♪ >> live from pier three in san francisco, welcome to "bloomberg west." i am cory johnson. we bring you the power players and global technology interviews that are reshaping the world. fox, rupert murdoch is looking to build out a new piece of the multimedia empire and hope that time warner is a perfect fit. they have rejected the initial bid of more than $75 billion.

he said he would be willing to .ay more first brought the attention of kerry and lunch in new york. people seem concerned about number of factors, including lands for a share structure and the future of cnn. for more we spoke with jeff mccracken and niels akira. previously a managing director at time warner investments, where he worked with various operating groups. emily started by asking him what he thinks of the proposed deal. >> this makes a lot of sense for fox. what jeff has done over the last 10 years is shed core assets and increase value for time warner. i think of for fox it makes

sense, they are purchasing a crown jewel asset area for time warner i can see why they think they have created a lot of value. reporting oneen this from the very beginning. you know how this started to come together. >> it starts with a friendly lunch in new york in early june. he gets together with chase carey, who drops the idea of a big merger. then there are three really big issues. one, what is the plan for you. your contract is up in 18 months. second, there will be a dual class voting structure. third, the future for cnn. fox doesn't ever really get any feedback. he keeps asking for more time. and then on june 4 they address those concerns. right up front they get that done. second, we don't think that your

shareholders were carrot -- will care about dual class voting structure. third, we will extend the needact to the 23rd, if be. they address the issues without werefeedback in which they told a terse to sentence reply, not interested, we want to go our own way. >> the future of cnn, potential buyers have been suggested. having worked within the company , which of those seem most likely or realistic? cnn valuable asset, according to fox, is about $8 billion. that is roughly 10% of the value of the whole entity. and warner bros.. if you think about the natural buyers for cnn, disney is a

natural buyer for a lot of reasons. because they own some of the largest cable properties that exist today. adding to that set of properties gives them more leverage for carriage agreements. is interesting to talk about google and yahoo!, very possible, those seem like stretches to me. >> what about the idea that rupert murdoch is doing this just to fend off other potential suitors for time warner, like google, facebook, and amazon? >> i don't think you would do the deal to fend off other people. they are past the phone hacking scandals that have been plaguing the family. between directv and comcast time warner, he is seizing on the situation where

it is the right time. interest rates have remained so low, so a lot of things have come together in the same time to make it a deal that makes a lot of sense for murdoch. >> some of these mergers don't have a great track record. going back to more than a decade ago, he mentioned the cultural differences, the rivalry between foxnews and cnn. do you think that there would be cultural differences between time warner and 21st century foxx? >> i was there during that difficult merger and it was very difficult to overcome. >> i understand issues that can take place. as for the newsgroups, i don't think they can stay as one company. cnn would probably give it did happen. as a larger company, you have foxx studios and warner bros., very different cultures.

you have very different properties that had been very different cultures and i think it is a really different question and i think a merger would be done carefully and for a very significant time, keeping the company separate is a likely outcome. >> you're talking about if executives will stick around. >> in the letter that rupert sent back, he said we would want you to stay on going forward but it was also very clear that he wouldn't run the company going forward. whether it was an advisory role or serving on the board, this is an operation to be run going forward. >> how do you think a merger like this would reshape the industry for better or for worse?

and trying to buy time warner cable and at&t is trying to buy direct tv. we haven't seen a merger of more content focused players yet. >> the distribution consolidation is on the way and it is already started and is going to continue which a think is very bad for consumers and very good for the companies. it stifles innovation and there is pricing issues. that is a concern. on the content side, you're right. there is consolidation but it hasn't been to the same level. it is going to be necessary for it to happen. it has significant leverage given espn and other properties. other properties, whether it be cbs, time warner, they were recently in the 20 to $40 billion range. to have leverage is probably going to be a necessity for these content owners. it makes sense from a business standpoint, i'm just not sure it

makes sense from a consumer standpoint. >> 21st century foxx has suggested they are willing to pay more. time warner said we may not want to consider this while comcast and other studios are busy dealing with other potential acquisitions. >> 70% of the big holders are also holders in foxx. that is where the game moves now. that is where time warner and fox itself are going to say only you can get time warner to move there. that is contingent on being able to engage with time warner and get access to the books. they can be 1.5 billion. it will be all about meaning and in time warner. >> it might just be the beginning of the battle. we are talking about the regulatory hurdles that a

potential deal good face -- could face. ? >> welcome back to the best of tilburg west. potential regulatory concerns of >> it might just be the beginning of the battle. we are talking about the regulatory hurdles that a potential deal good face -- could face. ?

>> welcome back to the best of tilburg west. potential regulatory concerns of the two sides agreed to a deal. what are the issues i can prevent it winning government

approval? we started by asking if there are issues other than cnn that these companies need to be concerned with. >> i think if the deal goes forward, there will be a lot of issues outside of cnn. a lot of it will depend on trusting agencies to define the relevant markets. it will be everything from hollywood studios to cable networks to other assets that time warner and foxx have both in the united states and around the world. >> talk about the legal framework with which the sec will look at this. >> the sec will look at this candidly.

i don't think they have any legal foundation but that won't stop them. these are entities heavily regulated and it will take a good long hard look at it. and see how they are going to be able to affect the deal. they will do a public interest standard which is an amorphous term that will be whatever the fcc decides to do with it. it will look very heavily at the cable programming and also look a lot at the bargaining power and negotiations between the cable programmers and distributors. which is really i think what is driving the recent mergers. certainly comcast, time warner, at&t. directv is seeing about who can have bargaining power and negotiations in distribution and content origination. >> the sec is already currently looking at comcast. joining us from new york, susan, how does this deal strike you from a regulatory perspective

aside from the issue of cnn which presumably will be sold anyway? >> this is driven by enormous concentration on the distribution side of the marketplace. the bottom line is that hollywood is scared. hollywood needs a lot of heft on its side of the programming table. >> this is not driven by cable? >> this is driven by the programming industry wanting to make sure that they can reach people that love their programming without having to pay whatever comcast and time warner cable wants them to pay. they need to be able to control their own destiny.

if hbo can go over-the-top, it needs to be sure that it can reach subscribers. that will only happen if they have the power to make that true. >> why should the sec not be looking at this? -- fcc not be looking at this? >> that they don't have the authority to review mergers. they're served by the department of justice and the federal trade commission. you have hundreds of hard-working civil servants at these agencies that do a wonderful job of reviewing mergers and we don't need the sec to review it as well. >> time warner has already said we don't want to consider this with other potential bidders dealing with other acquisitions and verizon, potentially. how does this actually play out?

>> they have to be nervous the cousin as it goes through, they will control about 70% of american households. it will be the only choice for high-speed data distribution. if he wants to make sure hbo can get there, he has to worry about eventually being acquired by comcast. he will need some partner to control his own destiny. maybe that is google. there are only a few players left on the board with whom we can deal. >> why should or shouldn't the sec be involved here. >> when harold was a commissioner, he voted to approve all of the megamergers that have gone through. so he is presiding over enormous consolidation in the industry. the broad public interest mandate allows it to look out for the future of american communications and that is

extraordinarily important. it is very relevant for them to get a chance to take a look at this deal. >> you see this triggering a continuation of the state of megamergers? >> it is hard to predict the future and hard to know if there are large mergers down the road. thank you to for noting my tenure on the commission. she mentioned that i dissented from every condition on every merger on the ground that i thought the sec had no authority to review the mergers at large. i do see that they have authority to review licenses just as they do for the license transfers that happen routinely every year. >> what are the issues that you think the sec specifically would address that the justice department doesn't? >> they can look at the future of over-the-top video. i now they're looking at interconnections between the

netflix networks, the pipes and wires to reach comcast subscribers. having expertise in that issue is going to help them evaluate if time warner in the future will have the freedom to reach subscribers. it gets to look at the entire ecosystem and explore a deal through that lens. >> author of captive audiences. still ahead, apple and ibm have put aside some long-standing differences to form a new partnership. we have details about the tech giants next on the best of bloomberg west. ?

>> welcome back to the best of bloomberg west. it did her rivals since the dawn

of the personal computing era but companies have put their differences aside in the interest of growing both businesses. apple and ibm teaming up to develop apps that should be tailored to work with the data analytics and cloud services. on what this deal means for both companies, we started asking about how big a deal this really is. >> it is how the tables have turned. ibm was a company that set the agenda for technology and apple and google do that. it is a very clear sign that we are seeing a much weaker ibm as a tech company. i have read a lot of stories about this being a great move for apple and the think it is a defensive move by apple because they were going to get jostled out of the market by android which is a lot more open and more flexible from an enterprising standpoint.

so from that standpoint, this is a good combination for them. i said ibm is just another channel partner for them. wanting to target walmart in the consumer market, they are using ibm to go into the enterprise. from that standpoint, it is a net positive for them. it still doesn't take away from the fact that android is more flexible and more adaptable for the enterprise. >> will they be offering android devices in their enterprise solution? >> there was no indication about that. if every one of the fortune 500 companies sold an additional couple thousand ipads and iphones, it really wouldn't add to more than half of a percentage point of revenue.

but it speaks to how big apple is. and what it could mean is the holdout of blackberry users that refuse to embrace any kind of apple product. the notion that ibm and apple compete is a 30-year-old notion that does signify something different than the last boundaries of apple's reach have fallen. >> the shift to mobile computing has created a whole new class of leaders. those companies that are looking toward becoming the people that set the agenda for enterprise computing, you see, dell, hp. these are the companies that

have fallen behind and started on the wing, so to speak. i think this is a positive for apple. let's face it, i that is the better tablet in the market. >> the new surface device is an impressive device that does a lot of things that a laptop could do in the past. >> i'm impressed by tim cook's ability to strike up vital partnerships and do out-of-the-box things to make sure the revenue stream keeps growing and i think it is very easy to forget that this is a company that is trying to become big. >> apple is still trying to do something echo it is the biggest company in the world. >> a market share is not that great. they need to make more money and justify their business, i guess. >> we see them strike a deal

with beats, photos with dr. dre, photos with the ibm ceo. is this a new apple that is more cooperative than steve jobs? >> i think john gruber put it well that this is not steve jobs, this is tim cook. you see the imprints on the company already. >> i think this is execution oriented on the idea of partnerships, more willing to be adaptive to the new world. >> everybody looks to apple for new great product. >> is smart to get the biggest retailer in the world telling your stuff. it would be a very big deal for these guys. it's a big deal for these guys to be out there and this notion that ibm needs this rally.

they need to have the best solutions available. i'm sure the corporate clients for saying we can get them somewhere else. they saw nine quarters where they didn't see sales grow at all. these ibm certainly needs a deal. >> what apple does is not seen very easily by the public. the tablets and the devices, they make all the technologies. we don't see it. that is the new apple. we have to get used to it. we think of it as just a bigger iphone but what happens underneath the screen is something that not a lot of other people do. >> microsoft announcing the big round of playoffs, but what is next for the software giant?

on the best of bloomberg west. ?

>> welcome back to the best of bloomberg west. microsoft just announced the largest mass layoff in company history. the ceo tries to remake the company. as many as 18,000 jobs cut over the next year that amounts to 14% of their workforce. more than 12,000 cuts are coming from the newly acquired nuclear unit. we talked about what this could mean for the company. >> at think it is less a focus on layoff and more on the quote that you just gave.

we heard them redefine the strategy at a broad level of platforms and productivity. we started to see a change in the culture. it is exciting. it it's a much richer focus on interacting with the communities out there, and the thing about culture and listening is you need to be able to execute against that. this set of playoffs is about simplifying and streamlining and helping the company execute. >> 59% are no caps on loan. they said this is proof that it was a bad acquisition. is there more to the gnocchi a cuts in particular? >> i was referring to the other 5000 jobs and the types of jobs they have now cut. the gnocchi a thing is

different. i think it is more looking back to that strategy of platforms and product entity than how much do we really need to be that handset manufacturer in that particular strategic focus that we are moving forward. i think there is going to be a greater emphasis on cloud, in particular the azure stack. fast and increasingly data, the role that data-driven services play over the next 10 years. >> we knew the layoff for coming. >> we have been talking about more modern companies have built huge businesses on much smaller numbers where legacy companies like microsoft and hp have tens of thousands of people. can a make not just one hard choice but many hard choices down the line? >> i think it is early to tell,

but if you give them another month, you can give them a review. we will see a lot of positive early signs. nobody wants to have to lay off one person let alone 18,000, but it was this area. >> you mentioned open source software. what does that mean to you? >> what i think it means is that microsoft is going to listen to what is going on in the community. why are people looking at this software that is not microsoft software? and how can we have a role? i wouldn't be surprised to see than embracing some of the emerging. this data analytics world, we have already seen the background

under server and tools that we will run the next on azure. if you don't know why it's going on, how can you be relevant? that is a culture shift that is taking place. >> a huge tech community where you are. describe the impact, taking over the ripple effect. how will that be felt? >> we can look at the short-term and long-term. it is hard for people to be forced into this kind of transition but i think they will have a hard time with those opportunities. i think everybody is rooting for

microsoft, and five months and, people are very encouraged, cautiously optimistic that they are making some early good moves and trying to inspire through this focus on cultural transformation, the steps that can lead to microsoft being a relevant tech company for many decades to come. >> that was emily chang. if you watched and tweeted during the world cup final, you weren't alone. record tweets and we will break down the numbers with twitters vice president. ?

>> welcome back to the best of bloomberg west. germany's victory to the third-highest television rating on a espn.

it was seen in nearly 10% of the homes but television was not the only winner. twitter had records of its own. they spoke with vice president of global strategy and started by asking what made it such a big moment for twitter. >> it is the place where fans and professionals came together to celebrate. it was a huge deal. what is the biggest social tv event? ellen selfie? donald sterling? >> lebron? >> always lebron. if you think about the selfie, it was 200 and 54,000 tweets a minute.

it happened almost every single match. thick about the game yesterday, 1.5 times more tweets than the super bowl. and if you think about the overall conversation around sporting events, the game germany and brazil broke all records. >> a lot of engagement, but what about new users? >> we don't have our financial earnings call until a few weeks from now schley can't talk about users or revenue but i can they that it was a really big deal for broadcasters. we worked with keith and potential broadcasters. there was no other place where you could see comments, analyst, instant replays.

we worked with itv in the u.k., univision and instant replay of what was happening on the world cup on twitter. everybody wanted for -- went for the official content. >> what about the advertisers side? the brands. if we think about the brands that may have come to twitter because of the world cup and maybe will now stay, any sense of that? >> anything about brands that celebrated on twitter, they came there because people want to connect with their passions. it was really cool they were doing it in the moment on twitter. you think about official sponsors like mcdonald's. they were able to execute and

dream up a global campaign. twitter is one of the only places in the world where you had 15 different languages and fans on twitter. you had people like budweiser where the match was determined with voting on twitter. official voting, you had people like adidas and visa actually connecting with their campaigns with hash tags that you can see their commercial. and like winston are as -- as far as bit another player. snickers one with more satisfying than italian. the world cup, everyday events, they are celebrating. >> just to clarify, when these big brands are focused on the world cup, are they shifting all of their focus? or should we consider this to campaigns? is this additive? >> i would definitely say this is additive. they haven't always been on the everyday strategy.

if you are someone like snickers, you care about people being hungry and you're having fun with people and selling products. a moment like this is their chance to comment on culture. really what they are doing is getting into the culture and being relevant. >> you mentioned the suarez moment. you did see a lot more engagement with snickers on twitter versus facebook. the world cup happens once every four years and these moments are rare. how can you convince rands to focus on twitter over facebook? >> dislike with tv, i don't think it's either or. twitter is really about what is

happening right now. for every brand whether it is the world cup, the super bowl, or tuesday, there are things happening relevant to them. it's about what is important to you, to people, and connecting to that every day. it really is an additive part of the medium. >> that was emily and john ehrlichman with vice president of global strategies. lebron james is heading back to cleveland. we break down what it means for the nba and the lebron james marketing potential.

? >> welcome back to the best of bloomberg west. i'm corey johnson. lebron james returning to the cleveland cavaliers and pushed the valuation of the team to over $1 billion. james stands to make a lot more money as well.

he has endorsements from samsung and beats by dry and could be a prime target for brands looking to expand their roster of stars. we spoke with former espn vice president as well as ari goldberg, vp of business development for lebron james and cleveland native. why he thinks lebron chose to go back to cleveland. >> he is a special athlete and a special person. dealing with the things and diversity that he dealt with, just wise beyond his years. a nice redemption story. obviously dan gilbert is our lead style caster and i felt connected to both of them. just as a kid from cleveland, it's the most phenomenal thing i could ask for. really two of the great entrepreneurs of our time. now teaming up to do the same things in cleveland.

>> we talked a little bit about what lebron is doing off the court. has the luxury of signing a two-year deal and making the decision as a free agent. is he worth more on or off the court? >> he is worth so much more on the court and here's why. he has now made the break for all of cleveland and ohio. think of the fact that right now, i was just talking with some of the broadcasting folks, there were 25 national appearances coming towards the cleveland cavaliers they did not have. take about the fact that he held up the signing of 10 players that cascaded from his announcement on saturday. and think about the fact that richard nixon who has made such

a comeback in terms of perception from four years ago in cleveland to 62 and 68. he is the king of ohio. >> i thought you're calling for a subsequent comeback that did not happen. i covered basketball for a long time and i did not expect to be covering it again but i wonder in what ways do you see the value create business opportunities to change for lebron or the cleveland cavs by social media and new landscapes that we saw even perhaps with the world cup. >> i will take it from the media standpoint first. you saw that the clippers just went forward. that estimate for the cavs if they have the kind of success that the heat had for finals. that is just the tip of the iceberg. now cleveland and ohio innocence can become boston which has used

its sports teams to push its commerce, tourism, and its entire image. this is an ohio rising story that has business implications far beyond the basketball court. >> you know a bit about his inner circle. previously a lot of his close friends that work with him. a lot of them were very upset when he left cleveland and he has probably learned a lot from that experience. >> the media attention is usually loan out of proportion. the truth of the matter is that maverick carter, richie paul, these guys are geniuses. they are good guys and want to protect lebron. they have known each other for

years. the loyalty is unbelievable. this is a homecoming story, something much greater than basket all and it is amazing to see that retold. this is a town down on its luck. we've seen the shot, the drive, the fumble. we have seen this story before. what lebron is doing and what these guys all came together to partner to do is something greater than sports. it will affect every child. he talking about kids coming home, a town with a serious brain drain and you get all these kids to come back and similar to what dan gilbert is doing in detroit and these guys need to be commended for what they are doing. it would be great to see the haters come out and apologize

and show respect for the great things these guys are doing. >> if you look at the way that lebron -- his skills are unbelievable. i wonder if you can share his view on technology and how he uses technology. i wonder if that's different not just because of who he is but the generation that he comes from. >> i don't think there is any homes or debate about that. it is a credit to the work that rich has done and randy has done alongside with lebron getting him involved in deals like these. you can only make so much as an nba player. it is about the other things that you do, and it is -- lebron might be the savviest entertainment sports athletes businessman ever. they have pictures of him rolling around with foreign buffet, but this guy is a businessman who knows what he is

doing. he is signing a two-year deal for very specific reason because he knows the collective bargaining agreement is coming up. there will be more tv dollars at stake. these are savvy guys that understand technology. they are doing amazing things. >> talking with len deluca and style caster ceo. efforts to roll out the pink mustaches in brooklyn, queens at a regulatory roadblock thomas nothing is working hard to launch in new york. but what does it take to be a lift driver? we will show you next on the best of bloomberg west. ?

>> welcome back to the best of bloomberg west, i'm cory johnson. it will be a little while longer before the lift cars and the pink mustaches hit the streets of new york city.

they will delay the launch until all the eyes are dotted and the teaser crossed. in your taxi limousine commission. the ridesharing app fist bumps into brookland and queens, what does it take to be a lift driver ? we got a message from lyft c o-founder john zimmer. >> from san francisco to the cobblestone streets of brooklyn. they made an exception to allow me to drive in style. >> why did you pick brooklyn and queens rather than manhattan? >> the need for transportation is greater. you have the outer boroughs, and [inaudible] people need affordable transportation. >> the company just received $250 million in funding and is burning through some of that cash offer in the first two weeks of rides for three. -- for free. >> the scale of building an international highway, an

international railroad, it is just a massive opportunity. >> they say it is more of a social experience and suggests you ride in front and give the driver a fist bump. >> all these things are suggestions, just ways to break the ice. at first, i didn't get it, but then i started meeting people and it is a smile from the start, breaking the eyes. and if you want to be quiet, you're welcome to sit in the

back. >> it aims to disrupt modern taxi pricing. how much you pay is what you thought of the ride. cheaper than a taxi? yes. cheaper then uber? yes. >> that is crazy. >> the service must originate in brooklyn or queens. >> people can say i want a ride to manhattan and lift will take them there? they are allowed to leave brooklyn and queens? >> when we launch a city, we start in one area. we expand the coverage area and we plan to do the same in new york with brooklyn and queens being places that needed the most. and there is a lot of culture. and interesting people. we think it will certainly work really well. >> that was matt miller with john zimmerman. that is it for this edition of the best of bloomberg west. you can catch us monday through friday, 1 p.m. to 6 p.m. on the

east coast. we will see you next week. ?

♪ >> puerto rico's beaches and sunshine have always delighted tourists. for years, the economy has struggled under a cloud of debt. now, the government insist that the situation is improving. >> there is the doomsday prophecies about being like detroit or greece, they have gotten it wrong. >> creating tax incentives for business. puerto rico is taking steps to become a destination for investors and people are taking notice. >> san juan represents one of the great investment rt