Transcripts For CNBC Squawk Box 20161024

There you have it again, green arrows pretty much everywhere. The whole world is happy. Except for short sellers. And were watching crude prices this morning. Yesterday iraqs oil minister said the country should be exempt from joining opecs Production Cut embroiled in a war with islamic militants. Opec is planning to reduce production targets at the november meeting. Wti is lower by 5 cents but still at 50. 80. And scottrade is being acquired for 4 billion from ameritrade. Some competitor of scottrade said, why deal with us . We have a helicopter. No one really understood what was the because its successful. It trades more quickly to where they need to go by helicopter. It happens over the internet. So its confidence . A little bit of confidence. Interest rates are zero. Im confident, ill borrow money, too. A little confidence. People think the economy is a little better than we think. I dont think thats it. Well talk to the ceos at 7 00. For the media mega merger monday. I would argue that all the deals i dont know if i want to hear your argument today. Im sorry. I didnt prepare for this today because i was told it was not going to happen. How many of them . All of them . M a is very hard to cover. At that time of 6 00 in the morning when i was skeptical of this transaction to happen someone told you that. Or do you want to take the credit for being wrong . I would hang it on a source. No, im taking credit. You dont want to hang it on a source . No, i dont. I want to talk about at t buying time warner for 107. 50 per share. About 85. 4 billion, half in cash, half in stock. It is the biggest deal in the world this year. If approved, the tieup would give at t control of hbo, cnn, tbs, tnt, warner bros and other media assets. At t bought directv last year for 48. 5 billion. This new deal widely expected to receive intense scrutiny by antitrust regulators. Here to weigh in on that, ed lee, managing editor of recode joining us from washington, d. C. This morning. And every article on the front page of every newspaper this morning, at t facing a political banra banrage. What do you peg the chances at . I give it 60 chance of passing. I think theres good arguments for why it should pass, which is it doesnt hurt competition or take away consumer choice. At the same time, by that same argument, the deal itself doesnt make sense to me from a Business Economic perspective, which is a distributor owning content. That does not help either side or boost the value. Has it done anything for comcast, nbc . Comcast runs the cable business well. And nbc runs the content business well. But one doesnt necessarily boost the area. Thats what i think. A slow Growth Company like at t, what do you do when everybody already has so you want to change your service, fine. But by owning time warner, its not going to help you because hbo, cnn, turner networks, all that stuff has to be as widely distributed as possible, meaning you cant cut out other distributors. Wouldnt you say, for example, if you get an at t Wireless Phone, you get hbo go at a cheap rate. You cant do that. You have to offer the same rate to other distributors then. You want to weigh in here . Im more skeptical about the odds that this is easily approved. I think that they have to get fcc approval, and that is a very loose standard that can be very politicized and very difficult to get the deal through. They are trying to avoid the fcc. If they go through the department of justice, it is antitrust. This deal legally could pass muster, but i think the doj under a new administration could face some political pressure. I mean, i think it is really telling they are announcing the deal 17 days before the most populist president ial election in history. I think that puts this front and center on the politicians radar screens in the middle of this president ial debate. But the whole thing, cooler heads prevail after this insane election. Both sides are saying things they dont believe about the tpp, free trade, nobody believes any of this, barton. Once we get somebody in there that knows how the world works, they are going to look at this, read the journals oped piece. This takes care of the problems the fcc was worried about it. It opens up the future to the broadless, wireless ban. Im worried you are going to need autonomous driving. It is clear if they would have waited until after the election, they would face less scrutiny. I dont think they had time. It was not in line with the president ial campaign. Well talk to randall and jeff about this in the 7 00 hour. But we also thought that was the issue. They wanted it after the election. But i agree, if the fcc gets ahold of it, its harder with politics involved. 40 chance it doesnt pass. If thats the case, look for other networks to jump in and say, maybe we should buy it. I talked to randall yesterday on the telephone and jeff, they will be here today, but the most interesting thing to come out of the conversation, which i hope we talk about today a lot, is the idea of 5g. And the next Generation Development for at t and the idea that ultimately theyll be able to offer a National Footprint into your home, no cables, this is where we are completely wireless. And to the extent that you believe we live in a monopoly in most markets for cable, that this creates all sorts of new competition. But also creates new pressures on Cable Companies. To up their game, change their pricing. Potentially having to but the question is, do they end up having to go off and buy does comcast have to buy tmobile next, for example . And do regulators let any of this happen given they didnt want a Cable Provider to have a National Footprint before . All great questions. The 5g thing is exactly the right attack. My question is, you dont need to buy time warmer to do that, did you . Thats a technology upgrade. Randall makes the argument, agree or disagree with it, that it creates incentive to build out the network because you know have internet faster than otherwise. But customers could say, we demand it, so it doesnt matter. Verizon says, im going to sell hbo and cnn and turner network, you cant deny me the same access to the content. Ill pay you a good rate. What did directv do . Did that give at t the foothold into being the biggest paid tv outlet . So it gives them scale, but does directv make sense on a 5g wireless universe . Well, if you can get all your internet, whether your video stuff or just the stuff youre doing through a wireless connection, its just as fast and reliable as a wire. That was a pretty expensive acquisition. Does it add to the whole Product Offering for at t to have directv there, too . I think its a head scratcher which they buy time warner. You already talk about the competition with the Cable Companies nationally, at t was taking it mobile. So i think this really begs the question whether they get the fundamental benefits. Time warner has had a bat history of pipes and content. Sure, they cant change the pricing on hbo, tnt or cnn, but they have a great Creative Engine in time warner. If unleashing them to make new channels like directv now and other things exclusive fundamentally to this service that wont be grandfathered a legacy of products, it would have to be given to everybody five to ten years from now. Could you create the next amazon prime under the banner of the at t . If the regulators like that. You just raised a key point, grandfather, what will they do . The political environment is difficult to come out with meaningful content just on this network and not available to verizon and comcast. So it makes the whole foundation of the deal verizon has go 90 and nobody is telling verizon to this is a difficult merger. I understand where they are going. If the regulators pass the exclusive content on the networks, sure, it could be great for them. But im not sure that is going to happen. Reporter what about the fcc, the doj versus the fcc, it would be easier through the doj, i find it hard that the fcc wont want something to do with this. I think they will say, shoot, they outsmarted us. Darn it, we have spent all this time on broadband and net neutrality. Look at these guys coming over us. Theyre going to want a piece of that, arent they . They want to be able to deck at a time. The problem is time warner doesnt have meaningful fcc licenses. They have legacy tv station in atlanta and georgia. But they will not allow the fcc to get it reviewed. This is like time warmer cable 2009, why does this make sense now . I understand from a shareholder perspective, 107 shares is better than what it is trading now. Of course it is a good deal for him. It is another thing to distribute is it different factors . From a content licensing perspective, it doesnt change your calculus at time warner. Well ask the questions or answer the questions here. Ultimately it had to get bigger. And that is a more successful way to create value than they could have done just sumply on their own. I think. I think that is what hell tell y you. Time warner cable wouldnt be anywhere close to the scale of which this is. But thats randalls deal, not his. Not everybody is just worried about whether they will be the guy running it. I think given 64 to 65 i think hes been planning for years now. He beat the nation and we should have traded the nation. Before we go, do you think theres going to be more consolidation meaning if you have more wireless players, are they all going to want to try to get to a wireless struck cur . They absolutely have to. Is there enough spectrum . How many competitors will you ultimately have if at t is right, this is the way the world is going, which its only netflix sends dvds in the mail. Comcast could be part of what is happening here. And it has scale, too, in business. You know, the demise of running cable into your home theres a good argument to be made that cable, you will always need cable to create the wireless. Thats a separate issue. Barton, thank you. Ed, thank you. Appreciate it. And a programming note that we told you is coming its exciting. The at t chief randall see stephenson and jeff bewkes the time warmer ceo is here and will join us at 7 00 a. M. Alphabetic by last name, right . Interesting. Other news because people are happy and Interest Rates are at zero. Rockwell collins is buying be aerospace at 62 a share in cash and stock or 6. 4 billion. Thats roughly 23 premium to be aerospaces Closing Price on friday. You know, at t is getting a lot of debt at this point. Yep. A good time for Interest Rates to stay at zero and will for a while. You dont want to go below triple yield plus, right . Where are you going with this . Thats something to think about, too. You have to worry about whether or not Interest Rates oh, you need the cash flow. There are a number of balance reports out about the issue with the debt and therefore the security of the stock itself. And i like the cash flow, obviously. If people are willing to pay high yielding as of late, your Interest Rates may not go up that much, even if you are merger monday, genworth is being bought by chinese oceanwide for 2. 7 billion. Its only a 4 premium. Chinese outbound m a hit a record 181 billion this year. The company is looking to acquire overseas assets as their domestic account sells those. When we return, well show you the busiest morning for earnings season. Well talk strategy after the break. Back in a moment with more squawk. Coming up, Barry Sternlicht is. I think hes a product of this president obama. I thought we would go into a recession and we didnt. Im actually surprised. And investing in real estate. We have 84,000 apartments today. Growth is up 6 . Where do you see growth like that . Thats coming up at 7 00 a. M. Right here on squawk box. What powers the Digital World . Communication. Like centurylinks Broadband Network that gives 35,000 fans a cutting edge game experience. Or the network that keeps a leading hotel chains guests connected at work, and at play. Or the it platform that powers millions of ecards every day for one of the largest greeting card companies. Businesses count on communication, and communication counts on centurylink. Welcome back to squawk box. Tomorrow look for caseshiller and consumer confidence, thursday durable goods and pending hopend ing home sales. And it is the heaviest week of earnings. Among the big names to watch, 3m, caterpillar, dupont, general motors, apple, boeing, cocacola, comcast, tesla, ford, ups, alpha bebet, amazon, chevr. We may not have to use the eword. Election . The other eword. Theres economy, earnings. We only have 14 days. Then one of them becomes president. Ive taken the new view. I have. Its a bit of a relief for maybe private sector and business people. Just a bit of a relief. It is a bit of a relief. What is . That the eight years is coming to a close. What are you talking about . I dont care what do you mean . I can see how that doesnt register with you at all. The last eight years and the antiprivate sector, the constant confrontation between private sector and government. And you have two candidates who are going to go after the private sector, both of them. There are personality things that bother to your point about the left, even this is my problem with the current occupanoccupant. Its been a long eight years. And at least its about over. Some are complaining about Elizabeth Warren and now she gets more power in this administration. I dont understand why you are so excited. Because Hillary Clinton deep down is smart oh, my goodness, save the tape save the tape shes smart. And she understands, i think, the private sector. She may have had people from the private sector as part i also think for her legacy, she wants to make sure its the best economy if she becomes president. She wants to make sure its the best the reason all your friends are giving money this is listen to me. Throwing in the towel. I cant deal with this. Bravo. Politicians, in general, none of them are going to win the award for, you know, honesty. I mean, they all are doing things this doesnt mean youre going to vote for her. Thats why theres a curtain on dressing rooms and in voting booths. Nothing has happened. This is going to come to an end. It cant happen soon enough for some people. For more on the markets, joining us now is Geena Martin Adams from wells fargo securities. And steven whiting, the global chief strategist at citigroup private bank. Good morning. Good morning. Lets go back to talking about things that are easier to handle. The other two es. Well, it will be above last year. Fourth quarter will be above last year. And next year, and the way we look it will be above 6 for next year. This is the streak end for down quarter. It is just barely above. If you take the report so far and odden everybody yet to report to meet expectations, youll get 1 growth on the year over year basis. But we dont meet, we beat. So youre going to get closer to 2 growth yearover year. Interestingly, that was the expectation three months ago. 2 growth year over year. That is probably what were going to get. Now were beating the expectations. So were about where we are expecting to be in july. So its not a huge gain, but we totally agree also well see Earnings Growth next year. Relative to the last year. Over the last year, we had a 6 drag from last year. We would have been six Percentage Points higher except for one sector. And now we are above water and the rest of the economy is not growing great, but compare that to where Interest Rates are and it is an income premium to where we are rate market. So like it better than bonds. You have thought about friday what the gdp is going to be initially and what it will be at the end. The story and the initial take on this it will be about 2, but heavier on inventory and weaker on final demand quarter to quarter. Well see if the revisions to the underlying data change that story. But this time around its a little stronger on the headline, a little weaker on the demand side for that quarter. And that allows december they really want to do it and should want to do it, but are they still getting a lot of pushback from people who think inflation is still not where it necessarily needs to be. And why would you raise rates with a 2 or below gdp . My take on this out of the fed is that they are a little closer to agreement than i think it shows. The hawks dont want to do a lot and the doves want to wait a little longer. If you put this all together, next years expectation for two quarter point rate hikes is finally in the rem of reason for everyone. So i think this particular meeting where they didnt even cite the weakness in the august data, you know, just the absence of discussion of that, i think, is meaningful. And we cant quite tell if it is november or december. Markets are off course counting on december giving the precedent of having an election. I wouldnt entirely rule out that they could have a november 2nd tightening step. What do you think of the m a activity this morning . Historically people say its a great time for the markets, they are doing deals, but also historically you see a big, big deal and it marks the peak of something. Well, we have had a lot of big, big deals the last few years. And the market has been struggling to make new highs. I think companies are finding it difficult to find those Investment Opportunities beyond m a with the perilously slow 2 growth rate across the world. The only growth they can find is through acquisition. And that is playing out in stock Price Performance as well. I dont know that it necessarily, especially a small segment of telecom, does it mark the top . Not necessarily. M a took a down trend and now we are back on the up swing. So its been back and forth. I dont think m a suggests its a huge top. This is a consequence of extremely slow rates and slow growth. Cheaper to buy and build. Absolutely. In the past people have suggested it means the market could go higher because theres more buying to be done. Usually m a and stocks move higher together. Quite frankly, one of the powerful drivers of stock is the takeout of stocks. And this is just another form of that as theres just fewer shares around to buy. Charles biederman said that. Im not kidding here, i had a dream. I actually what happened in this dream . I had the dream. And it was not, like, a nightmare where i was terrified and it involved secretary clinton. And you know we talked about freud this week, people are not sure what dreams do, but they do sort of help you deal with if you work things out, the anxieties and stuff, and it was a marginally positive im not saying the election is necessarily over yet, either. But wow. I told my kids about it and everything. Did this dream happen over the weekend . Friday night. Earlier in the night or later why does it mat her . Because your dreams are most vivid closer to the morning. You dont remember the ones you had, like, at the beginning, you only remember the ones i didnt wake up screaming in a cold sweat, this is what had been happening. And its been happening for eight years, actually. Progress. Progress. Were going to give you an update on joes dreams in a little bit. In the meantime, u. S. Gasoline prices dropping for the first time in 11 weeks. I dont know if you had dreams about that, but Industry Analysts said a gallon of regular now averages 2. 25, thats down 4 cents over the past two weeks. This weekend at the box office, tyler perrys boo opened at 26 million. That tops tom cruises movie. It was a madea. I was hoping if i just read through it nobody would notice. Thats what you and andrew do. Madeas success you go to opera every night . Not while filling in for becky. Madeas success has disappointing releases like deep water horizon and blair witch. And Td Ameritrade is buying scottrade for 4 billion. I was glad i didnt stay up for this, i looked for it this morning and i thought, why cant they do it the way they do in college, start at the 25 and theres no ties in college anymore, but the arizona card analysis and the Seattle Seahawks were tied at the end of regulation. Both teams had a chance to win. You see the field goal there. Short field goals in overtime. The cardinals kicker hit the goalpost why the seahawker kicker hit it left. The game end in a 66 tie. The first time in seahawks franchise history. But i guess its okay to have ties sort of because its the end of the season, there are very specific ways to figure out who gets into the playoffs. And they can deal with the tie. But, you know, people leaving the stadium are like, why did i do this . Coming up, the cubs advancing to the first world series since 1945. Ticket prices no ties in baseball. No crying in baseball. No ties in baseball. I know. You just play until somebody wins. No ties or crying in baseball. Ticket prices are reaching super bowl levels for each night of the fall classic. Well talk to the ceo of stubhub about this landmark week in sports coming up next. And as we head to break, a look at s p 500s winners and losers. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . You recommend synthetic and can yover cedar . To me why super food . Is that a real thing . Its a great school, but is it the right the one for her . Is this really any better than the one you got last year . If we consolidate suppliers whats the savings there . So should we go with the 467 horsepower . Or is a 423 enough . Good question. You ask a lot of good questions. I think we should move you into our new fund. Ok. Sure. But are you asking enough about how your wealth is managed . Wealth management, at charles schwab. This is the rx. Elevated. Rx hybrid and rx f sport. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. Welcome back to squawk box. The chicago cubs clench the first world series berth saturday night. And one step away to win a championship since 1908. The cubs will play the indians in their own nearly 70year championship drought. It turns out the world series is one part of a huge week in sports getting underway. Joining us is scott cutler, the president of ebays stubhub unit that calls it this years busiest week in sports. Good morning to you. Good morning. So before we get into it, how much what can i get a ticket for . Can i get a ticket on stubhub to the game . You can get a ticket to any of these games on stubhub. What is it going to cost me . Well, the getin price in chicago is about 2,000. And in cleveland, its about 700 as the lowest price to pay to get into one of the games. Wow, that is awesome what about right above the dugout, first row, right there on the third base side, what is that . In wrigley, what is interesting is that this is the busiest week in sports and everybody wants to see the curse broken in chicago. And tickets are ranging between 2,000 to over 20,000 to be able to see this. But this really goes to its so important to be there to experience the event live. And people are paying almost anything to be able to get there. Are people buying because i go on stubhub and i dont know if im like most of your customers or sort of an outliar, i try to buy the last possible second hoping i can get a sort of lastminute deal. How do people really use it . Well, stubhub is a marketplace that really combines and intersects between supply and demand. And for a lot of these major events, it really is it really is the lowest price the seller is willing to sell a ticket for is the price that youll pay to get in. So it really depends based on the demand for a particular event. And as you look at major league sports, in most instances, the tickets go down closer to the event. But in certain instances where theres limited surprise, sometimes the price goes up all the way to the event time, which is what we saw with the super bowl years ago. Manuel miranda, the creator of hamilton said about stubhub, the larger issue of what he thought of scalping tickets, the idea that the customer cant even get in these days to get it right off of ticketmaster at all because theres all of these engines buying the stuff before humans can even do it. And what that does to the experience. What do you think of that . Well, we are actually opposed to bots that have the opportunity to get tickets in an automated fashion before the public. We recognize for a lot of the Events People want to attend, the demand is going to be much higher than supply. And stubhub is focused on having the opportunity to go to any event at any time. But do you have the technology to be able to stop that . Do you have the technology to stop it or no . Well, at stubhub were always open at any time. So we always have supply into the marketplace, where once youre sold out youre done. And the box will hit those sites, but at stubhub, we always have tickets able below and above face value. Thank you, scott. Appreciate it. Thank you, scott. There are tradeoffs. More people get to see things with stubhub. In a pure economic meeting, supply and demand, that is the only way. Thats the only way it works into the world. I completely agree. The computer is but before you would hire 20 kids to go stand in line. They are going to do that in some way. The little thing to show you value, maybe i bought something on amazon, but ive never done this. Its a great value in the thickest its fun to find the best value. You dont need to sit in the front row, but you have to find the best value and dont have to pay that much stuff. Coming up, the biggest political donors you have never heard of. Well take a closer look at the money raised in the president ial election. And then at the top of the hour, the ceos behind this weekends big media merger. At t Randall Stevenson and jeff bewkes are coming up at 7 00 a. M. That builds big things and provides benefits to this woman, with new cabinets. They all have insurance crafted personally for them. Not just coverage, craftsmanship. Not just insured. Chubb insured. Welcome back. Recapping the big deal, at t is buying time warmer for 107. 50 a share, about 85. 4 billion dollars, half in cash, half in stock. If approved, the tieup would give the Telecom Giant at t control over some of the most wellknown brands on the planet, hbo, cnn, tbs, tnt. Warmer bros and other film media assets. And at t bought directv last year for 48. 5 billion. The new deal is wide he expected to receive intense scrutiny. And antitrust regulators will talk about this. As a programming note, the respective chiefs of the two companies involved, Randall Stephenson from at t and jeff bewkes of time warner will be here at 7 00 a. M. This is probably the most contentious race for president in history, but look at the top five givers to each candidate. According to centers for respective politics, tom steyer and Sheldon Adelson are the top two. And Donald Sussman is number three with more than 34 million to the democratic cause. A big hunk of that is specifically to priorities usa, the Clinton Super pac. Ironically, part of his idea is to get money out of politics, ideally through the overturn of the Supreme Court decision Citizens United. Bob mercer is the coceo of Renaissance Technologies and has given over 23 million this cycle initially to ted cruz. More recently it went to donald trump. Hes regarded as somewhat reclusive but has with his daughter rebecca had a huge hand in the latter stages of the trump campaign. And the sixth biggest donor not pictured on the wall because so photos exist is fred icanner. A gay rights and clinton supporter, his camp doesnt have a website and his phone number is hard to find. And the number five donor is paul singer, the conservative Hedge Fund Manager who occasionally joins us on stage is not on air. Are these people normally giving . It is just that i dont know if i say normal elections, there are bigger names giving a lot more money, except this time around so few big names want to openly support donald trump. Interesting. So two things, i would say in a lot of cases, Donald Sussman is an example and george soris, these are folks who typically do give, they may be more or less profile depending on what it is, but they are giving more quantity this cycle. It is just an unusual election. Some say it is part of Citizens United and others say its the rejection of donald trump. That said, bob mercer has given more. Some less. Its a variety of things. But i was surprised how many were on the mega donor list. As a hedge fund whos who. And fred icanner, we never talk about him. Hes the perfect progressive. Yeah . Why is that . To end the big money, hes giving 34 billion. Hes going to spend the big money. But his cause is the right cause. Because he knows what the right cause is. Ah, glad somebody knows. Perfect. Love it. 34 million to overturn the big money. Right. Futures indicate a higher open on wall street as we head into the busiest week for corporate earnings. Mark grant is joining us next to talk political markets and political uncertainty. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. Were not passive aggressive. Hey, hey, hey, there are no bad suggestions here. No matter how lame they are. Well said, ann. Ive always admired how you just say whats in your head, without thinking. Very brave. Good point ted. Youre living proof that looks arent everything. Thank you. Welcome. So, fedex helped simplify our ecommerce business and this is not a passive aggressive environment. I just wanted to say, you guys are doing a great job. Whats that supposed to mean . Fedex. Helping Small Business simplify ecommerce. Welcome back to squawk box. The u. S. 10year posting dropping. The yield is 7. 2 . And a managing director of Hilltop Holdings joins us now, and why do you think we will see the 10year fall more . I think Interest Rates are pretty much flat here, michelle, but i think now the Japanese Central bank and European Central bank says the market is backed up, and the resistance line is 169 and thats on the 10year, and i think that will take us back in the 1. 40, or if we will stay in the range between 170 and 180 and i think its a question at this point. You dont think Interest Rates its the treasury . We are going lower in Interest Rates. Can i ask you if it were anytime of year, we would be talking about it more but with the election cycle, we are not talking about everything. I am watching the currency markets very closely right now, and we broke down through 1. 9 against the euro, and this is going to put tremendous pressure on the dollar. By the way, on our corporate earnings, and i think this is going to be a big influence in the next decision by the fed whether to raise Interest Rates or not, and i think you are 100 correct that we would be paying a lot more attention to this except for the elections right now. Skp if you look back to january, you see the move and everybody freaked out, right . The u. S. Markets went crazy, and then obviously the chinese figured it out and its flat and they let it strengthen for a while and now quietly here we are at this 6year low. Why arent the u. S. Markets so freaked out like they were earlier in the year . Your point was well taken that we are not paying to anything in america except the elections, and as you know i speak with some of the biggest institutions in the United States, and i will tell you with certainty those people are paying close attention to the dollar, and not only against the euro, and its going to have a Significant Impact on the earnings Going Forward and another thing people are paying attention to is the bun, and the twoyear is 60some odd basis points negative and thats going to drag Interest Rates lower. Mark, you know, it was months ago when you said trump might win and a lot of stuff has happened, obviously, and abc has Hillary Clinton up 12 points, and i love they do the polls in an interesting way media, far be it from them to make it seem like its better than it is or a slam dunk so nobody shows up, and you have a 14point difference, and we all saw brexit and what happened with columbia, and you are an outlier, and you are contrairing a lot of time, and what are you feeling right now. Should we still vote or inaugurate hillary in january . No, joe, i think absolutely every american should vote and i hope they do, whatever their choice is. Do you still think trump is in the race . I think trump is absolutely in the race. Here is where i come down on it, joe, these polls, they have likely voters, and you can drive a trump. I think the election is open and its going to get down to the last 72 hours when somebody announces something. Really. Thats interesting. Thank you. Always interesting. Day. Is it because so many go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential for decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. So wi got a job ews . Ill be programming at ge. Oh i got a job too, at zazzies. friends gasp the app where you put fruit hats on animals . I love that guys, ill be writing code that helps machines communicate. interrupting i just zazzied you. phone vibrates look at it friends giggle i can do dogs, hamsters, guinea pigs. You name it. Im going to transform the way the world works. proudly i programmed that hat. And i can do casaba melons. Ill be helping turbines power cities. I put a turbine on a cat. friends ooh and ahh i can make hospitals run more efficiently. This isnt a competition a megamerger monday. The deal that everybody from wall street to washington is abuzz about. At t buying time warner, and the ceos will join us to talk regulatory hurdles and the future of media and what the deal means for consumers and investors, straight ahead. And then what the deal means for your money. And media critic, author and writer for the new yorker will be here with the reaction to the big interview of the morning. And the real estate trends and the fight for the white house and why hes making an energy play in oklahoma, as the second hour of squawk box begins right now. Announcer live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc. And sharing thoughts on the politics, and barry sternlich, we will hear about him in a minute. And at t buying time warrior, and the two ceos will be joining us here on the set momentarily, and we will ask him about the consumers and much more, and time warner shares we should note in the premarket, up marginally, and the takeout price, over 107, and will the deal get completed . A number of analyst coming out and calling it a 50 50 chance. You are seeing at t shares down marginally down this morning as well. After we do all that, we will talk to two ceo deal makers this morning, and get reaction from ken auletta, and mario gabelli, and he has stakes in both. And check out the futures. This is on the back of some confidence, and dow jones looking like it could open up about nine points. Three blind mice is like writing about the model t with tesla, right . Yeah. And he had to obviously, time is moving question quickly in terms of technology, and three blind mice was not that long ago, was it . All 5g, lte and its part of the future. The world, you dont even recognize it at this point, do you . I find it fascinating. The idea that five years from now, its not going to be about cable but about whether you can get all the stuff wirelessly into your home and at t becomes a National Footprint. But would you watch game of thrones on an iphone . Some people do. You might be getting it completely and utterly wirelessly, and not even from a satellite in the future, and thats what Randal Stevenson will talk about. When he arrives any second now. I feel bad i feel bad if i was one of the other companies merging today, and its like lets get through this quickly, and this is a big one. Who cares . And a small deal no, its important. 62 a share, and 6. 4 billion, and a premium to beat aerospaces Closing Price on friday, and we have a couple are these the ceos or the models that came in here . Oh, he is buttering them up, or is it presence or the way they look. They dressed me like him. We should note, of course, reaching the deal with time warner to acquire the company for 85 billion. Randal stevenson and jeff, we want to thank both of you for being here. Can we go back to talking about game of thrones . Isnt that what all of this is about . Exactly. Let me ask you, because you just pulled the wall street journal up, and at t faces political barrage, and i want to hear why this deal makes sense and what you are going to do about this, and we have seen lots of politicians coming out over the weekend saying they are against the deal, donald trump is saying that, or others saying they are concerned . I think what we will do about this is do our typical process, and we will file our comments and application for the Regulatory Approvals in the u. S. And eu and elsewhere, and this is one where the nature of the deal is unique, and its a vertical integration, a big merger, and as you think about the areas that have been contentious over the last few years, and they have been horizontal mergers, and people are being concerned about a competitor being taken out of the marketplace, and we compete nowhere and we are not talking about changing how the content is made available to other people or customers or distributors and its a pure vertical integration, and while regulators have concerns with vertical integrations those are always remedied by conditions imposed on the merger and thats how we envision this one to play out. Tell us, you apparently had lunch together, about two months ago. We did. And the merger came up. Tell us what you talked about at the lunch and what this merger looks like in the you want to tell them about the lunch . We meet regularly, and we talk about all the increasing mobile consumption of video and as we got into it and we were talking about what the Media Companies are doing and what the Distribution Companies need to do, we realize if we had ourselves to go, that we could create more innovations from consumers, so they could have more choices of package, and they could end up with more competition and more prices, and theres going to be basically more affective advertising, so it wont be as disruptive. You have more efficiency there, and that means more of the cost of all the great programming made on tv to be born by advertising, and it could be advertising that is useful to you rather than something you are not interested in, and those are the advantages, and for years we have been trying to get all the networks on tv, and not just ours but everybodys to be on demand. Why is there going to be more competition from a consumers point of view . My choices are going to be what and what . If you look at right now, last year more than half of the advertising went to two companies, google and facebook, and we need to increase competition for advertising across television, internet companies, and thats an important thing. When you do that, what you end up with is more of the burden being born by Advertising Companies and less of it being born by consumers. As a consumer, my choices are you would have more packages, and if you want to have a mobile package, and randal is more eloquent about this than i many a, but if you want it mobile or in your house across all your screens, and this will enable it to do it faster, and it wont just be our channels. It would be channels the launch of at t, we are doing it this quarter. Jeff and i talked about this in our first meeting, and its where we see this going and we are launching a product as soon as we closed directv, and its a purely over the top video product, directv now is what we are calling it and will be launched next month and its a mobile centric product in the marketplace, 100 premium channels and we are bringing it in in november, and you should assume the price point will be radically lower, and its coming to the market, and purely mobility driven and over the top and its a whole new capability. And you can see it on your tv . Absolutely. If you have an 80inch screen in your apartment, you can put it on that 80inch screen in your a ptment. You said this when we talked about it yesterday, you will not be able given the restrictions from regulators and what you described as the business logic to keep hbo from verizon or comcast from the other players . We want want to do that. And as a result you will not necessarily be able to use that for, like, free caps, meaning zero data caps or do anything that will benefit it to at t, and the question that ed raised is what is the benefit then . I want to go back to something you said and i read about it in all of the newspapers this morning about the restricting the access to the time warner content. Its nonsensical. We are buying time warner for 1 100 billion including their debt, and the idea that we are going to come along and start to constrict the distribution of the content makes no economic sense, and so it would be a crazy idea and thats going to be the byproduct of this, and that doesnt make sense. I would set that aside. So what does change . Why put the two companies together . It gets back to what jeff said, speed. This thing the world of distribution and content is converging and we need to move fast and if we want to do something truly unique and begin to curate content differently and format content differently, and this is all about mobility, and think directv now, the new product we are bringing to market, and what can you do really fast and uniquely for our customers . Can you begin to integrate, and i want to clip it and send it via social media to my friends, and can we give a unique experience to our customers. This is what we are after, speed of execution in changing of the game. I have seen analyst say that pipes companies arent necessarily ready to become media moguls and know how to run Something Like an nbc, and so Brian Roberts had steve burke waiting thank god for that, because you need an operator in there. You are not i dont think of you as an elitist i take great offense to that. No, are you going to have the infrastructure i guess he is going to stay for a while or how is that going to work . I am not selling you work. Yes, you just did, you sold me very short. Do you have any idea with dealing with talent this is a serious question. People on television are crazy, and they are nutty, nutty people, and forget hollywood. You are making your point right here. You know what you are talking about. You are all going to be fine. We have, what, a year, to go through the review of this and then after it closes, we think all of our executives and creative people and journalists, of course, are going to stay because our company is going to be stronger and we are going to have more opportunity, and i am also going to stay for a period of at least a year or two to see how we need to make this work. But we have a tremendous bench of talent, and as always, because i was not going to stay forever, unlike some of my fellow moguls, you know, when we get our next group ready we will move to the next generation, but thats not in the next year. I want to address what he said, and when we were putting the deal together we spent a lot of time together and one of the primary issues we discussed, what you are articulating. You had fun with it, but i know nothing about running a movie studio, and making sure the talent is retained and we organize the business so the business is operated and run largely like it is today, and thats a huge piece of this. So i feel comfortable with jeffs plan of keeping the talent in place. We will see aol time warner, and at t time warner, and theres a parallel with acron s acronyms, and you were so against aol and time warner i was not against it and we were open minded to it as we were all until we saw the problems, and it was no fault really thats it, jeff. This is a better deal. It was misdescribed at the time. What you saw at aol and yahoo and msn, who were all in the same business, and they were the portal businesses, and they ae sraul evolved in a way not like search, and broadband distribution came in and changed the game, and this is not the same thing at all. Our biggest customer, and most capable districter is at t, and directv, and not just for time warner but for fox and disney, and what we will do is take your new product, and its not just our networks that are in there, and we should note all our networks are in there because they are good, and its the disney and fox networks and we think any of the innovations will increase adoption, and the consumers will decide, and when we vote, the media and Distribution Companies follow what they want. I was on the phone with the analyst said, and he said if jeffreyly believed invert kul intesraeugs he would never have sold time warner. No, thats not true. Its different. You did not have wireless and the advertising business and moving to customized datadriven ads which in those days cable couldnt do, and they were 12 of the country, and at t covers the entire country, and everybody watching this show could get an at t service. When it was blocked comcast from buying warner cable, and how do you think regulators will look at this . And the idea that you will be beaming all of this stuff into everybodys home and you may not need cable, and in some ways, its all sorts of competition and in other ways it creates a huge power play . Comcast time warner, while there was never a formal complaint filed by the government it appeared the governments biggest concern was what you just said, putting the two Big Broadband companies together and having a big and powerful i think the word dominant was used, bran broadband provider. Its not changing the media or marketplace, and theres nothing change where we are vertically integrating our two companies, and i dont think its reseplables comcast and time warner. Donald trump, on the stump over the weekend saying too much concentration of power in one group of people . We are not confused. We recognize its going to get a full review at a number of places and a number of areas, and our experience is the data and the law and the regulations will tadictate whether the deal gets approved or not. If you were going to do this, would you have done directv . Absolutely. The new product wont be satellite based. This is a natural move on the heels of the directv deal. You now have not only a nationwide video distribution platform, the largest in the United States, throughout latin america, jeff has tremendous content that does quite well. You are fearless after the breakup, and then yeah, a regulatory mast kist. You saw the diagram of the baby bells and what it went through. Did you talk to ed about this, and is he just sticking his chest out . You made him look like a out whitakered whitaker. How psyched is he that his old baby bell this is a Natural Evolution of our business model. It makes perfect sense. You dont circle with failure. It was mega, 50 billion. And then the way you did it, after they turned down one you knew they were not going to turn down another, and that was smart, and now this. We will talk about, debt, too. You are going to owe some money, my friend. The debt piece of this, and people have talked about how there will be a lot of debt and cash flow, and this is a 60 billion cash flow business, okay . So we have said our debt will move up to 2 1 2 times, and we have done directv and moved up in that range. Will you stay Investment Grade . 2. 5 times is the Investment Grade metrics. The data is what the data is, and the business can have the debt service has not tkeudly, and we think in a reasonable period of time we can get our debt back to what i consider more normal levels. I can help you out there, too. Thank you. Because talent does help. Will the Interest Rates stay lower for how long . Are you dependent on Interest Rates staying low . We are not dependant. The objective will be we have a 40 million facility in place to finance the thing and the objective will be to put term debt on this and take advantage of a low Interest Rate environment, and as you deleverage you are not concerned about Interest Rates and so forth. If bob from disney called you or netflix was to call you, what would you tell them the implications of the deal are going to be on them as a customer, meaning theyre a client of yours as well . As a customer . Of mine . Both. You buy content from them, and so what is the implication going to be for them . Disney came out with a statement saying regulators should look at this and will have to look at it closely. What do you tell bob . A lot of people will interject into the course of their own interest. Thats where i am going with this. What i would tell bob, it doesnt change anything about our relationship, and the world should expect we are going to be pushing to reiterate and innovate much faster, and heres the implication of that. As we integrate the content, and as we begin to drive demand, that does one thing, its going to drive us to have more of an tight to invest in what we call fifth Generation Mobile technology. We are now deploying or will be deploying in the next year this technology, this is one gig abit speeds in technology. This means nationwide we could have a viable competitor to your parent company, comcast. And so thats a big deal, and if you are a disney or a fox, thats a great thing for you. You dont think you would be suppressed to do that by consumers whether you own this business or not . Pressed to do it by consumers . Yeah, and mainly theres going to be a customer appetite for this product irrespective of whether you have the content under your own roof or we are developing plans to develop 5g now, and you know our business and watch us, and once you get confidence and get conviction, i am convinced it will drive us to go faster. Dont you think regulators would look at the two players that you just mentioned . I think about comcast and what comcast is able to do now, and its a great i have great media in my house, like 11 boxes. I think they are a poster child. Yeah, thats what i mean. If you put another scaled competitor in there, it makes both better, both work harder to bring consumers what they will want and if you dont let it do it just consumers, and if i am a advertiser, i love this, and if i am a distributor, i love it, and a customer, i love it. If you are using 1934 laws thats your job, to educate people. What happened with apple . Why arent we sitting here today, and why are we not sitting here today talking about apple and time warner . I think they are in a different business. They are busy with phones and devices on a global basis and i am not sure they are focussed on media production. When i read they kicked the tires, what does that mean from your viewpoint . Did you have a conversation with tim cook . We do a lot of business with apple and cnn and hbo and Warner Brothers and we talk to them all the time about a lot of things. Not about merging the companies. Is that overstated when they say apple kicked the tires . They did not kick the tires on time warner . I think its overstated. If you park your car on the street somebody might come by and kick the tires and you wouldnt even know it. The timing of this transaction, lots of questions happening, what, two and a half or three weeks ahead of the president ial election, and in a Perfect World i was told the idea was to do it afterwards and is there a reason this happened faster or am i wrong about that . We never talked about that. A deal like this of this magnitude, and the potential for leaks, they are really bad for a deal like this, and once agree on what the deal should look like, you move, and thats what we did as soon as we got the construct in place and agreed on the price, we said, lets get this done. If a Company Offered 20 more, it would be about the money i dont know, pick one, you think the strengths of going with at t would outweigh more money i would take 20 more if it were offered to me. The rules are, if you really have somebody offering Share Holders what is clearly, thats the question, a superior financial deal, and they are always apples and oranges, very hard to evaluate that and you have to evaluate it and all of that. The reason we did this, not just fast, but we did it without really any reversals in our talks, the more we looked at it, the more the capabilities of the businesses, the distribution business and the evolution of the mobile business, our strength, both of us in latin america, the more it came together and the more we just saw. There are very few other companies that could give the Media Industry or time warner as the leading Media Company the kind of evolutionary abilities this will give. The other thing is, and lets go back to regulation and consumers, and this is good for competition, and therefore its going to be good for consumers, because thats what competition does. Jeff, the break up is 1. 7 billion if another bidder were to top and 5 billion if regulators block the transaction, and typically in the Board Meetings when you finalize the deal the lawyers give you a probability that the deal goes through. What did your team tell you . Very high, because it should go through as randal said. And the issue is not breakup fees, thats not what we are interested in. The issue is we have an agreement together that we are going to pursue this, and you know, we have a pretty High Standard of agreement about getting this through for consumer benefits, so we will stick with it, and its not about looking at that versus some breakup fee . This is a matter of trust where you do these things, and we both want it to get done, and breakup fees are not that relevant in a deal like this. Are there any other bidders out there, anybody else you would talk to . We made a deal, and we are not going out and talking to other people. Nobody has approached you . No. Let me ask separately, when you the New York Post saying the breakup fee of only 500 million makes it appear that jeff thinks others are interested . Thats not related to other bids. Thats the other fee. And thats not the importance of it. We have got we have a unique transaction. If you start thinking about so if you have regulatory issues, we are committed, both of us, to get that done. Thats that side of it, thats the 500 million if the thing becomes impossible. If the government sues to block it, and we walk away and pay time warner 500 million. We talked about what happens to other Cable Companies, whether comcast has to go buy a tmobile or sprint, and you look out five years from now and talk about 5g and what it means to have a service like time warner inside at t, and how do you think regulators will treat all of this for everybody . I cant really estimate what other players are going to do, nor should i hear, and i always said to the extent our strategy succeeds, so its a function of how well we do together in pulling the strategy off. At t is down, and you would understand as an acquirer, and warner is off the top why do you think that is . Thats not how you would expect it to react, would it . Do you think thats skepticism . You have aur bough traus spreads. I dont think theres any ahhas in that. This is what took 14 months. What do you expect to have to have them agree, and what do you think they will ask you to do and what are you willing to do . I dont prejudge it. If you think about the example you gave, comcast, nbcu, and a lot of people think of that of the conditions, and that was six years ago and the government was trying to protect against two things, net neutrality, and protect the ott players, and that is done, and i dont like it and the ott, i think netflix is going to make it, pull through and make it, and i dont think the need to protect the ott players is like it was. And so will amazon . Amazon might make it, too, yeah. And lets say you try to switch that friday show from squawk box to a cnn show or something, and i mean, would you be willing to say no, i will keep that cnbc squawk box show on well for the regulators, they will say you cant do cnn out there on a friday, and you wont care thats why we are here. We are here for a reason. You wont care if cnn let me ask about the content. There had been a view that cbs would make a great partner with time warner because of cnn and Everything Else and i think that clearly is off the table. Yeah, we didnt need that. You see them coming together. The folks you spurpbd, mr. Murdoch, and put yourself in their shoes and they see this and they do what . You know, in fact, they dont actually have to do anything, so nor did we. Thats why we did not consolidate with one of the other Media Companies. And all of the distribution innovations we are going to make, they are available for their networks and so theres no particular reason why they should do anything, and they should look at what they do to improve their businesses and whether it serves customers better, and thats it. The innovations we will do will be available to everybody. Our expectation, if we execute on this, these are things other content players will want to participate in, and its not something we will just do for time warner, if we create unique ways to deliver cnn to our customers, we would like to do that with cnbc as well, and theres no reason to be exclusive on that. We can sign off on this set. This guy, you know we have one billionth of a vote. Thank you for joining us on this morning, and we wish you luck with the transaction. Appreciate it. When we come back, we will talk more about at ts deal to buy time warner, an arthur will join us, and thats straight ahead when squawk returns in just a moment. Ps like alpha modus to predict markets five times more accurately. I am helping tv networks use social data to predict what people want to watch. And i worked with marchesa to turn fan feeds into a dress that thinks. Hello, my name is watson. Working together, we can outthink anything. Upgrade your phone system and learn how you could save hello, my name is watson. At vonage. Com business this is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Im in vests and as a vested investor in vests i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. Among the stories front and center, a merger monday in full affect, and at t buying time warner, and it could give at t control of hbo, cnn, tbs, tnt and the storied Warner Brothers film studio and other media outlets, and we will have more on this in just a bit and we will be talking about this all day long, and i hate to harken back when was that, andrew . 99. Its the same company, and time warner, and here we are again. And oddly enough its an acronym that begins with an a. You think of at t was ma bell, and then to was them go through all of these things, and then michael armstrong, and all this stuff, its surreal, right. Doing a content deal. Do you wish you were not some boring real estate guy . I sat out the first 37 minutes. You raised an interesting point, the Interest Rates, and they cant fix the debt for over a year and cant take that risk of fixing 40 billion in paper and terming it out as randal mentioned. When i asked him about how dependant he is on low Interest Rates . Yeah, right. And they paid Something Like 14 times trailing for the company, and thats also interesting, if you looked at who could buy them, look at a company like amazon, what do they trade for . Talk about a crazy deal. They have plenty of cash. If you want content, content can be districted in lots of ways. If you dont keep the content away from other people then why do you need to do this . Is the speed a 100 billion reason. Theres many small players out there with small numbers and they are concerned what is going to happen is they will pay more for the marquee content even though the top line will look the same, but are they going to end up subsidizing that yeah, and there has to be something, maybe not the current shows. Maybe its the premium pricing that is inindividualable. Premium product, and has to be. And at t is slowing, and they are looking for growth, and they had released earnings on saturday, right . Yes. And so the subscriber growth, and mobile is down. The challenge is the comp on this deal effectively, is the people look at the comcast nbc deal, and that was purchased at a low point if terms of the value of nbc, and they were doing it nine times, and its a totally different story, so irrespective if you think theres other things, looking you pointed out they could turn around nbc. You had a motivated seller. Not sure why they are holding it for that long, and then the big rush to sell on the low. Your parent doesnt look like it used to look like, and it is a totally different company, right . I thought he downplayed the risk of the fcc getting involved . I think everybody will want to be involved, just the shear size of the transaction. He is making a political case, they should not be involved, its a vertical you heard him over and over again, and he said it, only horizontal. But you are a reasonable person, and i would want somebody to go up against comcast is a powerful entity, and i think it would be good for everybody i want a hurdle into the future while i still can. You have to be impressed with both ceos, they had a strategy and they met and they see it and you have to give them credit for it. Everybody likes good competition. Aol, and the 800pound gorilla, was the disparity of the companies, and these are two cash flowing companies. Was it the content and the distribution together will be powerful. The deal may be fine if they wanted to pay 3, and this one being a megadeal announced today, this in the new york times, it says here, such mega deals are often postponed during times of political or economic uncertainty, given brexit and everything going on, and what feels like a tumultuous moment in the economy, smooth sale somethi sailing is ahead. Theres a couple issues with being this late. You see megadeals at the end of the cycle and that bothers me and you see the big deals being done, and if companies cant grow, they often look to acquisitions. It says something about where we might be in the cycle, which scares me. These are not economically brexit, thats your kau mull khau wus . Brexit, Interest Rates, china. The tumultuousness. Are you refute kwraeuting that world. Last time i saw you, you thought the whole world was coming to an end. No, no, that might have been for media. Mario tkpwau belly owns 4 million shares of time warner and 2. 9 shares of at t, and is it just the back drop of the scary world we are living in to give these two pause, mario . If you look at time warner as a stand alone, over the next four years, they are going to generate 2 billion, and how does the company handle that . From my point of view as a share holder of time warner, i think this is an interesting exit strategy and i have no problem with it, and from my point of view of the telephone, they will deliver over time and you cant assume astatic, and by the way, most of our telephone was bought and we own it because of directv, and we are a cheerleader for both companies, obviously. Do you think this is the best time warner, its a jewel, obviously, with the assets and the brand names they have, and do you think this is the best fit of all of the acquiring companies, and we made the point, i dont know, some new tech company should buy it to they are all trying to get content and maybe they should have done it . They have a topping fee of half a billion, joe, and its 77 cents a share, and 1. 7, i mean, and thats 2 and change. Its open to the free market process, and if somebody wanted to come in and top it, we would be further cheerleaders. And the stock is at 88, and jeff and randal suggested it was normal course. I could make the argument this morning that thats not necessarily normal course for a transaction. The notion of being hurt because of certain deals, theres a legacy, and thats why in quotes its called risks aur bough traupblg. There will be antitrust issues being looked at. No. The argument is vertical integration . The stock is trading like a 50 50 probability of it going through. Thats what they tell us, right . I have an eps in 2020 of 7, and that assumes they use the cash flow to buy back stock, taking it from 7. 70, which they will do if there is no deal. Where will time warner sale if there is no deal . Its what makes the world interesting. The regulators have been so active, so much more active in these mergers. I hope so. Thats their job. They have really stepped up, and a lot of deals have been shot down late in the game. We are trading back now close to where the box deal, and offer of 85 a chair was offered. Do you believe inve in that vertical intesraeugs. Yeah, these things, as you know, discovery demonstrates discovery around the world, and we are looking at the market for at t, and the content would you be happier if they owned more spectrum so they could build out their network faster . Is there any argument they need the content itself, or could they go off and create content . I was talking to a creator, netflix and amazon prime came out of nowhere, and if you have a big enough wallet and look what can be done without having to buy a studio . Yeah, good luck. Go back to the 1954, is that far enough back . There was six major studios or seven major studios and theres a graveyard full of companies that have a couple hits and then where is the cash flow and where is the library and content and creativity . No, i think theres more barriers entry into a studio, and paramount has 300 million library, and they have to fresh start all over again, although jack reacher did okay. If this deal does get completed, what happens next . Well, the Companies Like sony looking at their entertainment business, and they split the company and have their robots and artificial intelligence, and they decide finally to split the company, and then you look at what dr. Malone is going to do, and hes obviously a deal maker, and you will see, and all the Investment Bankers will call and say how do we get into this, and what do we do next . A lot more will happen, you know, whether they continue to look at Liberty Global or skype is bought by news corp. Not news corp. But fox, you have a lot more going on. Im on a highway, so i have to go. Talking and driving. When we come back, we will continue the conversation on the big transaction. The futures looking like the dow is opening up 75 points higher. More on the top story, the acquisition of time warner by at t, and earlier both joined us to talk about the deal. Its a big merger, but its a vertical integration, and if you think about the areas that have been contentious over the last few years, in our industry and jeffs industry, they have been horizontal, where there was a competitor being taken out of the marketplace and this has none of that. We think this will enable us to do those things faster. And one of the great wise men on this industry. Does this transaction make sense to you . Yeah, i mean, one of the concerns that content companies have is we dont have a pipe, and one of the concerns that Pipe Companies have like at t is we are a dumb pipe and this makes the dumb pipe a smart pipe. If you cant keep the content exclusive to your pipe, what is the advantage . They would argue, among the strategic advantages are, what at t has, they have enormous amounts of data, and if you could use that to target people more effectively, you have built a new they could generate more advertising revenue by owning the content rather than if they are just sending the content down the pipe because they could tell them you are going to get a white male between the ages of blah, blah, blah, and we know women of a certain age do blah, blah, blah, because of our data . Why not do that on a licensed basis . You could, but everybody wants to own the data if you can, because if you license it you dont own it and somebody could take it away from you. We were talking about where the stock is, and how dooh yooh dull that. Theres another issue. I think one of the things we are not looking at here is the cultural issue. If you go back to 2000, when the time warner aol deal went into effect, and steve case and the other at t people were in the room, and the head of hbo, and he whispers and says look at these guys from aol, and they call us old media, and i made more than aol made and they call me old media, and the tensions between the content company and the Technology Company at aol, and that was one of the reasons the merger did not work, and you have to raise and talk about the cultural issue. Jeff did not want to do the deal with 21st century fox because he thought there was a cultural fit problem, and he thinks theres a cultural fit in its possible that randal seems to suggest i will hire great people to do it, and it seems like he will keep his distance. He seemed acutely aware in the danger in the response to your question and you could be acutely aware and not act on it, and so the question is do the at t people who have little experience with content, and at some point the crazy people you were talking about here, they say we want more money, and the guys in the green eye shades say we dont want to spend more money on content. There are potential clashes there. We have to rap. I imagine we will be talking about this for a long time. Day one, and likely a year, exactly. Coming up, more reaction to the media merger, and James Stewart joins us in the next hour, and stay around for the next hour, excellent, and squawk box will be right back. Megamedia merger. The world of distribution and content is converging and we need to move fast. The company is stronger, and we will have more opportunity. Now the next big hurdle. Will regulators approve the deal . Analyst and politicians are all weighing in. The final hour of squawk box begins right now. Announcer live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc. The futures have been strong all day long. And a lot of good feelings generated by mergers today, and atat buying time warner for 85 billion, and cash and stock in time time warner is down, and they were up earlier, and so a lot of action in the shares today. At t shares, to be expected, perhaps, down just under 2 , and Randall Stevenson and jeff beau cuss joining us earlier today on squawk box, and look what they had to say. Its a big merger but its a vertical integration and if you think about the areas that have been contentious in our industry and jeffs industry, the government was concerned about a competitor being taken out of the marketplace and this has none of that. And we were trying to get all of the networks on tv, not just ours, to be available on demand and this will allow us to make that faster. Veteran is okay, jim, there are 30yearold veterans, and so dont take that the wrong way. The makeup lady said i was, quote, looking good. First, before we get to jim, animal spirit alive and well beyond the at t and time warner deal, and Rockwell Collins buying be aerospace about 6. 4 billion, and programming note, dont miss the cnbc exclusive interview on squawk on the street at 10 00 a. M. Today. And ocean wide buying genworth, and the deal represents a 4. 2 premium for genworth Share Holders. And td amayor trade will buy scott trade. The estimates are the cash and stock deal will save 450 million per year in expenses. How about for merger monday. Now, back to the deal of the decade, at t buying time warner, and Randall Stevenson, andjoine us, and this is what we talked about. They dont actually have to do anything, so nor did we. Thats why we did not consolidate with other Media Companies. The innovations we do will be available to everybody. Our expectation, if we execute on this these are things other content companies will want to join us on. Does vertical integration make sense . Well, let me look at it from two standpoints. I assume people know what vertical integration is, and i am a total antitrust nerd, but from a regulatory and classic antitrust analysis, this is a nobrainer. Theres no concentration in either one and they dont compete in any way, and vertical integration, the big issue here is the consumer angle and another big issue is the management angle. The problem with vertical integration historically is it often does not work out for the company doing the integration. Its tough for a management like at t to suddenly step into a business it never has been in and doesnt know anything about and manage it. Theres a lot of practical issues. There will not be over arching concerns like what donald trump raised yesterday . There is going to be a lot of issues here, and i would have said this has a 98 chance of going through, until i watched what happened with comcast and Time Warner Cable, and that was arguably socalled in the cable business, and that got shot down, and basically it was doctrine that had not been used since the 18th century, and they came up and said, well, you know, theres too much power in one hand, so i think we might see the creation of a whole new antitrust doctrine here, but i still say thats not likely. I would put the odds not at the 50 50 people are saying, more like 70 30 that it will get approved. And the actual integration, do you think they effectively run side by side . I talked to the ceos, and randal is saying the right things saying i am not going to stick my fingers into this, and i will let pwaoubgious run this. The reality is its tougher, and i heard somebody say earlier, what happens when they talk about money, who is getting paid and the stars want this, and thats going to be tough sometimes for somebody who spent their entire life in the telephone business or the Telecom Business to get them used to it. What happens to a company like disney . What do they do . They look at Something Like this and think what . We talked about what pressure will be on the other companies. I think the jury is still out where the giant integrated things like this will make sense. The real model we have is comcast and nbc that seems to have done well but they really bought nbc at the bottom, and disney has been doing well withstand alone content, and, you know, again, one of the things i was pushing them on is i think you brought this up, too, why nown it and not just license it, and they said we can do easier when we own it, and disney in theory standing alone should not be at a disadvantage. Does everybody need to run and do a deal now or wait a year to see if this happens or not based on the washington issue . The prudent thing to do would be to wait, but they are not always prudent. And yeah, i mean, the danger the good stuff gets snapped up, and warner was the jewel of the crown and that is gone now. I was sitting here thinking about verizon, and we are thinking on the content side what do they have to do, and verizon is like, aot and yahoo and these guys get time werner abo, and game of thrones . If i am verizon, i am feeling i would feel like i needed can we back up one second. People are going to get tv from their Wireless Phone company . Thats what this means, right . People are not going to care. They are going to get it through the broadband and on their mobile phones. Are we really going to be watching everything on the mobile screen . Apparently. He is saying from your satellite or the next gen of lg you will get your tv from your Wireless Company. Yeah, you can bypass verizon or whatever it is. The consumer doesnt care where it comes from, just that they get it . Its a strange thing to wrap my head around. Cable people say its impossible, the physical wire will always carry more data than you can do wirelessly, and that ultimately when you get to vr and all of the new kinds of technologies, even higher def tv, the wire is going to keep ramping up and amping up the amount you need and the wire will never be as good as, and im just telling you what the other side is. They claim its procompetitive because it puts them in competition with google and facebook and the Silicon Valley technology companies, on an advertising level, and thats an interesting idea. Interesting argument. That they can nail that data with the content and the target that will impact these big jugger knots. I think you would have to say thats probably healthy. Great seeing you. Thank you. Coming up, we will tell you why one analyst is making a big call on verizon i dont know. We have yahoo . I dont know. I would be like, wow, i am feeling bad about myself. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at Td Ameritrade. I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound whether its connecting one of or bringing wifi to 65,000 fans. Campuses. Businesses count on communication, and communication counts on centurylink. Welcome back to squawk box. The futures opening up this morning. Lets get back to our guest host, the capital ceo. And andrew wants to talk about trump . I am curious. I will give you my time, grant you my time request barry, which is valuable. What do you think happens to the trump brand hotels and they are changing the name for the new hotels and what about the old hotels . It would be silly. It will depend what happens with the election. The price point with existing hotels are high. Do you think hes damaged his brand . Do you think his brand the company said this was always the plan and to reflect the next generation and has nothing to do with this . I would find that this is a company that made its entire brand i think trump Hilton Worldwide warnings acquires 25 from blackstone . It makes hna makes an investment in hilton . Thats the chinese. And its at 24. 50 here. They came in at 26 . 26. 25 per share. They found a buyer for a big block of their stock, which is an excellent execution for both companies, and hna have been looking to do something and they were a buyer for our company we had in france, and i think we had a big hotel company. And there is tremendous number of interest for chinese. What is hna . Tell us more about it . Its a Chinese Travel Company based in beijing, i believe. Is this different than the japanese, if you will, coming to the United States . Theres fewer japanese than chinese. Yeah. I think for many of these chinese life companies, and this is the currency hedge in case they continue to have to lower the currencies against the dollar because of the slowing growth at home, so they have been devaluing the currency slowly. Did you mean, when we look back at all the japanese bought, they were bad, and they bought at the peak they have free money, dont forget. Their foot in tokyo was less than six miles of land in the u. S. , and they are using funny money to come and buy different things. You can argue this, but i think its different. The bubble in china, they have been trying to slow that down and every time they do the economy slows down and they lose their conviction and let it heat up again. I think theres a tremendous you see nothing of it. China life is the Largest Hotel company is china, and we were working with them for seven months to complete the transaction with them, and you see, what is interesting, is them being so visible. To me thats interesting, they want people to know they are coming and are here. I think thats interesting, because before they were afraid of the political backlash and they would come behind somebody and you wouldnt see them and today they are willing to put their name on the door. They have to be thoughtful with a lot of due diligence. What did you think of the markets . It was bullish. You thought new york was overheated. How is everything going with greenwich and your own sale . I am not trying to sell a house. You were out i was out to lunch. Actually, connecticut has the highest debt per cap in the country, and as tax rates rise in connecticut, the differential to new york city becomes so close, and some of the people are staying in new york. Greenwich is the worst Real Estate Market . I should have said the high end. The strength in the market was 1 to 3 million homes, and you are seeing that in new york, too, and the market in San Francisco is buckling and people cant afford the rent for the new apartments in new york, and we have 90,000 apartments over the country, and its a 16 billion portfolio, and we see 16 growth. The Housing Market is really great. You have 50year lows of Home Ownership lows in the United States. Is the economy terrible or great . What . Is the economy terrible or great . I am never a bull, and you never know me to be a bull, and taking out iran and the middle east and russia and the crisis of the world which are real and material,s think whoever is elected the good news, i was telling joe, i was at an event when a former Vice President who said the good news about this election is somebody is going to lose. After that happens Barack Obamas not going to be president anymore. Thats a happy day for you, if not for you . No, i would you are still stained with that initial vote . I didnt vote for obama. You didnt . No, i did not. Sorry to make the news. That was quickly denied. You guys in the media said i did. Look, i do think donalds campaign is a function of making America Great again is a reaction to what obama did. He can shirt his own legacy by creating trump. I think hillary is more moderate than she appears. But he is too popular at the moment, and opposed to what is going on, he looks like the cleanest person in the room, and hillary, i heard her give her a speech and she was in favor of going to syria, and they were shot down as was gates and everybody else and thats why she left but doesnt say that, and i am surprised she didnt want to do that. How did we get into politics . The Housing Market. Look at that pivot. Its great, right, and the homes, theres a 40 year low of home inventory. And we have a colony star wood homes which is the second largest renter, and 75 occupan occupancy, and business could not be better. The sunbelt cities, seattle, killing it. More cranes in seattle downtown than any city in the country, and more than San Francisco and new york combined, seattle. What is that, a red light . Every time i hear about cranes, its a bad side. Red light, red light. The hottest markets are easing back, and they are overheated, and even the capital want or the chinese want to buy in new york. Those are the hot markets. Atlanta is strong, and florida is pretty strong. You brought up politics, and you said the Vice President said somebody has to lose . An exVice President. Barry is going to be here for the rest of the hour. You just did the most annoying sound in the world. Meep i thought you were having a seizure or something. I am taking that very personally. We are kicking off the busiest week of earning season, and squawk box will be right back. Meep, meep lets catch up on some of the mornings earnings reportings. Kimberlyclark, fell at 1. 52 a share. Also Vf Corporation came in ahead of estimates, came in at 1. 19 a share, and it fell short because of the jeans business, and tmobile, quarterly profit of 27 cents a share, and came up a bit short but the wireless carrier raised its full year forecast. Dont miss, tmobiles ceo coming up at 10 00 a. M. Eastern time. And then the ceos of time warner and at t, and why one analyst telling investors to get out of at t and instead go to verizon. Squawk box will be right back. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley i was diagnosed with parin early 2013. Lly it took awhile to sink in. We had to think a little more seriously about saving money for the future and for the kids. The income of airbnb really helped to mitigate the stress. But we have that flexibility of knowing that if you know things get worse, we have this to help keep us afloat. So thats very, very important for us. Welcome back to squawk box. Todays big story, at t buying time warner for 84 billion, and both ceos joining us earlier this morning. We realize if we had ourselves together, that we could create more innovations for consumers and they could have more choices for packages and more competition for lower prices. This is a pure vertical integration, and while regulators will have concerns with vertical integrations, those are remedies by conditions, and thats how we expect it to play out. And eamon javers joins us. First off, you hear maybe these Companies Made that mistake announcing it 15 days before the National Election and the reason is we have seen politicians already over the weekend with statements opposed to it and that boxes the political statement in, and Bernie Sanders said the administration should kill the merger, because it would mean higher prices and fewer choices for the american people, and donald trump coming out on the political spectrum against the deal, a deal we would not approve in my administration because its too much concentration of power in the hands between too few. This means its up to the next administration, and a lot of people betting it would be a Clinton Administration that would handle this through the process in to 2017. If you look at both companies, and they have a lot of lobbying firepower on their side, starting with at t, so far 8. 5 million, and 28 outside lobbying firms working for at t, and that does give them muscle here in washington and time warner, a similar picture, but smaller overall in total expenditures, and just 320,000 spent on four outside lobbying firms, and that does give them muscle for the process, and the deal is will Hillary Clinton boxed in and forced to Say Something about the deal, possibly opposing it, and that could set the political tone for this, and regulators say they make these decisions on the merits, but they do swim in a political ocean here in washington, and if all the major factions are opposed to the deal, that could make it difficult despite all the armies of lobbyist, guys. Thank you for that. I dont know what is going to happen. Look at the price, though. Look at the price. Thats all you need to know. Drexel hamilton downgrading at t this morning, in the wake of the news the company is buying time warner. Joining us i was kidding around, and i thought verizon when the music stops and they want to sit down, and they ended up sitting down with aol and yahoo and that seems like not a great consolation prize for somebody getting time warner . We upgraded verizon today, and they are going into media in a more measured fashion and they are targeting mobile and jen sea. Thats a better strategy . We think its a better strategy than at t, and they face a lot, and i thought at t said it would be creative in the in the first year after, and so in 2019 they are saying creative. And 1 billion, we dont know if they will get that once the regulators weigh in. How do you have the sepber geez. Now the challenge with that is, they are not going to be able to do anything exclusive. Ironically they have an exclusive for the nfl sunday ticket, but wont be able to do exclusives with hbo after the regulators get done. What about they can use it as a content Creative Engine to create new channels and they create directv now premium, and they have all the creative people that built hbo and the guys from Warner Brothers to do that, and would that be protected that they couldnt keep that to be exclusive . I dont think they will be able to do it exclusive, and they said directv will launch the over the top offer with about 100 channels next month and i dont think they will be allowed to exclusively put time warner content no, what i am suggesting is new product. Is there a way for them to build and create new products exclusive to their product . I think the regulators will block that, because thats the concern they will use the content do you buy the speed, the integration, its the speed of this and they can work closer together and bring things to market no, i think they did a great deal with the nfl, and i dont think you need to buy the cow to get the milk. At ts growth has been slowing. Wireless, negative growth this year, and media is growing nicely, and its about free cash flow. The Media Business kicks off a lot of free cash flow, and the Telecom Business, very attentive, and then remember, discenter geez. You are assuming at t will do the transaction, or are you assuming either way if it doesnt go through you still downgrade it . Either way you would want to be in verizon stock, and i dont think they will get it approved by the end of 2017, and any new administration will have other prioriti priorities, and i would put about a 60 probability that at t does get it. Does verizon go off and try to do some large media transaction himself because of this . No, i dont think so. Its well thought out, and its less risky, but hes going after a different demographic, and mobile only and jen what he was saying, i get my cable thats not what i mean, i get my video content from my Wireless Company in a 5g world instead of a Cable Company . Even if they did not buy time warner, is that world coming . That world is coming and it depends on where you are viewing it, and in my generation, i like to watch it on a tv in my living room and my nephews like to watch it on a small device. Creating a different type of landscape with the Telephone Companies and the Cable Companies . They will use 5g in certain markets to pipe it in, and the consumer will agnostic we get that, and the possibility of it is we live in new york city, and you get Time Warner Cable owned by charter and thats it. Its mostly a monopoly, and if all of a sudden you told me at t and tmobile and sprint will offer Cable Service wirelessly, that changes the entire dynamic. I think 5g will be more in the suburban markets than urban market. No way, dude the takeout food comes right up everything, we do not go into retail. Do you go to art museums . All the time. All the time. Last week. Lincoln center, last night. When we return, todays top stories, deals, deals, and more deals. Tomorrow on squawk, and in between that we have eli lilly, and the ceos of Procter Gamble and home depot, all that starting tomorrow at 6 00 a. M. And squawk returns in a moment. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive prge a manufacturer. Well thats why i dug this out for you. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Welcome back to squawk box. It has been a big day for mergers. Among the deals, ameritrade involved in a merger. Tim hockey will join us to discuss the deal, and a little overshadowed by the other deal. Just a little bit. And the regulators, have they begun the review of microsofts deal to buy lynn kau done. They are concerned whether the deal will reduce competition. Another version of the apple watch is about to hit stores, it will go on sale on friday, and the watch designed for runners and has a multitude of related apps was revealed at last months product event. And what did we not get to cover this morning that want to talk about . You dont want to talk about the election . No, lets talk about the Media Business. I was saying i think the economy might surprise us and we will get a Fourth Quarter gdp number friday, right . Consumer spending and business spending was down big, which you would have thought come into the election cycle with all the chaos and all the unknowns and maybe post election, i think you might see Companies Make a more aggressive stance on spending capital and building plants and hiring and waging are going up and thats the last piece of the puzzle is wage increases and shortages in labor, and you saw the 5 growth in the Household Income number, the highest in 50 years. Wages are accelerating, and businesses will start investing and barring the world never has been more messed up, so thats the big caveat, something could go down in yemen, iran, and i was with an egyptian billionaire as you would be. I was at a conference no, i was just hanging out with him, found one on the street. From their perspective, the world has never been more screwed up, and the turmoil in the middle east, and donalds comment are so funny, and you keep bringing up politics. Its funny to defend putin, and he is dropping bombs on our allies, and 17 departments have said the russians are interfering in our democratic process, and he is doing that on land and sea, and flying by finland and inviting people to visit with him, and i saw trumps Foreign Policy, its simple. We want to get rid of isis and what was the best way to do that and it was very focused to i dont actually understand what john kerrys Foreign Policy is. Its obamas policy. I am not sure what they think their priority is in the middle east . What is it . I am not sure at this point anybody knows. You dont know who is going to replace is donald trump misguided on a lot of things, absolutely . But theres a clear vision on what mishmash we have got. You have senator kerry running around begging banks to do business with iran. Yeah, the ayatollah is sitting there saying death to america, and we are saying give them more money so we can bomb us. The dumbest thing we have ever done. I agree with donald. And at some point, this can lead to a major conflict in the middle east, which it almost has to, the iranians are in lebanon, and they are in yemen, and obviously gaza, and so theres a bright side, a thing called the tkpwraoup of four, and theres a rumor that saudi, egypt, jordan, they are getting together and trying to work to actually bring peace to the palestinians, and then with israel, turning their attention to a nuclearized iran. Yeah. And the economy is bubbling along, and we are in a big expansion, 50 months of the expansion, the longest expansion on record, and i am seeing the Real Estate Markets have never been better in the United States, no over building, and i am not sure what the government is complaining about bank lending to real estate, and they are not doing anything they were doing before, and businesses are not borrowing, so theres lending to real estate, but they are lending at 65 at cost and the markets are balanced, and you have a 1 vacancy rate in industrial orange county, and hotels slowed down with the economy, and the growth for hotels slowed, but overall, our one hotel in manhattan is running 90 occupancy, and we are bullish on the markets are overbuilt in certain places, like new York City Hotels are generally overbuilt. What about the financial industry in new york . We talked about hedge funds over time, and that whole market, the bank market i think they are soft. Take jpmorgan, and they are t if he does, you know he has a lot of back office in columbus, ohio. They all save a billion dollars. And the hedge fund, you dont hear about hedge funds except for one, and the market is 150. Given the performance of hedge funds are you giving them more or less money these days . Less. Why . I think its hard to trade against atfs, and 70 of all the money going into the market is in different funds. Is that what you are doing . I still pick stocks. The economy is large enough to see what is going on, and we have apartments and hotels and 30 malls and we can see a lot. The economy is okay. Its not great, but great means theres no inflation. I hope, please, god, she raises rates in december so we can move on and the curve flattens a little bit. It never ends. Its a pipe dream. I cant wait what is really lacking in politics is common sense. I wish we had a Little Common sense in the election. More from barry throughout the show. When we return, jim cramer will join us live from the new york stock exchange, and we will get his take on this mornings top stories including the me megadeal. Verizon limits me and i gotta get home. Youre gonna choose navigation over me . Maps get up here. Umm. That way. Girl you better get on tmobile why pay more for data limits . Introducing tmobile one, unlimited data for everyone. Get four lines just 35 a month. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. This has none of that. There are no competitors being taken out of the marketplace. We compete nowhere. Were not talking about changing how the content is made available to other people or other customers or other distributors. This is a pure vertical integration. If you want a package of more channels, fewer channels, you want it mobile in your house across all your screens, this will enable us to do that faster. And we think if consumers like it wont just be our channels. Dealmakers of the morning, Randall Stevenson and jeff bukis joining us on squawk box earlier. We just had an analyst on that upgraded verizon and downgraded at t. Just if i were a ceo of either at t or verizon, id much rather just, you know, think im going to manage these time warner assets than like yahoo and aol. I mean, you know, maybe do you think it is better . Do you think verizons better positioned . Well, i think if i were a shareholder of att im in it for the yield. I dont know, i think the Balance Sheet is not being addressed enough in all the coverage. Its very compromised by this acquisition. Very expensive acquisition. Those two gentlemen are right, very little overlap. As jim stewart said thats not been what the regulators have been looking at. Theyre looking at concentration of power. Concentration of power it is very much of an older antitrust doctrine, but were in a populist time and they say, hey, listen, theres no overlap. But i look at the deals this Justice Department has killed, most active Justice Department maybe in history, and i dont think its going to be any different under Hillary Clinton if she wins. Obviously we already know from donald trump that he doesnt want this. But lawyers are little out of touch with the populism at the moment. Just the way lawyers out of touch with what the Justice Department did at the banks. I think the lawyers are the wrong people to advice her. So youre betting against it . At least putting it 50 50. Jim said 50 50 initially and then 70 30. Im probably 60 they do it, 40 they dont. But as they get to 60 i dont think youre going to want to do the deal itself because theyre going to make you give up so much. Not because its rational. Everybodys so rational. That is great. That has nothing to do with the way politics is right now. Its not rational that right now that the walgreens deal being held up with rite aid. None of this is rational. Office depot not being able to merge with staples. Do you like the strategic rationale and value of the deal . I think they see google coming. I think they see facebook coming. I think they see were not that relevant, we need to build an ecosystem. I think they see john ledger and i think they see sprint, those are all taking subscriptions away from them. So they have to do something. Literally they have to do something. Thats the way i kind of feel about this deal. What a great thing. Put together a company, better deal than fox, going to get a lot of money for shareholders, if Randall Stevenson were totally motivated by shareholders, he wouldnt be doing this deal. Like marc benioff paying too much for twitter. Thats why they own the thing, they dont own it because of growth. Thats a different shareholder base. Its going to turn over in the interim. He doesnt understand that. Thats okay. Hes a big guy. Do you think every media ceo is having a Board Meeting trying to figure out what to do about this, or do you wait a year . Do you think well see a raft of more transactions or not . I think theyre all wanting to know what google does. Every time i get together with executives theyre always afraid youtube is going to be monetized and take them apart. And that hasnt happened yet. I think people are fearing google, fearing amazon, fearing facebook, but theyre very east coast guys who dont understand the mentality of what google might be up to. And theyre like, listen, were old white guys, we got to do something. Its a shame. Its really interesting thing to see these guys in action totally being at odds with the younger people out west, but very much also out of touch with the shareholder base. But theyre rich guys, think its going to work, their lawyers say its going to work. They are really all out of touch. I only say that because im older than all of them. Great american. Tell us what you really think next time. Yeah, why not . Im tired and im old. Thanks, jim. Coming up im not going to say that, anyway, i feel like you were going to say writing check to yeah. Hes going to be on. Say his name. Say it loud and proud. Legere, squawk box at 10 50 a. M. Eastern. New bikes arent selling guys. What are we gonna do . How about we pump more into promotions . Nah. What else . What if we hire more sales reps . Nah. What else . What if we digitize the whole supply chain . So people can customize their bike before they buy it. That worked better than expected. Ill dial it back. Yeah, dial it back. Just a little. Live business, powered by sap. When you run live, you run simple. Thats why a cutting edgeworld. University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. Guest host this morning Barry Sternlicht, we really have only time to say who the hell you are. Starwood capital chairman and ceo. Its been good having you. Thank you. Ill come in another day when theres not an 85 billion merger on the table. Your first 40 minutes did get cut off because of that. Thats okay. Its a serious deal. As i said earlier, these megamergers to me do signal youre getting to the end of a cycle. Really . Margins are Barry Sternlicht, thank you. Make sure you join us tomorrow. Squawk on the street begins right now. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. So much news, an hours not going to be enough. At t, time warner, tsunami of earnings heading our way over the next five sessions. Europe showing decent advantages, china up a percent overnight. Watch the tenyear, at least four fed speakers are on the agenda today alone. Our road map begins with that