>> live from pier three, welcome to bloomberg west will be cover innovation, technology, and the future of business. i had this hour, the ambitious agenda of netflix. is streaming company planning aggressive international expansion as well is bigger and bolder original shows. this coming after netflix passed the 50 million subscriber mark and pass the second quarter revenues and profits. location for potential 2016 presidential contenders. after rand paul rallied conservative attack workers, former secretary of state

hillary clinton is in town meeting with executives from twitter and facebook. making a thursday night football as popular as monday night football, that is what cbs is trying to do as he gets ready to air its first season of thursday night games. the chairman of cbssports tells us the network is devoting more resources to every thursday night game than any game, except the super bowl. , netflixead story, n says it has 50 million subscribers because of hits of house of cards and oranges the new black bringing viewers. they added more than one million internationally. even if netflix began targeting new customers one dollar more. as for the earning numbers, sales were up 25% to $1.3 billion. d.e income rise netflix has ambitious plans.

expanding in germany, france, and other parts of europe. it is also going to send -- sell gift cards for the very first time. cory johnson is with me in the studio. in l.a., jon erlichman. in new york, s&p capital iq senior analyst. what stands out to you most? >> i think what stands out to me is really the results speak to the potentially sizable, addressable market for netflix. about 50 million subscribers worldwide, you talk about that. what is really striking is the international front where you're talking about 700 million brough broadband subscribers worldwide. i think the attraction the company is generating, firing on all cylinders, domestic expansion, margins, growth,

original programming. you can go down the list and i think the results speak to the great momentum which the company is generating. >> there has been a lot of focus on the original shows. jon, i know you will then take a look at which of these shows has brought in more new subscribers. what are you singing? seeing? that doingly believe these original shows is a great way to get more people to sign up for the service. they claim in this case of orange is the new black, that is helping them in a big way to generate higher subscriber numbers. they have argued it has that even more of an impact in some markets that a show like house of cards. they are not shying away from the strategy. if anything, they will be spending more on the original shows. i think that makes sense when you think about having a business and wanting to have it is getting excited,

less exciting to say we have a library of old stuff. it is more fun to say we have a brand-new show, big stars attached. they will continue down this path. they talked about marco polo, a project they are doing. they signed up chelsea handler recently. >> i like both shows personally but i think i am more of a house of cards kind of gal. cory, you were speaking earlier about contest costs. what did we learn? >> this is a great dilemma when you look at the financials. we get a company where we can see the numbers. they can spin all they want but we can see the numbers. some of the numbers are not on the balance sheet. i think some of the most important numbers. we talk about how much we like the shows. we do not know what they pay for those shows. we know they do not own the rights long-term, only short-term. they're spending on content and

it is going through the roof. we do not see modes of those cost and the income statement. >> talk about the contract of kevin spacey and robin wright alone. >> how much are they going to pay for that in the future or other things? they signed the contracts. what they put on the balance sheet is it? a question mark. you have to dig through the filing. they have $7.7 billion in commitments and a minimum going forward. if they do not keep growing users and continuing to find profits, they cannot pay for the content they have already contracted to pay. there was a great risk and a looming one. did you have something to add? say this is akly company that has more than 50 million global subscribers. three years ago, they were

trying to get to the 10 million mark. as much as their content costs are rising, this is a company that has a lot of momentum. i think it really depends on whether you think netflix has a stronger global reach opportunity than, i don't know, versus amazon or hbo what they will have to spend to get there. >> what do you think about the priority of netflix and how they are spending the money? how much is being spent on these original content projects but we know it must be sizable? was $7.7levant number billion in content obligations. that is the number we keep a very close eye on. we agree the number is relatively high but as long as they can continue to deliver the kind of viewership and the kind of margin expansion and subscriber growth, i think the business model has really -- beyond that, clearly, i think

the international expansion is very critical at this moment. that is a segment that i think a lot of investors would like to see to attain sustainable troppo ability -- profitability. that is not very far off considering they were close to breaking it and launched and lots of markets. i think all in all, there is really a lot of positive takeaway. the one question we have is the valuation and that is the reason we have the recommendations on the shares. i think we have seen a lot of rally on the stock. did note increase appear to have any material negative impact so we can be confident. >> their operating profits are up 5% which is ok, i guess. important things like taxes and other things. you have a stock trading at 136 times earnings.

the notion that this company is so dependent on growth comparative to the profit margin or even their earnings-per-share growth, not as strong as their valuation. >> we of seen them reiterate their stance on neutrality, speak out against time warner's potential acquisition. who would've thought this little rental company would become such a player in washington? >> i think it speaks -- first of all, netflix continues to use every tool they have to the best of its extent. whether it is accounting, technology, regulatory environment. they say we would support net neutrality. we do not want to do the deal we just did with comcast and verizon to pay to get ahead of our competitors. we do not think that is fair. at the same time, as long as those are the rules, they will use that.

>> jon erlichman, i will give you the last word. do you have anything to add? anything unique stand out to you? >> only that the head content guy handed at bigger costs. there is been so much speculation about whether they will be launching more movies. per show or per movie budget, i don't think we have hit the ceiling on that yet. .> jon erlichman thank you. wasng up, hillary clinton a silicon valley today. why was she hearing who wish to trying to win over? ♪

>> welcome back. yahoo! is buying flurry. terms were not disclosed. flurry analyzes data for mobile phone users to help developers better understand their audience. marissa mayer has been looking at acquisitions to boost revenue growth in the company. did been out at least 12 acquisitions this year alone. valley is increasingly becoming a place to be for some of the biggest names in politics. former secretary of state hillary clinton is basing -- visiting facebook and twitter headquarters where she is taking questions and meeting executives. while silicon valley is traditional territory for democrats, republicans are also making a big show here with potential presidential candidate rand paul speaking at a recent gathering and counting his admiration for products like bitcoin in opposition to nsa surveillance.

cory johnson is still here with me and joining us from new york is sarah frier. sarah, what can you tell us about these questions and answers at facebook? >> hillary has always been looked at as against the social media. facebook really large following. she had a really popular tweet during the super bowl. siliconalways felt that valley is a very important place for her to be connected. on the flip side, we're seeing a lot of outrage from these executives. they are just as double matted as when they travel around the world, they meet with local government officials, president of countries. it is how things work now. >> hillary clinton has such a great twitter profile. i have to point it out. wife, mom, lawyer,

aficionado. the pictures with the famous photo where she has her glasses on and checking the phone. way she embraces the image. she is smart and clever. she is a quick thinker. her husband had the same sort of approach. i think it is not just about the money. as see a lot of politicians tol as celebrities want attach themselves the things that are technological because it seems to represent the future. it tells the rest of the world that this person knows where we are going. it goes towards a better future for all of them. just over the weekend, rand paul , who may be a republican

challenger, who is more libertarian than your average republican. >> many people in silicon valley are. >> many people in business really identify with the libertarian notions in theory more than practice. here, if youut want a libertarian white house or washington, if you are backing some of the ideas i support like limited and not zero government. that is what he is trying to do to get money. >> how is hillary clinton perceived compared to president obama or rand paul and people who could be her challengers? >> i think we've seen a lot of tension between the current white house and the silicon valley elite, especially with the nsa revelations. we have have had a lot of we have seen a-

lot of conversation between past ceos and obama have not gone so well. it is good for hillary that she haseems seems to have a lot -- seems to have a lot of support. these kinds of visits really help get companies rallied behind her. overall, in terms of silicon valley, we of seen mark zuckerberg back chris christie powerfully. we saw them together a couple of weeks ago. they are always talking, always promoting each other. >> president obama had a famous and mark on facebook zuckerberg actually faked -- showed up on a suit. i wonder if he showed up at facebook and not twitter. it is a must do. >> we were with president obama. we were standing 20 feet away when he was at linkeidin.

it is a regular thing in terms of fund raising and the world. goingone of the benefits to places like twitter and google and facebook. speaker seg to the ries. goinge politicians, it is to give them the ability to get closer to people and their ideas. what other companies are cozying up to washington and vice versa? >> we have seen google. we have seen linkedin. even venture capitalists have had a seat at the table. a ventureted capitalists home for meeting as well with other ceos this weekend. -- evenseen a lot of internationally, we have seen a lot of politicians, and make a

stop at twitter headquarters, at facebook headquarters. it has become a pitstop, something you do when you come to america. you try to build up relationships. at this photong of president obama with steve jobs and mark zuckerberg and eric schmidt. >> and that is a hot ticket. >> this was some time ago. certainly, still indicative of what is happening. >> let us not also underestimate -- ms. underestimated -- ms. misunderestimate it. they can get used to the dialogue so they're not become the next john mccain. jon erlichman and sarah frier, thank you. rolls-royce is no longer just a

name for luxury. is onepany's new coupe of the most technologically advanced car today. matt miller gets behind the wheel, next. ♪

>> welcome back to bloomberg west. we turn now to our wiring the world series. we're looking at technology is changing the future of transportation. rolls-royce vehicles are known for the luxurious features, but the rolls-royce is one of the most technologically advanced cars in the market today. matt miller took one for a spin to see how it was using high style with high tech. ♪

rolls-royce, the at $400,000 car. it had the incredible classic design, plus it has this super that rolls-royce has ever produced. there are the little luxury touches that rolls-royce delivers. you have the suicide doors. .uper luxurious shag carpeting the starry night sky liners. you can see a rolls-royce umbrella. the doors close automatically at the push of a button. it is actually more high tech than almost any other car on the market today. the most exciting feature as far as the technology is concerned is the way the gps and satellite

systems work with the transmission and the headlights. so, if you were going into a corner, the satellite alerts the gps system, and realizes you are about to turn, it makes a transmission downshift and aims the headlight into the corner to make it easier for you to see. eventher cool feature is if he didn't have headlights that turn around the corner, even if your headlights were off, you would still be able to child becauser it has an infrared night vision system. it illuminates any life forms. it gives you an audible tone if you are on a collision course. one other system that rolls-royce has really perfected for this car is the adaptive cruise control system that allows you to set the car at a certain speed even in bumper-to-bumper traffic.

you can use these bumpers on the -- the buttons on the steering wheel to determine how far away you will stay away from the car from you and behind you. technology now that rolls-royce is owned by bmw will eventually trickle down into the kind of cars the average wealthy person can buy. >> bloombergs very own matt miller riding in style. with israel's ground invasion of gaza getting more intense, military defense technology and advanced alert systems are being deployed to limit these attacks on both sides. that is coming up. ♪ >> time now for on the markets. let us get you caught up on where stocks ended the day on this monday.

down across-the-board but nearly as rough as it had been earlier this morning. the dow jones down 125 points, if it is 48.5 at 17,051. the s&p 500 down a quarter of a percent.

>> you are watching bloomberg west. i am emily chang. here with cory johnson. the israeli ground assault in gaza is escalating with death old climbing on both sides. than 500 palestinians, mainly civilians, had been killed since the israeli offensive began. the ids has lost 18 soldiers. how has technology helped in the efforts to avoid any more casualties? red alert apps greater joins us now from jerusalem. is an applet that warns israelis

of an incoming rocket strike. we are joined by a person who led the nation for nearly a decade on the phone. thank you both for joining us. i will start with you. we heard a lot about the technology and sophistication of the iron dome which helps prevent israelis from rocket attacks. can you explain how this works on the technological pe rspective? >> it works like an air defense system. you have radar or another sensor that sees the target. and calculate the trajectory of the rocket. it intercepts the missile. it shoots it and killed it. s it. the principle is simple but the execution is quite difficult because it is like hitting a bullet with a bullet. is flyingng missile

twice the speed of sound. you have to find it. -- have defined in the sky you have to find it in the sky. easy to say, difficult to be done. missile-defense system is a response to other failures in the past using new technology. what new technology are you using with red alert that was not possible in the past? alert when i red created two years ago before i started working here, it is very basic technology and technology that i any developer could use n a daily basis. we are not using anything so sophisticated here. at the numbers of people who are subscribing to our app, we see

the technology we have to get , we have to get to all the people all these notifications because it has to be really fast. >> what kind of pickup have you seen an activity since the latest escalation? >> there has been a sharp increase in downloads, especially in israel. 80,000 downloads. mainly in the south from people bombarded. because everybody is a target have overrael -- we 300,000 on i android, over 300,000. we have an ios in the states. that is seen a large increase in downloads there as well.

there is been a huge demand, unfortunately. >> when it comes to the effectiveness of the iron dome, i read differing reports -- and some say it is 90% effective. some say it is more like 30% or 40%. what would you say? 30% oruld say this -- 40% with 10,000 rockets being --practically no one. i am talking about places in the city. let us hope it keeps that way. 40% is impossible. they should've landed some. area andviv

casualties. the whole purpose is to find out. some of them are going to hit and some of them don't. we decide which one is the dangerous one and the closest ones. i would say it is an effective way of defense. it can prevent serious casualties. we saw interceptions. we saw the heavy blast. this is close to 90%. >> let me ask you a question maybe it is not an easy one. bring your app and ways to try to help people be safe, but i wonder do you consider the fact that it also makes it easier in some regard for the state of israel to sustain these rocket attacks and go on the offensive in gaza and the

terrible suffering of the people in gaza, many of whom who are civilians. tos your app make it israel go on the offensive? this partner and i created just to notify people. you have to understand -- the other side is targeting civilians. i was a chain commander in the israeli army. we always target terrorists. we are not fighting anyone else. it is unfortunate that on this and people were killed -- it is unfortunate that innocent people were killed. we are only targeting terrorists. sometimes, we have been in cases might be ines jeopardy to save these people's lives. i know that firsthand. thankfully, they do not need this app.

on the other hand, they are not looking at the civilian so much. >> a number of civilians have been killed in gaza. and number of children have been killed. uzi, over like to ask you the last question. have such sophisticated missile defense and missile technology, could this technology at all be used to better target places in gaza where children are not playing for example? , mirrors willly happen -- errors will happen. [indiscernible] i want to point out an important fact. toas has sent its rockets installations. -- let meo way

stressed this point. every rocket that comes out of gaza. that plays can be hit and destroyed. it, but thestopped cost of human life would be tremendous. so we do not do it. that is called human shielding. yourappreciate you sharing perspective. creator from jerusalem. thank you both. elon musk is not the only one working on high-speed to transport -- tube transport. we are talking to one person who can shoot you from new york to

beijing in just two hours. ♪

>> welcome back. we turn back now to our wiring the world series where we are looking up is shaping the future of transportation. elon musk envisions as hyperloop transportation system as a way to get the cities hundreds of miles apart very quickly. one organization has an even bolder plan. cory johnson is back now with more. >> it is called evacuated to the transport technology -- tube transport technology. it is a vision for tube transportation. and yet you from new york to beijing in just two hours. it sounds a great idea. there'll, talk to me about this -- when elon musk introduced the transportation, i admitted it was ridiculous. will you tell me it is wrong? traveling in an

evacuated environment is the most proven form of travel in the universe. all of us have been traveling this way our whole lives without realizing it. the sun travels every hour of our lives. travels of human billions of miles through the lifetime in space. travel in pipeline is also proven for cargo. stuffis more 10 miles of moved through pipelines an. more than trains and trucks and aircraft combined. >> how long could this feasibly go? if it is built to the same standards in every country, the same diameter tube, and then they could be networked together on a global basis that would allow a person to travel from

south america up across the united states, cross canada, crossed the bering strait, across siberia, across china, through india and across europe, and across the strait of your gibraltar.-strait of >> what does it feel like to be in such a thing? what would you imagine it felt like? to be asdesigned to close as possible to the best form of transportation that we can come up with so far. cars have won the global transportation market so we have adopted vehicles that the market is already determined to be the optimal size. it will be like traveling in your car. and said of accelerating for a few seconds, you can accelerate for 20 seconds to get up to 400 miles an hour. or you can accelerate for three

minutes to get the 4000 miles per hour and then you can coast. the ride would be very silent. it is like a jet where it is almost silent. >> it would seem to me that any -- when i drive in a car and i run into potholes which should not exist or whatever -- would any injury to a tube cause a catastrophic event for the transport, including the people? >> of course. it is subject to the same kind of geological forces that roads and bridges are subject to. occasionally, there are major earthquakes and acts of god, acts of terrorism that we can do really little about. they are just focused randomly in different areas. fortunately, less than 1% of transportation related fatalities come from those types of sources.

most transportation fatalities result from failure to control the vehicle or failure to control the conditions of travel which travel and in an evacuated environment offers more protection and much safer and much less reliant on mechanical systems such as magnets. >> the ceo of et3. we appreciate your time. >> i cannot wait. sunday and monday football are hugely successful, but football on thursday nights have some hurdles. we are talking about cbs and its big bet on the thursday night package with cbssports chairman. ♪

>> welcome back to bloomberg west. cbs is home to sporting events like the masters and march madness, but this follows the new home of thursday night football. adding to its lineup of sunday

games. jon erlichman caught up with sean mcmanus to talk about the network's investment in thursday night football. joining us now with more from l.a. hear alls a story we the time -- these big battles between the broadcasters for sporting rights. the case for this deal for person i football, cbs comes out a big winner. the first question i had for sean mcmanus was what was your reaction when you were awarded these rights and what was the reaction of the investors? >> i remember when we finally got the call, i gave them a hug, what he said to me was and now the real work begins and he is right. it is a lot of work launching a new franchise. we still do up to seven games every sunday of nfl football. we have to do that and addition of thursday night.

wednesday after the super bowl, it has been 85% of my job just on thursday night football. new graphics, new music, new technical facilities. we are using more equipment on thursday night game and use on any other game on cbs other than the super bowl. it is a huge commitment. >> in terms of numbers, the thursday night game on the nfl network was averaging somewhere between 6 million and 8 million. thursday night on cbs are pulling in much larger audiences. you have any expectations on how many people will turne in? >> i think the ratings will be really good. we have significant divisional matchups. i think we will have great ratings. it depends on how good the game is. if you have a competitive game at 11:00 in the fourth quarter, the people will grow. >> thursday night for cbs is a one-year deal.

you guys were totally fine with that. is there anything that would prohibit you from say even during the season to discuss with the lead possibly extending this if things go well? >> possibly. we speak to the nfl almost daily. to talk the nfl wants to us about extending the one-year deal, we will make ourselves available. i think we will talk a lot during the season. we will adjust reduction if -- production. that is important to remember that we are producing the second half of the season for nfl network. >> beyond broadcast, talk a little bit about cable. every broadcast network today has a complementary cable channel, sports channel. abc has espn. what do you want to do long term with cbssports network to make it unique? be a fullym, it will

distributed viable sports network. it is not fully distributed right now. we have not taken the path of investing hundreds of millions of dollars of programming because that is not our business model right now. decided tonies have create their sports channel as large leaders in the near-term. good for their company. we haven't gone out and acquired major league baseball, nasca r. we have a different plan and some point we will get there and we will be competitive. be very viable and very relevant. it will be a good sports network for the duration. rights, bills will be potentially up for grabs. there has been some reports of negotiations taking place. doesn't cbs have an interest in

the nba? >> i love the nba. i think it is a great product. espn and turner has been a great job broadcasting it. we do not have room in our schedule right now for a full slate of nba games. unless you are willing to make that commitment, i think we are probably not going to be able to bid on it. i would love to but we have golf on a lot of weekends from january through the first week in april. inhave college basketball december, february, march, including the tournament. games to include many nba probably is not in the cards. >> fox get everybody's attention by showing strong interest in time warner. what was your reaction is somebody in the media business to that announcement? >> i do not like to comment on other people's acquisition plans. i think what is interesting is

that whenever somebody talks about a big acquisition or merger, sports is always somewhere near the center of those talks. the fact that turner has -- time warner has as many sports properties as they have, i am sure that was some kind of factor in any discussion that will be at going further. >> cbssports chairman sean mcmanus with jon erlichman. how much money do cbs make from nfl games? that ithey will share was profitable which is impressive when you're spending $1 billion alone on sunday football. it is a combination of bad dollars. ad dollars. he said last year the top 30 rated shows on television, only 28 or 29 were football games. i think they feel like it was a correlated that. >> jon erlichman, hang on. it is time for the bwest byte where we focus on one number

that tells a whole lot. cory, what do you got? >> it is the number seven, lucky number seven. it better be for nba all-star new york makes a small forward carmelo anthony. he has formed an investment fund to invest in technology startups. it will be called m7. >> everyone and their mother, literally. >> the water is warm. he is partnering with a guy named scott goldfarb. a former board member of a couple of companies. >> a former executive of nbc. he is active in l.a. >> you don't even have to go look at the companies. just a courtside like at the warriors game. >> no outside investors at all. >> good luck, melo. >> m7 tech partners.

thank you all for watching this edition of the show. ♪

>> welcomes a money clip where we tie together the best stories, interviews and stories and interviews. the fighting so far in gaza. the nation and the secretary of defense outlined his vision for u.s. role in the mideast and elsewhere. could the ceo of time warner walk away with more than $79 million? and meanwhile, we speak to the man behind john paul mitchell products. and the food of the future.