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tv   Street Smart with Trish Regan and Adam Johnson  Bloomberg  January 13, 2014 3:00pm-5:01pm EST

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if there is any forecast. they have so heavily invested in the country. >> more on the markets in 30 minutes. "street smart" starts next. ♪ >> good afternoon. live from bloomberg world headquarters, i'm emily chang. >> i am michael mckee. lots going on as the markets close. we got an interesting start with the jobs report. is earnings week for the big banks, which will kick us off. week but nobody pays attention. everyone wants and know what the banks are doing.
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out there thatn goldman sachs is not setting a high enough target for its return on equity. some investors say they need to get that up from when they went they had al 2007, 30% return on equity share. they have barely gotten 10% over the past few years. the interesting thing is they only need 10% for lloyd blankfein to get a big bonus. investors say that this will be one of the big issues for them. jobs report is any indication, there is still a lot of uncertainty out there. so can goldman guarantee higher returns? >> analysts say they cannot. regulators are forcing them to hold back more of their equity as capital. stories i haveop been looking at is technology. ongot more information target and how those potential 110 million customer accounts were compromised. malwarey what they say,
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infected their pos system in their stores, and hackers were able to get the data in an unencrypted state. they saw people's names, credit card numbers, and they were able to upload that that an astounding speed. >> have we seen many reports of people reporting a crime or money being stolen? >> not yet. there is not a lot of information out there about zachary how it happened, but one of the things we have been talking about is why are we using swipe credit cards at all? pineurope they use chip and cards and they do not have this problem. arenalysts would say we going to that, but it cost the bank's money, so it will be a slow transition. >> credit card companies have
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been resisting it a bit. it is expensive. merchants are also resisting because it puts the burden back on them. target over the holidays, and i only shop online, so i do not think it affected me, but it makes me question, do i want to shop there again? >> this is new york, so the big besides those two is a rod. he was suspended for the next season. he is filing a lawsuit to have the arbitration decision overturned, and according to a judge, he is able to file an unredacted lawsuit. he can put all of the arbitration hearings on the record. we can see all of the gory, juicy details. like the evidence is stacked against him.
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why not settle, why is he continuing to insist he is innocent? everyone else settled. that seems to be arguing he was unfairly singled out. he does not seem to be arguing that he used the drugs. he said he was never tested after his original use. issue., it was a big he says he is doing it for the players. a lot of people think he is doing it for himself. a giants fan, i live in san francisco, but i am curious to hear what yankees fans have to say about this. one of them is sitting next to us. kevin ryan, longtime tech entrepreneur. i want to get your resume right. i think it is the longest one i have ever had to read. ,hairman and cofounder of gilt chairman and cofounder of biz doubleclick, -- what did i forget?
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>> chairman and founder of zola. >> what do you think of a-rod, are you sick of him? >> let's not forget he was one of the most talented players in the past 20 years. at the same time it is pretty clear he used drugs. he probably has only a few seasons (the so i can see why he is fighting every step of the way to play every game he can. last year, of course, he played. what i am jealous about, we would all like a contract that allows us to still get paid, even if you cannot perform. baseballot a huge person, but he is suspended for an entire season but he still gets to come back and the yankees have to pay him. why is that contract not voidabl e? >> that is how it was arranged in the beginning. these players have incredible leverage. when this was made 10 years ago,
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this question did not exist. now when contracts are signed, do they put that clause in? he still get some of his yearly salary, including a $3 million bonus this week. i would love to get that. >> i would as well. >> the futuristic world of connected devices, the internet of things, seems to be running into the roadblock of doing is this is in washington. megan hughes is with us. what is the holdup here? things.nternet of we are talking about all sorts of devices coming out, really, in a rush, and the rules have not caught up yet. we have been hearing from matt miller in detroit about self vegasng cars, we were in last week for cbs. you have these self running
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appliances, these cars from audi. the question from the government risk. to balance think about the potential for hacking. hacker getting into a cart system and causing a crash. and think about the personal data now involved with these things. you could hack into these things, steal them, and get that personal data. the government needs to figure out what our companies allowed to do with that data, which is a andquestion in washington, also, what is their responsibility when it comes to security? that is a framework that we do not have at this point. what do you think, are you going to get driverless cars? >> i did get to drive in google's car three years ago, and these are still quite a ways
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out. i question is what is the federal government doing to fix these issues? we know they are starting to think about dates and rules for driverless cars. has not really even address the topic. >> one thing the government is doing at the ftc, they are starting to look at the deceptive practices umbrella. when it comes to misleading customers, companies violating their own privacy policies, security lapses, they will be looking at more enforcement action on that end. but when it comes to driverless cars and nhtsa, they could come up with some rules this year, they could be looking at more research, or a combination. in the meantime, you have states looking at this. nevada, california, florida. think about the problems that could create for car companies, if they have a patchwork of rules while trying to come up
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with this technology. >> let me play devil's advocate. the internet of things is already out there. it has been going on years and years. how many problems have there been to date, or is this a group of suppose it security x brits making their living because they want to make everyone nervous claiming everything can go wrong? to date, i do not see a lot of issues. of ftc enforcement action, there was a case, trendnet, where they settled, where home video cameras were hacked into. new.f this is very once self driving cars become commonplace, you can imagine, once you have a lot on the road, there will always be accidents, so there will always be questions of liability. whether it is the technology's fault or it was a malicious hack, these are things that
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money to be figured out, and there will need to be lost to figure them out. kevin, i want to throw one question about you, talking about the internet of things, and gilt. is there any plan for drone delivery a la amazon? >> i think that is a little bit of a gimmick. i him bullish on drones being crops, rural areas for agriculture, things like that. city, with the density, if you had 75 drones descending on this blog, it would not be feasible. 'd?were we punk >> i believe that we were. do you know the average number of deliveries on any street? it is not possible. i do see local warehouses. there is a company in china that delivers to your home in three hours.
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amazon boxesiple on my door every day. what about same-day delivery? we just did a special at ebay, doing same-day delivery. , it gets backe pretty quickly and is a smooth process. the same thing with google shopping. it took me six hours to get my stuff. with ebay, it took me 45 minutes. with gilt, where are you with delivery? >> we still use ups and system like that. we do not do same-day yet. we are looking at that. the entire industry will have third-party providers. you can imagine it ups or fedex were here, they would be working on this. i do think we will have same-day delivery in many cities on many items in the next couple of years. >> we are going to stay with kevin ryan.
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we will find out more about his businesses. megan hughes is plugged into the business of "street smart." back in two minutes. ♪
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>> welcome back. we are back in two with internet entrepreneur kevin ryan, groupe. of gilt a retailerooking at who doesn't internet stuff, they would hope they did more of it. the stock is down today, lulu lemon. they are cutting their revenue and earnings forecast. the cfo says since the beginning of the month sales and traffic have fallen meaningfully.
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not something you want your cfo to be saying. is this a store that is out of fashion or is this a store that stepped in it? >> they stepped in it. they had some problems with the execution, they changed some people. it is still a powerful brand. a huge lulu i like gifting it. but the process of buying it was not very easy. --ad to go to the real store believe it or not --to exchange a couple of things. it is not the easiest process when they are not accessible online. >> they can come back but it may take a year or two. a powerful brand that they can work out of this. >> there are so many different players out there. obviously, gilt is doing well. you also have a company like fab
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who is going down the roller coaster. number ofve a challenges, they have cut 50% of their staff. interviewing right now, the ones that are remaining. when you are a high flyer and you lose momentum, it can be difficult to recover. especially in the internet business, it is the hardest. able to send on your employees like sharks in the water. there are so many great opportunities out there. we have a shortage of people but there are unlimited jobs. overall the flash sale space is doing great. the fundamentals are there. theou are all startups of e-commerce side, but what about brick-and-mortar that has moved into it? is there somebody that imitates what you do very well? j.crew does a good job with
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e-commerce. that is interesting. i have been buying from them since high school, and still when i go to the website, it does not show me something for me personally, it shows me men's shirts. why don't they recommend things to me? it is actually a process to make sure i am making the right choices. those websites, to date, does not do any of that. we have 2000 different versions of our e-mails that go out every night. we have lots of targeted sales. that is pretty sophisticated technology. having said that, j. crew has a good-looking site, good delivery times, inventory, they execute well. >> don't you need more than that in this day and age? >> that is why they are losing market share. retailers overall did not do well.
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all the growth will be sucked out of physical stores the next way years by online. >> is that because it is so much easier -- obviously -- but i do not get to touch the stuff or put it on. for a lot of people, that is part of the experience. >> you are talking about clothing. or things that are not a fit issue, it will not be an issue. withe will become familiar rands, maybe send something back that does not work for them. aree by issue, people solving the problems of getting better fit, delivery, pricing, everything. this is five percent of the economy right now. it will be 15% within 10 years. >> kevin ryan, chairman of gilt. more with him after the break. ♪
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>> welcome back to "street smart ." we are back with kevin ryan, founder of gilt groupe. also with dust is cristina alesci. >> japanese brewer announced suntoryhas purchased -- announced that it has purchased beam. you are going to have to educate us. >> you do not drink brown spirits? it is the fastest-growing segment in the country. this company has gotten such a large premium because of that. for 20%is buying beam
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higher than what the stock was trading for. if you look at some of the deal metrics, it is an expensive deal. they are paying 20 times ebitda for the company. depending on how you parse the numbers, that is well above the average, 16 times ebitda. you could fudge the numbers quite a bit. you are in the deal market, you can fudge the numbers anyway you want. suntoryir standpoint, has a very mature market. an amazing hold in the japanese market. but it does not have many other growth opportunities. not only brown spirits, and bourbons in particular are exploding in the u.s. they can capture that growth. but they can wring this over also to asia. i was surprised learning how this would happen. i have tasted japanese whiskeys. they are unbelievably delicious.
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much better than a lot of the ones we have here, but still american brands are popular in asia. often see at japanese company buying an american company. can succeed or not succeed based on the cultural assimilation. there have not been a lot of examples of large japanese corporations. >> to your point, the japanese yen has been stronger, and that has discouraged some deal activity into the u.s. but the fact is, interest rates are so low -- the fud is tapering here, but the bank of easing. still using -- we could see more japanese companies borrow cheaply to make acquisitions here in the u.s. from an integration's standpoint, suntory does not have many sales here in the u.s.. -- sales reps here in the u.s.
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an will not have too much of overlap, but you have a different culture at the mothership could impact in, to your point. >> we will let you taste. >> that is tonight, for sure. >> julie hyman is on the market for us as we head to the closing bell. things have turned red. >> more so as the day has progressed. no big catalyst pushing stocks lower. valuations,oking at which on its face, is still low, but relative to the past couple of years, higher than they have been. also looking ahead to economic data later in the week. in terms of individual movers, the most in the four years after seeking approval for a cancer treatment. it will also decide what to do with its animal health and consumer businesses. also up,etworks is
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targeted by an activist investor, elliott investments run by paul singer. be back on the markets again in 30 minutes. next.street smart" is ♪
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>> welcome back. we are just 30 minutes from the close of trading. wexler here with our guest host for the hour, kevin ryan. also joining us is a partner also known for his time as cp oh of the huffington post. >> we are talking about the future of new media. i read a new study that said that by 2017 the media as they define it will either shrink from $1 trillion are double. what's it going to be? >> media is clearly a growth business, and that is thanks to
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technology. i think it's going to double or maybe even triple. everyone is always on their phone looking at some content. >> is it because there is organic growth, or just because there are more people and we always see more growth? >> people are spending a higher percentage of the day looking at more news items, looking at more sites. that is just growing the market. from a revenue point of view, it's not growing that much yet. i think it will over time. i think will have more subscriptions. right now we are getting a tremendous amount of content for free. iere will be more devices, think it will be a boom time. >> you had the experience with the huffington post and you with the business insider. yourre getting a lot of content for free from other people. if that continues and you can of allies the source with --
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material.e the source the case with bloomberg tv, but there are a lot of tv shows that have lost a lot of their audience. is advertising business always trailing what is going on. worth of tvbillion advertising, only 20% or 30%, going where the audience is, which is on your mobile device today, in social and video, that would be a tremendous boost to the revenues. >> let's talk a little more about revenues. a company you back just got a big investment from nbc. business. news we like the news business, the huffington post being one of them. this is video news taken to where the audience is, on
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platforms with six seconds, 15 seconds, and 10 seconds videos. fine, snap chat, these have tremendous audiences. 400 million snaps are being shared every day. 100 50 million instagram users, and that is growing. >> i have a question, i don't know who is the expert. six seconds, is that long enough or summit to focus on it, to register what it is, to internalize it and be able to focus on whatever advertising you are doing with it? >> there is room for everything. tv, we no question on have seen in over 20 years, things are getting shorter. >> we are seeing business insider do more longer form investigative stories, that long piece you guys did on marissa mayer. , where youideshows
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just putting a tweet on there and just writing about it a little bit. is this the future, and can you make money on it? >> it's absolutely the future. fouryou're seeing in the promising media company started years,last eight business insider, gawker, huffington post, they are all all with tremendous traffic, a lot of loyalty. >> but how do you protect your business model? up worthy which sort of came out of nowhere and they are doing sort of the same ring. shareableublishing things, viable content. that is easily replicated. i just have to go out and figure what is going to get the most elite. .- get the most clicks
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>> the companies we talked about have done very good jobs and in theory could be replicated. the huffington post has been around for five years. it is not easy to duplicate. i think there is real skill in editorial. at the end of the day, it is about content. buzz feed has dozens and dozens of journalists. >> a new book by the father virtual reality raises the question, if we are getting all the stuff free, the people who are contributing are not getting paid. all the money goes just to the people who are running the huffington post, for example, and not to the original source content providers. then they go away, and you don't have the content. >> that is not actually the case. zzfeed employs 145
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journalists. we tripled the number of journalists last year. so we actually are hiring journalists of the future and paying them as they would get paid anywhere else is journalists. >> how much of the source material that goes on your site is original? >> quite a bit. in the world of social, you also aggregate. that is just a very normal way to share information. but these journalists are producing a lot of original content. be a commentary, the warren buffett on tv and you rewrite something about what he said. day andt 250 pieces a journalists are writing a high percentage of what we are getting. >> we will continue the conversation after a quick right. here with the ex ceo of the huffington post and an injured -- internet entrepreneur. we will be right back. ♪
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>> welcome back to "street smart ." we are about 20 minutes away from the close and it doesn't look like we're going to have a very good start for the week. s&p, about a 1.4% decline. it appears that people are worried about valuation's. >> this is what i was talking about earlier in the show, about all the uncertainty that is out there. it seems like there is a recovery and then something happens. >> a couple of analysts this morning said we have been expecting a correction for the last four years and we haven't got it. it doesn't mean were going to have a terrible year. >> you wonder what janet yellen is thinking just about now. we are talking about new media ,ith our guest host of the hour
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kevin ryan. ex ceo ofus is the the huffington post. i know you were against the sale of the huffington post to aol. looking at companies like buzz feed, gawker, what is the long- term plan their? what is the goal? is it to sell yourself someday? someu would expect at point it would have some form of exit. this is a tremendous time to build enterprise. it has been a golden age for new brands. we are launching a new one today. the longer these brands are able to be nurtured and not be under the scrutiny of a puppet company , the better they become, the
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richer they become and the more valuable they are. york, whereat new the key media companies are, tumblr sold for a billion dollars. it is a great company, but it has less revenues. >> what about bi? >> i think about just building up a valuable business. at some point, if someone wants to make an offer that is really compelling, you would think about it. that weit is important don't sell business insider for a very long time. condé nast been 100 million dollars launching portfolio magazine. creating assets that will be around for 50 years, for tens of millions of dollars. it is a unique time.
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jeff bezos ball old media, he bought the washington post -- balked old media. >> has he given you any insight into what he is going to do? >> is not that personally involved with is ms. insider. with business insider. i have no idea what the plan is for the washington post. i am sure there is a huge plan for it. i am surprised at that acquisition. i think the washington post has a huge challenge. they are a local newspaper but they have to cover national issues and they are caught in the middle. they are not the new york times. , your folks that aol company tried to go very local and have had a hard time with it. >> local has always historically
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been a very treacherous area to go. the idea that you could build a national organization that becomes local i think is almost impossible. everywhere you go locally, there are tons of little websites or newspapers or information places cane you can go where you get a lot of local information. these are done by people who live there, who are passionate about their communities. >> we could talk about this for hours, but we will have to leave it there. au, thanks for joining us here today on "street smart." kevin ryan will continue here with us on the show. >> this was original content. >> the detroit auto show takes off today and matt miller is there interviewing the top execs of all the big car companies. one making headlines is toyota. he is joined by the north american ceo.
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is "street smart," but i hear bloomberg west and i think of technology. we are sitting in front of this car that is so amazing. i have been following cars a long time, and i did not think it was possible to make a fuel- cell vehicle. >> we have had prototype after prototype for about the last 20 years. this is the real deal. this will be available to the general public in 2015. >> i knew it would be possible, but i thought only for hundreds of thousands of dollars. everyone is saying technology is too expensive. when you compare what you are going to do with battery technology -- >> when you look at the ease of refueling this and the zero emissions, it is the real deal. >> explain to our viewers what it is, how it works. oxygencally it is using and hydrogen to produce
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electricity. it produces electricity to either drive the vehicle or recharge the battery and all the emissions are only water vapor. >> that is pretty awesome. you are going to come out with this so soon, it is amazing. i told you i had this toyota hybrid world tour t-shirt that i sleep in every night, so i think about it. but you guys have been the driving force in hybrids across your vehicle range. how much of your sales are hybrid vehicles? laster, 345,000. 340, it will only go up over time. one of the reasons the fuel-cell work so well for us as we are using hybrid synergy drive to basically power this vehicle. rather than have an internal combustion engine, it's going to work off a fuel-cell. we didn't have to reinvent the wheel to come up with the fuel-
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cell. >> very cool. you have something extra special behind matt among which i didn't expect to see. one of the real surprises of the day was the ft1. is that the direction you're headed? >> it tells you about the brand. it is just heart pumping passion. that is what that car represents. it gives the designers a chance. if you could design a car, forget platforms, engines, all the details, what would that car look like? that's what they came up with. it is exhilarating. it means heart pumping passion. you have a lexus coming out tomorrow that i cannot wait to see. it has not been unveiled. i feel like it will be the sportiest lexus i have seen.
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>> it has the most powerful engine we have put in a car. it is more exciting even than the isf. >> a lot of people don't realize lexus was the number one selling luxury nameplate in america for over a decade. will that help you get back there? >> if it's not important to the customer, i don't think it is important to us. luxury is getting blurred in today's world. you have luxury cars under $100,000. what is number one is that we -- what is important is that we are number one in the hearts and minds of our customers. >> what do you think about 2014? what does it bring for toyota and for the industry? still see continued growth in 2014 and beyond. the rate of growth is going to
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begin to moderate. two years ago, the growth in the industry was 1.7 billion dollars. last year was $1.1 billion. we are forecasting next year to 500,000. we have satisfied a lot of that pent-up demand since the great recession. the growth now is really going to be based on economic growth within our economy that will help spur car sales. that is a good thing long-term. spending timeor with us. always great talking to you. matt miller in detroit. we are back with kevin ryan, long-time internet entrepreneur. are you a car guy? >> i'm not an excessive car guy. likeave car companies tesla that have more engineers, computer engineers than they have actual engineers. today, but 10er
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years from now, general motors will look more like tesla than it does today. >> that will be hard for people who live in the detroit area. >> they will have to set up offices in other places. they will have to be in new york or silicon valley. >> i was just in detroit covering a tech conference and the have seen a bit of a renaissance there. the industry there has been spearheaded by dan gilbert. they are trying to attract more .echnology perhaps the car industry feeds off of that somehow. the electronic components can be created by other companies, just like there were more metal- based components as well. >> i know you're very involved with the city of new york.
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your name has been floated as a candidate for mayor. >> i'm definitely not running. city and it is a great job. i have thought about it, yes. >> i know you follow politics very closely. what is your take on this whole chris christie thing? >> it is a wonderful story as a journalist to watch. reinforces something that people have always felt, that he has always been a bully. he still comes across as a real straight shooter. i have been in a room with 100 business people and they all walked out feeling good about him. if it turns out that he was not telling the truth on as some suspect, i think he is in undercutsrouble and his key selling point that he says the right thing and does the right thing. >> doesn't matter whether he
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knew or not, if it appears he has created an administration in which it is ok to do things like this? has he set that tone, regardless of whether he knew about it or not, that this kind of rector bijan is ok? -- this kind of retribution is ok? >> i don't think it is a fatal problem. your average voter thinks that politics is rough and tumble and that is just part of it. but they don't like is when someone gets up there and actually lies. and it's how they perceive a chief executive is treating the people who work for him. people get thrown under the bus. there is more "street smart" after the break.
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>> hello, everyone. i'm trish regan. we are just minutes from the close. it is time for your top 10. introducing an all aluminum version of the top-selling f150 truck at the detroit auto show. alan mulally tells matt miller he is confident in the country's decision. >> that is incredible.
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in u.s.-selling pickup history. twitter is up one percent. the target stock price. >> number eight is quicksilver, down 3%. it is being sold to charity for $19 million. they plan to use the proceeds to pay back debt and invest in emerging markets. >> the drop in holiday shopping traffic was deeper than anticipated. consumers waited until much closer to christmas to shop. >> wendy's jumped about 6% today. the forecast beat analyst estimates. wendy's also announcing a share buyback program and expects 235
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million dollars in proceeds from the sale of more than 400 separate restaurants. searching one, news it is being bought by japanese beer maker. include jim beam and maker's mark. it will create the world's third-largest premium spirits company. inventory, itmium is an interesting cultural matchup. you have this japanese country that makes high-end japanese whiskey. then you have this other company. it will be interesting culturally. >> i think there will be a lot of appeal for maker's mark oversees. you may see a lot of appeal for japanese whiskey back here at home. >> 20 times cash flow, that is an expensive price.
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are talking about makers mark here. >> number four, mgm is flat right now. buy of america upgraded to from neutral. it completed its longest streak of weekly gain since february 2012. stream reports preliminary earnings that missed estimates. it says lackluster holiday sales and increased product costs will hit them. >> number two is gold corp., down almost one percent. its deal would add 10 million ounces of gold reserves. >> are number one stock of the lululemon dropping to its lowest level in two years. the company is cutting its
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revenues and earnings forecast for the fourth quarter. haveys sales and traffic decelerated meaningfully since the beginning of january. one analyst said on the show to me that the reason they were --ing >> it is still amazing the guy actually said that. no longer chairman of the company. sales are really struggling and have an image issue they have to deal with. then you have nike and him are -- under armour. off 1.25% there on the s&p. >> this is turning out to be
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very challenging start to the year after such a great last year. we are now down 2% on the dow jones industrials and 1.6% on the s&p 500. nowhere to hide. everything was lower. consumer discretionary taking it on the chin. along with energy. >> this is all in spite of the fact that we have gotten some very good economic data. the monthly budget statement coming in better than expected. exports the highest they have ever been. to 4.1%.erating unemployment dropping to 6.7%. the point is, the data has been pretty good, which suggests companies are doing well and should be making some money. >> a number of companies saying they would increase capital spending. all of that boding well for the market. the market did so well last year, it is quite possible that
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people are taking a little off the table. us. sherman is joining fill us in. >> we have some breaking news here, a story we have been reporting on for a few months now. we now know that charter has sent a letter to time warner cable right about now. we are first to report the price $132 50 cents per share, a price we have also reported more or less in that ballpark previously. now it formally gets the ball moving. , spoke with the charter ceo tom rutledge, and he told me he has tried to engage numerous times with time warner cable, most recently around christmas, consistentlyer has rebuffed charter, so he is taking his case to shareholders. he feeling this letter which we have first on bloomberg him a basically the contents of it say
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we have tried multiple times to do a deal. time warner cable doesn't want to engage. we think this deal is beneficial for shareholders. we don't think time warner cable can get the same kind of growth that charter management can, and therefore charter and time warner cable should do a deal. towill be up to shareholders convince time warner cable's management and board that a deal should get done. >> time warner said they would not consider if it -- unless it was in the realm of $155 a share. >> a sickly what tom rutledge said to me is, time warner cable came back to him with an offer that they knew they would reject on the face of it. we have heard from people familiar that time warner cable wants between $150 and $160 a share. cash and the rest is charter stock.
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tom said in the letter he is willing to engage in a friendly try to come together to some cash stock deal with time warner cable management. the question now is will time warner cable get involved with any pressure from shareholders? .50 ishareholder said $132 a nonstarter. the bid needs to be a lot higher than that. >> he is going to the shareholders trying to get some interest, to open the door for another big coming out in two or three weeks. do you get that sense? >> the bid question is, what will comcast do? comcast has sat on the sidelines on this. in the letter it does say that charter is potentially willing to do certain divestitures or asset swaps, which could hint that comcast could be part of a future bid where comcast gets part of time warner cable in a
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joint venture that might bump the price up. the other deal that tomkat -- comcast could do is make a bid on their own or in partnership with the third-largest cable company that they want to do a bid that is higher than that. but this sets the baseline at which is what they are starting off with their offer for what time warner cable is worth. news in ag this formal letter. >> taking it to the shareholders directly. news,other breaking google is acquiring for $3.2 , the companysh that allows you to operate wings like your thermostat from home. you can have a truly smart home. me theddy of mine showed
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app that he just downloaded for $120, he is now able to control the temperature of his home 100 miles outside of the city. >> let's get back to this media deal. paul sweeney and porter bibb are here. does this make sense to you, charter and time warner? >> i think adam hit it right on the head. this is the first of what is going to be a whole slew of bids. the deal is a long way from ever getting done. >> comcast doesn't really have to partner with anyone. they can do the deal on their own, and that is what time warner is betting on. they are just waiting for another bid to come in. charter sets the floor price here.
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they are not going to move until time warner and charter have gone at it for a while, and then comcast will come in, probably. it's not going to really speed up the process. if comcast is smart and its bankers are smart, which they are, they are going to advise their clients to wait it out and see how far this could go before jumping in. bid againstn't yourself, in effect. >> exactly. >> and the time warner shareholders are not going to be very happy with the deal that has so much charter stock in it. >> where is it ultimately going? time warner said they want 100 $50-one hundred $60. is that unrealistic? of $140.ld go north >> they would have a difficult time buying time warner cable in its entirety. they are probably waiting to see what kind of deal gets done.
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maybe they come in and just take certain assets or markets they like tom alike los angeles or new york. i think that is what comcast is more interested in at this point. >> earlier charter brought flow.m west 48 times cash that is a richer multiple than this one. is charter not as good a property? or excuse me, is time warner not as good a property? >> it is an excellent property, but it has been under managed. they lost almost a million subscribers. they are facing a lot of on petition, from fios in particular. nevertheless, it is the second- largest cable operator. if you are time warner cable, there's no reason to accept anything other than an absolute full bid. >> let me ask a philosophical
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question. is the cable industry really that great a place to be in the long run? not only do you have those , and youlling the cord could say we are going to make that of -- >> is not going to happen tomorrow. the major cable companies are the major internet service providers. that transition to broadband delivery will include usage fees. think it is the cellular mobility that people will be using? >> you have to have the core pipeline that the cable industry provides. >> want to walk into your home you're going to use wi-fi. you're not going to want to pay for that wireless signal because that eats a lot of your data. let's not forget who is the player here. this is john malone.
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he is not in it for the long term. he is not said why are how this deal makes sense on a fundamental or strategic basis. this is about rearranging a balance sheet and making money by moving money around. in the near-term, exactly. he is not in it for 10-15 years. he is in it for five years, and he will make a lot of money if he can pull off this deal. >> if he can pull it off. what do you think? tremendous track record over the last 20 years. he has not been a long-term holder of assets. in 1996 and since then has been building up in europe, in particular. he has a couple of deals where he now has a much bigger balance sheet to borrow against.
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there probably needs to be more cash than stock in this deal. there is a lot of balance sheet capacity there and quite frankly, i think time warner cable shareholders will demand more cash and less stock. toke -- thanks so much to the whole game. ♪
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>> we have some breaking news. it looks like a rod is firing back. >> alex rodriguez is suing the major league baseball group and its commissioner. up in his season- long suspension for 2014. we did think this headline would cross earlier today. a manhattan judge said he could file an unredacted suit. his lawyer has asked for a
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partial redacted suit. once again, alex rodriguez the mlb.- suing you you have a six week earning season that happened four times a year, then you have about seven weeks that are off-season. iny went back and found earning season, 10 stock to rally about .5% versus the off- season when they rally more than three times, 1.7%. when you look at this over 10 years, the difference is incredible. look at this. the off-season earnings returned about 66% over 10 years, versus 19% during earnings season. at the beginning of the season, you sell all your stocks, get through earning season, and then buy them back.
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fascinating. when we look at it this season in particular, this is a concern. the negative to positive preannouncement ratio is 8.4 to one. there are 8.4 times as many companies saying earnings are not going to be good this year as there are saying earnings will be good. for all of 23rd -- for all of 1.3, the ratio is 1.9 to add to that the fact that frankly we have been going above trend for a very long time, there we are right there. it just begs the question, should we sit this one out, on a day when the dow was down 107 points, maybe we just wait and get through earnings and then deal with it in march. >> more breaking, the government just releasing some updated enrollment numbers for
4:17 pm us with aes joins look. >> there are some signs of improvement. now we have a snapshot from october through december 28. 2.2 million people signed up both in the federal and state exchanges. the goal is to have 7 million signed up by march, so they have a long way to go. they did see a big surge near the end of the year. those involved a plan with financial assistance. so we are getting a sense of how much taxpayers will be on the hook for. the obama administration released demographic information, who is signing up. tos is critical for insurers set rates next year. 70% of sign-ups are over the age of 34. one third of them are 55 and
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older. that could be a sign of trouble. it could lead to premium increases. hha officials said they are pleased with the mix. they are stressing that open enrollment goes until the end of march. that thing young people will wait until the end -- until the last minute to sign up. >> coming up, we will talk retail. what is up with these retailers, target and neiman marcus did not bother to admit the leeks until after they had been found out. >> i would be concerned -- given the way this is all going. >> we will talk about that, next. ♪
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>> let's go to olivia sterns for some breaking news on yum! brands. >> they are reporting a miss on store sales in china. they were up five percent at the kfc brand. the big miss came from pizza hut estimates theyng would be up 5.7%. about intel.king when target admitted that its ,ata systems had been hacked the latest tally is 70 million, it was stunning news. facteal issue isn't the that the company was hacked, it is that the retailers didn't bother to inform their customers until days later. joining us is david boaz with a
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little more perspective on this. i think in some ways, customers are getting hit from both sides. not only do you have to worry about your credit card afteration being stolen going to target or neiman marcus, you have to worry about them not actually telling it was stolen, because there's no actual obligation or legal reason why they need to let you know. >> that is right. this is a new field of the law and business and we are working out what those rules are. a lot of this rulemaking is done between businesses, between customers. one very important signal target got was that it had to file new fourth-quarter estimates because sales fell off after this. that is the biggest punishment yet, people hear this and they don't want to shop at target. retailers should be doing everything they
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possibly can to prevent this from happening, because we all know what a disaster it is keep. -- what a disaster it is. and trying to manage the public relations with customers after the fact, but they have not been doing that. waiting to let people know in is first place seems like it not managing customer relationships. >> that is right. there are two things to keep in mind. number one, there were laws passed about data security in 1999. sometimes companies follow the law instead of focusing on what they actually need to do due for their data security. second, there can be times when by announcing the breach, by sending out an all points bulletin, you alert people who have stolen a computer or an unknown body of data that they have information that is more valuable than they realize. i think it is true that
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retailers are going to have to sharpen their game on this, or people will not want to do business with them. >> hacking in general is a lot of concern right now, especially with issues that the nsa making news every other day. should americans be worried about the ability for hackers to potentially get into the nsa nsa which may be gathering data on everyone? >> that is the bigger issue in the first place, the government has all this data. facebook has all this data and it causes him to put ads in front of me that i'm actually -- causes them to put ads in front of me that i'm actually interested in. i'm not that worried about that. data security on the government side and the corporate side is definitely something that has to be stepped up to read it maybe that our cards need a chip that they are
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starting to use in europe. where you have a pin number that you actually enter. exit will be more hassle. don't you have it set up on the internet where you can go to all sorts of sites without entering passwords because they have already been registered? i do, it is convenient. i got a new smart phone and the first thing is you need a password. customers are choosing this convenience. i got my new phone system, it says you have to enter a code each time you open the ipad. i went to my friend who knows this better and he said this is how you delete the need for a password. i'm not that worried about losing my ipad or the data in it that i wanted to worry about the hassle of the password. >> thank you so much for being here. coming up, a little front row magic.
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we have a radio mogul who is winning big name celebrities in his new lat form. we will talk all about it, coming up. ♪
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>> time for the scene, where we bring you the business behind media and pop culture. westwood one founder norm pattis is creating talk shows hosted by celebrities like kathie lee gifford, dr. drew, dennis miller. tojoins us from los angeles explain the whole thing. 100 million downloads per month, that is huge. >> what is driving it is
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basically the consumer. demand so thatn consumers in this case can listen to content and their favorite programs and things of that sort when i want to, is really what is driving it. it has been the driving force on the television side and it is now starting to be recognized on the radio and audio content side as well. how has it been with all these celebrities you take to these lakers games and woo them on the front row? health at podcast. i wish the lakers would cooperate a little bit more. kobe is going through some physical travails right now. the lakers have always done it
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in the past and i think they will find way to do it going forward. with 100 million downloads per month, you would think the advertising dollars would be there, but they are not. what is the disconnect? >> this is very much like it was when i started in the radio syndication business three decades ago. advertisers really didn't take advantage of them. what it took was somebody to go in there and build a sophisticated organization with the resources to provide advertisers with the metrics and all the information they needed to prove it was a good place to spend their advertising dollars. that is what we are doing at podcast one. dominated primarily by mom-and-pop operations. now we are curating a list of the top podcasts, many of which we are producing ourselves, so we can go into the advertising community and give them an
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option to take advantage of the growth patterns. it has been much the same as westwood one in its early years. advertisern until an they should be advertising on this podcast. how do you convince them it is money well spent? >> it's actually a pretty easy pitch. thatarts with the fact with our history of westwood one, we are doing something that's very similar to what we did in the syndicated radio business. this is not something that has to be filtered through a radio station. this is available to any consumer who finds this information interesting. since we have so many programs and deliver so many downloads, we can promote this to a community that is already very much interested in podcasting or .n-demand audio or radio so it won't be a secret to anybody, and it's only going to
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show growth, even without our involvement, the media is showing significant growth on the listener side. good opportunity for advertisers to get in on the ground floor. >> isn't part of the story the fact that you have created such a niche? the advertisers that are trying to target a specific demo can find it via you guys because that particular demo is listening to a particular podcast. >> you are good. [laughter] >> i actually don't understand why advertisers are not paying out more online, because you are getting exactly the customer you want. fans, there the people who would listen to adam corolla if they had to use a
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bent wire hanger. these are the people who are most responsive to messages delivered by the talent, which is what we do. about 1.15l is billion dollars. that is a lot of money. >> that is actually the revenue figure for network and syndicated radio. is network as a whole, it $17 billion. radio needs to embrace podcasting. it is the part of the audio experience that is actually growing. listening to radio stations is flat to slightly down. if you want to keep radio a viable medium that advertisers bet to take seriously and involved with, you've really got to use on-demand to show where the growth is coming. i think the opportunity to take a company like podcast one and
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have the same type of growth pattern we had in the early days of westwood one, where it becomes a business that can generate $500 million and have a market cap in the billions of dollars, i think that opportunity exists. that is one of the reasons why i am doing this. we wantish and i decide to do a podcast, we are calling you, norm. >> i will be very upset if you don't. >> apparently i will be able to sell it. thanks, norm. >> coming up, we are heading out to the detroit auto show and we will be joined by the ceo of audi america. we will go to colorado to talk to an owner who just created the first soft pairing menu. ♪
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>> a new business is emerging in the restaurant industry and it has to do with the legalization of marijuana. now, guess what? you can compare you can -- you can pair your food with blue widow kush. welcome, mark. >> thanks for having me. >> how does this actually work?
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you have a menu and you recommend various strains to go with certain foods? ,> it is very tongue-in-cheek that now in colorado it is legal . we just wanted to have some fun. obviously you cannot actually go into the restaurant and order marijuana and get it served. >> what about instead of parsley or deal or some other herb, you just sprinkle a little over the top of the salmon? x that is actually not legal in colorado. >> you cannot eat it or smoke it publicly, that is correct. >> to you think that could change? you think of everything that is happening right now in colorado, it is quite fascinating and amazing. forported on this industry
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a while now, and if you had said to me three years ago, do you think recreational use will be legal in this country in the next three years? , probably would've said no maybe six or seven years. but here we are in colorado. do you think that it's some point, businesses similar to a restaurant having anelka hall license, might actually have a havingna license -- like an alcohol license. >> is this the beginning of the end of prohibition for marijuana , the same way it was for alcohol? it's hard to say what things will look like in five years or 10 years down the road. >> when people walk into the restaurant and you hand them the menu and they say, wait a minute, how do you respond? >> we have certainly had some ask, and wein and
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tell them it is just a parody to have some fun. most of them have a good laugh and decide to stay and eat with us anyway. >> the marijuana license potential is interesting, similar to the liquor license. but my hunch is it's not going to be easy. i don't know how familiar you you are with the dispensary license there, but that is pretty difficult. >> that is my understanding. , know those who have tried there is a lot of paperwork to go through. i think they are still trying to figure out the law and what it's going to look like as this thing get started. >> interesting stuff. maybe there will be a day. you will go to need at a
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restaurant and actually order marijuana on the side. >> it is uncharted territory. this only just happened as of january 1, it became legal. .> we will be going to detroit matt is having fun today looking at all these luxury carmakers. >> we will talk to the guy who runs out in north america. some of them are going -- who runs audi north america. ♪
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>> the detroit auto show kicking off today. matt miller joins us live with the president of audi north america. ofwe are sitting in front one of the new vehicles they are releasing. looking around, i see the words e-tron everywhere. the hybrid is the wave of the future and audi is fully taking
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it on. i think it is exactly what is right for america now. you get a lot of range on pure electric driving, but you also have a fuel efficient engine. it is a good solution. the most important thing is, it drives like an audi, and has all .he quality of an audi >> people talk about affordable luxury as if the trend was started last year by mercedes. but the a3 has been around for a decade at least. someone starting out, first car -- first-time car buyer, does he buy that and then eventually move up? that luxury a myth carmakers cannot generate any profit from making small cars. if you look at the dynamics of what has happened in america
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with fuel economy, mobile devices, the concept of making stuff small and unique, we started it, and that is what we see people jumping into our brand and then they migrate. that is what we are looking to do. you see that as we launch our new products this year. >> before we get to this new thenology, ford unveiled new f1 50. it is very excited. people act like aluminum has never been used in cars before, but i automatically think of audi. >> we came to a very simple truth. reduce the weight of a car and you have all sorts of positive effects. of get the positive benefits weight savings. with efficiency.
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a lot of brands just keep adding weight to a car. bigger brakes, bigger engines, bigger fuel tanks. , now youd with the a8 have the r8 behind you, which is a great example. smart solutions. a shot of the r8 t talk to me about the kind of technology you chose, because it was really heavy for audi. this is where we show technology 3, 4, 5 years out. lasers for headlights. it is big-time time austin powers. it is for real. you get twice the power of led's . we see from our research that a lot more accidents happen at
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night. this gives you far greater visibility. we were sort of the adventures of led's. led's.ntors of the laser is blue, but we project it through a process where it comes out quite like you see from a normal headlight. it will be at lemans for the first time. we will be going up against porsche and toyota, with laser lights leading the way. >> that is fantastic. they may ask about what you expect for this year. for north america but also for the industry. do you expect to see the same kind of growth we have seen the last four or five years? >> i do, i am optimistic. you know the energy situation
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with fuel, it is abundant. prices are stable. interest rates are at historic lows and we think they are going to hold. the average luxury car is 11.5 years old in america. there will be a lot of reasons for people to come back into the market. new sedans, new body styles. we will deftly have another record year in 2014. >> you heard it here. their motto means advancement through technology. you really see it with these laser headlights, among everything else. >> that is outstanding. miller, with the president of audi. tune in tomorrow, we will see
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you here. >> that is going to be a fun show. ♪
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>> its 56 past the hour, which means bloomberg television is on the markets. let's get you caught up on the markets, they were lower across the board with the s&p posting its biggest lost in two months. dr. rally to all-time highs in 2013. 2-rosoft, disney, exxon fell 3%. brian jacobson joins me. today we sell the s&p at a new low for the year. is there concern about where the stocks go from here? is that is what drive -- is that
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what is driving the negative sentiment? >> i think perhaps it is too high for the fundamentals. i am of the opinion that if valuations are fair. some spots are overvalued and some undervalued, but there is nothing unusual about these levels. if you think about how low things worse since the march 2009 lows, people think of 2009 as being normal for the markets. i think where we are now fits more of a normal situation. >> we saw a couple of big declines with disappointing outlooks. what is your anticipation of what is ahead? >> we will see some winners and losers during this earnings season. it is volatile right now with the market down where it is. over the next few weeks as we work out where to earnings season, we will see some choppy trading.
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on average it might not look like the market is going anywhere, but if you focus on the fundamentals, looking for revenue growers that can be expectations, those are the ones to watch. growthould see greater abroad in europe and emerging markets. i think it is because everyone has had -- a lot of people i talked to were bullish on the energy markets for 2013 because 2012 wasn't all that good. a lot of people have given up on emerging markets. they see so many different problems, when you think about brazil, russia, india, and china. those will continue to underperform, except for india and china. because of the structural reforms taking place, we should belittle more excited about the long-term growth prospects of those countries.
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structural reforms in mexico are phenomenal, but some of those the probably in your to benefit of businesses that can take advantage as they penetrate the oil market or the banking system there. you believe a lot of the negative sentiment today is already priced in? >> i think if you feel as though you're not exposed enough to the market, try to work with a strategic asset allocation and make it appropriate for what your risk tolerance is. i favor growth overvalued in this market. income.ite off fixed too many are concerned that interest rates are going to pop like we saw in may through september. the fed is going to move easy as she goes. we can still post competitive returns. >> thank you very much, brian jacobson with wells fargo funds. ♪
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>> this is taking stock for monday, january 13, 2014 peered i am julie hyman. we focus on dealmaking. billions of dollars of deals involving google, charter communications, time warner cable. we break down the latest on these deals. we head out to the detroit auto show. major automakers unveil their new designs. you will meet in executive back to make a bit cornwallis in seconds. headlines


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