Global news 24 hours a day powered by more than 2600 and analysts in more than 120 countries. This is bloomberg. Bloomberg technology is next. Caroline im Caroline Hyde in for emily chang. This is Bloomberg Technology. Coming up, 14 billion from the Television Empire he has always longed for. We will analyze the proposed merger. The road ahead for tech in the u. S. With donald trump in the drivers seat. Commerce secretary Penny Pritzker joins us for an exclusive. A reallife robot going to war in a virtual space. We will introduce you to the augmented reality battlefield. First, our lead. 21st century fox has reached a preliminary deal to buy sky for 14. 1 billion. Shares closed down more than 2 . Sky shares closed up 26 . You will remember Rupert Murdoch owns 29 of sky and has been trying to increase his stake for years. Joining us for more on this deal is alex sherman. Thank you for joining us. I remember six years ago when this deal first emerged because there was concerns about the phone hacking scandal that embroiled Rupert Murdoch been. Why is sky such a tasty asset . Alex it is a little different today than six years ago and did not when the world of the news scandal hit. But other is consolidated assets in other countries like italy and germany. Sky is both a content distributor and also a content creator. Fox is now deciding to buy the other 61 . It does not already own. In a similar transaction to at t buying time warner. It puts together more content and distribution. The only difference is fox already owned a Minority Stake and it is an international transaction. It increased the heft of fox. Viacom and cbs are now having discussions. It seems to be a trend if you are a Media Company that you need more scale and want to get bigger. Caroline content is clearly king. It looks pretty tasty at what they are offering. Because of the british pound it is a good time for getting in for 20 thre 21st cey fox. What are the other catalysts . Alex one is brexit. This is a bet that brexit will not be a collapsing event for whene, similar to say Warren Buffett invested in the United States after the financial crisis. Two, the market rise from the trump rally has given fox a sense of doing this deal now will probably not collapse their own share. Three is that at t and time warner deal. I think that took time warner off the table for fox. Hostile offer to buy time warner and now they are all the table so they can move their attention away from that. Sky was the obvious thing. Fox has been fairly public about saying owning only 39 was not really a longterm relationship. They were either going to buy the rest of it or sell off completely. It was like they will buy the rest of it. Caroline alex sherman, great to have you with us. President elect Donald Trumps new administration after tough talk on the campaign trail, these a concern and diplomatic tension with china, many leaders in Silicon Valley are wondering what will be the impact of their policies on tech . What better to talk about the legacy of the Current Administration and what the future would hold than secretary of commerce Penny Pritzker. And from new york, one of the most connected guys in tech, the david kirkpatrick. Welcome to the show. Penny, we want to start with you, secretary. Thank you for joining us. Digitals a pretty president , trying to build bridges between washington and Silicon Valley. Thisoke to you last is always a positive thing and is that sort of relationship certain for the new administration . It is absolutely positive. It is essential. President obama recognized from the beginning the importance of the Digital Economy and the importance of technology and innovation. We have engaged to be a Real Partners with the leaders of the businesses in that area. We have developed digital policy to ensure there is a free and open internet. We have been working on trust online to make sure the privacy and Security Policies work for both the security of our country, individual consumers as businesses. We have been trying to make sure there is Broadband Access for all americans which is essential to be effective. Businesses. We havent focused on our been focusedhave on the workforce that can use the tools that have been created but prepared to work in the businesses. Finally, we have engaged with companies, which brings me out here to san francisco, with companies that are working on new technologies to better understand what they are trying to accomplish an interface with the federal government. Caroline we have to bring out you, david, because you have many a viewpoint about what may be the next legacy. What does donald trump bring to the table. Im sure you have plenty of questions for penny. David great to be here with you. It is so clear under the obama administration, and much of it has been your leadership, there has been recognition that technology and Silicon Valley internet industry is one of the great flagship industries, the greatest american flagship industry globally. A real relationship has been built to show washington finally recognizes that. How robust do you think that relationship is going to be in the next four years . Penny what we have tried to do is institutionalize the relationship between the department of commerce and the technology community. They understand the tools that we have in place and how we can be therir ally in government policymaking, not just here in the u. S. , but a lot of policy that can affect the free and open internet that is going on, negative implications around the world. It is important that we stay engaged. We have tried to institutionalize that in a number of ways. First of all, through formal bo ards we have. We have a data advisory board. That is where we have private sector members that are giving us feedback on a regular basis. We are also spending a lot of time in the communities. We have put in place digital caches in 12 Different Countries around the world so that we can help our Tech Companies better navigate the digital challenges that they are seeing. China, it is through the brazil, india communities. We have tried to put into place china, tools, institutionalize the relationships. Recognizing that the economy has gone digital. Im not sure what a Digital Economy is. Is the economy and technology is emerging. David how much are those advisory bodies and digital attaches really into si institutionalize best we have heard a lot about what could happen and people are concerned. How institutionalized are those things that you are confident they can continue . Penny i think the next administration, as best as we can understand from the Transition Teams we are working with, understand the importance of that engagement and want to continue it. Exactly what the policies will be, i cannot comment. I think they appreciate the importance of the relationship. Caroline give us a sense of whether some of the powerhouses of Silicon Valley have become too powerful. They seem to be growing in discussion, whether it is about fake news, terrorist related pictures and videos. How has there been too much regulatory open arms for these companies . Penny i think collaboration is very important. Let me focus on one area. Cyber security we have put out the Cyber SecurityCommission Report last friday which is something i encourage anybody in the Tech Community to take a look at. It calls for greater engagement as it relates to addressing Cyber Security. I know some people get concerned about engagement between our companies and the government, but it is very important to protect individuals, their privacy as well as a national security. We need to define safe mechanisms that we can work together. Caroline what about the global regulatory picture . In the eu, we have seen a lot of activity coming in what has perhaps not always the most welcoming of arms. Do you discuss such regulatory moves by the eu . Penny absolutely. The Privacy Shield that we negotiated was a replacement for what used to be safe harbor. It is a way we can mesh our two different privacy regimes in europe and the United States so that 290 billion of digital trade can continue and continue to grow. Absolutely, we are in the conversation every day with our counterparts in europe. No. Times yes, sometimes the point is if we dont engage with that and not talking about the implications they want to continue to enhance their own innovative society. We talk about what policies and what implications of different policies. We have to remember we are dealing with a lot of innovation going on very quickly. Governments are not always at the forefront of that. We are often behind the curve. It is important that as governments look, i am from the private sector, that is my background it is important that governments understand the implications of the steps they take. They have one goal and may have unintended consequences. That is where it is really important to have a dialogue not just between the eu and the u. S. , but it is important the private sectors as well to give their viewpoints as to what different sets of the implications are for different companies. David what do you think about president elect trumps pick for oss, replacement, wilbur r and are you doing anything to help make that transition happen already . Is there any discussion underway . Second of all, there is so much talk about protectionism. I hope you can talk about that before you go. Penny let me start with the designee for secretary of commerce. I reached out to him and he said we will be in contact. I have written a letter that i will share with him when i need mim telling them meet hi telling him the things i wish i was told i took the job. Absolutely, transition is underway. President obama asked us to do the most professional transition in history and we are very focused on that and working well with the Transition Team coming after us. Caroline i have to ask you we have seen many people who have come from government take up shop here. Condoleezza rice at dropbox. In siliconor a job valley . What is next . Penny i would like to go back to the private sector, but obviously i have not been able to figure that out while in this job because it creates too many conflicts. I look forward to many possibilities. Caroline last question, david . David i want to thank you for joining us. I guess i would like you to briefly touch on the protectionism issue because it is so much in the rhetoric of the incoming administration. I know you have worked so hard for a more open attitude. Can you talk about that a little . Penny i think the United States cannot close itself off to trade. We are only 5 of the customers in the world, 95 are outside the United States. If we act in a protectionist manner, what i have been told by my counterparts around the world, they will have to retaliate. That is not a good cycle to get in. That is a negative cycle. It is important we figure out a way to engage where we improve the ability and the opportunity for the average american which i think with the president elect is focused on. He wants more of our goods made here and bought here which is a good aspiration. We just need to figure out how to do that in a way where we are not putting up a barricade around our country, but instead engaging with the rest of the world. Caroline you have just come from mexico. We were with the u. S. Trade and commerce. What was the dialogue like . Penny i was optimistic by the attitude of the mexican government. They are very mature and they realized that engagement is important. They recognize that nafta is an agreement that was made 22 years ago. They know there are enhancements that can be made. We negotiated a number of those enhancements in tpp. There is opportunity to improve the engagement. The Business Leaders there are nervous because it is unclear how things will proceed. My hope is that there will be time when the folks are in place and the new administration is in place to really sit down and talk specifics about how to continue to grow the over 600 billion of trade we do back and forth with mexico. 40 of what the igo exports are on their of what mexico exports are americanmade content. We have to figure out how to make it better. Caroline it seems to be an ongoing discussion worldwide between the eu, u. K. And the u. S. And mexico. It has been wonderful having your time. We wish you all the best in the rest of your remaining days in office. Thank you very much. And, david kirkpatrick. Still to come, innovation ind and, david kirkpatrick. Drones flying faster than the rules can govern it. What can be expected under a new department of transportation secretary, next. Caroline turning to the skies. A government watchdog report found that aviation regulators have approved Drone Applications quickly, in some cases missing safety violations. An example of how the Department Transportation has its oversight over the drone industry. Joining us in new york to regulationdrone transportation expert. Wonderful to have you on the show. First of all, you have written some incredible pieces talking about the future of airspace. Perhaps we should not be thinking about automated cars, but automated aircraft. Carried in theseation things . We believe in a future that eventually you would be going out and instead of failing an hailing an uber, a vehicle will come and you will fly to your destination. One thing that we say if you can deliver a package, you can deliver a person. We believe in that. To get to that future, we need systems of automation that will allow this to happen. I think that is part of the challenge dot will face, one part automation and reform. Caroline the Current Administration has been trying to tackle the automation situation. What do you think of the new nominee for the position in transportation . What do you think about the future . Greg most of us in the future are very bullish on the appointment of elaine chao. She brings a lot of experience. Discussa willingness to ways of and thinking about problems and pause for a second and say is that necessary to be a reform . She did this in her prior jobs. We think she will do this in her future position, helping us reform our Traffic Control and find ways of automation that will not only help industry succeed but may make the airspace more safe. Caroline talk to me on a global she did this in her prior jobs. Perspective because when i look at the u. S. When it comes to regulations, i saw amazon having to go to the United Kingdom where i come from and canada having to test its drone because regulation cannot keep up. Is the u. S. Becoming a more welcoming place . Greg there is an amazing amount of global commercial arbitrage going on across jurisdictions. While, companies were criticizing the u. S. For being behind europe and canada and the new regulations came out over the summer. The faa administrator said it is americas goal to lead regulations on the Unmanned Aircraft space. Canada would reform the regulations. Australia is in the process of reforming the regulations. Europe is in the process of reforming their regulations. It is a wonderful Competition Among companies and jurisdictions who are trying to be first to have unmanned Traffic Management systems where drones can fly autonomously. It is something that is very exciting. I think that is why we are seeing so much investment in the space. Caroline and we will see that investment potentially fly as we see Companies Accelerate in the area. Thank you very much, greg m cneal. More Bloomberg Technology coming up next. Hasline president obama ordered an investigation into hacking attacks related to the 2016 president ial election. The report will be provided to congress, but not necessarily made public. For a look of the impact hacking may have had. Clout strike has confirmed the role of Russian Hackers in this years dnc hike. President elect trump has expressed some skepticism about the countrys involvement. In michigan, they now have the first set of statewide car driving rules. The law allows the creation of a network of on th demand autonomous vehicles. Only Motor Vehicle manufacturers are allowed to operate such networks. That means uber and google cannot do this. Chrysler and fiat can. Episodes ofhat all Bloomberg Technology are Live Streaming on twitter. Check us out on bloombergstream. Check us out on bloomberg tech tv weekdays at 5 p. M. In new york and 2 p. M. In san francisco. We will have much more on the world of robotics coming up next. A tech roundup of the week, discussing the all important deal with softbank. This is bloomberg. You are watching Bloomberg Technology. Now a check of first word news. Caroline donald trump is stumping for a candidate in the final senate race. And a new era in the oil and energy sectors. Our plan begins with reform to create millions of really good paying jobs and we will see refineries and pipelines and a lot of things happening. Courtney he also said there would be consequences for companie