mark: you are watching bloomberg technology. let's begin with the check of first were dan's. the obama administration confirms premiums will go up next year for health care for millions. a mid-level plan will increase an average of .5% across states served by the federally run online market, however administration officials say subsidies are designed to rise alongside premiums. sign up season begins november 1. hillary clinton and elizabeth warren campaigned together today in new hampshire. senator warren reminded voters that donald called clinton "such a nasty woman" during the nest

last debate. she said he should know that nasty women are tough, smart, and vote. in saint augustine, mr. trump told a rally that americans were, in his words, "fed up with stupidity and weakness" and with losing our jobs to other countries. kurdish forces are advancing as they try to retake mosul from the islamic state. the offensive could take months and involves more than 25,000 iraqi troops, airplanes, and advisors from the u.s. coalition. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. bloomberg technology is next. ♪

emily: i'm emily chang and this is "bloomberg technology." coming up, it could be the biggest deal of the year and change the way you view tv. getting regulators to clear the at&t's proposal to buy time warner could be tough. earnings season is in full swing. a slew of tech companies report this week including microsoft, amazon, and google. my conversation with -- he gets honest about his relationship with mark zuckerberg and taking on snapchat. first, to the lead. the mega deal everyone is talking about. at&t agrees to buy time warner for $85 billion. shares of both companies closed slightly down. time warner shares closing at under $87, well below the buyout offer of $107.50 a share. meantime, politicians and competitors are already raising the red flag. critics of the deal said it

would concentrate too much power in too few hands. the acquisition would give at&t ownership over hbo, cnn, warner bros. and content like "game of thrones" and the batman movies. joining me now from new york, our lead reporter, jerry smith, and the former president of cnn, john kline. thank you both for joining us. i will start with you, john. at&t says they are committed to maintaining the independence of cnn. do you believe it is possible? john: i believe they are smart business people who understand the value of an independent, strong, thriving, aggressive cnn. for now, there's no reason to doubt it. the real test will come with a company like at&t, which will find itself in more controversial new stories than time warner, the entertainment

company had in the past, when that happens, we will see how tolerant they are of being covered aggressively by the news network they own. emily: jerry, how about you? how hard a sell is this going to be with regulators? jerry: yeah, for now, yes, take at&t at its word. it is going to be a tough sell in washington. you know, this is very similar to a deal that comcast did when it acquired nbc universal. and that deal was approved by regulators but comcast had to agree to a lot of really tough conditions that in some ways has hamstrung nbc. emily: so, john, jerry mentioned comcast's acquisition of nbc. in your experience, did that impact nbc at all? john: it does not seem to have from the outside, except maybe in a sense providing a little more clarity of management, a

little more strategic management. so, you know, cnn, too, has been through several rounds of acquisitions in its lifetime. there are a lot of people still at cnn who lived through the acquisition of turner broadcasting by time warner and the merger of aol and time warner. the difference is those earlier acquirers have a journalistic heritage, both of them did. at&t doesn't. it might make it easier because this is a vertical integration, not horizontal. not horizontal. there will not be as much fighting over common ground as there would have been if rupert murdoch would have succeeded in acquiring time warner. can you imagine, not only fox news and cnn trying to live together, but fx cable channel and tnt or tbs fighting over the pie? maybe it will be easier to get along because of that.

emily: an analyst was on bloomberg television earlier today talking about the inefficiencies of big cable companies and why this could be a smart move. take a listen to what he had to say. rich: the internet disrupts inefficiency. you had to buy a huge package channel if you love "walking dead" but you are paying for the the entire year for that whole network for one show. the internet disrupts inefficiency, like it happened in music and publishing. we are seeing that unwind, and jeff was smart enough at time warner to get out. emily: given what has happened in the broader landscape, verizon trying to buy yahoo!, why does at&t want to do this right now?

>> you can see the lines between entertainment and telecom are starting to blur. the big trend in the television industry is more and more people are cutting the cord. they are starting to slowly decline and that is putting pressure on both at&t which delivers video service and time warner which makes its money selling both advertising and collecting subscriber fees. emily: do you think that at&t could help cnn? if you are running it, what would you be thinking to yourself? >> there is always the possibility of getting more resources to fund the type of acquisition or internal development or rmb that will be required as the media landscape completely changes. facebook and snapchat have gotten to 20 million video views

per day. where is the number going to be by the time this deal clears regulatory hurdles? that is the media environment in -- that at&t find themselves in. you're watching video at your friends say, drink sometimes your friends or famous people whom you feel you know. that is all threatening to escape the control of the content creators, and content distributors. what it means for cnn is, when this tv remote -- the battle for the remote, every content creator has to figure out a way

to have must have content that a viewer will pay for. we're entering a subscription-oriented media environment. emily: the former president of cnn who covers media for bloomberg news. thank you very much. i caught up with one of at&t's biggest rivals, t-mobile's ceo john ledger. he did not hold back. >> ever since at&t bought directv, they have not gained a single postpaid customer. i can only say in the short-term, this distraction with them trying to take over the entertainment industry is going to be a boom for the short-term future of t-mobile's growth. emily: about the long-term?

you are gaining subscribers but your competitor is making moves they believe puts them in a better position for the future. a more powerful position. what happens when you are just a carrier? >> even at&t announced earnings today, verizon last week. they are diversifying because the business they are in is shrinking. we are the reason it is shrinking. we have a sustainable growth is this in the wireless industry. verizon and at&t need to create new revenue streams. when you move toward the strategic concept of, how do you take the customers we have with mobile devices and provide them access to the content that they want to view, i don't see the

need to own and control the content the way that at&t is. with bing on and t-mobile one, we have a way for customers to view on daily basis. there are so many ways to innovate that i can add on search capability to view content by others. a big part of this deal with time warner is them ensuring the government that they will close down the option lt for the content that they have. emily: you said that there will be a long road ahead. would you say the same for verizon and yahoo!? they are in a pending acquisition. yahoo! has been potentially crippled by a massive hack attack. >> i feel really bad. and wonder about verizon's strategy -- i wonder about

verizon lester strategy of dying old technology companies at great cost. their wireless numbers were very weak. this is a new business model. it is an attempt to get into the advertising space. even with their aol purchase, you don't think they will sell to me? it is a matter of owning and controlling. emily: john ledger, not mincing words. we will break down everything to watch for an apple's earnings report tuesday. this is bloomberg. ♪

emily: it is a big week of earnings in the tech sector. wednesday we are expected to get earnings from tesla. thursday we watch for earnings from solar city then amazon and alphabet and twitter. there has been a lot to talk about given the samsung -- >> the big question is how did the iphone 7 do. this is not revolutionary. did this have enough whiz bang features to get it out of the stores and into people's hands? 45 million is the estimate we are hearing. carriers really backed it. samsung's woes.

they were taking the note 7 off of shelves. you had an alternative. this is the end of the cycle for a lot of phones. my iphone 6 has had it. emily: mine keeps dying too. >> i think the iphone 7 will do very well for them. not enough to get the revenue up. emily: we will be watching that closely. interesting hearing john ledger. he did not think this would have as big a hit on samsung as some of their partners. >> it is a combination for things this quarter. >> amazon shares up as goldman sachs raised up its price target. third quarter amazon is a big

investment quarter. you expect margins to get hit. we might see a widening of margins which is due to small, medium-sized businesses. they go to aws. that is a big boost for them. they continue to invest in programming and warehouses. all of that original programming costs a lot of money. they have their big marketing splash in july. emily: what about apple? we will be focused on mobile ad revenue. we will also be focused on youtube. and these other alphabet holding

companies that lose money, as far as we know. >> alphabet has done us all a solid by giving us more information, losing lots of money. they make up for it in spades losing their court advertising business. big milestone for them. youtube is huge. all of those are big revenue generators for alphabet. we want to hear more about how nest is doing. at the same time you have a report of the cfo coming in,

exercising a great deal of discipline. let's stop experimenting a little bit. let's look at the bottom line impact. there will be more visibility into that. emily: alphabet, amazon, twitter. your team will keep us all apprised. still to come, the sites behind some of the of the videos on your facebook feed are banning -- banding together with a big backer and $100 million. we discussed the new venture next. ♪

emily: media consolidation is the top story of the day with at&t proposing a billion-dollar deal for time warner.

it would cap a wave of other smaller tieups we have been watching. univision buying a stake in the onion, and the remnants of gawker. group nine, and new media holding company, born out of other short form shareable content makers like now this. we asked the discovery ceo whether the move was a way of hedging his bets. >> when it comes to people consuming brands on television, our business is growing. as they start to consume on other platforms, we have to make sure our ip is on every platform. we are trying to make sure we get as much share of audience on each one. emily: joining us now for more

is ben lehr. the subject of the day is more media consolidation. how should we view what you are doing in the context of that? >> i predicted this, clearly. no, i think you can expect more consolidation to becoming. this looks like the 1980's. the rise of cable tv where you saw these individual brands get built up. i think you will see a similar thing happen with digital with a bunch of brands that are being built with big audiences but that are not necessarily getting the kind of scale they need to have leverage with the platforms or advertisers. group nine is an effort to take digital, mobile video first brands and put them together to make something bigger. emily: what does a digital media

company get out of partnering with an old school tv network? >> i think we get a bunch of this partnership with discovery. for one, we are going to build an ad sales partnership. we have tons of brands that have been buying linear tv for a long time and these brands are coming saying, we don't just want television. we're trying to extend this to digital. at group nine, we are going to be that digital counterpart. we are going to build programs that can go from linear to digital. the partners we have been working with have wanted it that we are going to be able to bring it to them. i also think that longform programming is something you will see more and more brands get into in the digital space. this is a video first business.

in the midterm we are creating more short form built for consumption. the bundle is thinning. linear tv is not dead. there is a bunch of ott and svod options we can explore. discovery will be a great partner to help us discover how to do that and distribute the content. emily: do you think that digital media committees can survive on their own with google and facebook taking a bigger share of ad dollars? should you be diversifying your revenue sources? to what? >> i think you can survive.

it is hard to find a bunch of it is hard to find a bunch of scale. you never know what goes on with the ebbs and flows of the economy. being a brand that is hanging out there in the digital space isn't a place you really want to be. you want to set yourself up to be self-sustaining or capitalized for the future. that was one of the reasons we put these brands together. obviously google and facebook -- it is scary to live in their shadow. we're moving to a world where advertising is opting in. what our brands are doing -- helping brands figure out how they can create content that people actually want to consume. there are other revenue models. then there are services. looking at the traditional

agency business and figuring out how you can build that. emily: we will have to leave it there. thank you for joining us. coming up, studio 1.0. ♪

>> revived plans for the ipo of a hotel unit after the chairman publicly apologized for the corruption investigation, and the family paralyzed the group. a potential offering was showed in june, and they are talking about a timeframe. the group has plans to unwind holdings and reorganize into a holding company. soared on its debut in tokyo after an ipo that raised $4 billion. the government sold 160 million shares, the top end of the range.

this comes after efforts to get people to contest more in the stock market. kyushu makes most of its money for real estate. finding hundreds of job cuts to be announced as soon as this week, around 8% of its workforce, which equals about 300 people. this comes after disney, alphabet, and others backed out of potential sales. an announcement could come before third-quarter earnings are released on thursday. twitter has tried to control spending as sales growth slows. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. i just want to show you some of the movers we are watching in the asian session. hong kong looking quite good after an executive says the stock is undervalued by 45%.

it's also rising in seoul. an apple chip supplier topped earnings, and you are seeing a good rally in iron ore, at an 11 week high as china output increases. of weakness a lot coming through in these china related stocks in south korea, the likes of cosmetic players and also in households. this is following a warning that china tourism to korea could be down by around 20% in 2017, according to south korea's tourism board. having a look at the overall market picture, we are generally higher, the nikkei coming back and holding onto gains at .6%. this is the end weakening for a second session against the dollar. you are also seeing solid moves in australia, which underperformed on monday, but there has been a switch out in hong kong, hang seng down and heading into its lunch break.

the shanghai composite is off by around .1%, but remember that the market hit a nine-month high during monday's a session. generally the asia-pacific index is holding on to a two-week high. ♪ emily: this is "bloomberg technology." our longform show of studio 1.0 returns this week for season five with a lineup of the greatest influencers, including steve ballmer, and the founder of coastal adventures. remember, four years ago, facebook but instagram for $1 billion. mark zuckerberg pledged to let the team work independently. i started by asking him what sort of kid was he and what sparked his interest in technology? >> i remember when my dad got our first computer, i just

played video games. as i played, i learned you could create your own levels. than programming was a thing. i took classes in school and wanted to make my own games. it was something that inspired me and i loved it. emily: photography. you also got involved in that at a young age. >> it was hard to find me at a young age without a camera in my hand. i used to get in trouble, there would be 10 packs of polaroid film. i would go through them. they were not cheap. i loved taking photos. i studied in florence in college. i sat in the dark room developing photos. that is where i learned about filtering. you could add these chemicals to the developing bath. i profit along to instagram. emily: isn't that what you learned about square photos? >> my photography teacher took my nice camera out of my hands and said that you will use this.

the plastic camera that took square film format. i learned to love it. emily: while you were at stanford, i understand you had an offer to drop out and work at facebook. what happened? >> there was a girl involved than i did not exactly want to leave school. i talked to a lot of my mentors at the time who said, facebook is a fad. it will go away. to this day, i think about that decision. i think it was the right decision. i loved finishing stanford and what i learned. when i think about it, i think about how many technologies i come about. the number of people who thought instagram would not work in the first few years still don't think it will work. it is hard to refute at this point. you have to keep going. that was one of the lessons as an entrepreneur. emily: you interned at podio,

working with evans and sharing a desk with jack dorsey. >> when i showed up my first they of work with bodio, i got this -- odeo, i got this puzzle book and they said, oh, right, we hired an intern. i don't think i would have the same passion for social media that i did today. jack is super creative. awesome engineer. it was great to learn from them early on. emily: what did you learn? >> your first idea sometimes does not work out. i worked at odeo, not twitter. it became twitter, but i remember it not quite working and keeping in touch with jack and evan as they made that transition. realizing that often as a company you need to pick it into something else. instagram had a similar history. we were working on a game called bourbon and it turned into is to graham.

emily: the first instagram video was a video of your girlfriend with a stray dog. >> had i know that would be the first photo on instagram, that it would get to this place with 500 million people around the world, i would have tried harder. my girlfriend at the time is now it wife. -- is now my wife. i said i will not post photos unless the can look a great. you should add filters. so i started by making a filter. i added our first filter to the build and took a photo of her foot and a stray dog. i posted it as a test and it lived forever. emily: how quickly did it become something that you realized could be, not just big, but really big. >> i may have been optimistic, but the second that we launched i realize there is something new and different. i worked with other companies who struggled to get 100 people

to sign up in a day. my eyes were wide. i had never seen a service grow that quickly. we saw that we had lightning in a bottle. it was our job to capture it and not screw it up. to this day, we think about that as our job. it has a life of its own. don't get in its way. make an awesome. emily: we will pick up on the topic of rival snapchat next. ♪

emily: returning now to my conversation with instagram ceo kevin sister. i asked about the moment he

decided to sell the company to facebook. >> when i look back at the decision to sell to facebook, the pros are, we got to para with a juggernaut -- pair up with a juggernaut of a company that understands how to grow. we get to use them as our resource. most acquisitions do not work that way. you can look at how many acquisitions have settled -- failed. funders have left abruptly after acquisition because of culture clashes and misalignment. we have been able to do this for four years. that is what is awesome. it came true. we got a little lucky. but we also worked very hard. emily: at the time, you're contemplating raising money. you're talking to twitter and jack dorsey, then mark zuckerberg came to the picture.

what happened? >> the acquisition happened quickly. mark and i decided it was the right thing to do. closed over the weekend. i remember us being at his house saying, let's do this. lawyers were everywhere. we were signing documents, that it was a whirlwind. i think we were in the snowman's land for six months to nine months figuring out if the deal would go through. when it did, we were able to partner. the value became clear. we were able to fix our infrastructure. every day that went by, we were struggling to keep the site up. we were able to figure out spam quickly. we had this giant spam attack. we got them in and study using their tools to fight spam. a lot of things started happening immediately after the acquisition and helped the company skyrocket. emily: why not twitter? >> there were a lot of companies. there was google and others interested in the growth.

facebook is the one that took it seriously. i think mark acted quickly and decisively. at the same time, look at the pairing now. it feels native. emily: google was interested too? >> i think every company was. i don't think it was google specifically. companies were interesting. we were a bit of an anomaly. people but we had all this growth. people could not get why those things could be true at the same time. a lot of people wrote off photos. no one quite understood how important photos would be for the future of social media and expression. if you look up people express themselves now. it is not just through chat but photos. no one understood that was the revolution instagram was about to embark on. emily: facebook but instagram for about $1 billion.

one year later, citigroup valued it at $35 billion. did you ever think, what did i just do? >> every entrepreneur measures value on impact. i hope they would. mark giveaway 99% of his wealth. we are not in the game to make money but change the world. if you talk to entrepreneurs that matter, the elons, the sergeis. they say, did we create something that did not exist before? did we unlock value? that is what we focus on everyday. emily: went mark zuckerberg at the company, he pledged to let you work dependently. >> mark has been true to his word, and then some. his interaction is basically through meetings with me. i have learned a tremendous amount with him. about our transition to advertising, our transition to a more global community.

he is one of the most interesting, long-term strategic thinkers i have ever met. think about it as having the best board member and the world. that is what we get. it is independent, but you get amazing guidance and amazing counsel from someone who has been able to build a tremendous company. our transition to advertising was an interesting one. i was of the belief that if they had fewer advertisers it would be higher quality. if you have more advertisers and are able to bring in an entire ecosystem, you get higher-quality advertisements. i remember him saying, i felt the same way when we introduced advertising. i was able to learn a lot. emily: you mentioned that you met not with just mark but yan and brendan. how do you take advantage of some of the more interesting things like virtual reality? >> if our vision is to make you

feel like you can travel anywhere in the world in a fraction of a second, imagine the day when you can put on a headset and be at a coldplay concert. seeing something happen like a big protest or riot in the world, or something as simple as a friend's wedding. virtual reality in the coming years will play a critical role. emily: how about artificial intelligence? >> we use it today. making sure we have the right amount of targeting. emily: do you see more in the future? >> for sure. the more personalization you have -- if we can have an experience that caters to you, if we know your interests, and what you engage with, we can use machine learning and artificial intelligence to make a much better experience. >> what about e-commerce? do you think about adding a buy button?

>> i excited about the future of e-commerce on instagram. we effectively have a buy button now, but it doesn't complete the transaction on instagram. we are starting by letting advertisers get to their audiences, promote their own products or posts, then take them to the advertiser's website. if we can make that more seamless, we will. we are starting to walk before we run. emily: who is competition? >> where do i start? we only have limited amount of times as consumers to pull out phones and do something. anyone competing for time. emily: one employee told us they are concerned facebook and instagram are not more scared of snapchat. are you afraid enough? >> i do think it is our job to be afraid so much as understand what is happening. we are competing against many different services for time and eyeballs. getting to 500 million users run

the world is a big feat. 300 million our daily actives. 300 million people who open up instagram every day is a big feat. we are not sitting happy thinking that will last forever. we need to keep innovating and keep introducing products. emily: harassment is a problem across social media. one singer reportedly attempt at suicide after reading comments on instagram. does instagram need to take a harder line? >> we work harder on it. we take every report of abuse seriously. we provide tools to public figures to moderate comments. that is something we are focusing on. it's unacceptable for that to exist on any platform. we will be a platform who takes it very seriously. emily: up next, how kevin systrom was able to get the pope on board. ♪

emily: kevin systrom is widely known for being a product-focused ceo. he explains how he hired kevin we'll. -- kevin wheel. >> building product is much more operational. it is like the guts of the machine. how do you build product? when you have an idea, how do you make it reality? that assuming that kevin brings instagram. he has done it before and seen it at scale. i don't think i am a good project manager but i love the team moving strategically. not only do you get two kevins but you get a great pair that is like the yen and the yang of the product process. emily: i notice that you have not used your twitter handle.

do you think twitter can turn itself around? >> i probably should use my twitter account. i think every company along their course of growth will hit speed bumps. it's all about how you get out of that. i respect a lot of what they have done in the past year. emily: how much of instagram's success has been focus and commitment to simplicity? >> that is the complex part of instagram. it is easy to let a product get bloated. it is easy to say to every employee, work on whatever you want. we will see what sticks. before you know it, have a product all over the place without a singular voice. that is complex. managing to get something to be simple and straightforward, even

though it has tremendous complexity behind the scenes, that is the hardest part of any ceo's job. saying no more than yes. emily: what are some features you throw around and ultimately said no? >> we had a lot of people responding to sponsored filters. there was a two base company that wanted a teeth whitening filter. that is a funny example, but it makes sense. we have filters, we should do sponsored versions. we focus on simplicity doing the right thing by the consumer. not make them so commercial. make them great. there are decisions like that everyday. you could make a few bucks by doing them, but they add complexity to the product, and it does not add a lot to your bottom line. emily: you redesigned your logo which some people did not like. >> really? emily: at week called it a travesty -- ad week called it a travesty.

what did you learn? >> i knew there would be a challenge. there is a single company like starbucks or gap that has changed their logo and it has been easy. the question is, how much work have you put in before you get there? how much resolve did you have? are you doing it for the right reasons? we wanted to give people an idea that we are not just about photography, we are more general. we are about creativity. thus the colors,the simplicity. we wanted to win that would look great on a phone, a t-shirt, a billboard. our logo that we had would not do that. the current one i did not have a heavy hand in designing. we have an amazing design team that thought through all of these things. what you see with every brand as that, it goes from being complex to simpler, simpler, and simpler to iconic.

apple, at&t. the big brands do this. we just skipped a few parts. what did i learn? it is hard. what else did i learn? it will be ok. emily: your time line is now logarithmic as opposed to chronological. how does that work out? >> it is working the way we hoped. engagement is up. it means people are liking instagram more. they have more feedback on their posts, more feedback on the posts they want to give feedback to. the good news about an algorithmic feed is unlike what people believe, it is not "not" chronological. it just takes it and reorders it to make sure you see the best stuff at the top. emily: you have been traveling

around the world. you are at fashion shows and major events. what are the last few years been like for you personally? >> i don't think i would have thought the nerd in high school would be at a fashion show someday. i go to these things because i am a representative of the brand and instagram. by having relationships with people in these different industries, whether it is the pope, or fashion dinners with anna wintwerp, those things are -- could not be more different, but are extremely important on instagram. emily: you met the pope twice. what was that like? >> really inspirational. there are not many moments when you think, why am i here? and when it happens you think, i will remember this moment for my entire life. you realize you can on board someone who will go down in the history books for thousands of years hence they are choosing your product to connect with the people who care about their

message, that is awesome. emily: kevin systrom. we will be all over apple's earnings tomorrow. that does it for this edition of "bloomberg tech." this is bloomberg. ♪

>> oil falls from a 15 month high. >> a boardroom coup. the boardroom is toppled by ing.a's $100 billion join >> more guidance and we could possibly see three hikes next year. >> saudi arabia's record bond sales are being felt across the