thank you. >> i'll come in another day when there's not an $85 billion merger on the table. >> your first 40 minutes did get cut off because of that. >> that's okay. it's a serious deal. as i said earlier, these megamergers to me do signal you're getting to the end of a cycle. >> really? >> margins are -- >> barry sternlicht, thank you. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. so much news, an hour's not going to be enough. at&t, time warner, tsunami of earnings heading our way over the next five sessions. europe showing decent advantages, china up a percent overnight. watch the ten-year, at least four fed speakers are on the agenda today alone. our road map begins with that megamerger between at&t and time

warner and $85 billion deal is more consolidation ahead? >> plus, getting that deal approved calls for scrutiny and consumer protection already coming from washington. let's listen to how both ceos are pitching the transaction. and goldman sachs lowers outlook for corporate earnings through 2018. why it sees profit growth slowing in the s&p. but first up, at&t's mega merger with time warner already facing scrutiny from presidential candidates and capitol hill lawmakers. earlier on squawk at&t ceo randall stevenson said he believes the deal will pass regulatory muster. >> this is one where the nature of this deal is unique from anything that we've done before. and that is a vertical integration. it's a big merger, but it's a vertical integration. and as you think about the areas that have been really contentious over the last few years in our industry and in jeff's industry, they've been horizontal mergers where the government was concerned about a competitor being taken out of the marketplace.

this has none of that. >> so we now know how they're going to try to frame this deal, guys. saying no rivals being taken out, distribution and content makes it vertical. >> well, look, i think they're using very traditional methods and i totally understand that. that's what a lot of the lawyers have done in these deals, but traditional metrics have not been in play more palatable justice department. and i would be more concerned about the things lawyers don't seem to understand, which is the tenor of the times, and the tenor of the times says we don't really like big companies. the deals that have been stopped most of them should have been approved. i had lam research on the other day, no overlap, when i asked why said justice. el with why? well, justice killed it. >> that goes to the unpredictability of the regulatory process, because i agree with mr. stephenson, he's correct in the sense of vertical integration should not necessarily bring challenges from antitrust. there will likely be conditions placed on this company, but it

would appear at least on the face of it if you follow the rules and the law as we know it that it does not represent an anticompetitive deal in that sense. it's not a horizontal deal. it will take a long time to get done. you're looking at at&t shares that are below. below even the collar or very close to the bottom of the collar and therefore the value will be 107.50 or below that. and there you see of course half cash and half stock. guys, i think though the scrutiny really will come from at&t shareholders. and i think some of the questions some of them will have, well, does it really make sense. if you're a time warner shareholder you're likely applauding jeff bu kis. he did deals that came up in a couple years and got a great price for shareholders even though time warner will not be up sharply because of the fact the fall in at&t and the time this is going to take to get done. but if you're an at&t shareholder, you certainly have to say, okay, do i fully

understand the strategy here. by the way, did you see the numbers from the company that we got in terms of earnings? they're losing subscribers. underscores the challenge that their basic business is under from the likes of t-mobile. we'll talk to john legere in the show. they get growth and coverage and then this unt to talk about the changing world where they'll be able to deliver very specific ads with compelling content that's somewhat unique to the user in an unbundled world. >> kind of like what facebook can offer right now, and google can offer right now, and maybe amazon offers right now. those are the three networks everyone fears in terms of traditional networks, t-mobile blew numbers away, sprint is doing the same. i think if i were an att shareholder i think it's an easy call to sell. there's no reason to buy, dividend's not that great. >> coverage improves because of free cash added from time warner. so that's a positive. directv also helps in terms of -- >> they got good reaction from

the shareholders when they bought directv. but i think what they really misread was verizon went up too and that was because these were bottom market equivalents. if you take a look their stocks peaked exactly when interest rates decided -- troughed. >> right. >> i think they misread the shareholder base. >> you do? >> yes, i do. i also don't think they care. >> although a shareholder base cares about dividend, cost of capital is extraordinarily low, going to borrow $40 billion like that. >> if you're an att shareholder, majority of those people want it because it's better than box. >> okay. >> it is. >> for how long though? >> thank you. that's what they saw. i think they saw, let's get low cheap money and the fed's going to raise rates so lock it in right now. >> if you're randall stephenson, i understand it from his perspective, challenged in terms of price competitive environment. what do you do? but you raised the point. you're not google. you're not facebook and you're

not amazon. >> they're ecosystems whenever they want to be. these guys have to develop. lelts say nothing happened today. here's what i would be talking about. john legere took a huge number of ads -- follow twitter feed. they're telling you they're eviscerating att and verizon. >> att saw post sub trends lost 268,000 subs. >> what kind of business is that? >> it's not a growth business. >> exactly. not a growth business. so they add this. can we congratlation jeff. man of his word, kind of exactly the executive i want running my ship. >> he's been a great american. that's the joke we always make whenever his name comes up. now he's a really great american. >> he's a great exec. i'm not saying he pans stephenson. stephenson sees the writing on the wall. the problem is that time warner under -- so well run under

bewkes. ask the bench. >> it's funny. i spoke to stephenson yesterday and to bewkes a couple times this weekend, but i didn't get an answer to that. part of the strategic rationale to find out. there's been speculation, purely speculation about peter would he consider coming in to run this business. that's a long way away by the way, we're talking at least a year for the regulatory review to take place. as jim said it is uncertain even though it would appear on the face of it that vertical integration should not get a heisman from the justice department. on the time warner side i will say this though, mr. bewkes has set about the last decade taking apart this company that included aol, that included time warner cable, that included time magazine. and here he is embracing and taking half of his consideration in stock for a company that's going the exact opposite direction therefore saying what, that actually strategy's okay now?

i did ask him that, and he said, listen, the world of wireless video and new opportunities for delivering ads in more effective way is now here. and it wasn't. and as for time warner cable, he said it was a regional player, it didn't have nationwide status. but it's interesting. >> let me ask you because i know parent company of this network and i own shares in it, comcast/nbc has worked. the stock is up from 16 to 63 -- >> it has worked, but has it worked because of the integration amongst everything or worked because they did a great job buying the assets? >> i think it was an asset that wasn't well run and they've made it well run. the theme parks incredibly well run. just how much cash they can out of this. but if i were att the worst that happens is maybe we become like comcast. >> except we're in this world where things are becoming unbundled. if there's a bigger sign, i don't know what it is than this deal itself where he's talking to me, randall stephenson, yesterday, about directv now, that's their over the top

product, is going to be a key product. >> but that's old technology. >> when he says that premium content will win, by the way sounds more like sumner redstone than anybody else. >> yes. >> but directv sells subscriptions to people who are getting satellite broadcast. it's going up by the way. the subs have gone up. but in this unbundled world will that continue? and he's going to own networks that will rely on being part of that bundle or have to be part of every ott bundle. isn't that a challenge? >> there's a challenge every has. whether it's wireless business, john legere is a-talk about directv for a second. i love football. and i have fantasy and i have johnson. that was a 6-6 game last night. okay, i'm telling you that that nfl package peaked. i think it peaked. i think ratings are down this year because people -- there's too much football. the games are not exciting, the

refs are involved in everything. i'm not being facetious. i'm telling you directv would be worth less today than it was a year ago. >> but to david's point here's coen this morning, half ebitda comes from basic cable networks in a world where content is being disaggregated. so they're getting into the problem that we already know. >> yes. >> and i ask that question of mr. stephenson yesterday in our conversation. and i know obviously he was on with the guys this morning. >> right. >> and he, you know, he seems to think or believe that they're going to be able to add more value as a result of having this unique, not exclusive by the way, unique content available to their subscribers that will obviously help them deliver ads on a much more effective way, get a much higher price from advertisers as a result and keep their subscriber base. >> well, good luck. but facebook knows exactly who i am and is only pushing ads toward me that i want. that is an extraordinary competitor. that is a tank.

these guys are calvary. >> he can't buy facebook. >> no, but facebook can crush him. >> and he can't buy google. >> combination of whatsapp, i think they recognize in the older generation that they've got to do something, whatever it takes. they're kind of in the whatever it takes mode. and facebook is in the take share from them mode. >> yeah. listen -- >> to not include facebook in the discussion is crazy. >> of course. and sometimes you feel like you're in the time machine go back to 1998 i feel like i've had some of these same conversations back then it was convergence between the internet and television. now it's about wireless and everything else. but it's similar kinds of conversations. and it doesn't mean it worked back then either. >> no, some would say you're being cynical. i would say you're being correctly skeptical. >> okay, thank you. >> i'm coming from the other side which says i remember the justice department -- bank of america -- let's talk about the justice department. bank of america, citi and j.p.

morgan go down to the justice department say, listen, how can you tell us we should pay $17 billion, $13 billion, $7 billion, and they say because we're the justice department and we don't have to explain everything. when the lam research was killed and that was a very important deal because they had no -- that was a total vertical. when they asked them, they said it was the justice department. dow and dupont, they want that deal done, when i asked the problem, it's the justice department. i'm saying justice department under either candidate is not what you think it is. the justice department has not shown any due process, so to speak. they do not tell you why they're blocking a deal. >> you can go to court at least with them. the fcc is a different story. remember the fcc is the one blocked comcast and time warner cable and could go on forever with this review. here it doesn't really have as big a role. they could get rid of the broadcast licenses and not have any role at all. >> ftc, you think walgreens that reported last week -- it's been more than a year for rite aid, okay? the government says we don't like deals.

>> if all of this is such a high bar and content and distribution being together is a problem, why was our deal done? why was comcast approved? >> because they were giving away -- oh, because they were roofs. they didn't know at the time. they didn't know. >> i don't know. there were plenty of conditions put on the deal that comcast did. >> but they let it go. and now they feel like they shouldn't. >> but why? what has it done to competition? has it really lessened competition? it hasn't. >> you're a candidate from a major party -- republican major party saying i would kill this deal right now, what i'm saying it's provoked a level of unpopulism not unlike united and continental, you have a concentration of power -- think about the american people. >> you know what, technology and everything is moving so much quicker than the justice department can ever figure it out. >> but the american people have had it. they saw their price rise -- they saw fares rise when it came to airlines. i'm not kidding. >> i hear you. >> the american people have had

it, the justice department as much as we may respect the justice department, responds to what the american people think. i could not believe that the first thing trump said this deal's dead, under my regime it's dead. who did he talk to? did he call five ex-supreme court judges. who did he call? there used to be a justice department. it was independent and made rules. >> it might still be and you can take them to court. and if law prevails one would expect this deal will get done with provisions on it and it will be a year from now and the world will potentially have moved on. who knows. things are going so quickly. >> the concussions in football and refs in directv signups go down. >> interest rates go up. >> interest rates go up and directv satellite when i asked apple to please buy directv because i wanted integrated, said satellite, that technology is old. to me it was new. i remember when sputnik went up. >> if you asked alexander graham bell said your company is going to buy a tv media company in the coming years, he would have said

what's television. >> that's a good point. >> going hollywood is a big deal. >> well, stephenson and -- stephenson probably watches tv. >> i understand he's working from what he can. he's working from the -- dealing the hand that's dealt him. he doesn't go home. he goes big. >> yes. right. legere, the traditional business of what we would be talking about right now is i cannot believe legere took that many customers. instead the dialogue is, hey, you know what, hbo subscription, directv, nfl -- >> well, if there's any gem in this deal, we all know what it is. it is hbo, no doubt about that. >> remember when those crazy people were trying to get him to separate hbo from time warner, since i was one of those crazies. hbo is good. >> i think the three brands he mentioned this morning, game of thrones, superman and cnn.

>> those are worth having. >> the good news is content is still important, guys. >> yes. >> until we get replaced by machines. >> content is king. yeah. fleet content you put on facebook -- how much facebook pay you for all that content? zero. that's a good gross margin. these guys all know it. tired of paying. i like that. >> that's me with my virtual reality goggles on. >> when we come back this morning, we'll look at some of the other deals making news this morning, and there are a lot of other ones. more reaction to at&t time warner, former aol chairman and ceo jon miller will join us, we'll get to kimberly clark and others when "squawk on the street" continues in a moment. these goofy glasses.

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more m&a to tell you about this morning. aircraft component maker rockwell collins agreeing to acquire airspace. stay tuned for the ceo of rockwell collins in the next hour. te ameritrade buying scottrade in a $4 billion deal. october is now the third largest month ever in announced of u.s. m&a. >> wow. geez, that's incredible. >> this is a giant period right

here. wow. by the way i think it's going -- i mean, i think this month, yeah, the fourth quarter's going to keep going. >> these two deals are fabulous. so if you're rockwell collins, c.o.o. kind, you got a deal with stretch bombardia, boeing needs to make more supply and airbus which is powerful, you need to merge. remember, b.e.a. is the galley, seats are very expensive. so this is a way to be able to deal with how powerful those big three are. for scott, i mean, that's great. too many players killing each other. now there's less competition. that's smart too. i think both deals fly under the radar screen and get done. but they are what has to happen in order to be able to deal with, one, a very cutthroat atmosphere in brokerage, and two, a really powerful group of aircraft companies that rockwell collins gets played off of. >> the name has been a around for a long time as a

potential -- >> remember, it failed. >> right. >> but b.e.a. is a very good company. i was very surprised that thing kicked around for so long given how powerful boeing, airbus are. >> 27.90 in shares of rockwell, nice collar 7.5% up or down as opposed to 5% by the way with att and time warner. and at&t is below the bottom of the collar. you're not getting any more of a ratio there. >> wow. okay. >> so it was about a 22-plus-percent premium, jim. >> just a classic deal. those are the kinds of deals i expect to happen. remember with -- >> basically like a can duopoly now, they let all the beer companies merge and then they squeezed all the can companies in order to have more power against beer companies. they need to have b.e.a. merge in order to be able to say to boeing we're not going to take

those prices. boeing's partner program. you know what that kind of partner's like? >> tell me. >> marc benioff, jack dorsey. >> oh. >> no! he wished his friend dorsey -- am i wrong? marc said he wished dorsey good luck. that was cynical? >> that was so mean. it was mean. you're my buddy benioff, you're mean. >> he's not mean. he's a sweet guy. >> when he came in here he seemed mean. he scared me. he wouldn't even look at me. >> trust me, i know sweet when i see it! all right? >> cramer's mad dash is after the break along with the opening bell. take one more look here at the premarket. obviously responding to some of the enthusiasm regarding at least m&a today. we're back after a break. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack.

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futures higher ahead of a busy week. a lot of m&a today. fed speak. 163 s&p companies reporting earnings. gdp on friday. we'll get to all of that when the opening bell rings in five minutes. what powers the digital world? communication.

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all right. let's get to it. we got a couple minutes before we get to the opening bell. we also had earnings from the real economy this morning. you want to hit that, right? >> yeah. couple 3% yielders that intrigued people, kimberly-clark really reported a very challenged number, organic growth 2%. i'd been hoping for 3, something higher. the revenue's decreased, felt some was currency bukurcurrency disappointing quarter. been a straight shot down for a great american company. i can't stick my neck out and

tell you, but another one that was a great growth company vf corp., down two, again yielding three. remember when northface was really strong? northface has numbers that were quite frankly down for the first time in a long time. wrangler down 6, lee down 6, levi's come on strong. revenues are very disappointing. talking 2% versus what i thought was 3 or 4. outdoor which is one of their most important versus mid single digits. kimberly consumer packaged goods disappointing. keep that in mind because this is earnings season, after all. >> any idea what might be driving that? when some had been talking about the revival of denim at least. >> yeah. you know, i had chick burr, who runs levi's. they're having very big numbers. they've made a major comeback. no one thought that. they've really come back and killed it. that's who's taking share.

calvin klein similar. when pbh, when manny came on the show, they're doing well. vf corp. being eviscerated here. >> let's get to the opening bell. look at the s&p at the bottom of your screen ahead of a busy week at the big board today. the posse foundation, a provider of full tuition college scholarships. at the nasdaq founders forum, network of digital entrepreneurs and b-12 artificial intelligence company celebrating the winner of its rising star award. obviously we'll want to watch twx all day long. >> think about that artificial intelligence company, machine learning, by the way that hat this weekend, we didn't talk about the hat. >> yeah, on friday. >> the things we love so much, they shut it down. >> it's a scary thing, right? your crib monitors and and connected things that don't have any security whatsoever to direct these huge denial of

service attacks. >> i was kind of taking my breath away about that because we should have talked more about that. but at the same time obviously time warner and at&t trying so much to deal with a world where the other guys, where amazon is machine learning, they know what you want. netflix knows what you want really well. hbo's a great asset merged with the machine learning and with artificial intelligence will become even stronger. just understand if facebook -- and another one we don't talk about enough, snap, they know what you want. snap being a very good place to advertise. >> yeah. >> that's coming public. it is a very well run company. >> on the performance of at&t and time warner is interesting of course to note time warner shares are actually down. you may say wait a second, $107.50 and it's down to $87.90? well, time of the deal, it's going to take at least a year. they are talking about a closing by the end of next year.

the risk that jim has talked about in terms of regulatory even though it would appear as a vertical integration it should not necessarily be something that's opposed by justice. it's unclear. at&t also is below the collar $37.41 was its collar. so you're getting a fixed ratio now of 1.437 shares of at&t. that's how you get to the price, which is a bit below $107.50. that's why time warner is trading significant discount. >> monsanto well below. >> well below. >> sin yenta. >> sin general ta down dramatically. glad you mentioned it in part because kim china didn't try to e mill rate any of the concerns of the eu, which typically you allow for some concessions. people are concerned now about chem china and its willingness to do what it needs to do to come out and buy syngenta. you can see what that's done. that scares off risk a--

>> do you think china ocean will be able to buy gem worth which is a challenged company? >> chinese, they're unscrutable. >> do we know the chinese balance sheet? full disclosure genworth life insurance i come back and say i'm concerned, now the chinese are going to get that if they get that deal done. but all these deals require so many different government approvals and i think we're underestimating the populism worldwide. not nationalism, populism. very different. >> with all this talk about the ipo pipeline and now the m&a pipeline, are you warming up to the banks anymore? >> bank stocks, bank of america say it's going to break out. remember these are all so

everyone accepting fed talk there will be a december rate rise, but the best acting stock are airlines and i think they were undervalued and then bank of america, j.p. morgan, the regional banks are on fire, bb & t, they are the ones doing very, very well. and some techs are doing well, but it's basically fang and apple. apple reports this week. remember apple? >> i remember them. >> didn't we think -- interesting they continue to pass at anything big. >> as of now. >> oh? you were the one on friday said this time warner deal is real. looked at me is this real. >> reporting worked. >> it did. though it was more real than i thought in the sense of closer. >> what about the -- versus the younger journalist. fun, facts, readers, page views, do they trade-off? >> no, i think when i see some

younger journalists they don't want to get on the phone. prefer to use e-mail or text. >> in the box yesterday at the eagles game, my daughter and i going back and forth, wow, that was an ugly fumble, yeah, that was bad. she's behind me. but she addressed me. >> that's right. talking on the phone. 3m the leading dow component upgrade today at barclays on recovery in emerging markets. it's going to report tomorrow morning. >> that's a gutsy call. but i think the longer term thesis about that was very important which is we're troughing. if we're troughing for the internationals, that could be very big. but you did not see that with hon honeywell, you certainly didn't see with ge where there was a sense of ennui. >> world weariness. >> yes. what's the symbol for -- >> i'm not sure. >> a lot of the products driving earnings now didn't exist five years ago.

i don't know if you look at the product portfolio but they are just a fountain of innovation. i'm not saying because my dad once worked for them, i'm very impressed they seem to have new products globally. and they're doing a lot of security, health and those are growth markets. >> i like them. >> wish they didn't upgrade the day before. >> yeah. >> comcast upgraded to outperform talking about the digital innovations, dreamworks of course. william sonoma citi takes it to top holiday pick. >> that's good. i know some retailers last week nordstrom was a very good performer. looks like kohl's has bottomed. but i think the numbers may be a little too high for those -- we don't know what the fall shoppers -- david, i want to ask you about comcast. >> yes, sir. >> comcast has been treading water -- we own shares. been treading water, but that's actually better than a lot of

the others. >> and happens to be a month behind. >> anyone say look at comcast had good growth, went from 16 to 66, 64 actually now, do they ever mention it? >> comcast comes up all the time. sure. >> and we're not kissing up. i'm just asking. >> no, listen, you hear different things. it has done a very good job navigating this current environment. >> right. >> broadband is an extremely strong product. but there is continued concern about people who are no longer going to take their video subs. and menu obviously had that more so on the content side of the business of which we're a part of this family. >> see, i was going another way. i hear from people -- >> that they're going to buy a wireless company. >> no. that people love xfinity. >> the technology itself. >> but they love the product. you never hear anybody say, you know what that product is really good, other than for apple. xfinity advertises very heavily at lincoln financial, where the eagles did deliver a military beatdown to minnesota vikings

and sam bradford. but like the xfinity light, yeah, i like xfinity. and like, you like xfinity? the technology at comcast is revered. >> without a doubt and i'm glad you mentioned that because it is very well thought of. and it's funny. they license it now as well. and it's -- >> it's good. >> and it is having an interface that is easy to use is very, very important. >> that's right. they're in the conversation is what i'm saying. >> i mentioned t-mobile of course. >> i was just going to say $50. >> yeah, it's having a heck of a morning after third quarter results by the way strong, prepaid, postpaid, sub results, they also appear to be above estimates that analysts had for both service revenue and ebitda at t-mo. very different report versus at&t of course which lost subs. >> remember verizon got half the subs we thought? >> there was a time when the justice department was right in blocking a deal. >> yes. they needed t-mobile to keep rates down, although our bills

are so high to begin with. >> they are. >> but t-mobile hand it to legere, he's literally the younger person. my kids -- periodically they try to say, dad, it will save you money. i say how do you do, dad, i'll go to sprint, i'll go to t mobil. >> well, thanks, i'm on the family plan, it's the only good deal i have. but, yeah, people like legere. younger people identify with legere and they identify with sprint's low prices. >> it's basically a 52-week high for that stock right there. >> remember when sprint stole the actor from verizon? >> yes, i do. >> these guys hate each other. it's like richard sherman going up against anybody on the cardinals. >> yeah. >> or going up against himself ext existential crisis. i'm saying there's nfl like tendencies in that particular telco business. they don't seem to get along. >> it's okay. >> a lot of personal fouls, you know what i mean? a lot of ejections. >> we've talked about whether or not that's a manufactured rivalry. doesn't really seem like it. >> no, i don't think they really

like each other. say you like randall stephenson, no, he's dumber, he's always doing the dumb and dumber thing, that's an insulting thing to be called dumb. >> it is. >> but legere doesn't seem to mind. if i called you, petty -- >> that wouldn't be nice. >> no. who else did you say was mean? >> marc benioff. >> yeah. >> charitable mean guy. boy, you really are coming at him. >> i'm not coming at him. he wouldn't even look at me. walked in this place and did an interview with you. literally wouldn't look at me. i'm not scary. >> he wouldn't look at you? >> no. >> you took it personally, didn't you? >> i did. >> dow up 123, best gain since september 30. let's get to courtney reagan on the floor. >> that's right. we're seeing major averages up by about 0.7% or so give or take across the board here. it is a nice day here for the bulls. like you mentioned it looks like we could be actually close to erasing the october losses if we

can hold here. we're boo uoyed by a little of deal making confidence, you've been talking about the deals as well as earnings reports. the dollar also continues to trade near seven-month highs. we're watching that a little for some of the multinational reports, but slightly lower today against a basket of currencies. you can see there a nice lead up here for the major averages. want to take a look at the sectors and see how the chips are falling here within the first ten minutes of trade. of course we've been talking a lot about the deals in telecom space, so those are some of the stocks we're going to be watching in particular. you mentioned t-mobile, of course at&t and there's some movement there we need to be watching closely, but there's also some movement in the consumer stocks. let's take a look at what's going on with vf corp. this of course is one of these manufacturers of apparel. so you may not know the name vf corp. if you're a consumer, but you certainly know the brands like lee and wrangler, northface, vans, those are some examples. this was a mixed report with

earnings beating, revenues missing but big cut in guidance. i find a difference in jeans wear, that's different from what we've been hearing from some other apparel players seeing strength in denim. i'm particularly interested in the comment from ceo eric wiesman regarding outer wear were related to wholesale orders for the fourth quarter. that's an interesting read through potentially for what we're seeing during the holiday season. with some of these retailers getting potentially less of this branded apparel. we can take a look quickly at kimberly-clark. this was a miss as well for the personal product maker on both earnings and on revenue here hurt by weak currencies mainly in latin america. last but not least take a quick look at the earnings picture. we're seeing a very nice result of 120 companies so far in the s&p. 78% or so have beat expectations, that's much better than the historical average of 64%. and we're seeing a surprise beat

by about double from normal. david, back to you. >> thank you, courtney. courtney reagan giving us an update on the broader market. >> vf corp. was up -- >> you know, guys, what we haven't discussed is the media landscape after this historic deal and whether or not it's going to have any true impact on the way people view that. and so worth taking a look at some of the other players both in content and in distribution and/or we mentioned earlier comcast our parent company in both. cbs comes to mind more likely than not to happen, yeah, probably. there'd always been a hope in the part of leslie moonves people believe and i'm amongst them thought once that deal in fact happened that it does happen he might try to look at a time warner deal even though it would still have been a far larger company. at least it was something they thought about. that's obviously not going to happen any longer. but this does seem to bring to bear the necessity now more of this kind of a transaction. they're not talking yet. don't expect them to for a

couple of weeks. the independent committees of both committees have gotten together, they've hired their advisors, they're doing their internal conversations right now. and they will begin let's say by early to mid november having real conversations one would expect about a potential deal brings those two companies together. of course they are controlled by national amusements. what about some other content companies? when we came into trading this morning it did appear some of them would be up. none of them are now. discovery actually even is down after a big move up on friday. some say that was short covering, others wondering does it force more consolidation amongst content providers. it's unclear why it would. they're still facing the same problems they're always facing, which is the unbundled world and what of their networks will be included in the various packages that are now starting to truly be offered, whether it's directv now, whether it's what's going to be coming from hulu, dish and so many others that are out there, what will you have, what won't you have? and as consumers have more and more choice, what do they really want and they can make choices

as to what to include or not. so that may put some networks at jeopardy, not necessarily saying discovery's in particular, but just generally speaking many of the ones out there. other questions of course, what does disney do? disney, run by arguably the best ceo in media. >> yeah. >> who's made on the big questions almost always the right choices. what does he choose to do, jim, when he looks at the world? they were really there for twitter, was disney. they of course walked away. like as did salesforce. but does that show a willingness on iger's part to say the world is changing, i'm looking at my espn subs, they're not going to be growing anymore, i've got to think about something else. do they even consider a netflix? >> wow. i don't know about that because he cares passionately about earnings per share. i thought what some people think is a little deal with the baseball -- >> mlb. >> mlb, right, i think that's a big deal. i think that's a very good

merger with some of the fantastic digital people they have up at espn. it's not being taken seriously. it has a lot of technology that i think could -- would be greatly pleasing to advertisers as it goes across the board because that's how we want to watch sports. i watch all out of market games because i'm not -- i like baseball. well, when the phillies were good, it's a little tough to watch now. but i do think that technology that they bought was a great way to do it without spending a lot of money. >> he's going to do something else before he gives up that ceo seat. i think -- don't you think -- i don't know, is it content or distribution? do you try to get a netflix deal done? >> look at these $800 million movies that he's got, time warner marvel was so good, i don't know. i think he cares about his shareholders in a way that he doesn't want to do anything that hurts them. but you could say that the reason why it's gone from $120 to $93 is because of espn. and does he have a second act? i think he has had multiple

acts. i'm willing to give bob iger the doubt like i did with bewkes that he knows more than i do. when i argued forsif rously with bewkes about the idea of spinning out hbo, he had a better vision, which said, listen, all these things are worth more. i think when i tussle with disney about what they should do, i have to defer. in the end i'm a generous pundit, call myself a pundit self-dep ra kags, okay, but i'm going to tell iger what to do and i congratulated him on the mlb deal, but i think going against him has been a sucker's game. he's very smart man. >> it will be very interesting to see. and what our parent company if anything chooses to do. do you need to buy wireless now to sort of have that same group of -- >> that's the question. i want him to buy t-mobile. >> the advent of 5g, the idea to get broadband wireless connectivity in your home not today or tomorrow but call it five years from now, what does that mean? >> let's not forget google is

going to launch their own service next year. i was in austin over the weekend. huge store front for google fiber. >> but they've kind of stopped that effort in most of the places because it was so expensive. >> when you talk to google about what they can do, they're like, listen, we have so many things we can do and -- well, it did hit a high, almost hit market multiple which is insane they're doing so well. i think it's very interesting that if t-mobile had not gotten its act together, i think it could have gotten a bid from the likes of say a comcast. but john legere, incredible execution. you know, john legere is talking about just crushing this industry. clo ray is talking about crushing this industry. he's a bright man. he reports this week. >> no, they're aggressive guys. t mobile does have majority shareholder. >> sold to you, my friend. >> all right.

let's move on now to the oil patch get a look at where things stand now. jackie deangelis is at the nymex. >> international producer are meeting in vienna today, the opec/russia energy dialogue. it happens every year, but it's not necessarily what's on the agenda but the sideline conversations that could be more meaningful. you've got the russian energy minister meeting with the saudi energy minister and the opec secretary general about this production freeze that was announced in algiers. now, the russians have been cordial and said they would cooperate but they've said that before. the question now is if they will get in on this. and also, if they don't, if opec will move forward with that freeze as scheduled at the end of november. now, remember, you've also got the iraqis, they're saying we don't want to be involved in a production freeze. we're just ramping up. there's a lot of reasons that the market is not believing opec right now. and of course you are seeing energy prices a little bit lower but holding over 50, so far the session low 50.08. back to you. >> thank you very much, jackie. when we come back a lot to talk

about with john legere, the ceo of t-mobile in a first on cnbc interview, the stock hitting multi-year highs today above $50. dow is up 118 for the best gain since late september. we're back after a break. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves.

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dow's up 122, but a couple of notable all-time highs, facebook and alphabet, as the conversation of the day really centers around how content is going to be delivered to you in the future. we'll get stop trading with jim in just a moment. it's not just a car, it's your daily retreat. the es and es hybrid. get up to $5,000 customer cash on select 2016 models. see your lexus dealer.

time for cramer and stop trading. >> the potential for more m&a in the semiconductor stocks. we didn't see the qualcomm deal hoping for nxpi. >> not coming today. >> right. j.p. morgan starts qorvo with a buy, that is not a tequila we serve, this is one of the finest semiconductor companies, it does rf content, very important. and they did have some negative things to say about skyworks. i disagree had skyworks on last week on "mad money," but watch qorvo, a natural takeover candidate. that does matter. >> all right. what's on mad? >> david was being skeptical earlier about how well acquirers

do, i have the one company that has made all the m&a moves that is right and i'm going to reveal it. it shows you how to really do a deal. it's a brilliant company. every time they buy something the stock goes higher because they make so much money. it's the antedoidote to what we seeing. and bewkes, i want to congratulate him. he kept the status we all want. he's a great american. >> he's the mailman, he delivered. >> he did. we'll see you tonight, jim. "mad money" 6:00 p.m. eastern time. 114 up on the dow. we'll talk to john legere about t-mobile after a break.

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giving them the agility to be open & secure. because no one knows & like at&t. good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen and david faber at post nine of the new york stock exchange. it is indeed a merger monday with media deal of the year, time warner, at&t, but that's not where it ends. fed speak, gdp on friday. right now watching the dow's biggest gains pretty much of the month up about 112 points. our road map begins with

mega merger monday at&t buying time warner for nearly $85.5 billion transform into a media giant. we break down the deal and regulatory hurdles straight ahead. rockwell collins purchasing purchasing/e aerospace. and t-mobile reporting earnings beat sending shares soaring to new 52-week high. we'll sit down with the ceo john legere, good day to have him here. let's get straight to of course that enormous deal. we heard about the possibilities of it on friday. it was announced on saturday. at&t, time warner, worth about $85 billion. half of that in at&t stock, the remainder in cash, roughly almost $40 billion plus they'll be actually securing the debt from the likes of j.p. morgan and bank of america on. so many different things to hit on, but let's just start with the basics of the deal itself. as i said, half cash, half stock, there is a 5% collar

meaning at&t stock price can move 5% up or down and that's it, otherwise it will conserve the value of the overall deal. it's below the collar right now if you take a look at those shares after company also reported third quarter earnings. they weren't particularly strong, they were okay on the ebitda side of things. margins were okay in terms of services, but they did lose postpaid subscribers. to the tune of 268,000 subs during the course of the quarter. and that may be one reason why at least strategically if you're randall stephenson ceo of a company in a particularly competitive marketplace you may be looking at time warner as an opportunity to attain a bit of growth and also to actually have your dividend coverage increased because of the cash flow that will be added from time warner. actually makes the dividend safer at at&t. and you give yourself a shot a what you believe is this new world where consumers more and more will be able to access

content anyway they want including of course and perhaps primarily on their mobile devices, delivering ads to them in a very specific way along with unique content. these were all the things mr. stephenson is talking about when i spoke to him yesterday about the rationale behind the transaction. for jeff bewkes, a man who fought off fox a little over two-plus years ago and its $85 a share bid this is justification as to why. he secured franchise agreements or he secured his affiliate agreements with a number of the big distributors. he built in a growth plan. he got the multiple up. and then he sold at a very high multiple to a acquirer looking for of course that group of assets. but the stock itself not doing particularly well today. this of course after the run-up on friday, also as i said at&t stock is trading below the bottom of the collar. that means you will only get 1.437 of at&t shares.

and then concern about regulatory review. justice department will have a good look at this. while it is vertical integration which should not necessarily raise their hack ls, we're in an environment where any large deal will get a great deal of scrutiny and at least take a long period of time. let's get more on the deal and joined by jon miller, form aol ceo, currently partner at advanced capital with sheri redstone. brings back memories, i'm sure. >> indeed. >> when you hear randall stephenson say to me as he did that content is king, that the ecosystem is going to one where we need to deliver for a mobile environment and we need to have ads that can be delivered in a more effective way to a more -- to an audience in a more addressable fashion. does that mean anything? >> well, here's the way i would look at that. you pay a certain amount as a consumer. you pay a certain amount for your device, your phone, your

bandwidth, connectivity and content and services. that's a bunch of money every month. now, is that going up or down? chances are it's going down a little bit. in what parts? not going to pay more for phone or more for the bandwidth. if you're going to make any money, it's got to come from content and services. >> these deals are extraordinarily hard to do from an execution standpoint some would at least say. come back to time warner and aol itself although that was different and done for somewhat different reasons, but as somebody who's worked in large organizations and small, do you think at&t has the wherewithal to actually make it work? >> well, i think the aol and time warner merger was trying to merge a legacy company with a disrupting company. that's really hard. mergers are hard to begin with, as you say, but that adds another degree of difficulty. here you're talking about essentially two legacy companies that are both facing challenges they recognize and they're trying to come together to be better for it.

i would give that a higher chance. i don't think it's ever easy, but certainly give it a higher chance. experienced management on both sides of this. so i wouldn't -- you know, who knows, but better than five in ten chance. >> that's assuming that the politics stayed constant, right? >> yeah. >> has it changed? >> external politics? >> yes. >> yeah. i think there's a whole new world we'll find out soon enough about, but i think the environment will change there. i think it will make it harder. >> if they do get it through, what sort of conditions do you expect to be imposed? i think there were 144 pages of conditions imposed on comcast when it was allowed to buy nbcu. >> that's right. a big part of it was to not favor the content of nbcu at the expense of things they did not own, right? third party content and so on. i can't imagine if this gets through it doesn't have very strong restrictions in that regard. one of the things i did when i was at fox is i was involved with hulu, and it was very real. i mean, after their merger, comcast owner of hulu as you

know, they could really not vote, i think it was a period of five years. they could not vote on matters. they had to go with what disney and fox decided. >> basically silent partner. >> silent partner. and i think that's the kind of thing involved in joint ventures or own content, they're going to have strong restrictions on. >> mr. stephenson is not talking about exclusive content but unique content. from the strategic rationale does it make sense to you there are consumers who would want unique content and advertisers willing to pay more for it as a result of it being to a much more focused and -- a person i guess who's in a much more willing position to actually buy? >> yeah, i do think so. contrast it to the music business. you have spotify or google's music or apple's music plays, you get all the music, right? for whatever it is, $10 a month, you get it all. there's not a differentiation that much on the catalog of music you get. in the content business there's always been a differentiation. what's on hbo is on hbo, showtime is on showtime, netflix, there's been a history of video or video content

business around exclusivities and consumers have accepted that and pay for multiple services. so i think there'sjonathan, wha timing of this deal? it comes at a time where cnn is doing really well, we're in a hot political environment and they're getting political advertising up, "game of thrones" is also doing well which is going to end in two years, how do you feel about when at&t is deciding to buy time warner how that relates to the price and the timing of the cycle? >> i think one of the interesting things about the media business is a lot of people want in. if you think about there's the telcos like verizon and at&t. there's the tech companies that flirt with it and i suspect at some point and this may be the point they decide to get in, and there's non-u.s. companies, particularly from china. so you have a lot of pressure -- and if you're a stockholder, i would think maybe good pressure against these large cap media stocks where people want in. i think if you're at&t they want to get ahead of that. i don't think they wanted to

necessarily engage in a bidding war or anything like that. >> but you're also dealing with a world that's becoming unbundled. we've been talking about it for years, it's finally happening. the proliferation of these over the top products. you're buying hbo which is a jewel in an over the top world, but you're also buying cable networks that make most of their money from affiliated agreements where subscribers are valued and where subscriber levels are going to go down and you have no guarantee you'll be included in all the bundles created not to mention directv which while subs are going up right now, it's still a direct satellite broadcaster when everybody's going to be getting everything over broadband. >> let me do it from media side, as you said in different words, media have been wholesalers, they take movies, wholesale them to theaters, networks, and so on throughout their business. even though we know a lot of their products as consumers, they don't actually sell to consumers that much. and dvds are sold to walmart, let's say. so they don't actually sell to

consumers. the power has been shifting to these huge platforms, amazon, apple, google, facebook, that do go direct to consumer in their business. and so that if you're a media company, that is i think sort of at the highest level your biggest issue. you don't have scale in consumer relationships. you may have scale in product creation, and that's great. but you don't have scale in consumer relationships and those guys do. so that explains why you would want to do this if you're on the media side. if you're on the at&t side i think it goes back to what i was saying, content services have to be your growth area, i would expect. if you're at&t, you're in a market share game on wireless, right? you're not going to get a lot -- it's not a growth business, it's a market share business at this point. so you need to go to something else. this is sticky, this has engagement. and, david, to your question, i do think high quality environments will continue to attract high quality advertising at good rates. it's actually getting scarcer. it's a funny dynamic, as the audience shrinks in a sense, the

scarcity value goes up for the advertising in the high quality environments. >> so of all the possible reactions from, i'm just thinking apple, disney, netflix, facebook, amazon, what would you expect the fallout to be? maybe not right away, right? obviously this is going to happen in the next couple years. >> yeah, i do think it is a starting gun. i think the first wave was comcast/nbcu, and now i think this is the starting gun for the other companies i mentioned. because in a game of it will become musical chairs because there's not that many top tier assets if you're one of the buyer companies that i mentioned. so i think you have to play because of the exclusivities, which is you can't be at a disadvantage -- i believe you can't be at a disadvantage by not having your own at-scale content and services. >> jonathan, appreciate your insight. good to see you. thank you. >> thank you. >> jonathan miller. >> obviously we have more regarding the at&t time warner deal. we'll hear from t-mobile's ceo

john legere. and shares of b.e. aerospace soaring after reports rockwell collins buying that company. we'll have exclusive with the ceo straight ahead mpkts we're not confused. we recognize it's going to get a full review. it's going to get a full review in a number of places in a number of areas. our experience is that the data and the law and the regulations will dictate whether the deal gets approved or not.

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with just 15 days left until the election, can donald trump make up ground or has his window already closed? joining us this morning from washington, former bush and reagan advisor ed rogers, with us at post nine former pollster for president clinton and mayor bloomberg bernard whitman author of the book "52 reasons to vote for hillary." gentlemen, good to see you both. ed, little more than two weeks we know what all these polls are saying and now we have regulationin fused in the race as they both commented on the time warner deal. >> yeah. >> what do you see changing say over the next week if anything? >> good, i'm fine. >> i don't know if trump has the wherewithal to change. more of the same out of him is undesirable, but it's been that way since at least july, since the convention. and he can't change. he has very little discipline, very little affirmative case to make for himself. it's rather sad from a republican standpoint, and i'm not crazy about him being president. but i don't want him to get blown away because of the down ballot consequences. but donald trump's problem is

donald trump. hillary's not going to beat him. he's going to beat himself. >> but don't -- i mean, when you look at the times we know what probability is at, we know the race has tightened, wouldn't you be nervous about being so complacent on either side? >> yeah, clinton side no question. first of all, it's bad luck. you can jinx it by acting like too much of a predetermined winner. number two, they can act smug which enflames independents, people undecided, if there's any of those left, but this notion of their right now focused on the transition more than two weeks before the election is bad form and it's smug and condescending to voters and that will hurt them. they need to be -- they need to exercise great message discipline. they need to get away from this transition talk. they need to take -- not take anything for granted and hit the trail hard. >> bernard, they also have to clarify a bit her position.

i mean, investors and even republicans that are considering voting for her are trying to figure out how far left she is on certain positions like this deal is pretty fresh in our mind with forces like elizabeth warren and bernie sanders getting political power. what can you tell us, did we learn anything from all of those e-mails that were released about just how she's going to govern? >> i think that we've learned over 30 years that she is fundamentally a pragmatic progressive, which is why i've always supported her going back to 2008. she is someone who likes to bring people together, she's realistic, she's pragmatic and i think she's going to take a look at what's best in the interest of consumers and if ultimately she and the administration if she's fortunate enough to be chosen as our president decide it's not in the best interest of consumers, i think clinton administration would be firmly in support of the deal. >> already said too much consolidation of power on this one. >> i think this epitomizes why donald trump would be a terrible president. because before he's even taken a shred of time to look at what the merits of the deal are, he

said i'm against it. this is not someone we want in charge of either our foreign policy, national security, domestic policy or regulatory -- >> but this is curious timing for them to announce this deal right here during the eleventh hour white hot political atmosphere. and no matter if you're a republican or a democrat, it's not the right year to say matter of factually, yeah, i have a friendly disposition toward a mega merger between two corporate giants. everybody has either got to express skepticism, take a hard look at this when we get back to washington, or say no. so i'm wonder if they worried about a leak or if they for some reason they had to announce it quickly. the timing is curious. >> you don't want to wait too long on these kinds of things, ed. once you get out you got to move. believe me, they were not thinking about the political climate when they announced this deal. >> not okay to do so. >> yeah, not the key consideration. >> it's a smart combination as previous guest has talked about it makes perfect sense. and i think ultimately what's going to happen over the next year is we're going to see consumers basically weighing and saying am i going to get a

better deal through this or not. and if consumers feel they're going to benefit, the government will support it. that's my sense. >> we're going to have this to kick around for awhile, guys, that's for sure. we won't spend all of our chips right now. guys, thanks so much. >> thanks a lot. because we have more deals to talk about. coming up, rockwell collins buying b.e. aerospace. we'll speak exclusively with the ceo of rockwell collins next with the dow up 85 points. some things are simply impossible to ignore. the strikingly-designed lexus nx turbo and hybrid. get up to $5,000 customer cash on select 2016 models. see your lexus dealer.

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rockwell collins striking a deal to buy aircraft interior makers b.e. aerospace. it's a $6.4 billion deal in cash and stock. our phil lebeau joins us now with a special guest to cover it. phil. >> thank you, sarah. let's bring in kelly ortburg, chairman and ceo of rockwell collins joining us from new york. kelly, how quickly did this deal come together for you guys to buy b/e aerospace? >> well, this is a culmination of a year we went through to look to how to optimize our company. rockwell collins historically has been very strong in the

front of the plane, b/e is strong in the interior. it's great to increase the scope and scale of our company. >> when we spoke yesterday you pointed out there's very little overlap, you don't expect a lot of resistance in terms of regulator regulators, correct? >> true. we have no overlap in our product lines. this is about complementary product line between the front and back of the airplane. we see evolution of next digital airplane where our technology will help improve the market penetration of their interior systems. >> you mentioned the digital airplane. how close are we to seeing that become a reality where from the cockpit to the tail of the plane involving the crew whether it's working with passengers, whether it's working, you know, in the cockpit with the ground crew down below, how close are we to seeing that become a reality? >> well, that evolution is happening today. we are currently providing broadband systems on to the airplane to communicate with the

ground, onboard secure fire walls for cyber security, networks on the aircraft. and in the future all the cabin systems are going to be nodes on that network, and that's the thesis here is that we'll be able to bring that networking technology to the products that b/e brings to our portfolio. >> boeing and airbus are becoming much more aggressive in terms of either buying suppliers so that they can bring some of those parts in-house as they're building aircraft, or being much more aggressive in terms of the pricing. how much does this help you with the boeing and the airbuses of the world to say, look, we have a much wider portfolio of parts and supplies and products to offer here? >> well, much of the interior product line is actually sold to the airlines as opposed to the oems, so we expect that to continue. but you know, we have great relationships with major oems, both boeing and airbus, and it will give us a broader

portfolio. and we work with those customers as they think about what they do versus what we do. i think it will provide us a much broader ability to be successful with those oems. >> kelly, does this set the stage for more mergers potentially when it comes to aviation, whether it's on the equipment side or whether it comes with, you know, some of the plane major component makers? >> well, i don't think so. i think this is a unique fit for rockwell collins where we're looking to expand our footprint and find other avenues for growth in a common market channel that we're very well experienced in. i don't think this is going to precipitate a lot of movement in the marketplace. >> it's sarah in new york, i just wanted to get your thoughts on a debate we're having in this country right now about american manufacturing and manufacturing jobs. a lot of talk on the campaign trail about bringing them back from other countries. do you see this as an issue that the next president can fix, whether it's renegotiating trade deals or other sort of policies as the ceo now of two major

american manufacturers? >> well, we are american companies, but believe me we participate in a global aerospace environment. and we need to be able to service our customers. roughly 50% of our sales of the combined company will be outside of the united states. so it's very important that we have a friendly trade environment that will allow us to continue to deliver not just to the u.s. oem manufacturers but to international aircraft manufacturers as well. >> kelly, one last question. how quickly do you expect this deal to close? i know you expect double digit accretive in terms of the impact in the first full fiscal year, correct? >> yeah. this should be a really good deal for both rockwell collins shareholders as well as b/e shareholders. we expect a deal to close in the spring of 2017 after we go through the regulatory approval process. and as you commented, we don't expect any issues to get through that process. >> kelly ortberg, chairman and

ceo of rockwell collins joining us exclusively here, guys, this is an interesting deal because it does bring together two companies that do not overlap. and a lot of people have been saying for some time when are we going to start seeing some deals within the aviation industry. here's a big one today. back to you. >> you got that right, phil. thanks so much. phil lebeau. when we come back, a lot more on at&t/time warner. we'll talk to john legere when "squawk on the street" comes right back.

good morning everybody. i'm sue herera chlts here's your cnbc news update this hour. it is day two of a new two-pronged offensive by kurdish peshmerga fighters on the outskirts of mosul. for a week now 25,000 troops backed by u.s.-led coalition aircraft have been battling isis in mostly uninhabited villages around mosul. a camp for refugees and

other migrants in greece has gone up in flames over protests in the delays of the asylum process on the island. about 70 migrants threw rocks at offices used by officials and then set them on fire. the u.n. world meteorological organization says greenhouse gases rose to a symbolic milestone last year. the wmo warns it means climate change has entered a new phase, which could last generations even if governments act to curb it. and comic actor and movie star bill murray receiving the mark twain prize for humor at the kennedy center in washington, d.c. a sold out crowd saw some of the 66-year-old's memorable characters and musical performances. the show airs friday on pbs. congratulations fo him. that is the news update this hour. back down to you, sarah. sue, thank you. we'll see you in a bit. back to our big story of the morning. at&t buying time warner for $85 billion, half cash, half stock. so what kind of impact will the

deal have on other media stock valuations? our mike santoli is here taking a look at some of these stocks and joins us with more. wa have you found? >> sarah, if you looked on the surface of the price at&t is proposing to sell to time warner, you'd say the other big media stocks like disney, 21st century fox and vie coacom anyw from 20% to 60% upside. the problem is you can see by the muted reaction in those stocks you cannot extrapolate this deal onto theirs. here's why. disney is probably too big for almost anybody to buy aside from the very largest tech companies. it's not really considered to be a target. 21st century fox viacom obviously both have family control, and time warner seems to be a relatively unique set of assets that does not have family control. and that's why. another reason though besides just not being able to apply that multiple is nobody really knows the fate of this transaction and whether in fact you're going to have a real round of consolidation going on in media. you can make the argument that media stocks are just cheap on

their merits, but not necessarily in an m&a scenario. also you do have this other secondary line of thinking that says time warner's willingness to be acquired maybe has a scary message for the rest of the cable players. in other words, that jeff bewkes and time warner seeing the economics eroding over time wants to have kind of a safe home inside of at&t. maybe that doesn't mean great things for the cable bundle. and i think, guys, that's why you're seeing the stocks kind of have a diffident reaction to this deal. >> we also talked this morning about the dilemma of trying to sell your synergies and advantages to consumers while not scaring away regulators watching the exact same thing. >> to consumers and investors. if you are time warner and att, you have to say, look, strategic rationale is we're better together. we can exploit this in a good way, that's not necessarily a message going to get approved on a regulatory front. >> you laid out a number of questions there, thank you, mike. for more on the deal we'll talk

about it with james dicks and todd younger, media analyst at bernstein, both of you covering time warner. you look at the stock price today, james, what in the high 80s? long way away from the 107.50 deal price. would you tell investors to buy it? >> you know, the upside here to what they're offering in the deal probably doesn't make it a buy relative to other names in the space. i mean, it seems clear there's a lot of concerns about the likelihood of the deal going through at the current valuation given the regulatory scrutiny. i wouldn't change my neutral at this point. >> todd, what about you? >> i have to just pile on and concur. i mean, i think it depends on what type of investor you consider yourself to be. if you're a fundamental investor like james and i are fundamental analysts, i think most

fundamental analysts have a price target somewhere around $90. we did. our price target's $88. so if that's how you think about investing, the stocks hit your price target, the rule book says you should sell. this is now in the hands of the m&a arbitrage professional nst investors really stock's going to be based on likelihood of deal closure not fundamental cash flows at this point. >> todd, i think it was you that raised an interesting point in this research note whether the willingness to sell now for time warner means that jeff bewkes is seeing some bigger structural problems looming in the industry and whether investors should be worried that he wants to get out now. what is the answer to that? >> yeah, well, i think when you compare or think about the fact that twix had a bid from fox about two years ago that they rejected out of hand and said was essentially insulting. and now just two years later

they have a bid which we think would have ultimately come down to being very similar in terms of terms, and they very quickly accepted it. a bid with probably less strictly defined synergies because horizontal integration with fox there's some obvious more cost takeout. so why were they so insulted two years ago and now today so willing to sign with this partner, who i firmly believe a big part of that answer is they have better information than any of us, they being time warner and jeff bewkes, that they, you know, think it's better off selling let somebody else deal with the problems that we think are going to come more and more obvious over the next couple years. >> james, is todd right? is it the same multiple that fox was offering on ebitda? i mean clearly fox not even in a position to come close any longer, that's one reason why they certainly wouldn't be part of this. but is it actually the same multiple? >> you know, it's a different set of assets.

between fox and time warner. >> no, my point is is it the same multiple that they're paying now, what is it 12.5 times ebitda? something like that, mike? fox was offering back two and a half years ago? >> it's probably a little bit higher than that simply because i think fox's deal was like at $85 a share. so in that sense -- on the other hand we don't know what the mix of cash and stock would have been for the fox deal since it never really went forward. you know, if at&t's price keeps coming down, as it's coming down today, then there's a risk that the value to time warner ends up being a lower multiple. >> james, what do you think this does to other content companies if anything? does it force any sort of consolidation there? or is it really a non-starter in that sense but perhaps has more of the distributors looking yet again at opportunities to include content in their mix of products? >> well, i mean, if you go

across the large cap media space, cbs and viacom with common, you know, voting control already in discussions about a merger, i think this probably slightly increases the odds of that happeni that happening. because i think for cbs there was probably an outside chance they were can go a deal with time warner, now with this at&t deal on the table that seems a lot less likely. perhaps that gives some incentive for that deal to go forward. for fox, they'd already been indicating they were actually being interested in doing some more acquisitions as opposed to being a seller, you have in generation of family management there. so i tend to see there's not a lot of implications for that. there's not a lot of other scale players like time warner that some other type of distributor could do a similar type of strategy with even if they wanted to. >> todd, you also write that you doubt we'll see more m&a. >> yeah. that's my view as well. just a quick comment on the fox

mu multiple. we don't really know what the fox deal ever would have been to. initial deal was $85, time warner didn't engage with them. most investors we talked to believe that bid would have gotten up in the $100 range, so i think multiples and even the price would have been comparable. in terms of more m&a in the future, listen, i think you got probably plenty of willing sellers among the lower scale network players. the question is who are the buyers. if the answer is more vertical integration, it seems like all of the big scale paid tv distributors have already found content partners. comcast has, now at&t has, you could argue that charter and time warner under the john balloon empire sort of do. horizontal acquisition seems tough in a world where everybody has too many networks and then you sort of look to silicon valley. i'm not sure there's many silicon valley companies who want to pay a multiple on the affiliate model they basically

think they're destroying. they might want some content, but that's different than buying television networks. so if the buyers emerge, i'm sure we'll have some willing sellers, but we struggle to think who -- you need two parties to make a transaction. >> all right. gentlemen, we'll leave it there. thanks for fielding the questions james dix and todd juenger both on hold with twx. when we come back this morning t-mobile up after reporting that earnings beat. we'll talk to john legere of t-mobile when "squawk on the street" continues in a moment. whether it's bringing cutting-edge wifi to 35,000 fans... or keeping a hotel's guests connected.

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what stocks are set to see the biggest moves on earnings? good question. we'll give you some names and how to trade them at tradingnation.cnbc.com. more "squawk on the street" coming up.

the at&t/time warner deal raising all sorts of questions

about possibly big regulatory hurdles ahead. our eamon javers joins us now from washington with that angle of the story. eamon, good morning. >> that's right, sarah. when you think about this, you think about the preparation here for a massive lobbying fight in washington over the next period of time, maybe up to a year. and the first thing people in washington are going to do is look at the political contributions that both of these companies have made. that in washington we sort of think about that as preparing the battlefield, how you deploy your political contributions gives a sense of where you're going to want to fight your battles over time. take a look here at the at&t contributions. these are data from op opensecrets.org. these are corporations by the company, its political action committee and its employees, you see hillary clinton tops the list of top recipients. this is sort of the profile of a company that is prepared to curry favor with both sides in washington. because you look at their house contributions and you see sort of a flip pattern.

on the other side we saw hillary clinton at the top of the list, on the house contributions for at&t though you see much more money there given to republicans than to democrats by at&t. $1.75 million to republicans versus just a little over $1 million for the democrats. take a look at time warner and a very different profile of a very different company. time warner's top recipients overwhelmingly democratic in their top recipients list. you have to go way down before you find the first republican. this is, again, an indication of the employees plus the komcorpoe decisions that the pac has made. hillary clinton there at the top of the list $391,000 from time warner affiliated pacs and individuals. that's a lot of money. and that indicates both of these companies will have some influence with the hillary clinton administration if there is one coming in next year. so that's a positive sign for them. but overall this is a big regulatory ask. regulators will tell you they don't look at these politics,

they don't look at the numbers, they're going to decide this on the merits. in the end though cynically often it's a mix of both, guys. >> big question especially after trump has gone after her so hard for special interest groups. >> watch hillary clinton over the coming days because we saw bernie sanders come out against this, we saw donald trump come out against this. is hillary clinton going to feel boxed in here that she has to make a statement? what will that statement be? that will set the tone for this whole lobbying fight to come. >> eamon javers, thank you very much, for the washington angle of this story. now let's send it to jon fortt with a look at what's coming up on "squawk alley." rally being led by tech with telecom lagging. >> we're going to continue to dig into this proposed at&t/time warner acquisition and the impact on the rest of the tech landscape. and don't forget apple earnings coming up tomorrow. how is samsung's trouble with the galaxy note 7 going to affect all that? will apple project a strong holiday season? well, we'll see. all that and more coming up on

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shares of t-mobile up almost 7% this after the company was beat analyst estimates on both top and bottom line adding net

851,000 new postpaid phone customers. the president and ceo of t-mobile is john legere and he joins us from the company's headquarters. john, always great to have you. sorry you're not here in person. are you going to as one of your key competitors decided to do have any interest in buying a movie studio, pay tv company, cable networks company? >> yeah, david, listen, i was having a contest in my head of how many seconds it would be before you had me pivot to the deal of the week. give me just one second because what we announced today are historic results. 2 million net ads, a million postpaid, 851,000 postpaid phones, 681,000 prepaid phones, rising, low churn, very importantly 13% service revenue growth, 18% overall revenue

growth and 38% adjusted ebitda growth. so there when you compare and contrast to what at&t announced in their earnings, they're bleeding. they're needing to go and find new revenue streams. they lost 354,000 postpaid customers in just a little factoid for you, since q2 of '14 when they announced the directv acquisition, they haven't added a single post-paid customer since. so we're at very different spots. we even raised our guidance. it's a beautiful set of results and sets the stage for us to do a tremendous amount of things innovatively without having to use our balance sheet to buy a movie studio, although i'd really like to get my hands on bath ma bat man. >> i bet you would. don't worry, i was going to ask you plenty about your results, but you shared them with us and they are very strong, john, but do you understand the rationale behind what at&t is thinking and is it something you would ever

potentially consider, namely that you're going to be able to deliver targeted ads and unique content to users of wireless phones in a way that is going to perhaps make them stickier as subscribers? >> yeah, i think, david, there clearly is a vision, but let's just be clear, what they are doing right now is a vertical integration, it's an attempt to enter businesses and have adjacent revenue streams. what people shouldn't think they are going to be able to do or would do is hold content hostage so that only their users could view certain content. that would be the death of their overall business. but from a standpoint if you think about what we already do with binge on, so, for example, i have a directv app on my phone and i'm a directv customer in one of my homes and i can watch all of directv and directv streams free on my phone. by the way, i have more go 90 customers than verizon customers

does on my phone streaming free, so i have a similar vision than they do. maybe it's to become an aggregate tor, creating an index where users can decide what they want to watch and bring it into their mobile device, or maybe there's a future industry structure where people are coming together to provide a full set of capabilities to mobile customers. and as you know, my stand on consolidation is this will only just accelerate the more natural ways of doing business for customers. >> right. so your point is, you can do what you need to do through commercial arrangements and what not, you don't really need to own the assets? >> a lot of people are questioning why would -- let's go through it. remember when they entered mexico? they spent $5 to $10 billion buying a mexican wireless provider so they could get access and capabilities in mexico. i made two phone calls to their competitor in mexico and announced seamless capabilities before they do. you don't always have to own and

control and use your balance sheet, so i can certainly do a lot of what they do. certainly, dish has tremendous licensing and capabilities, or maybe it will be somewhere in between, but i find this, david, highly exciting from a t-mobile standpoint. >> why? >> they are going to be very distracted. first of all, they already donate 50% of all my customer growth. they are going to be even more distracted and focused on this. by the way, within five years i'll be a bigger wireless company than they are to begin with. it will accelerate our growth, we're highly profitable moving in this and i own 70 million customers and growing that i manage on the fastest lte network, i'm moving to 5g. my role in this game of how you do this is going up all the time. very exciting. >> you're going to be bigger than they are in five years? you're going to have enough spectrum to meet all the demand you see coming, john, and do you need to and are you participating in the current broadcast spectrum? >> yeah.

obviously, i can't talk about the existing -- i have more spectrum per customer than they do. secondly, i've acquired 272 million megahertz band and i've deployed 225 and i've made it very clear t-mobile is probably one of, if not the most aggressive participant in the current 600, and if these guys all lose their focus, this could be a windfall set of capabilities for us. yes, we're investing heavily and we will in the 5g space, as well. >> john, you recently had to pay about $50 million to settle with the fcc about failing to inform consumers about the unlimited limitations, slowing speeds of heavy data users. do you expect this to have an impact at all on the business? did get national attention. >> yeah, it got a lot of attention, and thank you for bringing it up, because even in your description there's a lot of confusion. i was very pleased with the settlement of the fcc. very clearly a few things, this

was not about not providing unlimited. unlimited is unlimited. it was not about throttling. it was about disclosure and wasn't even about not disclosing. it was that we both agreed that our disclosure could be better and the item in question was network management during a period of congestion, and we agreed to beef up that language. actually, we beefed it up 16 months ago, so we made a settlement that included providing benefits to our customers, as well as investing in education initiatives with government, so i was very pleased with it. i think it will have no impact going forward, once i can explain it. >> john, you know, 5g i'm starting to hear about, bringing broadband into the home. is that going to be a real thing, and if so, does that mean a cable company, perhaps a large cable company, would need to have a significant wireless component beyond what it can do with itself and have to buy t-mobile, for example?

>> 5g has tremendous potential, both in the internet of things and as a fixed broadband replacement. it also has great mobility expansion capabilities, but these are out a few years, especially on the mobility side, 2019, 2020. but inherent in some of your questions is with where the world is going, not just 5g, but advanced 4glte and things people want to do on mobile devices, cable players are going to need to have owner economics in the wireless business. i've been very clear on that. the nbno is a head fake. i'm sure the underpinnings whatever deal signed with them is not going to be economics they can use. it will be secondary traffic. it won't be what you need to compete with the kinds of things that at&t's going to do and that we can certainly do. it's just another of those things. >> finally, the samsung note, you know, what about samsung, john, and the hit that brand has taken? what are you seeing on the front

lines? >> yeah, the samsung note7 issue, you know, first of all, they'll survive and thrive, and mainly because they did the right thing. anybody else hasn't done so, you know, clearly turn the device off, return it for a full refund. samsung is participating very aggressively, and the first step towards surviving and thriving is what they are doing, take care of customers no questions asked, work with your carrier partners. you know, caused an equipment revenue issue in the first and foremost, but there are alternative devices, but they'll be fine. they are a great partner and great company. >> congrats on what were strong numbers, of course, that you told us about there john and certainly appreciate you coming on. we look forward to future conversations, john legere, ceo of t-mobile. don't miss marcelo claure

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