He stops by to play what he is talking about. Good morning, everybody. Makers. Tching market im excited to be here. We have a great show coming up. Had to do that. There was a time when you hosted a show with three women. It is time now for the news feeds on the top business stories making news around the world. The lake about 400 million loan fraud. They fired 11 people for failing to prevent or discover fraud. More City Employees may face penalty. A private at the firm is preparing to buy the biggest rental immunity in manhattan. Im sure you remember this. To dish out 400 million. The owners of the apartment complex defaulted on a 3 billion mortgage three years ago. Anyone in the u. S. Can buy google glass. It is the a test version of its spectacle on sale. We can improve both the hardware and the software. If you have got teenage boys, they justy know why closed out a monster year. Grand theft auto five. Do you do for an encore . With us today, the man with the answers. Welcome back. Great to have you. Tradednoticed your stock a little bit down this morning. Why do the is, streets so consistently overestimate or underestimate . It is an extraordinary strong guidance given that we do not way. A new highly diversified. It is perfectly reasonable for them to say we would like more. I am not sure why anyone, disappointing. We were right with an analyst at the patients. Analyst expectations. They are announcing at a time when they will have new video coming out. We really want to know when grand theft auto six is coming out. Million versions of grand theft auto 54 sold very it is still selling. The successes continuing to see more success. Grand theft auto online is generating more spending. That is a first for us. Ago, when short years you release a video game, you made the game and put it in a box, ship the product and that is it. You collect your money. Today, that is just the beginning of a longterm engagement with consumers. Grand theft out online is exciting because of that. Stingy . He so why not give people a better area i a better idea of what is coming down the pipeline. Not giving them much more than that very we have tried to launch more property. Border about a more a new borderlands title. A couple of analysts who follow thus made the point that, apart from the fact those are a lot of signpost. We stopped using analyst calls to do marketing announcements. We want to make sure we leave simmers with a strong appetite for what we have and announced really kicks off our competitors have a different approach to request those same analysts you just reference and consumers alike are wondering forher it is a rock Star Syndicate divisions will come series. A major press we hope that will fall in that category and a flyer they activating back . Why is there so uch activation that you will . When is grand theft auto six coming out . Vice we have not begun talking about it. No plans for a movie. We have not taken any of our titles and turn them into a Motion Picture or reason. We do not and Motion Pictures. It is not a great business. Lifeve conversations about thing all the time during the problems is licensing is swamped. Y have Something Else to it is offset by a potential award. We want to know what is in the i find. Generation going to use technology and Something Different . Title number one sports in that game, you get to see the beginning of what those consuls can fill can allow . Envelope onsh the what a machine can allow their it it is still new. We tend to do that later in the cycle your there are great opportunities and evolve will show that off. The fiscal year was ended with almost 1 billion in cash there are minimally three things we can contemplate here in the last a month, we returned 770 to shareholders. , to is certainly an option return cash to shareholders. Secondly as organic growth. The company has been great. We have 700 million in revenue in thousands of them. The last year, we did not release. We had 1,000,000,002 in revenue. Quite adited of bit of revenue growth. Then there are the opportunities to buy things. We need to take a quick break. Sit tight. Strauss, you are being very coy as usual. An idea on when we can expect the next monster hit . That would presumably be grand theft auto six but you have other stuff off your honestly. Autoou do with grand theft what disney has now done with star wars . Keep the franchise bible effectively forever . That is our goal. We now have 10 that sold over 5 billion units for the additional individual release. Does not always proceed. The way you do that is created enormous it is patient and deliver high quality each time. Moreu have to deliver every time. What are the challenges . Technology making it easier to improve the experience at lower cost . Do not seem to be going up in this generation. We have Processing Power and greater geographical capabilities. Inside thereativity game is much of anything else. The heart goes into it. For six years in a row, we have had the highest medically scores in the business. Red dead redemption sold 13 million unit. It is one i missed. I want to ask you about your digital strategy. See in terms of monetization with grand theft auto online . Oure said it succeeded expectations our initial thought it was assarily relatively recent thought. This is our second year with basketball. We watched it with grand theft and that has one thing ive noticed that i find perplexing is valuation. You have had a huge year. Grand theft auto five got a billion dollars in sales. You trade as seven times moldable presales. I would say our guidance reflects the fact that we push the ball higher and exceed expectations. Whereour seventh quarter we have beaten our own guidance, 29 over the last 30 quarters. We all love what we do. It and to keep doing keep delivering. A billion dollars in cash, the best product lineup in the business, best creative teams in the business. I think the future is pretty good for us. You sell relatively inexpensive games. What is the rise of the casual games like candy crushed and angry birds . I wish we owned one of more of those titles. By the time they raised their hands and had a great hit, the price for buying them is way too high. For the company that made angry birds, that was a one percent hit ratio. The company that made candy crushed, they have done a pretty good job. But their hit ratio is low. Make we make deep immersive titles. Our hit ratio is high and that is make it a good this is. Good business. Attention on the video industry. Another event that focus attention was the acquisition by facebook or 2 billion is a lot of money to spend on an untried and tested product. 2 billion is your market cap. He did not mention what is up. This is true but it is not a video acquisition. I have a demo. It is still in demo stages. For a core gamer, it could be a wonderful spirit. A lot of people who play videogames play with their friends next to them. That technology will not appeal to them. It is a Core Technology but antisocial. We will support it to the extent it is brought to market. Are they working with facebook . Tend to talk about that. I would say we do not have an long it will how take and facebook is not a Hardware Company. It is not meant as a criticism but an observation. It remains to be seen. The deal is worth nearly 1 billion. You think thisll be the beginning of a youtube m a frenzy . We are biased. Investor and were thrilled with the valuation. It was reported in the new fronts and a number of people have talked about it. Digital advertising is growing through the roof. It is still very low. Certain time where advertisers say, were getting the results and we are going to have to pay for it. Digital networks will become valuable at that point. That is that that. Class before we get into other content deals, do you think there is content opportunity in the short form video . Or do you think we will go into longform like amazon . Lets all of the above. I think there is an opportunity with longform and every time a new medium is launched, even though you still watch audiovisual media in this way. We watch it on a small or mediumsized largescreen. They offer different formats. Pay television had different formats. Wille audiovisual material offer a different format. That is a short format. Story but that does not have it would not be taken does. How does the media capitalize on the hunger for content question mark the demand we see from the likes of yahoo , example. Not just netflix, but amazon as well. Video is getting into the game. You are right. We have owned content businesses. Indeed a content business. Stay tuned. We expect to acquire another content business. The reason we are peppering is because,stions has a 32yearold, you were the president of 20th century fox. Appler deal in the works, has another hard well hardware deal. This is really new for apple. In a differents mindset. The innovation always had to be inhouse. This is the first acquisition. Tim cook is saying it is a different show now and that is impressive. I cannot comment on evaluation. I do not know the numbers. It does strike me as a big number. They believe they can dominate the business by creating putting apples magic into what beats us. Is a goodd us there reason youre not in the film or music business. You believe there are better businesses than film or music. Videogames being one of them. Beats is a hardware business for the moment. The future of the Company Seems to be in its streaming service. Curious to know what you think of streaming. Fourere enough room for competitors . Questionnaire demonstrating there is an economic model, but mama the none of those has a big revenue base. But there is no question i was having breakfast this morning. A shiftow dealing with from digital to digital. The shift, it means download is dead. It is not dead, but under pressure. That is quick. They thought they had the holy grail. To deal with streaming. Will it be monetized double . Monetizeable . Nowo you think pandora needs to team up with a Hardware Company and do you think if apple beats the potential deal that speeds up the process for spotify to go public . The latter is almost certainly true. You never want to bet against apple. They really figured out how to make digital music. No one had done it. Mp3 players have been launched and apple figured out how to make money with their technology. They were the first to create a technological mix of hardware and software that actually word from a consumer point of view. What trends in media today are you most closely paying attention to . Sexy as thet as conversation were having, but the world coming unwired, Everyone Wants to be unwired. Data over mobile is a really interesting opportunity and a really interesting issue. That creates opportunities for us in cyberspace. We own two companies in cyberspace. We are looking for new opportunity. That would be two examples. The explosionso of television content. Television distribution is everyone posses this is now. Amazons business, yahoo s business, and someone has to supply all the content. Highly creative surprises will do it. Great to see you and thank you for joining us. A great conversation with the chairman and ceo of the Company Behind greg. Oms founder of the companiesall those public. That is next. Also, a bloomberg exclusive ear the Russian Foreign minister tells us the situation in ukraine is that it and getting worse bad and getting worse. That country is as close to somewhere as you can get. Live from bloomberg headquarters in new york, this is Market Makers. Im Erik Schatzker. I am Olivia Sterns in for stephanie ruhle. Blackstone has had a pretty good year. He stated, just how successful have the ipo posses been . Blackstone has been doing a good job. T has closed a bit in weeks we have seen very good news for private investors in a sense private investors have in getting money back on their investments. Was 38 billion. Huge checks to private investors. When you look at a deal like hilton, which we all thought ,ould he a terrible deal theyre doing it out of pretty good evaluation. Blackstone is a seller here. Market investors are the buyers. You are looking at a 13 return on investments since going public there it when you look at Something Like pinnacle, youre looking at a 50 return and that does not factor in the announcement deal with phil scheier, which bumps the deal up ready far. Into the 70s. You are looking at this portfolio of assets, which cally it is interesting the divergence between an Extended Stay Hotel company and hilton. It looks like a big bet on the Hotel Industry. Chris absolutely. Absolutely. Qwest is blackstones schwarzman says with these Companies Speak for privateess case equity . You by a company like hilton and you pay a lot of money for it like you did in july of 2007. Then it goes into the wastebasket. You can hold on long enough because you are private and you are not under monthly or quarterly pressure. Qwest that is right. They have a timing element that works to their advantage. That is for sure. That said, you do not want to go through a deal like hilton. An extreme amount of restructuring. They do have time on their side. Just to put this into perspective, for hilton, they still own 70 area they want to be thoughtful on how they go into the market in the next couple of months. Exit theyears to fully investment. You do not want to put downward pressure by selling them back. How much is their stake in hilton really about investment in real estate and how much is about the Hotel Industry . Like a franchise model. They do not own that much real estate. It is more of a franchise model at this point. Qwest as blackstone gets larger and it continues to get larger and larger and larger, who bring up investor assets, will this become the norm . Blackstone needs to make large salesthat out right become harder. There are not that many potential buyers. Your only exit is an ipo . You bringnteresting that up. Blackstone has done a pretty good job on the Corporate Private equity side in the m a exit. Deals iy of their do not have the exact numbers in front of me but it seems like they are more successful exiting on the m a front. I was wondering when i would become a bigger part of their future. How many potential buyers out of hilton . Qwest they will keep them quite small. That is what they say and that is what all of these guys are saying. They were burned so badly by the big deals. It is their deals. Looking forward to those earnings. They will be hit hard. Thanks to cristina alesci. A realng up, sergei says war is what is taking place in the ukraine right now. Now to the ukraine. Sergei said russia has no plans to put troops in eastern ukraine. Have a listen and a look at what sergei told us. Qwest the ukrainians kill ukrainians. War as as close to civil you can get. I sent the messenger asking to respond to these in the german media. [indiscernible] these were spread even before and they were rejected. Now they are out again. We would like to see whether this is true or not. We also asked about the united conversation. Indicates he might have been involved in the life of the governor, he might have been involved in inciting foreign fighters to the ukraine and so on. We are waiting for answers. Have a view yet. Qwest we have strong suspicions. This might be true. Americans, they say, well, you should not pretend youre not there. Reports of 10 to 12 russian engines. Reaction was, please present them to the world. Show thedocuments, interviews with them. This happened for months now. No single allegations have been proven. Without any challenge, you know. We shall call them bluff. Ukraine is in a civil war. As close to the symbol were as we can get. My point is an interesting point. I always proposal propose my to go to the media. They always refuse to do this. I do not know why. The tension is part of mother russia. Language, russian , christianity, was born on the territory of ukraine as it stands now. We do not consider ourselves foreigners. In russia with ponzi him, and emerging markets investor. He is a chairman and ceo. Lets start with your basic reaction. It sounds like a bit of a contradiction . Situation russia has made a decision that he will not go with troops. The important thing for investors to watch is the buildup toward the election. The chances of them voting in the president ial election ukraine means the russians will have a lot of attitude. They also said in that interview they would wait and react. Ofmeans, it gives a lot reaction to investors with whoever wins. Qwest explain how you have come to the conclusion or the belief that russia will not come. People have been commenting it would be very expensive for russia to actually take ukraine. They do not want to absorb ukraine. Came in they annexed that. It is incidental, 80 of the ukraine economy. It has been more expensive for russia. Way. Is a cheaper what theyre concerned about is not having a nato member on its border. By disrupting what is going on in the ukraine, i do not think there is an fsb actively dissipated. Andre letting this happen being supportive of the relatively legitimate referendum going on. That gets the russians going where they need to be. Long can that situation persist . If you believe the putin goal is d stabilization, that is certainly something you could maintain indefinitely in the short run. A good question. Erms of Investment Opportunity the stock is down from the innovation of crimea. Cbs is actually coming quite a bit, 60 bits. We have not seen this selloff we are looking for for investing. The question is what you do between now and when things drag on. Abouts is sergei talking the importance of the ukraine capital city. , russiann language religion, orthodox christianity, was born on the territory of stands now. It we do not consider ourselves foreigners. That sounds like they think they have a right. If not, a strong connection. You said things did not get as bad as you thought. Once again, ratcheting up the sanctions. Is inench president ukraine talking about that possibility today. How does that affect your decisions in russia . We have to keep an eye on it. I, sanctions do you think that is likely . Look like not europeans it looks like there will be a lot of pressure on the russian economy if the sanctions put in place, if there is not a political solution within the next two months. Look through july. If you do not end up with a real soluti