Hear from the other side of this debate. It is good to have a voice and put a face to it. You become that voice for the 1 . The most controversial thing he said is that rich people should get more votes. You pay more in taxes, you should get more votes. We will talk about that coming up. The struggles having going on for so long. There is a publication that wrote the nsa spying story. A guest will come on the show later to talk about how Technology Talks about nsa in ways they have never before. Nsa gather cyber material. Drones making the strikes. Humans involved hardly at all. We will talk about that and the publication as well. And there is a new News Organization that he has founded. The top story is twitter. Insiders will be able to sell their shares for the first time tomorrow. Yes, saturday. Why tomorrow . It is after trading when they start. It is a small percentage of shares. 1. 8 . Compare that to 13 . Facebook allowed its employees to sell that amount when their lockup expired. We will see how big of a deal this is. There are Companies Like facebook and twitter that are somewhat new to selling on the private market before the company went public. Maybe there will be that rush to sell. As i understand it, they are only allowing them to do this so they can pay taxes that they owe. Perhaps. Tax revenue drives a lot of decisions. It is a trickle that will turn into a flow. Tell me if you think this number sounds right. I saw somewhere that on average, twitter employees could owe than 400,000 in taxes. It could be, but it could be skewed based on how many people in big positions could skew the average. We know they did a lot of hiring so late and so close to that ipo. All right. I want to bring in a chief economist. Is that 400,000 per employee sound right to you . A pleasure to join you. Things for having me. It sounds like one of the averages that their average family has 1. 3 kids. Sometimes averages are not that useful. The average may not be all that elicited in this case. How much will this lock up impact twitter share prices . Obviously it has been on a roller coaster. It has been hit hard. Will this be a big deal . I do not think it will be a begin. There will be a coming around and focus on the Bear Sentiment on the name. We have seen a 14 slide. I do not think that is important. The real challenge is there is a good chance that twitter will best those. Twitter goes from being a phenomenon to a utility to an ipo story. It will go to being a part of the markets. It is a growing up point. I do not think it is a major point. It might be though that people decide to stake their winnings and leave. People made money on this thing. One third can sell their shares. You wonder what could happen. We have seen many silicon valleys that have a year or so after the ipo are people who work there and they decided they have achieved a certain amount of personal wealth and have walked away. We saw it with yahoo and google. He saw some with facebook. We have seen those people leave those companies and go start their own companies. Absolutely. Twitter was fairly aggressive. They did a lot of hiring. They sucked up a lot of other firms. They made purchases with stock. Now they have some shares. Maybe they will be the first guys to go and look for the new start up opportunity somewhere in the area and be a part of that energy as opposed to the various challenges of being in a big public company. How would you compare the way twitter handle the lockup process with facebook . We had a better test of how this goes. The truth is that facebook had such a wild flurry of unconstrained trading. It created an overhang of some folks who were trapped in there and trying to get the money out, particularly given facebook had a much unpleasant ipo run than twitter. It is an apples and oranges story. There is always newfound millionaires were under kinds of real pressure. They want to buy a home or support a family member, etc. Some will make it out the door. I guess what i wonder is what would that tell you about what is going on with facebook if a lot of secondary shares are offered and whether that is with employees selling shares are the Company Selling treasure shares as well. I think we will see a little bit of both. An interesting thing is facebook has been settling into a pretty aggressive evaluation as of late. That will be the true test. Secondaries are a test of the strength around the price point in a public share. It could be a small expiry. Facebook began the process of earning its evaluation. It is bumping up at a pretty high range. A lot of people who want to go back in and by the next facebook and owning facebook is buying the last facebook and not the next facebook. What we saw was zynga, there was the secondary that was announced so soon after the ipo that some of the insiders were able to sell on the secondary and other employees were locked up. It twitter follow that, would that concern you . It would concern me quite a bit. Theres almost no chance of seeing things handled that way. A lot of managerial issues started intensely. Do not spend more than your total Free Cash Flow in a year. That is a rough combo. If i am a twitter employee, should i sell now . I do not think you have to. It is a Wealth Management strategy. It might seem funny to some people, but it is a good idea. If you want to be a part of the story in the valley, you need Free Cash Flow. Max wolff, thank you for joining us. House of cards is back. Yay i could not stay up until the night to watch it, but i will watch it this weekend and binge watching. We will talk more about how the Netflix Series has a high risk profile fans in washington coming up. Welcome back to bloomberg west. I am emily chang. The Time Warner Cable and comcast have raised a lot of questions about Media Companies and the ability to negotiate higher fees. The leader of Lifestyle Television home to Popular Networks like hgtv reported earnings today. Jon erlichman has more from l. A. There was this immediate reaction. What does this mean for Time Warner Cable on comcast getting together . A lot of the bigger players seem to be feeling ok about everything. Ken lowe joins us now. I would love to get your take as an observer of everything going on on those two Companies Getting together outside of what it ultimately means for your business. Good day. It is always a pleasure to be with you. Yes, youre right. Our industry always seems to have Something Interesting going on in the distribution landscape. Announcement yesterday was nothing unusual. As far as the cable industry, we have been in this for about 20 years, there has a was been consolidation. There has always been change. Are us, we see it is opportunistic. We are big believers in that tv everywhere model and initiative. It is an opportunity to take our Brands Beyond just the flatscreen tvs on the wall to mobile devices. As a matter of fact, we have committed to about 70 of our footprint to the tv everywhere initiative. Longterm, it is an enormous opportunity. At the end of the day, we are a content company. We are about quality content. It is what we do as good as everybody. You are always going to be desirable to distributors. Lastly, we have a great track record of partnering with our distributors in many ways beyond just tv everywhere, including helping them with local advertising sales. It is interesting. It is exciting in many ways. It doesnt really change our game plan. Lets talk about that content. A lot of people will say the best thing you can have is Live Programming. People will tune in for that. In my house, we watch a lot and we will watch it back to back. I have gotten the sense from what you have said that a lot of people on your different channels do that. They turn it on and they watch for a long time. That gives you some leverage. Can you elaborate . Yes. I appreciate your tv watching. Youre among the majority of viewers in the country. You are grateful for that. About 94 of our viewing is done live. It is the highest of any Cable Networks except barring sports and life programming events. People do tend to watch our programming. They leave it on. It is about the home category or the food category are the travel category. That bodes well for engaging upscale consumers. It is a great opportunity for our advertisers. Live viewing and Binge Viewing will sometimes delay people from watching commercials. What about where your content is going when it comes to new platforms . Amazon is a partner of yours. You admittedly were cautious about making the move into that world, especially because of the audience and the Live Programming. What should we think about the Amazon Partnership . Will that be a longterm partnership . Is netflix a longterm potential partner for you . What do you think about streaming deals . You go back to the amount of Live Programming that we do. There is probably less of an opportunity for cable Networks Like ours and those types of screening deals. Having said that, we have been pleased with the amazon deal. Not because theyre not a great company, but the netflix model doesnt work quite as well as amazon does as far as downloading our content. Going forward, we are open to all distribution partners. At the end of the day, we are very much row active on the cable and satellite distribution model and dual revenue streams. It has served us so well. Back to the advertising aspect, a cousin we deliver an upscale audience that is highly engaged, \ it is a hallmark for their advertisers to do business with us. We are about establishing. Were about getting into as many homes as they can. We think the streaming model is not a major play for us in the coming years. Before we go, there were reports recently about discovery being interested in acquiring scripps. I know you love scripps. Would you ever be interested in selling or listing it . I would expect you to ask that question. We get that question quite a bit. We have no comment there. We have great brands. We have a great company. We have a great future ahead in the Cable Network industry. All right. Thanks for joining us. Ken lowe. Back to you, emily. Coming up, house of cards has returned. We will discuss next on bloomberg west. There is one rule. Hunt or be hunted. Welcome back. Im intrigued. A clip from house of cards season three. Binge watching is so good when you are doing it. It is like binge eating. 13 new episodes of house of cards were available at or 12 01 a. M. D. C. Based fans asked netflix to release it early during the snowstorm. For more on the season, Jon Erlichman and Phil Mattingly join us. No spoilers, please. I only got one episode in. I got that First Episode in. It is great. Im pretty psyched to spend a long weekend watching the rest of it. How much do people in d. C. Love this show . Is there really a huge fan club . It is crazy. You mentioned the snowstorm when everyone started clamoring for netflix to release it. They decided not to. It is huge. Netflix really involved everyone in this. They got lawmakers to come in and help them out with the process. People really love watching something that is so intriguing. We took a camera up to capitol hill and asked senators their thoughts on the series. The only unrealistic thing about the show is that a democrat could represent south carolina. That would never happen. I think kevin spacey makes it look a lot more exciting than it actually is and a lot more devious. Probably a composite. None of us are quite that interesting. Im one of the few americans that havent watched it, but i will. Is this different than west wing . It reminds me of the way that news people would watch the newsroom on hbo. I love it. I wonder if it is the same kind of reaction . Everyone kind of hated the newsroom. It is different with house of cards. Everyone loves it. That lawmaker was from this state but would never say that. Everyone loves it. I can tell you without fail that the people behind me in the white house, including the president , all be spending the three day weekend watching the new season of this. What is the view from netflix on this . I think in retrospect, they are glad they picked a town that likes to talk about itself more than the town that i am in. Great marketing approach. What is different with the Second Season is that there is a show that everyone knows. I could launch subscribers for them. They did not know what would happen with the program. It turned out well. You talked about binging. For netflix, it is more about consumer choice. Phil got one episode in. Some people like emily will watch it all at once. Their hope is to say, were different than what you usually get, which is one episode a week. That helps with their business. Jon erlichman and Phil Mattingly, thank you for bringing us the story today. Coming out, will the faa start cracking down on the use of illegal drones . We will discuss that next on bloomberg west. This is bloomberg west, where our focus is on technology and the future of business. Im emily chang with your Bloomberg Top headlines. Jawbone is raising funds and putting evaluation at roughly 3 billion. Jawbone makes products such as and rakuten buys chat app viber. It will help expand their user base outside of japan. And smartphone growth is slowing in china. Shipments fell in the fourth quarter. The first drop since 2011. Several factors may be behind the drop due to the popularity of phablet and the fact that they did not start selling the iphone until the end of the quarter. Businesses are not waiting for drone rules to be issued by the faa. Estimates of drone usage is in the tens of thousands. This drone boom is overwhelming the faa. We are airborne. Drones have gone mainstream. They are making a movie without me. Real estate is one area where reallife drones are being flown today. Drones should neighborhood property and neighborhoods and even capturing surfers hanging 10 off the hawaiian shore. And has a high death camera. It can shoot from a few feet off the ground to 400 feet in the air. They are beautiful shots, but also might be illegal. The faa does not promote drones for commercial use. You cannot does acquire one of these vehicles and launch it into the airspace. That is not how it works. But you can. It is how it works. Im saying that regulation needs to say that. You will go in this range. This is closer to the 15002000 range. Can we try it out . Sure. The technician says the phantom 2 is flying off the shelves and the sales are legal. How the drones are you a star someone elses problem. Are used is someone elses problem. Is there something in here that will show me what the faa says i can are cannot do . No. Others are worrying about crashes. You can see a chopper in the drone airspace. The worst case is that the drone can take down the helicopter. It has sent some 17 notices ordering people to stop using drones, the only issued one fine. Last month, the faa ordered a company to stand down after a drone was delivering beer to an ice fisherman in minnesota. What is the timeline for the faa to let businesses know what they can do . It is a huge source of frustration. Rules were supposed to be out back in 2011. Now they are expected to be out in november. Theyre waiting on final rules that incorporate drones into the airspace along with planes and helicopters. Congress directed the faa to have that done by 2015. A lot of people expect that will be delayed as well. I wonder if Drone Companies entering the fact that the rules are so vague. It is quite the contrary. A lot of people want to bring their businesses to scale. The representative we spoke to said a lot of them are going overseas. Overseas, drone use is a lot bigger than it is here. It is much more widespread and permitted. There is a lot of frustration. This is an industry where they are begging for regulations so they can have their businesses be legal here. We will continue to follow what in fact they do manage to do in washington. Thank you. Death by metadata. They might be replacing human intelligence on the ground. Interesting stuff coming from a good source. I want to get right to it. It is an interesting thing from an interesting publication. There is a publication called the intercept. I want to talk about your story. I want to talk about the publication. Lets start with the story that you came out with. It is something that is near and dear to the technology company. That technological intelligence is being used for drone strikes. A lot of americans are under the perception that with the Drone Program that we know the individuals who are involved with terrorists. What we found in our investigation that in part is based on two sources from within the u. S. Military that worked on the program, as well as documents provided to us by the nsa whistleblower, edward snowden. In many cases, what they are doing is simply using the metadata provided by the nsa Satellite Technology or cell phone towers that have been put on the bottom of drones that are used to track and other sim cards are handsets of mobile phones. In many cases, the u. S. Does not even know the identity of individuals using these phones or in possession of these phones. It has simply bill a web of their own social network tracking. Theyre basically targeting people on the metadata of where the phone was and who that phone was in contact with. These people can be cleared for a drone strike. They are targeting people because of the metadata activity and not necessarily that they know they are a terrorist involved with criminal activity. The notion that technology has its limits, it is the human intelligence versus a signal intelligence. Is this the mastery of the mastery of technology over human intelligence . In some form of another, they have used a signals. And as a was been a part of u. S. Military operation. What were seeing now with the rise of the use of drones and the ability of the nsa to tap into