>> live from bloomberg headquarters in new york. class a takeover bid, will it happen for him? we will find out. christ big shoes to fill. mark will be the next ceo of ford. we will ask what the automaker challenges ahead. qwest the new york film festival is in full swing but it is more about disruption this year. here for an exclusive

interview. qwest good morning. i am erik schatzker. qwest i am stephanie ruhle. a lot of news this morning. there is also breaking news in the housing market. economistsless than expected. the negative news turns out to be a positive area let's bring in michael mckee in the headlines. class i am not sure this is as positive as the spin could be. you're right that the forecast is for one percent and home sales fell by two senate -- 2/10 of one percent. this is margin we're supposed to see housing pickup. this is not necessarily great news. homes unchanged. you coulds good news, say it is the supply coming online.

ordinarily, that would not be great news. is suppliesseeing shortages. it is better we have homes for sale. >> ok. i want you to stick around and bring in a special guest. how concerned are you that people are not feeling very good about this in the start of spring. they do not like these numbers. as i do not know if this is good news were not. forecast.6 million we came in at 4.59 so i would say our models are working well. one of the things people have to remember that existing home sales is that we count the sale at closing. day -- you buy the house but you do not close for a month or two months. what this really reflects, the march data, is activity from

and february. i live in chicago and you live on the east coast, anywhere from atlanta, memphis, all the way north. we know how hard it was to go look at a new house. people just stopped in the winter. it was an ugly and brutal winter. i am not that disappointed with the data. it is not as high as it was, but not as bad as people have feared over the last three or four or five months. qwest that is certainly the hope, that as things get warmer, things will turn around. you go back to last summer and last fall, this is the seventh dropped in eight months. october,eptember and we were down. the mortgage bankers reported that the mortgage lending in the first quarter was at a 17 year low.

it is not just a pullback. it is a real drop. we saw that reflected in wells fargo. the mortgage originations fell off the table in the first quarter. something else is going on here. people are concerned about whether or not this is secular and cyclical. qwest during the post-crisis time, perhaps after jobs, that one on for a couple of years. when we are looking at the do you need closely to pay attention? >> this is really important. a key back then, back in the 2003, 2004, 2005, 2007 time, is a bubbleeally did get in housing. interest rates were dropped to one percent. bigger housesying

than they should and were putting no money down. prices signaled a bubble. we crashed. we have come back pretty rapidly. likes are up 30% in places phoenix and florida, las vegas. some people are worried about a bubble and i'm not. prices are still below their peak. one of the things that has held housing back, especially existing home sales, is that there has not been good inventory out there. i do not want to forget to talk about this. the mortgage market itself is a mess right now. fanny frame freddie mac have done 90% of all 30 year fixed rate mortgages. thanks art not in the game and the reason is, would you lend money at 3.8% for 30 years right now?

banks are just saying, forget it. what is happening is we have got a tight mortgage market and that is one of the key problems. it is loosening up here and i do expect housing numbers to get better over 2014. qwest brian, thank you for joining us. our own economics editor, michael mckee. qwest a lot of m&a in the truck industry today, but nothing more interesting than what the lacquer minutes doing. in the of almost 10% botox maker over the past few weeks. he is now teaming up to make a takeover offer. with us to talk about the unprecedented move, our bloomberg contributing editor. gentlemen, welcome. professor, if i may begin with is, how -- i understand it

unprecedented. thisnique and different is than anything you have seen before. qwest it is a major step forward and a great opportunity for the shareholders of both. terrific innovation. the bad news is i think the sec will regulate and make this much less profitable. qwest when you say it will saying forre you this deal or future deals? >> future deals. >> lie is this so innovative? >> you have never seen before a a -- an investor like

bill ackerman, and a company in the same industry as the target. synergies.eat creating difficulties credibility. companies making outside activity events also have difficulties. solves a lot of the problems that others have. qwest this is potentially a game changer for the way m&a has done. if all of a sudden, you can go to the hedge fund manager like the lachman instead of a bank -- becausemate winners, the lawyers are the ones who will get paid here. qwest the lawyers always get paid. the m&a banker the lawyer? >> lie higher and m&a bank and

pay them two percent when he could get this guy put his own money up and do the dirty work. youn investment bank guys through the difficult process of all the different filings, and beats up on the board to resign into the governance issue you want, the sport is on annual turnover. ackerman will know how to call midway through the year, and he will effectively have an investment banking role. they are only putting up capital. they go away and effectively ackerman will shepherd this through the process while the biomedical team and the other side can show clearly -- >> hold on. dimon, and my kicking the behind of my m&a bankers?

case.this is an odd there are bankers involved here. of theon the lending capital, on the financing side. i have not seen anyone on the real deal advisor side. but will end up happening is good firms, he knows his stuff, .e will be able to guide you west how could this go wrong? >> they cannot prohibit it. there is so much attention on hard-corehat a real scorched earth defensive strategy is not likely to work. speaking of marty, he is the urged toster which

change the rules to make this more difficult. qwest that is probably a difficult -- a different conversation. for the time being, it is unlikely they adopt a poison pill. could we then draw the conclusion that no matter what happens, the white knight comes in, whether ultimately valiant has to raise the price, that ackerman wins? >> vasily. just so the record is clear, it is not at all clear that allergan will not adopt -- they may. that will not necessarily be a deal killer. it will just bring them to the table and make them negotiate. qwest it is highly unlikely they exist. the entire upper east side is thrilled to hear it.

realistically, they will go out and look for a white night. , allis merger environment the talks and deals that went through, white nights are not hard to find. cosmetology, it is relatively stable stuff and they are willing to pay up a serious amount. my guess is they will either look for a white night or look for an acquisition or do a financial share buyback. they are too much in play. understandou help us bill ackerman's investment style? you have to have some flavor because it seemed like all the investments are i are some level of government action.

he will get us through. if you're talking fannie and freddie, that is involved in government. herbalife did. . it is so unpredictable. case, you have got the product overlap against botox and dermal fillers. of them have large cosmos of the goal lines, all of which will have to be looked at. >> a lot of cosmetic stuff is .ot regulated qwest correct. less likely to be an issue. those overlapping is absolutely likely. qwest we are a heavy regulatory environment that there will be regulation in whatever anyone does here there is more in the recent areas you identified. under current regulations, regulation will not be a deal

breaker. defense,cialized in in to do a activism. one of the obstacles they raised was the notion bill ackerman, a hedge fund manager, and cannot be part of a group. it is not like when they say nasdaq teams up to make a joint bid, in which they both become operators. class come on. qwest of course. that is why i'm putting the question to a law professor. qwest there is no problem when this deal has been carefully lawyered. certainly, bill ackerman is already filed scheduled -- i do not think so. i do not see it as close to the line. he has not done anything that implicates a government statute for m&a.

qwest this activity has to happen. is number of drug buyers getting less and less and therefore cement prices down. there is overcapacity and inefficient companies and your purchasers are getting more and more powerful. dealing with five major drug buyers. >> he has not taken a vacation either. how about bring break? break. not take a i am tired. i want to go to bed on a monday night. he is into it. qwest thank you very much. editor, he will this next hour. it will cost you more to sign up for netflix and investors seem to be very happy. qwest the center of the world when it comes to movies, it is

like my neighborhood. this is market makers. we on -- we're on bloomberg television streaming live. ♪

>> it is about to get more expensive to launch house of cards. netflix says it is preparing to raise prices by a couple dollars of months -- a month. an earnings report that saw 4 million more customers sign up for the streaming video. jon erlichman is still here in new york this week. east.hollywood comes >> i think it is expensive for

netflix to pay for all stuff. pay this mma said, ok fine we will pay that. they got their way and it has worked out for them. stuff.s a lot of or twose prices one dollars? we're spending on stuff without giving specifics, of course. they do not want to speculate. you arerms of who rooting for, would you not root for the creators of the content? for me, i would say great, let the creators of this fantastic programming, let those guys get paid. >> unless you are a subscriber. qwest than the cost -- >> of course. that is why so many people have added for cable.

it is not like you're paying for the challenges you are watching. >> they learned through the original shows. not all of them had but enough do that people like that and they want to keep doing that to dollar increase for a news subscribers for friends you bring into netflix who are not used to necessarily seven dollars and $.99 whatever. the rightaying it is thing to do but that is what they're doing. qwest it seems those who are addicted to house of cards and are in watching -- binge class i think you're right. only non-nete flicks subscriber in this holding.

he paid for with bitcoin. qwest simply looking at margins, netflix does not make it kind of money. you compare it to time warner cable, their net margins doubled what netflix is our. there is room to close the gap. hbo. take an incredibly profitable business. if they roll out in more markets, it is already like the cost is there. there is a lot of technology and the infrastructure is already there. they are careful about getting to the wrong markets, where the are piracy issues. for a'll be back with us very special interview. more of that and more in the next hour. who does not want a star wars

well,? qwest coming up as the future of ford, who be the company's future ceo. ♪

>> as we told everybody about 26 minutes ago, existing home shells -- sales came in with a decline. qwest less than people were expecting. an interesting antidote, you have to pay attention to her closing dates are. i had not thought of that. if you bought a house in february, it would not show up for another 30 days. not that it is an important

economic indicator, but it it was reported its manufacturing index came out better than expected. >> there you go. the market seems to like it. >> when we come back, a changing of the guards at fort. the incoming ceo with the former president of chrysler. ♪

qwest you're watching market makers. if only you can see it all. you can. in the meantime, there soon will be someone new behind the wheel as america's second-largest automaker. we are talking about ford. allen is paving his way to retirement. credit virtually all the .

job, weof ceo's his expected to be confirmed in short learner -- short murder -- short order. the president currently the assaulted -- consultant for nissan. his mark feels the right guy? >> he has been groomed. in thet a career background and jobs he has had, he is the right guy. this is the right time, the best time for a good transition. this'll be the beginning of a great new era for ford. qwest why do you say the right time. is the job done, effectively? >> no, he built a foundation. he has gone through a grade

eight year time of creating a culture, and now they have established hurt -- perfect metrics in every part of the business. they can start on the business of not just solving problems but making history. this will make ford become a globalrong leader in the auto industry. qwest alan mulally gets to leave on an -- on a high note. he just handed matt miller to mass the raptor. he feels like, who done it now. microsoft, everyone, it was public, new that the ceo, he was talking to them about it as well. that got people thinking maybe it is time for a change and we should bring the change forward. he was planning on staying through the end of 2014. add to it the fact allen may have a serious job up his sleeve. he will not play golf at augusta or the detroit country club.

will keep working. 68 years old. it was said the guy was 48 years old. he has a lot of energy. qwest a few months away, why not go to microsoft? alleems like this guy was in with ford. a few months later, actually -- >> he may not have wanted the job. you have to ask yourself, did anyone outside of microsoft want the job? may be, who knows? there another job in microsoft? another job at a big company? preparing for 2016, a presidential bid? he just laughed there he obviously did not answer. qwest let's go back to you. you know these men. you know mark fields.

how will fields be different than the ceo of ford? >> he will be his own man. i guarantee that. qwest what does that mean? hallett is his management and executive style different? >> he is a businessman, a strong and sharp businessman. greatk he has been a leader and brought a lot of culture into the company. mark will now take the company and make it a high-performing organization where the foundation has been built there it i remember following the great leader at toyota and my first thought was, do not screw it up. not makes mark will change for the sake of change to put his imprint on things. he will take what is there and make it better. that is what he has been shaped to do. allen has got him in a position to do that. qwest i know you have not seen it yet. i looked at headlines. he said to want voice and expanding manufacturing and said

to have lined up post ford positions. do you think that is true? >> probably. a lot of it is speculation. we are talking about things that may be happening. .ou said he is young and vital he will not be ceremonial. if you remember, he worked with president obama. he has got the experience going through a terrible restructuring time in coming out ahead. what he can do now is he can pick what you want to do. we will see that soon. >> other job aside, for him to keep a position on ford, he has been very close to bill ford and has become very close to other members of the family. this is a family run company and

makes it very different from the other giant corporations. it really affects the strategy and the investment thesis. i wonder what you think about bill ford leadership. allen gets all the credit. leader, a great turnaround died. bill is the one who brought him in. bill is still the chairman. there workingl be with mark. bill ford has done something right here. absolutely. that is the start of the crisis. it is not just allen. wonderful bench. the talent they have, the biggest problem is to make sure leadership keeps going forward. bill ford will do that. very easily, with mark, they work well together. family company. look at the global auto companies that continue to do well. i have always put forward in the

same category as you did. it opens the door for allen to continue a role. they are at least talking to them about continuing a role in the presence. that will be natural for him. dr. toyota is still involved in toyotas operations years later. momentum andf perhaps with alan mulally joining the board, we will see how that pans out. what will be screwed up most easily? qwest the biggest challenge will be leadership and keeping the ford teams. going forward. he will now be able to graduate and not be a manager as much but leave the organization of this is an strategy.

business sense and not survival, it will be a challenge because now he does not have the crisis mentality to form the organization going forward. it will have to be his own leadership and his own strategic -- >> he will be able to do that. qwest thank you very much. go ahead. mention,ing i want to i am the president of transportation, my main job. i wanted to make sure that without there. notintroduction, you had mentioned that and it is important to me. qwest if it is important to you, it is important to us. thank you so much for joining us this morning. no better person to get great insight on the subject. >> indeed. and our own matt miller, we call him the car guy. >> we need to put our heads together and come up with something. class we will work on that

during the commercial break. thang up, a lot more movies. we blare from the cofounder. stay with us. ♪

qwest the 13th annual phil kessel is in full string. plenty ofo kick up cinema buzz and of course they have. with janespoke rosenthal, who cofounded the film festival with robert tamir following the attacks at the world trade center. stephanie asked her, what has the festival become in the past of years and here's what she said. class we feel fortunate we have been able to continue the festival. the first year, we did it in 120 days and i do not even think they would have movies. the festival has devolved into good stories for diverse audiences in the world, right

here in new york city. it is now not just movies. class you have got handoff, events, andve people through the destructive innovation projects. sxsw? -- >> it is a great comparison. it will turn into something special. yearsou think about 12 ago, our reality was vastly different. 12 years ago, there was no google or youtube, spotify, instagram. we were not talking about tweeting. and how youunicated got your message out there was vastly different. all of these different platforms, they are all different ways to tell a story. as storytellers, we have to embrace that. these platforms threaten the institution? have a

lowered the barriers of entries? so they start ups could have a ig audience? >> anybody could now have a platform. that is a good thing. films oroduct or the the short films, is it better because anybody can have a voice? no, because people have to learn how to edit and learn the art of telling the story. that is the will that a lot of what we do. we tried to focus. the interesting thing for us is when we do something like our storied program and our transmedia program. we are taking technology and storytellers and putting them into seeing the product that comes out of that. >> you have an online edition of the festival because you want to broaden out who you are

reaching? >> no, not everybody can come to the festival. not everybody who comes to the festival can come to the theater. hopefully, you will be able to see it online. there are different types of programming you can see online. with newng a project video artists, new online artist, and to spotlight and curate that for people who do not want to search around and do not know where to look. really being able to look at new talent no matter where they are in the industry, spotlighted, and watch the talent grow. >> you sold tickets for it. year i it was the first could. we have a new partnership with msg. they own begin. still able to sell tickets for the first time through an

opening night. also, a product of the film institute. a proud night for all of us at tribeca. it was our ecosystem, our institute, the project came out of tribeca asset program. and landed opening night at the beacon. brand? is tribeca's sundance has an identity. what does tribeca represent? about spirit, individuals. looking at trying. -- class it gives you -- >> it gives you a ton of access but limits. when you have just her voice, you have complete independence to do whatever you want. when you partner with someone as big and influential of msg, does

it limit you? think so.t i hope not. it will really give us the backbone, things we have to re-create every year. an amazing sponsorship team, it gives us additional sponsorship, stronger marketing, a wider reach, and he gives us different venues we have never had before. was my interview with jane rosenthal. the festival is going on right now. it is a big success story for new york. in terms of how big festivals have become, look at toronto. the toronto film festival scours are really the next oscar pick. sundance is on for a super cool -- the question is, what is tribeca's identity? the fact that they are trying to be sxsw, i would say toronto, he to give you credit, kind of seems to me like a champion

here. >> maybe it has to do with timing. toronto comes at the end of the summer. is --when everybody building a lot of buzz behind the films. now, we are post-oscar. it does not feel it does not feeling the right time to roll have a lotthat you of buzz going into january. >> it is super documentary focused. a rows the second year in they lead with a music documentary and they make it farically acclaimed, but as as distribution and dollars, it is not the same kind of narrative story telling. best place ite will end up in cnm -- cnn on prime time. back, new york's one percent. who are they and what does it take to make the exclusive cut? ♪

>> welcome back or we talk about new york city's money class all the time. who is that one present and what o they do for a living? scarlet is here with the morning answers. where do rich people make off with the money. businessrcent, mostly owners and lawyers and accountants. dated numbers. how these interesting guys made their money. you know they talk about using the money to make money and having their money work for them. the majority is doing that but 40% is from actual wages. a quarter is from capital games income, you have

, and greg highlighted all these findings in his column. for 2011t is this is and is based on -- a lot of rich people make it a point for a certain number of days. classless as it take to get to the one present. >> in terms of income, thousands of dollars in the city. the average income is a lot higher. 2.5 million dollars. -- in terms of total income, 91 billion dollars. it makes up 36% of the city. among 35,000 people. >> nisei for the most part this is owners, are they in a

specific industry? class it is not clear. he you never know. cleaner, theydry are not preparing all their assets. >> point worth making is how much harder it is to crack in the city than nationwide. class it may be easier to crack the one percent, but it cost you so much money this year so maybe it does not matter. to 2010 figures for the irs, it was 370,000 roughly for 300%. substantial difference. the average was $1 million in america. class do know someone who makes 2.5 million in new york? class there are many who do. it is ridiculous.

>> once you factor in private school tuition. class a caregiver and only one person in your house should work. class anybody who feels like that needs a savage beating. that is what my little brother would say. check forality everyone in new york. scarlet fu. it is time for bloomberg to take you on the markets. if you do not make enough money on your day job, maybe you can investing. >> it is your kind of day and sunny outside. what can we chalk this up to. it is hard to say. we have seen stocks trending up. we saw home sales figures of better than expected. a broad-based one in tech land. maybe there is a recovery. there was a big selloff a couple of weeks ago.

class since scarlet is with us, i want to talk about one of her favorite companies. harley davidson. after reporting first-quarter profits, it topped analyst estimates. motorcycles of increase. i cannot dig into the rationale of it. i do not know about the two of you. suburbs, have a motorcycle in there. why do you think matt miller is in the suburbs? harleys fork about a moment. allergies are searching today. why will ackerman is teaming up -- a hostile bid. we will be covering that the next hour. up six percent as well. still relatively more expensive they wills yesterday.

have to come up with cash. especially with a poison phil. ♪

live from bloomberg headquarters in new york, this is "market makers." showdown-theurt arguments are about to start in a case that may determine the fate of online video service aerio. >> captain america made darth vader. a disney studio executive who has to manage those rounds under one umbrella. won't have that sinking feeling, the silicon valley entrepreneur will be ready for the next tsunami and is building an escape capsule. that's right. leave it to the rich people.

welcome back to "market makers." tore is a lot we are going dig into in the next hour but let's get you to the newsfeed. well-known activist investor bill ackman has botox maker allergen in his site and is joined forces with valley pharmaceutical to buy allergen. it is valued at about $46 billion. he already owns 10% of allergen shares. comcast is defying the trend in cable tv. the country's biggest cable operator is adding video subscribers for the second straight quarter and comcast reported first quarter profit that beat estimates. the supreme court has struck a blow to supporters of affirmative action. the justices upheld the michigan ban on using racial preferences at state-run universities. the vote was 6-2. >> right now, the u.s. supreme court is hearing arguments that

may decide the future of television as we know it. at odds is the legality of aerio and the legality which the big broadcasters say infringes their copyrights. ceo.oke with the aerio what if you tell you? chet said that he believes he will win this case. you spoke with barry diller who backed aeerrio who spoke about this case. he said it's more of a 50/50. this is a david and goliath fight. goliath aserio and the broadcasters, abc, cbs, nbc and fox. they say aserio which retransmits broadcast signals is stealing copyrighted content but aerio says we are like the antenna on your roof. we are just transferring that

data to customers. yesterday hechet and he said he is simply an equipment provider in the cloud. >> it's one consumer, one stream, one file, all things that are perfectly legitimate and millions of people do it today. how could it be wrong to do it in multiple locations? people make money selling and leasing equipment all day. nothing about any of these things is novel or illegal. say no way,ers know-how, this is copyrighted material and they spend billions of dollars making that content and they need to be paid for it. i had a representative for the broadcasters this morning. >> this is what the essence of what copyright law is about. the broadcast network spend billions of dollars every year creating content and acquiring

content and marketing and distribute in content. our broadcast television programming is the envy of the world in part because they expect to get money from it. they are not doing it as a public service. for interloper to come along and grab all of these signals and bundle them and sell them and make money off of them without compensating -- >> give us a sense of what is going on inside the supreme court right now. a high court trial or case is not like your typical trial, certainly nothing like a jury trial. it will be the nine justices hearing the opening arguments. they are running a little bit late so they are about to make their opening statements. you got the broadcasters who are going to go first, then the solicitor general will get about 10 minutes time to speak about the case and then aerio will follow-up. as usually happens, the justices

will ask tons of questions and sometimes it can be 70 or 80 in one hour. then they will go to their chambers and tentatively vote on this case and then a formal decision will be made or will be ofued sometime at the end june, before summer recess. >> i know you are eager to find out what is going on inside the court so we will let you go. aerio case,on the we are joined by chris sprigman and edmund leak. blumer television has a distribution deal with aserio. >> this is a great case for copyright nerds because it is 50/50. harry diller is right. aeruio says we are providing antennas for customers and dvr is. the dvr is a long car but it is just a digital video recorder.

the broadcaster said they are like a cable system. there are support on in the copyright act for both interpretations. the supreme court will have to pick one. i cannot tell you which one they will pick but it has tremendous implications. rio is what dropbox does or any other cloud service does. thisrio is ruled illegal, -- the supreme court will have to find a way not to rule all of cloud computing illegal. hold on, i have a question. o tof you liken aeri dropbox, how exactly. ? they take stuff available for free under federal license to use public airwaves and put it on a dvr-like service and make it available to you in real time via a streaming signal. >> correct. >> if i buy a piece of music and decide to store it on the cloud, i have purchased rights.

isn't that a different agreement between me and the music seller then me and the public broadcaster? >> that's a great point. >> i think it should be but the broadcaster saying it's not different because every time you stream something, even stream of right to purchase, you create what the copyright law calls a public performance. there are millions of people who stream content from dropbox and other cloud services and these are all- >> where does the supreme court decision from 2008 that validated the use of remote dvr services for cablevision fit into this? that is kind of the same as dropbox. not a supreme court decision. that was a circuit decision. rio's claim is that they are creating private performances. they are saying it's up to the consumer for them to grab the signal as opposed to them pushing it to them. that is the line of argument

thatasereo will present. hinges on these nitty-gritty legal details. the consequence is one way or the other is billions of dollars in retransmission fees. cbs is the most watched network area they get an average of about two dollars for every cable or satellite environment that picks up the signal. that's money that could be lost if aereo wins. >> what are the consequences if they win? from your perspective, is it a game changer? >> it could be, absolutely. >> for home? >> for the cable companies and for all of us. the cable companies, if they are allowed to operate, they will lose retransmission fees they would otherwise get. cable companies -- >> you mean the broadcasters- >> the broadcasters will lose retransmission fees and a terms of all of us, the question is whether the stuff we do on the cloud will come under copyright

suspicion going forward. >> how do i win? win?does the consumer w >>aereo says we are offering a the eightndle than dollars per month which is cheaper than your cheapest cable bill. >> when you get your cable bill at the end of the month and you look at it every month, are you kidding me? what else are you going to do? is a bundling aspect to this as a sideline argument to what is going on. all the cable companies so you cable packages and they are selling it the way the programming is sold to them. in other words, time warner will bundle together a bunch of turner channels like tnt and cnn into one package to the distributor who sells it in a similar form to the consumer which is why you can't pick and choose one channel over another.

asereo has a smaller bundles of their creating a de facto smaller bundle. >> given the fact that legal possible exists, is it that the court could split on some aspect of this ruling and redistribute the airwaves in a dvr format but not it would simultaneously in live streaming? >> it's possible but they are more likely to say that aereo never paid for the content and cablevision did so we can make we can keepown and other cloud computing services going. the supreme court is free to make it up as they go along. i would expect if they are going to thread the needle, that's how they might do it. it's only going to the eight

justices hearing the case because alito refused to hear the case -- recused himself. himself.ecused do you have a sense of which way he might rule? >> i would say it will be 5-4 against aereo. the two justices likely to roll be justice ginsburg and justice breyer who are liberals but they have different views on copyright. this is not really a conservative versus liberal argument, is it? >> it's not elliptical. liberals and conservatives split along different lines and there are intuitions about what consumers should be able to have access to. >> people have been talking about the technological implications of this ruling. are all of us at a disadvantage by the somewhat antiquated nature of the two

acts at issue from 1976 and in 19 92 copyright act. >> the 1970 61 will drive the decision. when congress passed that, they did not have a glimmer this would exist. the 1976 act and the internet comes in is widespread by the mid-90's and the changes everything. there is momentum building for congress to take another look at copyright law and try to align of the way the internet has transformed everything. >> the other aspect is these retransmission fees the broadcasters have been getting are still relatively new in their business. not too long ago, they were not getting those fees. it might have been less of an issue. it was less than 10 years ago. it has to do with what they call it must carry provision or non-carry provision. if you have to carry my signal, you don't have to pay me those

fees. if i get rid of that provision, you do have to pay me. they negotiate for those rates. it's a lot of money they don't want to lose. it's a relatively recent phenomenon from a business standpoint and it is why they're fighting so hard. the facthat matter, that the broadcasters have the right to collect retransmission fees for so long but did not do it until five or six years ago? >> i think it does and even if aereo survives, i don't think it will material her the cable companies. the cable companies are making money off of subscriber fees. the broadcasters are making money off of ads. it is not as if this programming is being provided by aereo and no one is making money. there is still money involved. >> thank you both for breaking this down for us. >> when we come back, he has the portfolio that includes

everything from princesses to superheroes to jedi masters. you will hear from the his knee studio chairman alan horn. >> bill ackman is only one part of the story of data pharma. this is "market makers," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. all of our can catch good stuff on apple tv and amazon fire. ♪

you are watching "market makers." it's time for some "bloomberg ch headlines. at&t is trying to draw viewers away from traditional television. they have hired the former fox broadcasting executive and will root -- will invest $5 billion to build online services print amazon sales are taking it. a new study found that in states household the tax,

reduce their amazon spending by 10%. amazon collects tax in 20 states. leonardo dicaprio may star in an upcoming movie about steve jobs. acquired the rights to the recent biography. the studio is considering him for the lead role. is likely to be danny boyle who won an oscar for "slum dog millionaire." 18 months for all the star wars geeks. the seven film in the franchise is set for release at the end of next year and none of our young male producers can wait. our senior west coast correspondent and star wars enthusiast jon erlichman sat down with one of the men behind the film, alan horn, chairman of walt disney studios for the business of entertainment breakfast.

i know our producer had a star wars bar mitzvah is thrilled. >> geek out. disney paid more than four oh yen dollars to lucasfilms to acquire the world of star wars and they said we are going to do 2015er three starting in and 2017 and 2019. the first film takes place 35 years after" return of the jedi," maybe making available the old stars. >> one more time? we could see harrison ford? >> yes. that's what the internet tell us but disney will not tell us anything. theyked alan horn who said are almost done casting. i asked him to elaborate. >> it's almost complete. not ready to announce it yet but we will shortly. >> you had said that shooting it

started. >> we did second unit work in other dobby and other places because we have all of these locations we have to film -- in added debbie. abu dhabi.y -- we have to go to the places that give us the right look and feel. we have not commenced the main part of principal photography. >> primary location is pine wood in the uk's and abu dhabi is another location? >> yes. >> with this first film, initially the plan was to get it out in may because that's when star wars movies come out. they were not ready so they moved it to december. i asked him with the next films that are coming, what the lan on the release would be? >> does december make more sense? for enthusiasts, it is christmas

season. think of all the products they could dump into my house. >> you should go work for disney. you can help them with the marketing. absolutely in the same way the summer makes sense. >> are these all december releases? >> no, we are not sure yet. been made and we may revert to that but it depends on the ratings and where we are. the first one will be december 18 of 2015. we will start with that and see. >> there you go and he said maybe the budgeting per film is in the 175-$200 million range but did not want to say anything. they don't like to say a lot about "star wars." >> why? >> because it's an important brand and people are passionate about and have many opinions about it. and this is disney's first kick at the can. >> exactly, a better rollout

might be to let it come instead of trying to steer fans in one direction. >> this raises the point you were making earlier today. do they need to build it up at all? >> there are so many "star wars" super fans out there. >> things like caste become important because if you put leonardo dicaprio in the lead, thinkne will say i can't -- i can't not think about him so you will see some lesser-known names. possibly. that's what the internet tells us. >> it's so exciting. >> stephanie is so excited. >> i love that. in theprincess leia bikini. >> there are spinoff movies coming. chewbacca y to bring abnd jabba the hut back into my

life, i will pay to see that film. we are talking the business of entertainment. >> coming up, dealmakers are working overtime for novartis. it is involved in $28 billion of buying and selling today. we will have that when we return. ♪

>> we will be back in a couple of minutes to talk about government standards -- >> we will see a federal contractors really got hurt last escape -- the great

tsunami in silicon valley, this entrepreneur has an exit strategy. the only happens to superrich. this is "market makers," on bloomberg television, streaming on your phone, your tablet, and bloomberg.comand now available on apple tv and amazon fire. ♪

♪ live from bloomberg world headquarters in new york, this with erik makers" schatzker and stephanie ruhle. >> welcome back to "market makers," i am stephanie ruhle. >> and i'm erik schatzker. my ears are bleeding because she keeps cracking her knuckles. >> if this is the worst habit i have -- this is not even close. big news in the world of big pharma. bill ackman is teaming up to take over allergan, the maker of glaxosmithkline and --announced their own deal.

i want to discuss this with three experts. bloomberg's drew armstrong covers the industry, cristina alesci knows deals with anyone in the house and coming back as a hedge fund manager and director at the columbia university business school. that you have been watching this webcast, with the speaking right now. >> what he discusses is a very done and dusted deal. you can see his involvement in every step of the process. this is a fairly compelling and devastating presentation in terms of the hopes of maintaining independence in part of their takeover target. we have the financing lined up, yes, we will observe every bit ourselves, weisk will sell from our own portfolio requires.he fpc

step-by-step he has gone through and laid out a very powerful case as to why they should do it. but there is still the white knight issue, they made it look like it is a very attractive product for someone else. what they showed is also a very large commercial for maybe someone else, johnson & johnson, third in the space might look into them. allergane business of has nothing to do with government subsidies. a huge percentage of this is 100% cash, cash payout. this will be an attractive morsel for other countries besides valeant. >> and now the bankers are working overtime to find a white night? x this definitely puts the company in play. >> thisdefinitely -- definitely puts the company in play. andhave shyer in ireland,

you have a great tax benefit their and we have seen this before in the pharma industry and we have seen a precedent for this. but this is not a slamdunk for ackman or valeant at this point. they do have other options but this is a watershed moment for activism, like the monitor last night -- this really legitimizes them, they are partnering up to make a hostile bid for another strategic. this is unprecedented. >> you have to find the right partner and valeant is that partner. it is not like teaming up with pmg or exxon, he is a former mckinsey reporter who was taken from goldman sachs. and it a month ago, erik said that with the ceo of valeant, and acquisitions are

their style. listen to this. >> we have done our research on development and total and for the last decade or so this has not been positive for the industry. so we make a much better use of our capital -- buying products that are approved by companies that have approved products, and grow that way. >> you know, drew, this is a good opportunity to bring you win. you cover the drug industry. balanced approach to intellectual property is totally different than anyone else in the industry. that is what they are alluding to, that they do not believe in early-stage development. they have these trials to bring mature drugs to market, let the small companies do that and we will buy them up. >> that is there strategy, buy it and sell it and valeant has outlier in the drug

industry, like this bang of vikings. what they have to do is go out and look for a deal, we saw this with the activists where it -- where valeant may have approached them, they did the four a steal and now we are going to speak about allergan no w, if they want to stay independent do they have to go out and buy somebody? you have to fight the vikings and lose or join the village and try to protect yourself. >> there are unique challenges to every company in pharmaceuticals right now. theseoblem is you have big, established companies that have already wanted to be innovative, they wanted to have innovative technologies. but the biotech stock index has just 10 on fire. since 2012. they can't buy those biotech companies, so they have to look at other options. what are they going to do? you look at the deal today, this is an introspective play. let's do what shareholders have been wanting for us to do, get

out of the businesses we are losing in and get down with winners. >> and maybe wait for the activists to show up. >> may be. >> in this case it is almost different, he has decided to not even play it. he could be rolling up taco bell in kansas. he is not particularly interested in anything with respect to r&d. 85% of the products do not have a patent. so renewed lenses, people are very perceptive about what they put on their skin and shove into their eyes. >> if you look at what other countries spend on r&d, for approval, you can get that money back. >> the idea that this is a cash pay business, let's say you are a pharmaceutical maker, with an $84 per year hepatitis drug -- and the u.s. government is upset, if you are getting paid not just through consumer cash

that is coming out of their pocket, you have all sorts of other concerns. you can be in the cosmetics business, a nonregulated business, that is potentially a much higher margin is this with a lot less political risk and higher pay or risk over the next few years. when he was talking about all of the product line across eyecare he talked about six percent growth in this sector, 78% growth in that sector. none of this is the explosive i have the cure to hepatitis c -- but this cost you $90,000 per year to make this happen. he talked about an eye cream that is $250. doctors will share this for $500. this is an all cash business. >> we could see someone else step in here, another white night. what is the likelihood that carl icahn could roll up on his horse. no one likes messing with ackman's game more than carl.

>> he may be receiving phone calls, would you consider helping out with another firm. a big holder in this -- there is another big hedge fund. >> carl did very well with forest. labs, one of his big, signature turnovers. you could see him get along for the sport of bothering bill, i think it is more likely to be a legitimate investment banker deal calling up. you know he is getting 53 phone calls today. >> the bankers are sweating it out right now, the fact they don't have a seat at this table. this is a feast on wall street today. >> i was thinking about it. in thisn's working role, what would any banker bring to this deal. -- >> they are trying to get on the other side. to provide advice to allergan. --they ackman is aboard

don't need you anymore. >> especially with the financing lined up. alledeli --professor at the columbia business school. >> coming up, not all government contractors to get hit on -- the numbers only come back. >> if you missed any of our interviews, foolish under par, b can watch us on apple tv and fire tv, and streaming online on the bloomberg app. stay with us.

>> welcome back. ons is "market makers" bloomberg television. 2014 was a tough year to be a severance contractor. many of the company's top suppliers took a big hit last year. peter cook has more on these exclusive rankings. peter, i think back to 2013, and the first word that comes to mind is sequestration. is that what this is all about?

>> it shows that there is some real pain from sequestration last year. you can see this with bloomberg government, 200. the top list of federal contractors. it does not mean that contractors do not make plenty of money working with uncle sam. even with a tight budget some companies even increased their revenue in 2014 -- 2013. --y paid $251.1 billion on 462.1 billion last year on contracts, the lowest total since 2004, and in inflation-adjusted terms, the top 200 had 65% of the money and the top companies saw their contract dollars actually decline last year. and of theon at work 94 that saw increases, 21 saw growth in numeral for specific markets. cyber security and intelligence. that is where the money is headed in the future, the places

where a lot of these countries -- companies are now investing in the future. >> peter, which company or supplier or contractor does the most with the -- most business with the federal government. >> for the third straight year it is lockheed martin, the defense giant took $44 billion in contract money, followed by boeing, and the other prime defense contractors, they held every spot within the top 10. mckessonrvices company snuck in at number 10 but even that was defense-related. they are the top contractor for the eva, the top supplier of prescription drugs for veterans. the numbers for lockheed martin are $44.2 million -- billion dollars, the federal tentacles almost reach anywhere in the federal government, they are number one in energy and the transportation department. so you really see that lockheed martin is everywhere and it will

be hard to knock them down from number one any soon. >> the exclusive numbers, that is our washington correspondent peter cook. for more details on those contractor rankings, you can go to the bloomberg government website. coming up, preparing for the day he hopes will never come. -- is getting ready for a sin tommy. a tsunami.ready for ♪

>> start up lunch for newer

chris robinson -- start up entrepreneur chris robinson has never -- before and he says a tsunami may hit silicon valley. he has been spending time building a 10 foot high, eight-foot wide waterproof hide in his backyard. toomberg went to paulo alto, check out his progress. ♪ >> when i started, i just bought 20 sheets of plywood and just started. i don't know how to build a boat. project for me. one of these is just a cylinder, and i just put them together. wall, is a survival boat made of plywood -- and you can put 10 or 12 people in there. i got the idea from working on

the tsunami ball. i was on a startup incubator in silicon valley and we had an interview with an astronaut who may fall on earth and we must stop them because they could create tsunamis. you have people and you wonder if they are ok, this was a hard thing. the idea is to design something that will be comfortable on land, so that if you live in a place that has tsunamis it will be in your backyard and if you hear the alarm, your family can climb in and you will be ok. you can put this in the backyard somewhere, and it is possible we will try to do a deal where folks can come in and spend the night. i don't know what i have spent so far. i tend to look at this as if i am taking my retirement early, as i have the ability to jump up and down and lift heavy objects.

i have worked in a successful start up with the boat, the biggest one was with paypal, and at 1.i was with facebook. point i was with facebook. there are those who are building spheres in japan that are cost-effective that i did not know about when i started the project, but this is more like an art project. >> this is super cool and interesting. >> but this is an unusual so -- of -- this is an unusual obsession. >> that is crazy. >> if this guy worked, he is a start up guy. what if he is in san francisco for the day and the tidal wave comes. >> is unemployed neighbors are going to be like, suite. jump in the pod. that guy is at work. >> it is a labor of love. >> this is an art project. that is it. >> that will do it for "market

makers" today. >> tomorrow you have to tune back in to see the chairman, barrett gold has just been holding merger talks with newmont mining, to form a gold miner, the likes of which no one has seen and we will talk to peter monk to find out if a deal can be revised. ♪

>> we are coming up on 56 past the hour. that means bloomberg television is on the markets. i am julie hyman.

we are diving into derivatives and the option inside. joining me is james -- on the markets. six-day rising streak that we have seen, as usual, some of the most actively traded ftq's, the on the s&p 500 and the nasdaq. what do we see there, if you look at the options, does this confirm the mood that we see across the industry? >> unfortunately, we don't see that in the broader markets that we have seen particularly over the past two days. the reason is because the volume has been relatively thin, both yesterday and today and yesterday was the most heavily traded day of the year. sny --and onean thing that the options markets are telling us that they are moving at about $1.40 by this friday.

this means it could go up into the region of the all-time highs. it can be kind of shaky here because the last two days have been higher with volume, but short-term protection is cheap for any investors looking to buy. >> thank you for that perspective. i want to talk about one individual stock in terms of options, and that is netflix, after the company came out with earnings that beat estimates, they say they will raise prices for new customers. the stock has come down a lot recently, and is sing a big upward move on the back of these numbers. what do you think is the way to play this in the options market? there is morehat upside? >> i do think that, this is up about 20% right now and market makers had this at about a 25% move, and it could rise another dollar $.25 by friday. -- $1.25 by friday. they want to raise their prices

and that should help that, and the international business it seems to be going very successfully here. they beat in -- they beat estimates for new subscribers and are growing at a much faster pace than they thought that they would. >> do you worry that there is now another catalyst, do you no realat there will be new striving it? >> i don't think that there will be much new striving this higher higher,ews driving this but i think part of this is the momentum stock, and i think that they felt harder than they should have. this is one of the stronger names, fundamentally, i think this is definitely going to test higher, i the end of the week, and getting to the market maker implied move, of $380. >> one other company coming out , with taco bell and pizza hut and kfc.

the focus will continue to be on china, where they had been struggling but have seen improvements recently. what do you look at for the earnings and how do you see those? >> the only set up is to the flat or to the short side. they looked very weak and are facing headwinds out of china. cost of, the rising food could be a drag on their earnings this quarter. we saw the mcdonald's report and they saw a big drop in same-store sales here in the u.s. that should not bode well for yum!. i want a downside target just south of $72. i could get the weekly $72-70 three dollars but if the stock is below $72 on friday, i will triple my money. >> what if it goes up? oft if china came out ahead estimates, what is your risk? $25, whether they

rally one dollar or $100, i will never lose more than that $25. my risk and reward is very well defined here. that is the beauty of options. >> we will be watching those numbers and keeping track of how you did. from chicagog us on the markets today. we will be on the markets again in a couple of minutes. "lunch money" is on your way next. ♪

>> welcome to "lunch money." i am adam johnson. take a look at the menu, here's a we have today in motors. .or decides on a success we have got that and all more -- and so much more from the beijing auto show. world, the vice president is talking tough against russia. in movies, we will hear from a cofounder of the trifecta film festival on the most anticipated movie of 2014. finally, in wild card, what's -- what makes the burlesque star so