Transcripts For BLOOMBERG In The Loop With Betty Liu 20140213

Ther, we will talk to Senior Vice President of cbs interactive about the future of Digital Deals amid the era of threat. The big headline this morning, a little monopoly talk. Acquire timeeed to warner cable for 45 billion. Combining the two Cable Companies in a deal. Paying about 159 a share. The dollar shy of time warners asking price. A rare day out in the cold, but here you have it. The darth vader of cable. That is his moniker. I want to bring in alex sherman right now, and he broke this story for us and he covers comcast and Time Warner Cable for bloomberg. Talk to us about the idea of a monopoly here. Have, if they get rid of 3 million subscribers, they will have 30 market share. I feel like they will have closer to 75 of the cable universe. You got it. Question to regulators will be, how do you define the market that often . If you include directv and dish and verizon files, comcast will of all paytv subscribers. If you look at this world as just Cable Companies, comcast becomes really dominant, combining number one and number two. You could also look of at the world of tv viewing these days to include youtube and netflix and amazon prime and who, etc. Then you get a bigger universe be on the 30 . Regulators have to make the choice, are they comfortable so manycast owning cable subscribers and owning the Nbc Universal content portfolio. That is a lot of power in the industry for one company. Them up to about 30 threshold on paytv may not draw much i are out of regulators. I am guessing comcast has done its homework at this point. You think we could not see tther tie up like at t mobile takes forever, nothing gets done, a big breakup fee . No. This is a much different scenario. At t mobile took out a competitor. Comcast and time warner content and Time Warner Cable do not compete. That is a big deal here. Comcast has talked to regulators and they have given them an indication that because of the key difference, there will not be any theoretical pricing difference by eliminating the competitor. The other thing to keep in mind here, Cable Companies getting bigger, they have more leverage to push back on content providers like cbs or disney. That could keep cable bills down and be a benefit for consumers. John is not called darth vader for nothing. He is a smart guy. He has been operating in the media universe for at least a decade. Why would charter not come back and make a 160 bit or a 165 it or a 175 bid. They clearly do not think it is worth it. Correct. Charter put out a statement saying they will be disciplined on price on this. The problem is that charter is just not that big of a company. It is easier for comcast to absorb Time Warner Cable into their balance sheet. Charter would really have to lever up. They were already pushing their leverage target to above five times, which is a lot for the cable industry. Even largered an deal here, they would run into a situation where banks might start to get hesitant on loaning them so much money and Time Warner Cable would certainly resist turning into a company that has so much debt on their new balance sheet. We have to leave it there. I want to ask one thing. What are you wearing right now . Shirt. Ck pants and a t that is not that exciting. Alex has been in the office literally all night long. He is hardworking and wearing a black sweat suit. Thank you so much for joining us. We will check in with you later. As we mentioned, regulation is an issue here. Washington will have to bless the calm cast and time warner combo. Cook, to bring in peter who has more on that part of the story. Down inthe initial take d. C. , even though i know everyone is holed up in their houses and afraid of the snow . The government shutdown, we do not have an official reaction at this point, but any time you combine number one or number two in anything in this country, washington will be initially skeptical. The deal will have to be scrutinized on a variety of fronts. It is not just cable versus cable. It involves a lot more players and what it means in terms of Program Costs and the flow of information on the internet. The fcc will ultimately decide if this is in the public interest. We are a long way from done and it is not clear initially exactly where the government might be. The pros, they do not compete in the same market. A Larger Company could leverage its size to reduce or limit cost. There are possible efficiencies here for businesses. The cons are that they will be big, really big. How will they really push in the pricing front given that. One thing to remember is this company has friends in high places. There was a top high comcast executive at that dinner here. So you think there was a conversation had. Do they need to do anything to sweeten the deal and make the government like it . Or do you think it is fully baked . They have to sweeten the deal. They even said so in their Statement Released with the news of this transaction. They will, at a minimum, offer least 3 million cable subscribers they would be getting from charter. I would keep them below the 30 threshold in terms of cable eyeballs, 30 million customers there. They might have to go further and they might have to again to maintain Net Neutrality. It is something they committed to as part of their deal. Rulingsve been legal against the government and that front. That is complicated, but it is one of the chips they could use and one bargaining point they could make. In the alphabet soup of regulatory acronyms, what are key letters we should look out for here . Doj and sec, i would really watch the key the newry player here, fcc chairman, tom wheeler. He has already brought in the folks from sprint and softbank to express concerns about that in wirelessbination and he is also talked a lot about competition and his willingness to maintain it across the country. A big test for him. Qwest thank you very much. Our chief washington correspondent. For more on the huge deal and how it changes the game for the cable industry, customers and content providers, we are joined by the former president of cnn, as well as the bloomberg deal reporter, cristina alesci. So many interesting points to discuss on this. We have you for the full hour and we are excited. Size in all about delivery of content, internet, etc. , whether you are in the cable delivery business, or you are a former phone company, verizon and at t. All of these guys have to get as big as possible as fast as possible. In the cable industry, this is close to a monopoly. Know, but verizon and at t, they are national networks. The Cable Program is localized there that might be changing. You suddenly have a company that has almost a national footprint, but they have to have that in order to compete against alternatives. Google is developing fiber that delivers 100 times faster speeds than your cable or phone provider does. Good point. How quickly will the industry change . How quickly will Cable Provider who cares . Young people talk that way. Anyone under 40. I talked to our 25yearold producers, they do not have cable. Qwest they do not feel they need it. Less people will have it. One thing everyone is talking about today is the idea of a monopoly. What is not being talked about is the fact comcast investors will have a lot of tough questions. You pointed out the loser here. Is he really . Contest is paying a big price. Malone was going into this with a completely different philosophy on how to use cash. He was going to take advantage of the chief debt market out there. Comcast is using expensive stock. Investors will have a real issue with this deal today. That is one thing they will have to get over. Forget about the sea. We will talk wall street here and focus on what comcast and how comcast will message this deal to investors. Just the other day, we had a chance to speak with a man who knows this well and what he thought about charter top possibly buying, warner. Just buying time warner. I remember saying 15 years ago we would one day get to a place in this country where there are two Big Phone Companies and two big Cable Companies. If he says it, i will not fight with him. He is my boy. Certainly, 131, below where the thing trades now, in what universe does that work . That was john malones approach. What do you think . Fromlearned how to dress parsons when he was my boss. I took an oath there. Regardless of how you pay for the financialat structure is, these companies have to get as big as possible as that this possible in order to keep programming costs down, in order to create even more economy scale, marketing, back office systems. All of that stuff. Comcast had been a leader in driving charter interest. Trying to match the economies to scale. Comcast was achieving. Now comcast has a bigger league. A mucht is that it is bigger universe than just cable and growing. Watchlong as i can bloomberg tv. Qwest toomberg, cbs, it yes bn go negotiate what they want, comcast can say, we own the whole country. Well tell you how much you are getting. Thank you. Cristina alesci. We will be back with more talking about other media headlines of the day. Stay with us. Youre watching in the loop. That theylly wish is had a commercial camp. During the commercial, this man says some stuff funny stuff. Were also joined by the former cnn president. Our guest host for the hour. What makes this man an expert . Take a look. Androducer, onto the north, executive. A treated force in the media for decades. In the late 1990s, he saw the digital revolution before most. A pioneer in digital video. Returned to his roots, but this time, at the top. As president of cnn, he built landmark sews shows. He saw twitter newsgathering value early on. He keeps looking for the next big thing. He today tells us who will win the battle for attention span. Qwest pretty good. That is why we can ask you a number of questions to span the media world. I want to start with apple. When i think media, i think apple, maybe because all of the products we use are made by them, speaking of monopoly. Apple talking about a content deal. What do you think about the integration of cable . It is kind of a dying industry. The biggest need Cable Providers have is a better interface with users. Understand. Qwest there are beautiful sites you go to and apps where they your experience of accessing the information. It is clean and simple. Flip board is gorgeous. You go to your cable guide, just hunting down what is there, it is horrible. Class i keep landing on cspan. Do you have files or time warner . Time warner. Qwest that is to that. Files is wonderful. So fast era in that city, you cannot. It is all about customer service. If you do not like them and they have you on hold for 24 minutes, your other option is nothing. User the user the experience is part of it. How much like my provider has to do with how easy it is to use it. Modern companies obsess over that. Cable companies, throw best, have to catch up. They are spending a lot of money. Can go to files and grande day if you live in austin. Is 100 times the connection speed. It is right for being leapfrogged. That is what is going on. They have got to Pay Attention to this. The downfall is they take their audience for granted and that is an enormous opportunity for newcomers to come in. Time warner cable sees apple and they love to be able to say time warner customers, do not leave us and we have the school apple thing coming down the road. Apple does not have content relationships. That is where these things always washed up on the rocks. Intel is developing a box of their own and it was going to be beautiful and have a fantastic interface. They just have to zip up content deals. It never happened. Who bought them . Over eisen. Verizon wants that beautiful interface and they have got content deals. Qwest use a content and i have to bring us to our second headline. The second is in a house of cards is premiering tomorrow. At midnight,es perfect for valentines day. The number one weirdest thing about you, i think, and there are a lot of strange things about her, she does not have a netflix subscription. Lets talk about why. I am old school. As long as i can watch law and order marathons, i am good to go. Netflix, they have got house of news and orange is the black. Are they really turn into hbo as far as this content . That is my only reason for watch it wanting netflix. Qwest what is fascinating about what they have done is they started out as a Distribution Company. Dvdsled you this created by other people. That is all they did. House of cards pose quote is symbolic of the melding of distribution and content. Comcast is as well. It started out as a Distribution Company distributing other peoples content. Then they started taking a percentage of the channels. Now, they bought nbc. And are now a content Distribution Company, exactly what netflix is doing and where everyone is going and everybody is trying to be both things. Orange is the new black time warner, verizon files, directv, they all have the same crappy guide section. They are all trying to be the same. Facebook, tumbler, twitter, they are all starting to look like and do exactly the same things. There is the new twitter interface. The dangers ofs going public. Twitter just went public. They start out with a revolutionary new concept, a feed, and they are the newsfeed. They go public and now they are under Quarterly Earnings pressure. That means we have got to get more subscribers and users and people spending more time with us. How will we do that . We will start to look like the other guys. We are living in an age that suspect the onset on the onset him the unspecific. Investors needr to look at companies in other ways . Not saying delivered to me right now. Do investors have to change it not twitter . Yes. They should. As an operator of companies, yes, you wish you could escape from that pressure. But, that is the reality right now. You wish companies could follow steve jobsexample. They kept innovating. They knew that innovation was the ticket to growth and not imitation. Qwest we will take a quick break. We will talk about it. On, tim cook, if you could give him a grade. He is not steve jobs or thomas edison. All right. Qwest coming up, snow is falling in new york city again. A big storm snowstorm again. How weather is assaulting salt supplies. You are watching in the loop. You can catch a streaming on bloomberg. Com, any device. Any device. We are totally modern. Qwest we have got a lot to cover. Sit back. Qwest it is not too cold to trade. Bloomberg television is on the markets. Let me first off kick it off with a look at futures here down across the board. S p futures down 6 10 of one percent. All the major indexes are as we await serious Economic Data this morning. Tom keene will be tuned in at 8 34 the initial jobless claims. They will break it down. First off, whole foods, shares cutting the forecast for the future. It is facing competition as it expands into smaller cities. The expansion is cannibalizing. Also, the company be Fourth Quarter profits. It also announced it added 77 million to its reserve. Allegations in china, illustrating just how small the company is. The company has over 300 has spent over 300 million in the last couple years. Jpmorgan, there you go. Banking. I am a whole foods shopper. They serve human meat but only if the human was grass fed. Winter storms, Everybody Knows it, have been pummeling the u. S. And highway departments have been struggling to get the salt they need to keep roads safe. We know that is the case in atlanta. Adam johnson is here to explain the issue. Qwest two issues. A lot of snow. It is not a shortage. Not an assault. We have had 81 major snow events. The average is about 45 typically. That is part of the issue. Another part is there is a total bottleneck of salt. There are only so many minds in the country. If you were to look at a map of the u. S. , there are only a handful of places where salt is mind. One in texas, the big one that looks like a full moon, they account for almost half of the salt. You can see why atlanta has got a problem. They are not near the salt lines. The president of the salt induced institute said, there is not a salt shortage. It is a bond and abundant supply. Many are ordering midseason and it did and there is lead time. No preservatives necessary when you store salt. Correct. There arel alternatives. There are additives. You take regular rock salt, like table salt but bigger, that will lower the Freezing Point down to two agrees. Be jews, it lowers it to 12. You cannot just throw be jews. What about a snowplow on the streets of new york city. That is an alternative. What about actually throwing down gravel . You live down out in the suburbs. I have been ordered not to shovel my driveway by my wife. The first day we moved out there, 12 years ago, i went out for a snowstorm and shoveled and she said to get in. If i moved to the suburbs, he would be out there. It is a whole business, a whole economy of guys who go around with their plows and they are good. Those guys are spreading gravel. Out in the brook, where we go shooting a lot. Gravel more than salt. Qwest they have gravel roads. A lot of dirt roads. You basically take a combination of dirt and sand and makes a little oil and press it down. You did not know i knew this much about roads. He is the infrastructure king. If you want to know about roads, he is the man to go to. The reason is he loves the equipment with with which you make roads. You put a pad under a horseshoe to protect horseshoe. Getting to rock salt, there are five. I mentioned the largest accounting for almost half, 12. 2 million. We consume 35 million in this country. You can see cargo. A concentrated industry. He is a rockstar. In ireland, you should go to the salt mines. Aboutknows quite a bit perfumes. Our chief economics editor here at Bloomberg Television. We have the initial jobless and spirit how is the weather affecting those numbers you requested does not appear to be affecting the numbers. A slight rise. More than expected. We are still in the range we have been in. Just noise. We have had a lot of holidays in recent weeks. Things are going pretty well. You said i know a lot about economics. I do not know as much as i would like to know because i do not have retail sales numbers. At 8 30. Due out the government will shut down. We keep looking but so far, they have not come out. They are coming out just now. A decline of 4 10 of one percent for the overall headline number. Was for no change at all. Last months prior gain of 2 10 of one percent, it looks like january and december coming weaker than expected. Take out the affect of autos and you have a flat reading for retail sales, expected to be up 8 10 of one percent. The number we want to see is the retail sales control group, supposed to be up only one fraction last month. That number feeds directly into gdp and the number is not out yet. Coming out at this point. We have to keep an eye on that. That would drive your impression of how retail sales went in the month of january and december. It takes out the effects of things like auto. All right. A quick look at futures. They are down slightly off these numbers. We have to look at them again in a few. We need to take a break. Derek jeter is going to be looking for a new career next year and i will have to find somebody else to go clubbing with. He announced on facebook he will hang it up after this season. Will fantasy gamers be nostalgic next, on draft him . This topic. Welcome back. 40 Million People will play Fantasy Sports this year, the entire population of canada. Overseeingcuss, entertainment and news and sports. Still with us, john, guest host for the hour. Also very important. For yourt asked acronyms but im sure there are a number of them. Lets talk about the 40 Million People. I do not and another you do. Now i know you do. It is huge business. Yes pn has whole programs for it. We do as well. We do a lot of it online. It is a big part of our business. Especially sports side. It is a deep User Engagement tool for us and a great way to bring people to our site. They are coming multiple times a week and reading all of our Fantasy Sports content and looking at our videos. A number of shows around sports now. You are creating your original content around it . What do you do . You are cvs. People of cvs. They do not need to think about it from a digital perspective. They love your tv content so much. What do you need to do to remind us, on digital, i am the man . The leader in terms of Fantasy Sports, we have had this product out there since 1996, sportsline. We just thought that company in the early 2000s. We have millions of players playing our fantasy football, baseball, hockey, and our Fantasy Sports content, including fantasy football, today, and fantasy baseball today, have been big video drivers for us online. Bornu are a career tv man to lots from yankee stadium. You love baseball. You believe the place for original content is in the fantasy world . It is exploding. It is the new trend in fantasy. It is no longer, you have a team for a football season. I thought of Something Else. Daily fantasy is what has exploded. People, these are mostly younger men who are very affluent, average salary is 90,000 a year arereater than that. They spending nine hours a day obsessing over this on mobile devices. Mobile is driving daily fantasy explosion. That is different than the fantasy we first came from. It came true. Not only are we consuming your content, but we are in your league. We are using you for the draft and we are signed up and you have our email addresses and you know where to get our 90,000 every year. Qwest exactly. An incredible engagement business. 50 of our users come to the site login. Mobile has been huge for us. It used to be people were doing some desktop and some mobile. Playerar, almost every on our site use our mobile app. Help me understand. I just started our team. My team captain. I just drafted him. I will pull it up. I thought i was going to go with. Evin costner there are real players. You can help me draft my team. Help me understand how this works. You will look at different layers in different positions and try to draft them. Qwest what am i going to go on digital and watch . Qwest you go to the sports website and look at the advice we give you on why we think they are best given the format of the lead league. You look at that content and try to make good judgment calls. Whether you play on cbs or espn or yahoo or anywhere else, you look at content from multiple sources. An amazing business where we are competitive, and yet we all understand. You are voracious and you want as much as you could possibly get. League butave this you think i will go to espn and cbs . It is addictive. You begin thinking all day long. It is like stocks. He started assessing over them. Everyone needs to give me a player i could be drafting. Yes. We know how engaging it is. We really want to know who you will draft first. A high onbase percentage, generates a lot of offense, young. Your first pick . Different positions. You will take big guys. I like the jeter pick because look over the history in the top three or four in every major statistic over the course of his career versus everyone else there. He is not there this year, you do not like the jeter pick. He is too old this year and the anchor desk the ankle worries me. To him at ated next dinner party and asked him if he was a sports agent and i was wrong. Thank you so much for joining us. He would never make a mistake like that. Thank you. When we we come back, we will get personal with john kline, more personal than his a small pick. Stay with us. Guest host for the hour, the former president of cnn. Back in 2005 when you took that job, you sat down with charlie rose and you were talking about the vision for cable and the network here the sticky look at what you had to say. Years down the line, we ought to be essential viewing. Look tot to actively see what it is you have on when you come home. We will have wellestablished the idea that we are only giving you some fresh angle or Fresh Information you could not get any other way. I will consider that success and my boss will as well. Qwest cnn has taken a different route and it does not seem like it is all about news. They are buying documentaries right, left, and center. Qwest it is smart of them. They have to establish themselves as a place to go to , a different proposition than during the day, where you can hit on the news. It is still newsy. The show, parts unknown, it is brilliant and fun and educational. It exposes parts of the world knownuld never have about. Other media executives continually strive for it. So many media executives they, we want to do Something Like anthony. Absolutely. In their way, they have got to differentiate themselves and be over drilled overdelivering on news when there is big news. Those of us who get all of our news on our smart phones throughout the day, do we want to turn on a channel reading a headline rock today . X no. During the day, when there is so much going on in the world, yes. The challenge during the day in delivering news is to be specific. We are moving out of the age of generality. Because of digital. That is all about delivering the exact song you want on itunes or the exact pair of lever leather pants matt is looking for. To read meant him the headlines. It is not about wandering aimlessly through the store. The same goes for news. You have to be more specific and develop more expertise. If there is not news, i want to watch piers morgan fight with Jeremy Clarkson on twitter. He is doing it every day. What you hopefully want is to be informed in some way when you tune in. That is what they are trying to do. They were the only Cable Network whose Cable News Network ratings were up last year. Be informed with what is going on in the deepest and darkest corners of your mind. Time for five burning questions. I want to know what you binge watch. Away from news and towards netflix. Breaking bad. I cannot get enough of it. I would watch it again. I would watch it all over again. It just pulled me down even further after the first two seasons. Childhood tv show . Rocky and bullwinkle. Really . I have the collected episodes. Answer. Y media savvy there are a lot of jokes over my head and i like that. We will move on. Biggest fear about Technology Technology . Class we talked about house of cards coming back. That is part of netflixs effort to create Neural Networks that can monitor your behaviors around their content. At any particular show, it is just there as fodder for their Data Acquisition effort era that is where everything is going in big data. I worry about how much everyone is able to know about you. The company at which you started . I started youtube. The feed room. A video aggregator online. We watched it in 1998, when there was not enough rock band penetration and nobody had enough to upload video, so we could not do the thing that youtube went and did in 2004. I admire them for it and i wish we had better timing. Quest that leads me to the next question. Iu have any regrets . Regret i did not have my kids earlier. They are so awesome. I wish i had had them for a longer time. A lot of people have been telling us to have your kids young. You missed that window. I had my nephews young. And i have my dog. That is good. Quest that was awesome. Coast to coast, business, personal, soulful, i am giving you and a today. With more final thoughts. Stay with us. Breaking news on pepsi. We told you to deal with coca cola, over 1 billion. Said, he hasantly to get into it because it is a lot cheaper to make the little canisters than it is a whole can. You can sell a lot of them. Class a boom boom a huge boom. Pepsi announced they are in talks looking at Single Service devices. They have not made any announcements as who they were going to do it with. Before the Green Mountain coke announcement, it was the only one. They are not down in premarket. Maybe people have not woken up and had their caffeine. I had a feeling this technology would take longer than everyone expects. Coke will not come out with their solution until 2015, 10 years from now. Pepsi has time to get moving. Class later today, you will see an interview i had talking about the future of the coffee business. Get final thoughts. This kid was cheering over thursday night and i was thinking, can you not watch it on nfl network . Class that is the thing, it was already on. Can stillast network generate buzz and conglomerate. Udiences nbc had a huge success. Live in november, 18 million viewers. They announced they will do peter pan next year. It is all for broadcast networks. On cbs when they do thursday night football, it will be really important. Great games. Quest on the sound of music was on, i was on twitter the entire time and most people were hating on it but it made who it is. Click cbs, nbc, they all want to do great things for viewers, giving you the best experience possible. Time warner cable, i moved out of new york. Cable Service Providers are the Worst Customer Service in the world. Class that is a real flaw and it opens up opportunities. We will have our eye on it. Thank you. Thank you so much. Class really fun. Thank you. That will wrap it up for in the loop. Betty liu is next. Stay with us. 30 minutes to the opening bell. This is in the loop. The countdown begins right now. Welcome back. You are in the loop. Heres what we are working on. 30 minutes ahead of the bell, futures are indicating a lower open on this does this snow we thursday. Snowy thursday. Pepsico will keep his drinks and snack units together despite pressure from an investor. Comcast agreed to by Time Warner Cable. The price tag is 45 billion. The two biggest u. S. Cable operators, Time Warner Cable rejected a lower offer from Charter Communications. For more on how the huge deal could change the cable industry and what it means for you as a cable consumer, i want to bring in cristina alesci. By comcast. E move a total surprise. How much did they catch charter off guard . They caught a lot of people off guard. In the early days of reporting this deal, i heard this was the way it was going to play out. How much ability comcast has to in and do these things. It is using all cash in the transaction and not taking out any debt. That would be a source of contention with investors. Investors at the end of the day wanted to see comcast take on a little bit more debt. The is the structure of deal. Comcast is going to be the biggest player out there and this deal combines number one and number two. From a regulatory standpoint, there is not a lot of overlap between the business. From a regulatory standpoint, the regulators may be ok with that part of the deal, but what they will not be ok with is the fact that now comcast is so big and it has so much leverage to negotiate with programmers, they may have too much leverage. The fcc and justice may not want that kind of dynamic. All right. Alex german is standing by. A Bloomberg News reporter covering this potential deal from the very beginning. He is on the phone with us and working all night long. What exactly happened here between Charter Communications and comcast . I thought they were in discussions to do something jointly ahead of the deal with Time Warner Cable. Quest you have got it. I want to followup up on what Christina Livesay mayor. Which is, she is exactly right. In the fullyear days of this reporting, about a month or two ago, the common thought was comcast would come in and make a rival bid to charter. Comcast was actually taking a different path, or should i say, taking two thats. They were negotiating with charter and actually at one point reached an agreement, a tenable tentative agreement that charter would potentially by Time Warner Cable and then ofl it, different assets Time Warner Cable, including new england, new york, north carolina. Here, charter nominated a rival slate of directors, which they did earlier in the week. Comcast started to get a little uncomfortable with the idea of and they aredeal implicitly supporting a hostile has for a long time been a very collegial industry, the cable industry. These guys know each other and they are friends. They compete with each other. The thinking here was that is comcast is going to support this, they did not want to add a lot of cash to the deal. From the reporting i did overnight, comcast and charter had a meeting last week and drove down the comcast ceo, stormed out of the meeting and in the few days comcast got this together, they broke off and were able to come to a deal to finish this. Why do smile . Alex is talking about the friendly and cozy nature of the cable industry but there is a player the cable industry did not want to see get bigger, and that was malone. At the end of the day, they were talking, obviously, to time warner. At the end of the day, comcast and he is not wellliked . Not as much as the other Cable Providers. I was trying to be polite. Where does where does this leave charter . A good position. They may get some assets out of this. Day, they werehe pretty rigid and pretty disciplined on price. To gettingen them up assets out of the combination. Quest thank you. You will be back to talk more with me about this deal. Alex sherman, our Bloomberg News reporter on top of the deal. Lets get a check on top headlines this morning. To negotiate with Time Warner Cable and other potential partners to add video content. Is aiming to unveil the device by april and have it available for sale by christmas. Websites are down for a second day after a cyber attack by investors. Is working with enforcement and making progress toward restoring service and repairing internal systems in the u. S. Bolstered its dividend after reporting gains and a second profit. The Mining Company was able to beat its target, as well as get. Pproved from rising prices prices have recently been falling. For more, we are joined from the rioon Stock Exchange by the ceo. Great to have you here with us on this program. What kind of demand you are seeing for your products, especially in china, where there is a lot of concern we are eating a marked slowdown in the country. Quest thank you. Good morning. We are seeing Strong Demand from china as it continues to urbanized and industrialized. The commodity, the supplier is very important to the developing world. , shipmentsre today are strong. Shipping orders coming through. It all looks good. Investors were anticipating a dividend. A followup to that would be, what are you going to do with he rest of your cash . A big acquisition on the table, is that something you have not done as a company for quite some time . A 15 increase in dividends, which did surprise the market on the upside. This ,ear, we said to the market there will be leveling out out there, strengthening our balance sheet, which will provide options for 2015. I am not looking at any major acquisitions. Our National Strength is inorganic growth. We have some great projects. We are developing a copper gold mine in mongolia. Those artsy two very large projects. Ssets in commodities on that project in mongolia, are there not delays right now in terms of building out that because youre negotiating with the mongolian government over unding financing . How are they going and what are the obstacles . No obstacles as such. These are complex and go see asians and will be very long run. It is important to get it right and it is important we sit down with the government and work through and clear all the issues commit billions of dollars to take the project forward. It is a good project and all sides want to see the project go ahead. Well be good for the people of mongolia, as it will be good for the shareholders. I should also mention phase one, the open cup, we are shipping to customers. Everything is going very smoothly there. There is work delayed. If there are no issues, what is going on . There is a minor delay. As you ramp up any project. There are things you need to settle down. But the point i was making is that the ramp up has been good and we are delivering to customers. Yes, a few minor issues we have to work through, but is a it is a good project and copper is a good commodity. Ok. Falling iron prices, we have seen about a 10 drop. Does that complicate the outlook for this project and also the outlook for the Company E Company . The world is a volatile praise place. We plan for the long term rather than what is necessarily happening today. Our view of the market in the laundered longerterm is that it will continue to be strong as the world continues to develop and all of our commodities are native. We have seen iron ore take a blip on the increase in the last couple of days. It has gone up from 120 22 21 22. It is not all bad news even in the short term. Quest thank you for joining us. From the london Stock Exchange. Coming up, were talking more deals from cable consolidation from Teresa Taylor joining us in the studio. You are watching in the loop. Contest 45 billion acquisition of Time Warner Cable shaking up the industry. Joining us now is someone with experience navigating a Major Corporate merger. Teresa taylor is the former coo is 22 giant dying billion deal. Great to see you again. Just as somebody on the sidelines here, watching the whole drama play out between charter and comcast and Time Warner Cable, what goes on during this time . You have led a huge deal. What happens during this time . The driver for almost all of these companies is to that scale. Whether it is cable or telecom or wireless, you need scale to offer services to consumers. You see very Large Companies coming together to become larger. You need a lot of money to put fiber into the ground, towers, wireless towers out there, to provide content for the Cable Companies. A little bit, what the real driver is is to get scale so they can negotiate content at a lower price and deliver it to consumers. Do you expect this to usher in more consolidation in the Telecom Space . Between telecom and Cable Operators, they are overlapping. There is a lot of competition going on between the two. Quest right. That is a good point. The lines have blurred. You have traditionally had vertical markets. You now have Companies Like google and mark and yahoo out there. You have got google tv, and then verizon files. Blurring. It is all it is about bringing communications to the home in whatever fashion that is. Quest from the telecom side, you expect that will create mergers on that side. Quest there is always interest. Every company is talking to everybody all the time. That is why these rumors are always funny when they start. Everybody is chatting. The Cable Companies chat with the phone companies, the wire companies, the content provider, and there is always a surge for something that brings value to shareholders. Book. Are part of my thank you very much. One of the things you talked about, you reflected upon your tos and how it is important be a decisionmaker. How do you get that to that point that you know you are making the right decision . Right. You never completely know. You take all the facts you have and make the decisions and go forward. Something like this is really large. Be goody, you have to at realizing you are making a bad decision. Where women make better decisions sometimes than men. We are ok saying, the fact i made this decision, a week later i had Something Else and i am ok saying we will change this a little bit. Mergers are a different deal, obviously, but it is the daily decisionmaking. It is more important to make decisions and move forward and adjust accordingly. Quest one of the best quotes i love that you had said that i put in the book is that, as long as you are in grenade range, you are doing ok. I think that is a great tip. Thank you for joining us. I appreciate it. We will be back in two minutes. Welcome back. Pepsico is tinkering with several singleserve at home soda products like soda stream. Cfo,er, i spoke with the who told me about the 1 billion in savings the company is projecting each year. Really, the program we announced today, the productivity program, billions of dollars a year for another five years, is an extension of the threeyear 3 billiondollar program we have been on. We have been evolving how we do that. Really, we see opportunities because of previous investments we made in information systems, to really make our supply chain more efficient and our go to market systems more efficient. As a result, we will be seeing cost cut opportunities really across the board. Labor will probably represent about 40 of the overall number. So, just to be clear, job cuts, essentially, stack reductions would be about 40 of 1 billion per year . Yes. About 40 billion in labor savings. That will come from a variety of ways. It will come from making the Distribution System were andcient, from outsourcing doing shared services with some of the work we have been doing. But i would expect about the percent to come from labor savings. We have historically been very effective in helping people find opportunities elsewhere. Johnson,t was hugh pepsicos cfo. Coming up, the cable world is shaken to its core this morning at the two largest Cable Operators sign off on a 45. 5 billion dollars merger deal. Much more on a deal between comcast and Time Warner Cable. Welcome back. 26 minutes past the hour, which means Bloomberg Television is on the markets. Olivia sterns has the latest rate before the bell. Take a look at the charts. Futures are headed lower this hour. A little bit of dickens disappointing Economic Data out this money. Lets start with retail sales numbers. January falling by the most in 10 months, down by about 4 10 of one percent. If you exclude autos, retail sales were unchanged in january. We also got a weekly jobless. Laim out here those rose there was a decline expected in those claims. A sign of uneven recovery in the labor market. I should point out we will not be hearing testimony from janet yellen today. She will not be making it to capitol hill. You can guess why. There is a major snowstorm in d. C. We will be back. Huge flurries outside. Thank you. We will be on the markets again in 30 minutes. The big headline we are watching, as we get to the bell, is comcast, buying Time Warner Cable for 45 billion. The deal combines the two largest Cable Companies, comcast paying 155 dollars, one dollar what Time Warner Cable was asking for. A deal subject to regulatory approval, what does it mean for the industry and you as a consumer . To dig into all the details, we have team coverage. Jon erlichman, the chief washington correspondent cristina alesci, and on the phone with us, he has been following the deal from the start. Rich greenfield is also joining us. Let me start with you, peter. We need to get to the regulatory front earlier. What are the chances regular regulators will say, ok, lets put this through. Quest this will not be a slamdunk. Anytime you can combine number one and number two to any kind of business, washed and will have a skeptical eye to it first. First of all, these two companies do not compete in the same markets. That is big to the competitive folks. The Larger Company could also leverage its size to reduce rogue ramming costs and that could be a plus for consumers but they will be big and that will be a worry for the government. Comcast in the con the content side of things. That is another way year for the sec as well. A lot of . s around it a lot of question marks around it. We might have to give up a few things. At the end of the day, this could get done. Maybe Charter Communication might pick up. Side,e on the content what does this mean for the content provider . Peter was just talking about the possibility of their pricing going down. I do not think they would be very happy about it. They have got to be cautious about what they say in a situation like this. At the end of the day, those pipes are still the most important way to get paid. They have traded a huge additional business by going back to all the paytv players over the last decade and saying, look at the content were making. Give us money for it. If you are some of the biggest players in the area, whether you are dizzy or fox, you are in a position to say, as the ceo of disney told me last week, things will not change that much. You still need to carry espn and the disney channel. That is true. Ringing together Time Warner Cable, which has a little bit less Pricing Power because it has fewer subscribers compared to comcast, into the world of comcast Pricing Power, does open the door for a little more leverage on the cable guys side. They are frustrated with paying those fees. Frustrated paying those fees. Frustrated with paying higher prices as well. Rich greenfield, how will this affect the cabletv customer . Everyone likes to hate the cable operator but the reality is commutative seen speeds go up in interfaces get better. If you use the time warner new guided new york, they doubled the speed yesterday, comcast is been rapidly increasing speeds. If you look at the xfinity interface, it is light years better than a few years ago. This consolidation will accelerate the cable industry by with inre Competitive Industry competitors. Comcast is competing with verizon. Nd dish and getting bigger and controlling more of the country will allow comcast to be a more aggressive competitor and offer Better Services to the consumer across a wider footprint. This should end up being a real positive in terms of how comcast is positioned to compete and thats why this deal will get done. It may take time there will be concessions but this is a deal with but from the beginning comcast could not let go. The two most important cities in the country, new york and l. A. , they had to do this deal and there is no way they were going to let charter become a close number two in terms of industry size and speak for the industry and control those cities. L. A. Is very important as a market for any cable operator. This is interesting about increasing competition and be a more dominant player. The Cable Companies find themselves up against the wall because not only are they Getting Compensation from the verizons of the world potentially but also newer players are emerging. Google is going to launch google fiber at some point and that will be a massive competitor in this business. They really have to get bigger faster and provide better service. To his point, they had to do this deal. Is on theely, alex phone reporting on this story. Where do we go from here . Lets say Time Warner Cable and comcast are able to get the approval to go ahead where does that leave us with charger and the other operators . Im sure charter will be interested in buying the 3 million subscribers that comcast said it is willing to divest. There may be some competition there. Its possible that cox wants to get bigger but the broader theme beyond charter will be what will happen to the rest of the industry. There has been a pause among all Cable Companies waiting to see what would happen here. The regulatory process on this deal will likely be lengthy. This is probably not going to be something that gets done overnight. When there is more clarity on exactly where regulators stand on this and it seems like the deal will go through, thats when we will start to turn our attention to the other smaller Cable Companies such as cablevision, southern link, media calm these companies will likely be the next wave of consolidation as this industry this is something that john malone has advocated as the industry consolidates more to compete with verizon and at t and the satellite players. We talked about the players in this and john malone is the big one that people were paying attention to. Tos is a pretty big blow john malone. Marcus who would not budge on his 60 per shell deal. Per share deal. Hearwould be interested to john malones first Public Comments on this. He has been a big public advocate for cable consolidation and thats exactly what we are seeing today. He is left out of this and it seems as though he was left out and away where perhaps he did not know exactly what was going on. It seems like charter was legitimately surprised that comcast went ahead and did this thing without them. Comcast was extremely quiet throughout this process. Comcasts reported that was bidding with charter but comcast remained completely silent. I think they were waiting for the opportunity to pounce. Theyd did and it sounded like it had only transpired really in the last few days or last week or so. What about on the regulatory side . What will be the biggest question for regulators . Ultimately, the biggest question might be the fcc question if this is in the public interest. Whats important is what they will offer to try to sweeten the deal for the government. We have mentioned the 3 million subscribers they will divest. I would look very carefully at comcastent decree that entered into with the government over the nbc acquisition. They agreed to abide by Net Neutrality rules even though everyone else did not have to. I would imagine that particular concession, things along those lines, are things that comcast will have to abide by maybe above and beyond what they did in the embassy deal to get approval. In the nbc deal to get approval. Ifi want to say that regulators do jump in and say any indication they might turn against this deal, thats where you could see charter jump in. Charter never give its best and final offer. Its not to say there will be an opening from charter but if regulators start to turn against this deal, if the public pressure builds up and regulators start to get shifty on this, you may see charter regroup and jump in there and try to take advantage of that. I totally agree. That is a real possibility. One thing they will be hamstrung by is the fact that they have that charter already has a lot of debts and it will be tough for them to raise their bid significantly. Its not like they cant do it but comcast is using stock. In thell have to go out debt market and raise that and they are already a leveraged company. Nobody wants charter paper. Comcast papers looked at potentially as cash. Will take time but there is a very low likelihood of it getting locked because comcast is up there getting into. It puts charter in a situation where they cannot raise their bid because they cannot work generate enough cash on their paper and that will not be valued. Marcus said if he got comcast stock, he would want a call on a because it would go down significantly. Exactly. Its important to remember that both of these companies have a lot of friends in the nations capital. There was a top comcast executive at the state dinner at the white house the other night an. Those ties in washington do not hurt him a big deal like this. Barack obama and Brian Roberts also vacation together at marthas vineyard. Imagine the content providers also have a lot of friends in washington. I bet they will be lobbying against this deal hard . Absolutely, this will be a very big business for a lot of lobbyists in this town to get this deal done. Ones whoammers other will be pushing the hardest for concessions unless the government to ask comcast to commit to keep their programming out there at a competitive tries. Price. They will secure as much as they can. We talked about consolidation the cable business. Watch for potential consolidation with different channels. When youy challenging are sitting in those negotiations and you are channel 200 or 300 that nobody generally watches. Then you try to figure out where your business is going. There is the story of what happens of cable blows up and you have a lockhart and where the smaller layers live. That is something you got to continue to watch. Thank you so much. Thanks for joining us. Coming up, the sense of the sense of pastries is hanging in the air. I can smell them. Its cinnabon we are talking about. Their president will be here in time for breakfast in the studio to give us a much needed break. New york yankees star derek jeter says he is retiring at the end of the season. The sent prices soaring for yankees final game of the season. The average ticket in the resale market for that game rose 164 to more than 800. The price of the cheapest ticket increased tenfold to 280. He is a 13 time allstar playing his 20th season with the yankees and turns 40 in june. He missed almost all of last season with injuries but is considered one of the top players ever. As we have been reporting, it is a snowy and windy chilly day in new york. Its the kind of day when you wouldnt mind something warm for breakfast. Maybe coffee and a cinnabon. With me in the studio, having braved the elements in new york and atlanta where she is raised is kat cole, the president of cinnabon international. Great to have you here. All of these fast food franchises including yours are looking at expanding overseas. When youyou looking at look at the emerging markets and the volatility, where will you go . A greatt a trait track record of being successful others consider volatile. We were the first one in libya and are one of the First American ranch ices open in sochi. Weve got a great track record because we are part of a conglomerate called focus Brands International and got incredible franchise art nurse. We have a level of confidence in pioneering markets were other franchises might hold back. What gives you the confidence . Just the history because we are doing business in 60 countries with all of our brands. We know what it takes to set up the supply chain and build the infrastructure and find franchise earners are willing to commit to the investment necessary to take advantage of unique Growth Opportunities like opening in sochi even though the mall is not ready. We are really surprised. The slopes,ng down thats what you want afterwards. How do you mitigate the risks . Get the product there, there is not going to be anything to sell. We have heard some of the challenges they face. Ani has product stuck in new jersey. You set it up months and years in advance and the second key is finding a Franchise Partner who is materially invested in the local market and understands the local market and has the ability to invest in the infrastructure. Almost 100 cinnabon locations in under three years in russia. Thats no fluke. That is a testament to a strong supply chain and they are all profitable. Mcdonalds would say the same thing. They are in over 200 countries and the just opened up their first restaurant in vietnam. We got a chance to talk to don thompson, the ceo. This is what he said about the planar markets. We dont have a lot of presence across the continent but clearly, were looking at the opportunities that Africa Mcgill for mcdonalds and were looking at an number of different scenarios and opportunities. Dialogue togoing build appropriate relationships and reviewing some of the other criteria we would need to be viable as mcdonalds. Irica will be a part, believe, of you future Growth Strategy for mcdonalds. Do you borrow anything from what mcdonalds does in these markets . No matter what, we look to groups like mcdonalds that have pioneered some many other countries to find out where they have failed and been successful. How have they tweak their concept to be relevant in those markets . Chain is one piece and Franchise Partners or another but if you cannot set your Pricing Strategy in such a way that the local community and the merging classes can afford it, you will not have a sustainable retail model in that market. We watch to see how other retail tweak. Change and in some cases, it could be a good change to the market. A lot of breakfast chains like Dunkin Donuts are going all day. Is that something you will be doing . 70it is, we have about cinnabon bakery cafes outside the united states. We have served sandwiches for a long time but has not been a perfect fit many of the malls. Our sandwiches and sausage bites and other portable goods or catching fire rapidly. How do you eat your cinnabon . I like to start from the center out. Thats where most of the frosting is. Thank you so much. Tonights titans at the table, if youre stuck at home, you want to tune in to the billionaire founder of faraline capital management, the fourth Largest Hedge Fund and the world. He gave me a tour of his ranch in Northern California as he is looking to fight the buildup of the keystone pipeline. Ise Northern California coast one of the most picturesque places in the united states. Its no wonder that this is where billionaire tom steyers lives. A few miles inland from the pacific is the 800 acre ranch that he bought in 2002. Only one hour outside san francisco, is a world away. Running this use ranch, how is it different than running a hedge fund . Its incredibly different. It is the same in the sense you think this looks like an asset but its actually dramatically changed by the people who run it. Thats exactly like every organization i have then in which is having great people participate, unbelievably significant and powerful. Thats were the comparison ends. Kat ranch is a staff of 15 including scientists studying ecologically friendly ways to raise capital. You basically move the animals from place to place. How the big herds of animals have moved across the plains of the earth. At this point, what we would think of as real success and it turns out scientifically that we are right and the way we are grazing the different animals causes the land to soak up twice as much carbon as normal. Steyer has always bugged against conventional wisdom. He and his wife chose to settle on the west coast near there, monitor, Stanford University thousands of miles from wall street. I intentionally chose not to live in new york city which of investment in the united states. I was reallyas if part of that Community Even though i have lots of friends there. Is that why you left wall street . I dont think my wife and i thought it would be a great place to have kids. Outdoors, it would be hard to recreate this. He try to get out to his ranch a few times a week. In addition to raising grass fed cattle, the rent plays host to local School Children who come to visit dorothy, a 300 pound pig. Way, we also went to mayflower, arkansas where we saw and thene break community there was recovering from a spillage from that pipeline. That is something that tomsteye rs set is another reason why he opposes the keystone pipeline. Tune in tonight at 9 30 p. M. Brought. K. , storm that 100 mileperhour winds overnight retail in london as neighborhoods continued to take on water. Forecasters warned that flooding are along the river thames may worsen in coming days. The italian Prime Minister challenged his partys leader in a lastminute bid to prevent the collapse of his 10monthold government. The letter was about maintaining stability. Government freed 65 militants from a former u. S. Risen despite her chest from the american military. The u. S. Call the men dangerous and the release is straining relations between the countries and the withdrawal of most International Combat troops. That does it for in the loop. On the markets is up next. We are about 30 minutes into the trading day. We are seeing stocks moving lower right now after we had a little bit of been debt disappointing Economic Data, retail sales fell in january by the most in 10 months, falling of one percent. Economists expected them to be not changed and we saw a rise in weekly jobless claims. We will not be hearing from chairman janet yellen today who was scheduled to testify capitol but she is facing some Severe Weather and will not make it down there for testimony. For more on this selloff, i am joined by todd horwitz. He is on the floor of the cme. Has the market run out of steam or is it catching its breath before another run higher . I think its probably just catching its breath before it tries to run higher. See 18301840 as a top in the s p 500. Once janet yellen is done testifying, i think we will resume back into the correction mode we started last week. The real risk in this market is to the downside. We can go a little higher but i think there is a greater chance we fall significantly lower. When we heard janet yellen testify, the dow rallied as much as 200 points and many wouldve thought you would have seen a cell because she indicated we were going to return to normal monetary conditions. Were you surprised how much markets rallied after she spoke . I think they priced in exactly what she said. They will continue to taper however she kind of said that if we get into trouble, we will be here and turn the Printing Presses back on them bring more money to the market. It was like an open ended link. We are going to backstop the market there is a problem and if not, we will continue on course and shes getting a lot of help now. Over the last couple of weeks, theres been a lot of flight to quality of the bond market which putting pushing Interest Rates down so there has not been as much of a problem than to deal with. She also said to recovery and labor market has long way to go. Lets turn to commodities. What is going on with gold . It is trading near a threemonth high. Goodld finally made a tactical pattern and found a bottom. I think we are getting a little bit of the fear trade. And are trying to buy gold protect against the dollar and you are seeing some more demand. The acid test is been depressed over the last couple of years so we would expect some sort of room to run for gold. Its almost at 1300 per ounce right now. Tell us why you think supply and demand on oil is out of whack . Youve got the refiners that are not running out as much, holding up the present oil. We have plenty of supply. Why is oil trading over 100 per barrel . I think that is out of line with their it should be. With where it should be. Is an opportunity for the refiners to jack the price up a little bit. Thank you for joining us. There was a new report out from the International Energy agency was moaning saying that Oil Inventories in advanced economies tumbled in the first Fourth Quarter by the most in 1999 because of demand. We will be back again in 30 minutes. Bloombergom headquarters in new york, this is market makers. The ultimate bundle comcast is buying Time Warner Cable in a deal combining the countrys two largest Cable Companies. We will hear from a top shareholder in both companies. Climbing thanks to a slowdown overseas at cisco. C