Tell us to talk to us. It is snowing up and down the east coast today. After two months of record cold snap, there are problems keeping up with the demand of salt. Welcome to Market Makers. K is off this week in colorado. Scarlet fu is helping me out. Good morning, you talked about comcast and time warner. The deal is more than 45 billion. Christina has been talking to executives and studying the fine print. Give us the overview. Pulled a shrewd move. It was talking to charter about and in thenturer middle of everything, it went around everyone and negotiated a deal on its own with time warner. It is the price the time warner wanted, 1. 60 per share. It becomes a matter of selling it to shareholders. Did that today on the call with analysts and its a big price. When you look at how historically these these stocks have traded, this is a phenomenal price and could spur some further consolidation. We are looking at some of the smaller players now that charter is left way behind. This is a long time coming. Time warner cable and charter were flirting for about eight months before anything happened and then comcast swoops in and takes everything away. Is there any indication that this will run up against any trouble from the department of justice . Of course, the government will review this case. They will take a look at the business. If you actually look at comcast business and time warners business, there is very little overlap in the markets. There is actually no overlap in their business. It will be hard for the justices of the fcc to find issue with that. They will find that comcast will be a huge player out there wont have a lot of leverage with local programmers. And National Programs that on the contact and justice may not like that they will dictate content but not pricing. Comcast will argue that they have contact they have never tried were before. They will make the case that they are not as big as they seem on paper. Buthat story is complicated why did Time Warner Cable selwyn been losing subscribers the cable players have to get bigger in order to stay in business. People are cutting the cord and over for them to be able to push back on costs especially programming, they have to get bigger and bigger on the pipe that is what really would jumbo loan has been talking about. That is hazel play that the Cable Companies have to write. Other companies will have to do something to get the leverage of programmers. Charter and cablevision are presumably scrambling right now. Iq. Thank you. Joining me on the phone is kris morandi at gamco. And 3. 5bout three million shares of comcast and Time Warner Cable. He knows what he is talking about. Deal. Talk about this the price is 159 per share. If you look at where there are trading now, it is only about 140 five dollars. Does that mean investors are worried the deal wont go through . There is clearly some settling that needs to happen but im not sure thats what it means. Andwn both Companies Investors might want to lighten up on one. We own all these players and this is a value servicing event so we are happy. Are you concerned that the government will say this smells too much like a monopoly . Fcc and the doj, their job is to scrutinize these deals and they will take their pound of flesh. Ultimately, i think the deal will go through. Lets talk about john malone. You have talked about him is the king of media deals. Was he left out in the cold here . He is probably outsmarting us all. Hes got an investment charter through liberty media. Charter did not have to do this deal. Pattern, a good growth one of the base best best managers in tom rutledge. I would expect them to participate in additional consolidation, perhaps picking up the markets that comcast has. Comcast t that they top comcast . They have the capacity to do it. Especially if they include a significant cash component. It would probably face less regulatory scrutiny than comcast would. It is pointless to compete with comcast given the relative sizes. I would not expect them to overbid but you can never count them out. What markets would they divest in the deal . In new york, we are hating life stock with time warner. You wait and time warner Customer Service hold forever. Happy because be of comcast retains that market, you will have the opportunity to participate and they will allow on their other services to improve. I presume that comcast will want to hold on to new york and l. A. , the number one and two largest advertising markets in the u. S. But i dont know. Affect with john malone is trying to do with syria . The market is looking at syrians and saying there is less pressure on liberty to sweeten their stock deal for syria. I ultimately think they will go through with it because there are other than of its longterm to bringing in syria. Theres much pressure on them to sweeten. Does this empower comcast to charge more . How much more power does comcast get as far as the power they programming cost is one of the synergies but it is small. Management downplayed that him a call. 11 millione how subscribers makes to comcast. I dont think thats a big part of the deal. Nobody is crying for the programmers. Cbs who has been one of the vocal, reported last night they editor for quarter. A dealdont think like this hurts them . I dont think its necessarily good for them but comcast happens to own one of the broadcast networks and one of the largest asian groups at nbc. Was will have some constraints on them in dealing with programmers. They are living under some with the consent decree. Im not sure the market changes all that mark all that much for programmers. This is in the hands of the supreme court. I dont think this has much impact in what happens with aerio. It is in and of itself. We will have to see if its a Legal Service and the on that, we will sue if congress decides to do because congress has the to effectively outlaw that service. Its not clear that if it were legal that companies could essentially offer and aeriotype service. You are basically long every entity in this deal. What is your ultimate outcome . What would you like to see happen. . Consolidation would be good for the distributors. When you talk about competing against large multinationals new company the would probably be better. Thank you for being with us. What are you wearing . In this cold weather . Suit3. In my its business as usual here. No one is exciting me. Thank you so much for giving us the latest on time warner and comcast. What about antitrust issues with this deal . In a moment we will check in with peter cook and see what the buzz is in dcn shares of cisco open lower after Sales Forecast missed some estimates in spite of a good quarter. We will be with the cisco ceo, John Chambers next right here on hope boat Market Makers, on bloomberg television, streaming on your phone, your tablet, and bloomberg. Com. Welcome back. Worlds biggest maker of Network Routers and switchers and forecast yesterday that sales for the next quarter may not he up to par. The company is seeing increased competition and continued to the police and selling products in emerging markets. Here to talk about these challenges is the ceo John Chambers who joins us from Company Headquarters in san jose, california. I want to congratulate you. The stock is not necessarily feeling it that we need to take a moment and acknowledge you had a good quarter. Yes, we did versus expectations. It played out exactly as we said it would. Revenues were down 10 and we were down 7. 8 rate earnings we returned 4. 9 billion to our shareholders, the most we have ever done and raised the dividend. Each of our orders and these product categories grew faster than revenues. We came in line exactly with what the consensus was for this next quarter. The number of people who raised estimates and lowered estimates were equal. We are coming back like we said we would. Can we talk about the Way Investors approach Tech Companies . Companies that have been around for decades, does not seem that investors want to give you a chance to have a second or third chapter. They are so winters by new technology that is not shown revenue or proved itself. Is that frustrating . I dont think its frustrating. It is stimulatings to say how you navigate about this. Many of our peers have become irrelevant and what cisco has done is reinvent ourselves for the fifth time. We are moving from selling boxes to selling solutions to our customers. In the u. S. Market, we grew at 13 yearoveryear. Which is need to do that on a global basis. Sell us toho help us sell these architectures where you can buy these products, like worldwide technologies, they grew with us 30 last year. Our strategy is working and we are exiting well and watches not off each quarter doing exactly what we said we would do or better. When do you expect to return to growth . We said we would watch orders in q4 q1 in terms of orders. We will be very conservative in our backlog and continue to add to it. Continue. Can we talk about im sorry, your turn. Let me talk about china. You look at what occurred in emerging markets last quarter, they were down 12 . When we set emerging markets moved down six months ago come if they would have gone negative on emerging markets, they would have made a lot of money and everyone in the industry said we are ended good indicator. We are a good indicator. There was a financial problem in 2007. They said the u. S. Markets would go up 2012. We sold them are we saw emerging markets improved last quarter. It is too early to call it a trend and we are not facing our guidance on emerging markets. China is unique to cisco, slow but steady progress there. I know the Chinese Market very well. Its one of the few vices were i am patient. The future. Bout you said you think the internet 19hings could be worth trillion. That is a lot of coffee machines and thermostats. That number seems high to me. What do you think is really on the horizon . I think it will be better than that. Year were the Tipping Point will occur in the internet of everything. It will empower us to become the number one i. T. Company. We have been focused on this for six years. At the consumer electronic show a couple of months ago and the World Economic forum last month in davos, it was the Top Technology project. In the retail space, it is 1. 5 trillion in profit. Most retailers get that. Many basicg how companies are saying i will be a technology company. Israel is the First Digital country so this is a trend we are leading an amateur power our growth for the next decade and we are positioned well for that 19 trillion in profits. In five years, how much of your business will be tied to the internet of things and how . Think you will see perhaps even the majority of our business tied to the internet of things. It requires what we call architectures, putting our product together to achieve Business Results in a quicker time frame at dramatically lower operating expenses. The big trend in the industry like cloud and Data Center Evolution where we are that number one infrastructure player, the big trend in the mobile side, we are the number one wireless player. The biggest trend in terms of security where we try to become the number one security player coming together, this will account for the transition. I think it could make the difference in cisco being number one in i. T. The ability to transform these is us movingrofit with products integrated together and consultancy integrated together and we are wellpositioned to be come our trust the trusted advisor for our customers. When you say transition, i think retirement. You have a trip to tahiti planned anytime soon . You will hear from us about our ceo succession planning when we announce that. I look forward to talking to you a number of times in the future and perhaps of the right time, share it with you. Thank you so much. I know the stock is not feeling it but you feel pretty good about that quarter. John chambers was asked to deliver and thats what he did. When we come back, more on our big story, comcast agreeing to buy Time Warner Cable and will the government raise antitrust issues. You are watching Market Makers, on bloomberg television, streaming on your phone, your tablet, and bloomberg. Com. We are approaching 26 minutes past the hour u. S. Stocks opened lower undisciplined Economic Data, jobless claims rose in retail sales unexpectedly fell in january. The indexes have been steadily paring their losses. The nasdaq is out of the red and now positive. Indexes, we are looking at most Industry Groups losing on the day. Are off by half of one percent and utilities are higher. Treasuriesstocks, are up. The u. S. Government will be auctioning 16 billion of 30 year notes later today. The british pound is stronger. It is the firmest versus the dollar since may of 2011. The chief economist of bank of england says Interest Rates will rise within two years. Oil prices are coming off a little bit by 1 4 of one percent but still above 100 per barrel. Data from the International Energy agency shows that Oil Inventories in advanced economies tumbled in the Fourth Quarter by the most since 1999 because of robust demand in the u. S. And other developed nations. Companies,individual whole foods is falling this morning, down by more than eight percent. It lowered its fullyear forecast as growth slowed because of increased competition not only from outside companies but also whole foodsnew stores are capitalizing are cannibalizing sales from other stores. We will be right back with on the markets in 30 minutes. Welcome back. The number one and number two Cable Companies in the country want to combine forces. We need to find out if washington will stand in the way of comcast time warner. Peter cook has more on that part of the story. Who has to sign off on this and what are the chances they will . You have three regulatory agencies the department of justice, the federal trade commission, and the federal communications commission. They have some say in the matter. The fcc big test is if this is in the Public Interest are i. Thatense i am getting is they expect this to ultimately go through despite the size. It will get a lot of scrutiny but these Companies Might have to give up a few things. Comcast might have to give up a few things to get the government green light. In terms of competition, they will be take but they dont directly compete in any of the markets now and thats a big factor for the government, particularly for the department of justice. They might be able to improve Pricing Power for customers. They might have more control over the programmers and those are two things in their favor. The big issue here is that you number twoone and getting together in the government will look at that and ask for a lot in return. Will they ask for so much that they make this deal less attractive to comcast . The fcc is expecting a pound of flesh so what do they want . We already know that comcast is willing to give up 3 million of time warner customers in order to stay at that the Million Dollar mark in terms of tv eyeballs. That is the magic number in the industry. Its about a third of the market. They dont want a cable operator to be bigger than that. The other thing they suggested is a commitment to Network Neutrality to not discriminate against content flowing over their pipes into peoples homes. That has been a big issue in washington. Its a commandment they made when they took over nbc. They may have to model that same agreement they did with nbc in this deal. They may have to surpass this if they want the government blessing. That is a test whether they ask for so much that they make this less attractive to comcast. There is a senior comcast executive at the state dinner the other night, what does that tell us . Coincidence . Maybe, who knows . Even before the state dinner, comcast and time warner still have a lot of friends in the city comcast is a very powerful player in washington. Brian roberts spent time with the president and washington and on Marthas Vineyard as well. He is the ceo of comcast and the companies worry active across the country. They give lots of contributions to democrats and republicans. You look at the top five recipients of money from comcast in washington in terms of lawmakers and its a whos who of congressional leaders in both parties as well as leaders on telecommunications issues. They have given to a lot of folks here who are very powerful. Those connections will help comcast. Its good to have friends in high places. Thank you, peter cook. I want to bring in the founder and managing art and are of Capital Advisors who specializes in media and digital properties. This deal was so they that you made it here in the snow and i heard this man dug out his taxicab, is that true . We got stuck so i had to help out. You really did . New yorkers do that. This time Warner Comcast deal you said it they get enough and i will make my way to bloomberg brief why is this a big deal . Its a huge deal. The landscape is defined by these kind of transactions and there is a whole bunch of things between programmers access to the internet. This will require a very heavy review of where power sits between distributors, programmers, and the web so it is very interesting. If the government does not mind a monopoly because it is not affecting customers, it is potentially going to affect content producers. The government does not care about that . I think they will look closely at w