>> live from pier three in san francisco, welcome to "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i am emily chang. before the airlines and the private space race richard , branson made his initial fortune in music muslim dimwitted things about apple hill to buy beats, and when virgin galactic will be ready for space travel. fcc chairman is revising his plan to offer paid internet fast lanes after backlash.

it is trying to offer assurances. to the people you follow on twitter sometimes gets annoying, but you're not ready to on follow them? you are allowed a muting feature that will allow you to select tweets and hide them. muting can be turned on and off. the new app, square order, is a better experience for users and square wallet. right now it is available only in new york and san francisco. they have taken what they have learned from wallet and built it into square order. now to our lead story, it is a

real that could shake up the paid tv industry as we know it. att in advanced talks to by directv at about $100 a share. they are tearing up for a 12 month regulatory process. directtv shares are surging in after-hours trading. cory johnson is here with me in the studio, and alec sherman is with us from new york. at this point, what can you tell us? >> we know these companies have been talking for a few weeks. at&t is interested in expanding their business and buying direct directtv, operating direct tv as a unit of at&t which would be run by direct tv management. in the long-term, it would not be the current ceo who would retire in 2015. he has been operating without a

long-term contract. the fact that he would leave is not a surprise that we are getting specific details. up about $100 a share, valuing directv at about $50 billion in equity value. what is interesting about that prices that direct tv has shot up in recent weeks about the speculation that this could be happening. these rumors have been around for a while. we even wrote a story back in 2010 talking to at&t ceo who said there is industrial logic and buying direct tv. the price tag he has to pay today than the price tag he would have to pay in 2010. >> more people want faster internet. why at&t, why directv? >> they are facing this slowdown

in customer growth. dish has lost several subscribers. they have seen the growth rate, off nearly a million a year to hundreds of thousands a year. that is a big deal, directv has had more success in latin america. it is this effort of consolidation. it also suggests that the justice department and the sec seem to be more pro merger that may have been in the fast, and maybe it is the time to get a deal done. >> on the regulatory environment, obviously at&t tried to buy t-mobile, and that did not work out. why does at&t think he can get

this deal done now? >> it is much different in that they are not taking out a competitor. at&t -- i guess they are taking out a competitor in the tv industry because they offer uverse. in that sense they are overlapping, but it is not the exact same business like it was with t-mobile. this would be an expansion of paid tv for at&t. about 5 million plus universe paid tv subscribers today. they would theoretically getting cost savings in the paid tv world, similar logic to why comcast and time warner cable hooked up. you want to get as big as possible so you have as much leverage over the content providers that have been charging more and more money for their content. you get bigger, you get a cost savings in that sense, because you can push back on those programmers a little bit. the big question that we want to

look forward to is why did at&t decide to go this route instead of buying dish? they have a wireless spectrum. if they were to take the plunge into satellite-tv, they would not have done it with dish, they like the directv better about possibly because of the line american business. we want to see if this shakes out if it does get done, what a says about that calculation. >> you take a stab at it. why directv and not dish? >> directv is growing, dish is not. buying a company with growth is an interesting thing. as a spectrum goes, not all spectrum is created equal. there is talk of heading an end to available bandwidth as early as next year.

dish might still look attractive. >> something we will continue to follow. thank you so much for that scoop. we are following phase look as they take steps to open a sales office in trying to work with mobile advertisers. this is according to people with knowledge of the matter saying that his book is in discussions to lease space in important financial center which is located in beijing's central business district. this is one of the last large market that remains untapped, and facebook has been blocked since 2009. so, is this at all surprising to you given the fact that facebook is completely blocked in china, and most people think it is not going to be unblocked in the near future? >> i do not think facebook is

going to become accessible in china anytime soon. but this move does not surprise me because a lot of chinese companies are wanting to become global players. they're looking at going into the united date, and will probably going to market like indonesia where facebook is strong, and they want to advertise on facebook to sell their products. it is key for facebook to be able to cater to the and open up a sales network within mainland china. having chinese companies sell through ebay overseas, i think that is what facebook is trying to grab a little bit of the business from. >> facebook cannot get in, but they can get money out of china. i wonder if this shows the power that is this is haven't china with the chinese government. whether they are able to get enough weight on the chinese government to allow facebook to allow them to use the tools to

their advantage. >> what you're going to see as more and more chinese companies, as they harbor ambitions to be global players are going to push the chinese government to sort of re-think their internet policy right now. the policies of censorship and banning certain sites are definitely hurting a lot of chinese companies. being able to generate revenue, if you do not know how to use facebook or twitter, how are you going to be able to penetrate the american market and get close to american everyday users who use facebook four hours a day? there's going to be more domestic push toward the government for reform, but there will not be any access toward facebook anytime soon because the government is still quite concerned about social instability. >> we know that mark zuckerberg and sheryl sandberg have been to china a couple of times. what kind of wranglings needs to be going on behind the scenes to

even get a license for a sales office? >> facebook has been smart, and and said that he was to be in china, and he wants to adhere to the laws of the chinese government. he has taken an opposite tack from the google people. sandberg has met with people in the administrative industry that is in charge of overseeing this. >> we will have to leave it there. coming up, we have sir richard branson. ♪

>> i am emily chang, this is "bloomberg west." we sat down with sir richard branson for an exclusive interview. he talked about a lot of things in his history. >> is an interesting guy who's

been in a lot of interesting businesses. everything from financial services to airlines, to train, to the music services industry. the notion of what is the next thing going to be is interesting. what does he look for in interesting new businesses? >> we're having a lot of fun. it is hard work, but later this year we should finally succeed. virgin galactic had the opportunity to be the umbrella for the rest of virgin group. >> i was determined not to ask you when because i imagine your sick of that question. what are the big hurdles to get over to get into orbit? >> we are hopeful that we are almost there. we have to put all the pieces together.

we're not going to go into we're 100% sure that it is safe. i would be very disappointed if it did not happen this year. >> i was there when they ship one won the x prize. >> i'm still fascinated by space. we are this tiny dot, and spaces there to explore. it has so many possibilities. not just the possibilities of putting people into space, but what we can do with satellite from space, and how that can transform things back here on earth. what we can do one day with intercontinental travel. the sky is not the limit. >> this is not just about space tourism, but that is the beginning.

>> 80% of people want to, would love to go to space if they could afford it. the market is enormous for space tourists who want to go and experience space travel. that will help us fund things like point-to-point travel, like our satellite program, and help us fund hotels and space exploration. >> i went on a zero g flight a few months ago. it was really cool. >> i have done that. just to line the bottom of the plane and find yourself lifting to the ceiling, there's nothing like it. there is the exciting thing about more of it in galactic,

for floating around minute rather than seconds. you can look out the window back at the beautiful earth. >> what is your take on silicon valley? all of these startups, all focused on the movement of electrons on some level to change business. what do you like about it? >> that is the most exciting places in entrepreneurial space in the world. extraordinary people, with extraordinary ideas. we need to put those ideas into practice. a lot of the problems of the world can be solved from silicon valley. whether it is feeding the poor

of the world, whether it is only people out of poverty, it will be better in 10 years than it is today. >> when you think of the music industry, apple has made a big investment into the beats industry. what do you see that is the difficulty there? >> i think we were very fortunate to sell out of our record company when we did. it was right at the peak of the industry. and thanks to apple the industry has imploded. merchandising of music does well, but artists can't make money off the sales of their music.

apple's new move, it may be a small way of giving back what they have taken. it would be great if artists could make a bit of money out of it. >> is there an ipo in the future? it has been on the edge of that for a while. >> i am not sure, and probably means that something is up. we will see what happens there. we will continue -- we are hoping, and we might get a decision today and we are hoping for good news. ultimately the right decision gets made, and that will be a great day for virgin america.

>> they did not make the love field decision yet. i thought he was hinting very strongly that a virgin america ipo could be in the future. >> thank you. it is bob barker's worst nightmare. the price is always right. the top the technology used. ♪

>> the actual retail price is $260. >> pricing is a little bit different today.

now it is all about algorithms. wiring the world, looking this week and how technology is changing the retail landscape. computers are deciding what price is right. >> we use algorithms in an increasing level of detail. fundamentally it is about understanding how the algorithms work and how people have their data. how they are able to figure out this, data mining, and seeing how and when people buy to estimate demand. you find out if it is going to rain, and people will buy more umbrellas. that is the art of the science. >> what companies are using these algorithms?

>> the way the web works allows prices to be set in a way that can be across the board. those with deeper data sets like amazon are able to do this more. ebay, even the auction, can do this in their own way. the way that computers can figure this out or amazon takes it to a whole new level. >> the retail industry has been under a lot of rusher with extra competition and the move online. are prices just better? >> this is just a percentage of commerce. you have so much more happening online, the ability to dynamically set prices online every quarter, it allows for more pricing algorithms to go to work. we are seeing more of this.

>> does it work in the retail store? >> it is much harder. it was done in the typical google way, they committed $1 billion to buy eight company, and it was a disaster. the got feedback from the industry because they did not know which ads were working. it ran again in the history of this business and did not work because they did not have the feedback on which ads were working. >> thank you. we will be right back. ♪

the dow jones closed at a record high. s&p had a small cap leading.

>> you are watching bloomberg west. i am emily chang. pinterest is launching a test of pins. it includes banana republic and lululemon. the pins can be targeted on genders and the type of device. joining me here is the head of partnership, bradford. thank you for joining us. what have you learned about what works and what does not work? >> we have learned that people

like to pin brands that they love and things they want to do in the future. it is really a visual discovery tool for pinners. if you are banana republic, it might be about dressing for work. it might be about lending a birthday party. the markers are organic and are excited to use a paid product. >> are their brands that do well on pinterest? >> that is one of the things we're trying to figure out. one of the things that we found is that promoted pins worked about as good or the same as regular pins. there may be an opportunity to pin all sorts of different things. if you are lululemon, you might pin fitness food or travel

ideas, as well as your product. >> how do you choose who to give the business opportunity to? more people want in and you guys are not ready. >> we are hiring a team and the team is analytics driven. they put a pin button on their website and then they build their board. it should be aligned with their brand promise and what their brand is trying to connect with. the last thing that they will do is use the promoted product. we pick brands that start on that journey and have been using pinterest pretty well. we are helping them figure out what should be a promoted pin.

everything from aspect ratio to what kind of headline they should put on there. the headline matters. >> you wanted to look good. >> yes. we wanted to look good. as people use it as a discovery tool, we want them to be able to search and find. we think that the pinner experience is the most important thing that we do and we can teach marketers to make great pins. >> will i ever see a promoted pin on my homepage? >> there is no plan to do that. there is plenty to do within a category and he gives plenty of context. there is a full range of services that we are bringing forward and we will figure out what the correct price should be in the market.

right now, we are doing cpm-based pricing. >> from what you have seen so far, how much money potential to use see? do you think that when you get this up and running it will be easy to rake it in? >> 75% of our users are on a mobile device and we think that is really important for advertisers stop we also add context. if you are trying to redecorate your house or plan a meal for your family, plan a vacation -- i was planning and i ended up going to a national park because i was inspired by a board that i saw. you can do lots of things. >> what does pinterest have to offer that facebook or twitter does not?

>> i think that we are a discovery tool that thinks about your future and how you think about your church. the things that you are interested in. we will help you decorate your house, plan your trip, help you discover things that you want and need right now and in the future. that is a little different than some of the social networks out there. >> you had a long career in tech and media. how are you liking it so far? >> i love the product and the brand. when i met the team, they were all very smart, very focused. they were focused on the experience in the consumer experience. in technology, the best thing you can do is put your consumer first. the entire company thinks about putting the pinner first.

where the company is in its growth stage, i love to build things and reinvention of format. that is one of the things we are doing here. it is a great combination of many things. >> what is it like working with him? is he different than other ceos you have worked with? >> he is focused on these. for a test on the experience -- he is focused on the experience for the pinner. he is a smart thinker about how the pinner experience goes. >> a lot people are knocking on your door to be a part of it. give us an idea of what the appetite is like. >> some days, i do for or five

interviews in a day. we have 20 positions and i expect to have more as we grow. it is about people who have a passion for the company and we are hiring a lot of people to make sure that marketing and brands have great partners working with them. >> is this something that will be open to businesses of all sizes? some of the best part of pinterest is discovering small businesses. maybe you discover a person in idaho you did not know about. >> we hope to service people. i find a lot are having great experiences and we hope that we have a product that can serve them at the right price point as we grow. >> joanne bradford.

thank you for sharing your vision with us. >> thank you so much. >> could computers be the retail salespeople of the future? we take a look at how one company is teaming up to figure out -- change the way. ♪

>> welcome back. i am emily chang. we want to change to how technology is changing the business. one san francisco startup is partnering with ibm to launch a personal shopping app. it will allow customers to ask questions, like what type of jacket you i need for a trip to tahoe.

the ceo is with me here in the studio. kent, thank you for joining us. how does this work? >> think about digital retail today. price, convenience, selection. think about that experience when when you go into a retailer. you are able to talk to a sales rep and they quickly get to the right product. the online experience today is self-directed and requires the end-user to do a lot of work. how do you find the right experience? the shopping experience is not great. you do not get advice and anyone to help you figure out the right product for your specific need. we have a couple of different and powerful components to this technology. one is the ability to ask questions.

it can engage with you like you would engage with an individual. it can process vast amounts of unstructured data. from wikipedia, product reviews, it can take all of that information and help you find the proverbial needle in the haystack. we are working to develop customers. as for the digital clients. they were looking at how they could commercialize it. they had early success and health care and said, let's look at retail. we want to bring the technology to the retail environment because it is broadly applicable technology that can solve a lot of problems. the north face is a ibm customer and we are working to create a differentiated shopping experience. >> what does it bring to you

that you do not already have? >> part of the ecosystem is the cognitive cloud. we created an incredibly powerful artificial intelligence technology. our team is building out the interface and passing the information to watson to get the results back. we are feeding content to make it intelligent and smarter. how the information is presented. what the shopping trend is like. that sort of thing. >> how much do i need to tell the app? >> it is totally dependent on the individual shopping. it may be one or two westerns. it may be more involved.

if you are looking for a jacket for a ski trip, that is relatively short. if you are a family of four that is looking for a great, that may be a more involved experience. >> right now, it is only the north face? >> we have other customers that we are looking to announce in q2 this year. >> i feel like retail has taken so long to be truly personalized. i like to use the example of the place that i have been shopping at since high school. there is nothing tailored to me. i have purchased many things there. >> how you purchase things online is fairly static. there is a degree of personalization. we think that what is missing is the ability to have a dialogue with somebody and engage in

conversation to learn about their needs. it is not just about the data and what products you are purchasing. it is how you ask the questions and what sort of watching you are asking. we understand what you are looking for. when you make that purchase, a good sales rep makes you feel confident and good about what you bought. you feel like you made the right decision. a lot of times, when you buy something online, you are taking a bit of a flyer. you are not 100% sure about something. >> do you think this technology can replace salespeople? >> we think they can make salespeople better. i do not think there will ever be a time where good salespeople are not in need. in this omnichannel world, this tool can make sales reps better.

it is intuitive. >> maybe we will need fewer? >> maybe we will need fewer. >> kent, thank you for joining us today. a legendary investor is important day over access to a beach. you can watch us on your phone, tablet, bloomberg.com. ♪

>> welcome back. i am emily chang. weeks after disney agreed to by a studio, time warner has its

eyes on a you tube video network. this is according to a person familiar with the matter. yahoo! is said to be looking into a possible acquisition. our correspondent, jon erlichman, broke the story and joins us with more from los angeles. what is the thinking for time warner? >> a lot of traditional media companies look at these businesses in los angeles that are almost like the new cable channel. they take all sorts of channels and house them under one roof. they become more powerful. you have millions of subscribers and, in some cases, billions of video views. that was part of the appeal for time warner with fullscreen.

they were an investor. we do not know how this will play out. we do know that the traditional media people are watching where viewers are going and where younger people are consuming video. they are saying, we need to pay attention to what is going on here. >> they got attention from other players. >> yes. the thing we want to highlight is that yahoo! is talking to fullscreen on two fronts. one is to buy the business. the other is to have them as a partner. yahoo! is interested in creating something youtube-like. they are also interested in stealing some of the thunder away from youtube with their own video network and teaming up with fullscreen is a way to do that and maybe get some youtube

stars to come over to a yahoo! platform. >> how much money are they making? >> these are young businesses and have not been making money. some might argue that they may make money more easily then maker studios. one of the things you will see develop is ways to bring up the advertisement dollars. right off of the top, youtube is taking their slice of the overall revenue. we know that this company generated between $50 million to $70 million in revenue. right now, it is less about profitability and more about the eyeballs. can big media or technology companies build something faster?

>> how do you see this playing out? there is obviously so much happening in the content landscape and the cable tv landscape. >> one of the things we just highlighted was how challenging this business could be because you're sharing so much money with youtube. a lot of people are interested in moving this to a subscriber model. if you can get enough people using one of these schools or services, if you get enough people to buy it, that is a lasting business model. for now, they are just figuring out how to get their toes wet in this. the funny thing about this whole situation is that, six months ago, people were questioning whether or not these businesses could survive and now we are talking about half a billion or one billion as a price tag.

>> stay with us for the bwest byte. >> 37 million. a lender is going to appear in court in a fight over a land grab. he bought a beech property. it is the site of a surfing break, known as martin's beach. he put up a gate and barred the gate. he painted over the billboard and hired security guards. california law says that the beach is public property for everyone. he says, you cannot use my property to get there. >> this has been going on for quite a while. he is trying to block access. >> the argument fundamentally rests on the notions that he made changes that were not

licensed. the changes constitute development. they should have gone through a review process. the foundation exists for this process. they are an interesting group that i profiled for a magazine in the early 1990's. it is interesting to see them out there is still fighting this fight. >> having been there, the surfer community is very passionate. john, you live in a surf town in los angeles. if somebody cut off access to the hottest surf spot in malibu? >> not happening in santa monica. maybe venture capitalist in silicon valley are going to have to learn to surf. >> this actually happened in malibu. the exact same thing and the exact same argument. that's interesting. we will be watching to see how this one plays out.

thank you all for watching this edition of bloomberg west. ♪

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