Transcripts For BLOOMBERG Market Makers 20140214 : vimarsana

BLOOMBERG Market Makers February 14, 2014

A valentines day edition of Market Makers. Im scarlet fu come in for Erik Schatzker. There is only love in here on this day. Frome top business stories around the world. Joseph a bank agreeing to pay ou eddie bauer. They have a venture prize value of 25 million. Joseph a bank has been fending off a takeover bid by mens wearhouse. 8 . Factoring output fell the fed put some of the blame on bad weather. It has not been this bad for the airlines sense Hurricane Sandy in 2012. More than 14,000 flights have been grounded this week because of storms in the south and northeast. More snow fell overnight in new york and boston. We move over to washington. Comcastrt to slow this takeover is already underway in full swing. Peter cook has more on the lobbying battle to come. The sales pitch has started in earnest. It absolutely has. Comcast reaching out to the regulators and lawmakers who say and in the way in th of this deal. Theyre moving aggressively to face competition concerns raised by the steel. Perhapsg it more making it more palatable to regulators. Keep market share below 30 . That best 3 million subscribers divest 3 million subscribers and committing to Net Neutrality. No discrimination over content in their networks. This is an nbc agreement. Theyre planning to do the same. It is considered one of the concessions the government would want to do. Another thing to remember is the key players here. Comcast has a lot a powerful lobbyists already in washington. Very effective lobbyists. One of them is the lead person the executive vp. The guy who got the Nbc Universal deal through regulators here. He is going to shepherd this transition or the process. Happens to be a very big democratic donor. Got 500,000 together for the president s reelection campaign. He was one of the top executives there. Comcast has republican ties. She is a former sec commissioner. She worked in the bush administration. She happens to be the daughter of james baker of republican fame. Dont forget, Brian Roberts has met with president obama several times. He is hosted them in marthas vineyard. Has hosted him in marthas vineyard. A bigs going to be breadwinner for lobbying companies ndc d. C. Who were the key regulators . Lets go to the other side of the table. Which key members should we watch for . I think you have to look to the sec and the department of justice. For the fcc, it is tom wheeler. This will be a big test for him. As a someone who used to represent the cable industry as a lobbyist. He represented the Wireless Industry as well. He knows a lot of the players here. He is under a lot of pressure here. Then, separately come at the department of justice, the top antitrust person there is bill baer. A veteran antitrust lawyer. He has signaled a tougher approach centered to cover this job. There are some questions as to whether or not he has refused himself in this deal because he represented the Nbc Universal deal. Something to watch for over the coming weeks. Thank you so much. Peter cook, our chief washington correspondent. Consumer groups say the new tooany will have much much market power. Senior attorney john joins me now from washington. Everyone is talking comcast, time warner and what it means for the consumer. What is your biggest concern . The biggest concern is the effect that a larger comcast could have come and not just on consumers directly, but on the rest of the medium. On programmers, Internet Services and those effects would end up affecting consumers indirectly. Do they care about the bottom line and how much is going to cost . Regulators do care about the harm that comes to consumers. They dont have to look to see whether your cable bill arrives. I do know that yesterday in a conference call, comcast admitted that this merger would not result in lower prices for consumers and would not even result in cable bill acceleration slowing down. There is a lot of harm to consumers. Anyone who relies on Internet Services should worry about the market power of a single isp controls so many millions of homes. If they start messing around with internet content, could be very disastrous. Surely it does not help the consumer of the prices went up. Should comcast have to say, will will make prices go down . When the fcc views a merger, they look to see that it merger will actually enhance the public interest. That is the fcc standard. Thatst has yet to show this merger will result in positive consumer benefit, which is the standard of the fcc. My only option in new york city as time warner and it stinks. This will open up this could help it. What is happening is your monopoly provider its name is changing to comcast. When i talk about this merger, love people wonder, why should i care . When you look at the effect on the Broader Market of media and programming and Internet Services, it will be pretty disastrous. These are the two largest isps in the country. You have to look at it from a broadband angle as well. List talk about concessions. Comcast has said that it is prepared to make some tom including divesting 3 million so. His house like a big number. In what markets . Are we talking legacy Time Warner Cable . What would you like to see you go . Theyre looking to get rid of customers so that they dont exceed a particular cap which a lot of people talk about. 30 of subscribers. However, im concerned about their percentage of control of the broadband market and the double play bundle between tv and highspeed broadband. What are the conditions that you want to see in order to support or not be opposed to this merger . I dont think any concessions would work to make this merger serve the public interest. Comcast already has a history of not following merger commitments that it agreed to in the comcast nbc merger. They are very difficult to enforce. Best way to make sure that it does no harm is to block the merger. What do you want ultimately . Be moret there to competition in the broadband market and i dont want any provider to have such dominant control over the ecosystem. , wouldharter had won you be happy . I would not be happy, but i dont think the scope of harm would be so severe. Industryset the interest in the line with what you were hoping for . When it comes to broadband, we need Net Neutrality that are permanent and we need to make sure that there are rules in place that prevents dominant gatekeepers come abusing their market power. What if they agreed to Net Neutrality and definitely . That would be an interesting concession from them and it would be comcast, who was originally an opponent to Net Neutrality to admit that it serves the public interest. Net neutrality perfections should apply to all isps. Why dont they make sense to everyone else . Im somebody who hates my Cable Provider and bill. Who pays you . I dont. We are a nonprofit founded by foundations. Our donors in the past have included comcast. Really . Give us an idea of who your corporate monsters are. Work you are doing is great. I want to get a better understanding of who is behind it. The majority of our funding comes from rabid foundations. Then, the corporate sponsors come from the tech industry, the Telecom Industry, wireless carriers you currently have funding from the Telecom Industry . You said comcast was. I dont have the numbers in front of me as to when they last a minute or how much they pay. I can say that the Telecom Ministry is very comp located and there have been issues where ive worked with the cable industry where i support them. It is not a black or white issue. I takee it issue by issue. Sitting on hold for time warner with my cable going down stinks. I appreciate your fighting for me. Have a great day. John is the senior attorney at public knowledge. Coming up on Market Makers, a big deal in the clothing business. Joseph a bank buying eddie bauer. Look at that website. Everything on sale. Including the company. There you go. The new house of cards season begin streaming on netflix today. Lets see what the real washington has to say about the fictional one. This is Market Makers on bloomberg television. Watch all of our interviews, streaming live and ondemand on apple tv. Welcome back. Bank will be buying eddie bauer for more than 800 million. Tries to fight off a hostile takeover attempt for mens wearhouse. Johnson to tell us what it all means. Via phone. Now fr is this just a defensive move . Are some cynics might say that this is strictly a defensive move. We think it has some defensive and offensive minded characteristics. These are two companies that jos. A bank and mens wearhouse that have been like a scorpions mating dance. Scorpions mating dance . Andts what happens when tw acquiring candidate tries to acquire the other. It will be one on top and the mating dance, one does not make it afterwards. There is only one survivor. Any rate how does eddie bauer fit into all this . What happens is, what has been a oneonone match is now turning into a multidimensional chess game with jos. A bank bringing in Golden Gate Capital they are the controlling owner of eddie bauer and supported bank with its 250 million equity participation relative to its efforts to acquire mens wearhouse. Can you tell us a bit about eddie bauer . How is it been doing . How has it been doing . Their challenge the spin this morning was that they are in a great turnaround. Here is a company that is in chapter 11 five years ago. It is doing better than that. It has made some improvement. Early some pretty good part of the holiday season. By our count, it is still a bit on the weak side. Its turnaround is so early that i dont know how great a turnaround it is quite yet. That being said, there are some potential synergies for these two companies. They may be able to realize them. Secondly, bank and mens wearhouse operates in a Slower Growth part of the apparel market. s and the formal Side Business where. Power operates in one of the eddie bauer participate in activewear and performance where. They may have their own niches. They are not exactly exciting companies. Due to mediocre brands make a strong brand . Not necessarily. Call these tr companies mediocre. They are doing modestly better, but not any kind of robust turnaround that we have seen yet. Bank is doing ok. But it is obviously battling back and forth with mens wearhouse. We characterize it as a multidimensional chess game but it is the two players and then bringing in golden gate to mw. Ort the original bid for now we have eddie bauer and there. Offere same time, the from bank is a tender offer to buy back 60 of its own showers. Beis there no argument to made that these three companies should just end alone . They could all easily stand alone. Eddie bauers turnaround which is quite early could be accomplished in its own right. Is not ine supposedly any rush to monetize its investment from five years ago. If this do an ipo root falls apart. It is a definitive agreement. Agreementdefinitive they have been abandoned before. Warehousesens next move . If you read their release from 45 minutes ago, they are evaluating their options. That is what they always say. Move inld do a counter this chess game or they could back out. We dont expect a timely resolution in any case. To be a couple more moves before this thing sees the end of the day. Eddie bauer has the weather on its side. Greg johnson, thank you so much for joining us. Johnson, thank you so much for joining us. What is the last thing you bought from eddie bauer . I think the last thing i bought something was in 1999. It was a red duffel bag. Back in the day. I wish it was more wild than that. When we come back, dea designer coffee, italian style. We will have that next come right here on Market Makers. 26 minutespproaching past the hour. That is time for bloomberg to go on the markets. Lets take a look at u. S. Stocks an hour after trading began in new york. S p 500 up by three points. The dow industrial getting 46 poin. 5. Stocks are mixed right now. Consumer confidence was unchanged. It was expected to fall. A mixed reading their in terms of ecodata. Outside the world of equities, looking at treasuries. Prices carrying their losses. 2. 75 . Gold prices ending the week at 1319 come headed to the biggest weekly advance since august. Crude trading below 100 per barrel. That is down. 6 . F individual company movers, Weight Watchers losing quite a bit. With weakrth quarter guidance as well. Everybody goes after it. Champagne, chocolate, dessert. Tomorrow, strong Weight Watchers. A lot of good enthusiasm about losing weight at the beginning of the year that dies off by the end of january. By january 28, a whole different story. Weight watchers is currently at 2301. Cliff Natural Resources this is a company that has been targeted by activist investors. Morean see that it is up than six percent after its latest earnings beat analyst estimates. Mining costs at its facilities in canada and australia the client. That was some good news for cliff Natural Resources as a tries to appease some of those investors. Quietlly, it has been a morning. We rebounded from weakness throughout january. We are off the lows, but not a ton of volume. Those are just corrections. We would think that we would see stronger buying here. More complacency today. It has led to again for 1. 8 over the last five days led of 1. 8 over the last five days. Coming up, different form of activist investing. There try to make a difference in the climate, not in a company. Plus, time for a coffee break. Were going first class. Thes designer java with founder of Italian Coffee Company illy. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. We all know the way activist investors play. They buy big stakes in the company to force change. What about making change through selling shares . A group of foundations his hoping that approach can make a difference on the issue of climate change. Whonor sees the executive t believes in the movement. When i think about activist investors, pretty successful at getting companies to do what they want to buy their shares. You spoke with social activist investors about what to avoid because you dont believe in western companies are doing. I think that the pace and scope and magnitude of the Climate Crisis mandates that we act fast and dramatically. One of closeesent to 20 foundations that are committed to getting out of fossil fuels and actually moving our assets into renewables and clean tech and the Climate Solutions that the world dramatically needs. How do you think people in wet Pension Funds feel about that . Even if they agree with you, what is so important with them is the return theyre getting. Thistually, we are doing not only because of the ethical risks of staying in fossil fuels , but also because of the financial risks. Bothe committed to protecting our returns and moving our investments into the Energy Sources of the future. There is very powerful arguments to be made about the carbon bubble and the risk and staying in fossil fuels. Even if you are right fundamentally come in terms of returns today. The investments that they may be and could be winning investm ents. We are virtually 100 out of insil fuels and invested renewables and clean tech. We have been doing phenomenally over the last couple of years being our benchmark. We have the returns now. Over time, those returns and the investments that we are making are the place to be. Fundbelieve the global began four years ago. You were an early investor in are you introducing volatility into your portfolio by focusing on those kind of companies . Over time, the volatility is coming from fossil fuels. Opportunity to be invested in the Climate Solutions of now and of the future is the right and prudent thing to do to for our portfolio. We went through quite a. Of volatility. The track record we have done quite well. We believe we will continue to do quite well. Is more impactful if you were a shareholder to make Companies Make certain moves . Disadvantaged as it should because youre are not a shareholder like carl . Youll have to have 100 million shares of exxon mobil to engage in shareholder activism. There are couple battery shareholder campaigns that call for disclosure of stranded asset risks of the fossil fuel industries that would drop down the x bennett or is that they down the capital expenditures. We need to turn this around. We need to do it quickly. It has been estimated that there annuallybe 1 trillion in investments in clean tech and renewables to orchestrate the Global Energy transition. Andlieve that philanthropy other Institutional Investors could be playing a powerful role migrating their investments into what the globe needs and what science the mans. I wonder if the exxon mobils of the world, they responded to you, notice what theyve been doing what youve been doing. They have not responded to us directly. I am more concerned that we are responsive to the climate and to the people of the world that and so so impacted impacted in the future. Exxon mobil has an opportunity to develop a Business Model that keeps them below two degrees celsius warming. They should do that. Right now, we want to put our investments into the renewables because the on fossil fuels, they are not committed to the transition. Thank you so much. Of is the executive director Wallace Global Fund in washington, d. C. , cashing in. Back casinos we tal

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