling for more of a decline, but want that limit them to some extent . At zero percent to 5 . Your typical wall street strategist that you interview 201526l you 20 earnings will be, they are usually high by 13 . Usingmbers everybody is will come down. They almost always do. When they do and you look at the valuation in the market, you are pretty bowl valued. Around 15. 5 or 16. 5 , that will be overvalued. You need earnings to come through in a big way. You need the 10 to 15 to be 3 . Like 5 or unless you get that, the stock market is vulnerable. Everything has to go right for the stock market right now, not just a couple things. Of course the economy is a big part of that. I wanted to bring in a chart on job growth. Momentum in the labor market has remained steady over the last year. Nonfarm payrolls has topped 200,000 per month. That is stronger than at any after 2000. When it comes to the broader economy, you believe the economy is basically a c minus if you were to grade it. You look at the chart and we might be hitting the escape velocity the escape philosophy. Right now we have had about we had the same numbers for job growth in 2012 and 2011. What we came out of the recession in the 1980s when the workforce was one third smaller, we produced half a million jobs per month. Go back to the 1990s and we were producing 350,000 jobs when things were going. 350,000, be producing 400,000 jobs per month if this was escape velocity. We are so used to lousy numbers that we see 200000 and we go, wow, that looks really good. Actually, it is pretty average is what it is. Havent a lot of these jobs gone away . If you are comparing it to the 1980s or the 1990s, you had a lot of jobs that do not exist anymore. Int you have to look at it the context of where we are in the economy right now . I would agree with you, and that is my point. The job growth is not there to the extent that you will get escape velocity, 3 , 3. 5 growth. We have not had it for five years or for the first half. What the job growth is consistent with is this muddling with, 2. 5 with six. 7 6 or 7 earnings growth, and it is difficult to make a case that we will have a big leap forward in stock prices unless the fed stepped in and prints money again. If that is the case, muddling along enough to move the fed when it comes is that the case that muddling along enough to move the fed . We know they want to and purchases did we know they want to and purchases. You have 26 different opinions on what they should do, and there is no agreement yet with the fat as to what is going to be the next move. Dowhat the fed is going to as its next move. Yet toellen has really define what she wants. The first thing she did was abandon forward guidance. Remember 6. 5 unemployment and 2. 5 inflation . That is out the window. We have the abstraction about labor market improvement in the inflation and the noise we are seeing. I dont know what she is thinking about when she wants to raise rates. I dont think she does either, so we dont know where the fed will go next. Once we get purchases out of the way, we will be like the 1990s with the fed back to guessing as to what they will do because they do not know yet. She will know it when she sees it. Thank you for joining us, jim bianco. We will ask former running back tiki barber about the tough news the giants just got about the 2012 firstround draft pick. David wilson. We will talk about come in a growth as well. Stay in the loop. We are getting more on the news that sprint is no longer pursuing the deal with tmobile. The following station has been issued certainly be others who disagree with him, saying it would be better to have three strong players in the telecom market. Agame two minutes with much more. Tiki barber as well as david steiner, the ceo of Waste Management. Globals time for the outlook, specifically the price u. S. Companies are paying when ocs fromg back home overseas businesses. Waste management north america Waste Management is north americas largest trash hauler. It did not dull the pain of a big tax bill when it repatriated the proceeds on the sale of an asset in puerto rico. David steiner is the president and ceo of Waste Management. Great to have you on with us this morning. Good morning. Thank you for having me. How much did you have to pay in taxes when you repatriated the money . Our effective tax rate was 44 for the quarter, when normally it is 35 . You can see the effect of a small sale a 90 million sale a small sale of our puerto rican operations had a big effect on our tax bill. We are sort of the poster child for tax reform. We need to have a more logical way to bring earnings back into the United States where they can be invested in the United States without a huge tax bill. Did you have to do this . Could you have delayed this transaction . What happened what we has what happened was we had puerto rico operations, and all the earnings from puerto rico were kept in puerto rico and reinvested in that business. At the point you sell the business, you have to take the proceeds and do something with them. Companies that have a deep International Structure can move earnings to it Different International to a Different International subsidiary. We are a north american, United States company, so we brought the money back into the u. S. And pay that high tax rate to do that. I take it that you support the inversion deals . No, no, no. What i support his copperheads of tax reform. It does not make a lot of sense that you pay a lot of a high tax rate on foreign earnings and the same high tax rate when they come back to the United States. You should have one tax rate for all the unitary earnings of the corporation. All it does is require you to keep those earnings offshore. Companies that keep money overseas are not investing in the United States. Do you support other ceos that are frustrated that will not see Corporate Tax reform in the United States, so i will move my company overseas . Do what is best for Waste Management, and that was into thethe dollars United States and invested in the United States businesses. I understand from a business point of view, folks with International Operations would take a different point of view. We all need to get together and say what is best for the corporation but also for the United States. Bringing those dollars back in the United States where they can support american jobs and american businesses, i personally think is the right thing to do. Is any of that money that you brought that, what is left over after the 40 perth percent of 44 tax rate, will any that go to creating jobs . Absolutely. We spent 1. 3 billion dollars to 1. 5 billion for a lot of Different Things that we are doing to make our fleet cleaner, to grow the business, and to create those american jobs, not just jobs and Waste Management but jobs in American Companies likeare producing thomas, producing trucks engines for our trucks. Also trucks that move to natural gas fuel. You are moving jobs up and down the supply chain, and that is a good thing for the United States. David steiner, thank you for joining us, the president and ceo of Waste Management. Now to a completely different topic. Turnedl legend thuzio just raised investments. , and tiki barber is in the house this morning. Great to see you this morning. Great to see you as well. I like the matching blues. I like it. To do with you going the 6 million . One, we need to upgrade our tech platform and expanded so it is easier on our side and the user side. As we move into the corporate category and match our talent with corporate customers, whether they are looking for brand activation or sales. We also need to expand marketing. We love what we have been able to do. We have a cumulative 2500plus talent across the country, we have accumulated 2500 plus talent across the country, but now we need to ramp it up. We have tons of talent in new york. All tons of talent in over the country, but we need to dallas, everylly, big sports and Business Market in the country. I want to turn to the other topic about your former team, the new york giants. Terrible news about david wilson, the rookie running back, now out with a devastating neck injury and will retire. You talked to him. I did. It is unfortunate. Every young Football Player has a dream of making it to this level, but it was cut short because of a disc problem. He had a spinal cord fused. As a quarterback you can maybe get away from those things. But as a running back, as often as you get hit, he had to call it a career. Said dont feel sorry for me. For alived his dream brief moment, and you wish him nothing but the best. He had a very short career, but would he be able to go on thuzio . Absolutely. He is a legend at Virginia Tech and people know him. His brand is activated, and io hasoh and thuz allowed athletes to monetize their brand down the street. It has given them a vehicle to network with Corporate America. Doing what you did. Of course. Dinner, andlunch, a you are meeting potential partners or employers. Who was your corporate mentor . Interestingly, it was one of our owners, bob fish, who passed away in 2005. Because i lived in the city, he took me under his wing and showed me the ropes of Corporate America in a big city. That is how i met mark courson, my cofounder. Mark gersten, my cofounder. We have been able to build a successful and exciting business around client activation, around transparency in the sport booking market. Are you a golfer . I am a little bit of a golfer. I try. I bet you are good. Because of the injuries was david wilson look at tiger woods. His back injury. Is he out of golf . I think he is facing mortality. When your body breaks down, it is tough to grab it back. I think he will still play. Will he win another major . I think you will. I will say yes. What would be best do you want to bet on that . I would, actually. The best for him would be to take time off and hell take time off and heal. Thank you for joining us again. Former new york giant and cochairman of thuzio. Tomorrow, roger altman will discuss a deal. That is tomorrow starting at 8 00 a. M. Eastern time. Hour,is 56 past the meaning Bloomberg Television is on the markets. Im scarlet fu. We have a decline on our hands are it for the dow, it is the sixth drop in seven days. The dow is almost 5 down since its peak on july 16. Halfway to a correction, which means a 10 drop. The euro has fallen to a ninemonth low versus the 133. 48. 1. 3348. Gold futures moving up by almost 2 to 13. 09. That is a safe haven trade. Tensions in the ukraine are not helping pushing people toward the safety of gold. You are seeing a similar play in treasuries, the 10year at 2. 5 , the lowest in may the lowest since may. Investors are wondering what exactly is causing a selloff, and is it time to buy . Lisa, this is a downturn that has left many questions in its wake. Is it possible to come up with a clean answer as to what is the trigger for the selling . Not at all. People are scratching their heads because last year in may and june when junk bonds lost 3 , there was a clear catalyst. Ben bernanke whispered the words taper, and the world went into hysterics. This time around there was not a clear trigger point, and it does not seem to be stemming from concern that rates will quickly rise. Is not fed related . To some degree it is all said related because that is what is driving the market, and there is concern that the economy is not Strong Enough to justify levels of record lows on the jack bonds on the junk bonds. At the same time, it is not that the fed has said they will go any sooner, and really they will keep the same language. It has been kind of a head scratcher for people. Is the money moving out of junk bonds into Investment Grade , into sovereigns . Yes, exactly. In july there was 9. 9 billion of withdrawals in bond funds. There was about 10 billion of inflows to investmentgrade funds. Last year there were flows out of both types of credit because people were saying easy areas all benefited from the Federal Reserve stimulus. Any kind of withdrawal in the monthly bond purchases will reflect will affect all of them. The selloff included rates. This is not including that, as the 10 year continues to in as the 10year continues to decline. Is this a buying opportunity, then . I am not hearing consensus, but it is. The reason why is people are saying at some point investors will be compelled by a reason to reduce their holdings of junk bonds. In that case, it might not be easier to get out as quickly. It comes back to liquidity. It comes back to liquidity, so people do not want to commit to being in this in the long haul when they can see the end approaching summer regardless of what the fed says. And even when they do not know exactly when the end will come . Exactly. Lisa, thank you so much. We will be back on the market once again. Market makers is up next with Erik Schatzker and alix steel. Live from bloomberg headquarters in new york, this with erik makers. Schatzker and stephanie ruhle. Top cop. Wall street lawyers up. You will hear from the manhattan da. Sprint replacing ceo after deciding to pick off takeover talks with tmobile. Will he name names cap go the man link to this their right scandal has been arrested. Prosecutors say he is operating with the investigation. Good morning on this wednesday in new york city. It is market makers. Happy wednesday. A ridiculo