For a new piece of the multimedia empire and is hoping time warner is the perfect fit. They rejected the initial bid of more than 75 billion. Theyre willing to pay more to get the owner of hbo, turner, cnn, warner bros. Over lunch in. New york, people whom i are with the matter say they were concerned about a number of factors including succession plans. Previously at time warner investments where he worked with various operating groups like hbo, all that stuff. In the last 10 years, they shed for assets and increased shareholder value. They are buying a crown jewel asset and for time warner, they are pushing back on closing a deal at this point. You have been reporting on this from the very beginning and you know how this started to come together. Give us some of the details. It starts with a friendly lunch in new york in early june. Jeff bewkes gets together with chase carey and chase dropped the idea on him of a big merger. Is, what is the plan for you . Your contract is up in 18 months and i think my shareholders are going to have a concern about this dual class structure. And what is the future for cnn . ,hey dont get any feedback they are asking for more time and they send a letter around june 24 addressing those concerns. Will sell cnn and that will be right up front. We dont think your shareholders care that much about the dual class voting structure. And we will extend out chases contract. They address some of those feedbacktill not much when they got the two sentence reply that we are not interested and we will go along our way. Buyerst of potential have been suggested, google, yahoo , cbs and viacom. Having worked within the those is more of likely or realistic if this deal goes through . Cnn is a valuable asset. Value that about 8 billion. That is roughly 10 of the value of the whole entity. Are hbo, jewels turner, and warner bros. Think about the natural buyers for cnn, i think disney is a real natural buyer because they own some of the largest and capable properties. Propertieshat set of and ithem more leverage think it is more interesting to talk about google and yahoo . Those seem like stretches to me. What about the idea that Rupert Murdoch is doing this just to fend off other potential suitors for time warner like google, facebook, amazon. I dont think he would do the deal just to fend off other people. I think he feels like the timing is right. They are passed some of the scandals and there is this uncertain environment in the seat, this antitrust situation, and i think he is seizing on a situation where he feels like its the right time. Interest rates have remained so low, so a lot of things have come together in the same time to make it a deal that makes a lot of sense for murdoch. Some of these mergers dont have a great track record. Going back to more than a decade ago, he mentioned the cultural differences, the rivalry between foxnews and cnn. Beyou think that there would cultural differences between time warner and 21st century foxx . I was there during that difficult merger and it was very difficult to overcome. I understand issues that can take place. As for the newsgroups, i dont think they can stay as one company. Give it didobably happen. As a larger company, you have foxx studios and warner bros. , very different cultures. You have very Different Properties that had been very different cultures and i think it is a really different question and i think a merger would be done carefully and for a very significant time, keeping the Company Separate is a likely outcome. Youre talking about if executives will stick around. Ruperthe letter that sent back, he said we would want you to stay on Going Forward but it was also very clear that he wouldnt run the company Going Forward. Whether it was an advisory role or serving on the board, this is an operation to be run Going Forward. How do you think a merger like this would reshape the industry for better or for worse . And trying to buy Time Warner Cable and at t is trying to buy direct tv. We havent seen a merger of more content focused players yet. The distribution consolidation is on the way and it is already started and is going to continue which a think is very bad for consumers and very good for the companies. It stifles innovation and there is pricing issues. That is a concern. On the content side, youre right. There is consolidation but it hasnt been to the same level. It is going to be necessary for it to happen. It has significant leverage given espn and other properties. Other properties, whether it be cbs, time warner, they were recently in the 20 to 40 billion range. To have leverage is probably going to be a necessity for these content owners. It makes sense from a business standpoint, im just not sure it makes sense from a consumer standpoint. Has1st century foxx suggested they are willing to pay more. Time warner said we may not want to consider this while comcast and other studios are busy dealing with other potential acquisitions. 70 of the big holders are that isders in foxx. Where the game moves now. That is where time warner and itself are going to say only you can get time warner to move there. Contingent on being able to engage with time warner and get access to the books. Be 1. 5 billion. Meaning andll about in time warner. It might just be the beginning of the battle. We are talking about the regulatory hurdles that a potential deal good face could face. Welcome back to the best of tilburg west. Potential regulatory concerns of the two sides agreed to a deal. What are the issues i can prevent it winning government approval . Asking if there are issues other than cnn that these Companies Need to be concerned with. I think if the deal goes forward, there will be a lot of issues outside of cnn. A lot of it will depend on trusting agencies to define the relevant markets. It will be everything from Hollywood Studios to Cable Networks to other assets that time warner and foxx have both in the United States and around the world. Talk about the Legal Framework with which the sec will look at this. Will look at this candidly. I dont think they have any Legal Foundation but that wont stop them. These are entities heavily regulated and it will take a good long hard look at it. Going to bethey are able to affect the deal. They will do a Public Interest standard which is an amorphous term that will be whatever the fcc decides to do with it. It will look very heavily at the cable programming and also look a lot at the Bargaining Power and negotiations between the cable programmers and distributors. Which is really i think what is driving the recent mergers. Certainly comcast, time warner, at t. Is seeing about who can have Bargaining Power and negotiations in distribution and content origination. The sec is already currently looking at comcast. Joining us from new york, susan, how does this deal strike you from a regulatory perspective aside from the issue of cnn which presumably will be sold anyway . Is driven by enormous concentration on the distribution side of the marketplace. The bottom line is that hollywood is scared. Lot of heft on a its side of the programming table. This is not driven by cable . Thehis is driven by programming industry wanting to make sure that they can reach people that love their programming without having to pay whatever comcast and Time Warner Cable wants them to pay. They need to be able to control their own destiny. Can go overthetop, it needs to be sure that it can reach subscribers. That will only happen if they have the power to make that true. Why should the sec not be looking at this . Fcc not be looking at this . That they dont have the authority to review mergers. Theyre served by the department of justice and the federal trade commission. You have hundreds of hardworking Civil Servants at these agencies that do a wonderful job of reviewing mergers and we dont need the sec to review it as well. Time warner has already said we dont want to consider this with other potential bidders dealing with other acquisitions and verizon, potentially. How does this actually play out . They have to be nervous the cousin as it goes through, they will control about 70 of american households. It will be the only choice for highspeed data distribution. If he wants to make sure hbo can get there, he has to worry about eventually being acquired by comcast. He will need some partner to control his own destiny. Maybe that is google. There are only a few players left on the board with whom we can deal. Why should or shouldnt the sec be involved here. Was an harold commissioner, he voted to approve all of the megamergers that have gone through. So he is presiding over enormous consolidation in the industry. The broad Public Interest mandate allows it to look out for the future of American Communications and that is extraordinarily important. It is very relevant for them to get a chance to take a look at this deal. This triggering a continuation of the state of megamergers . Hard to predict the future and hard to know if there are large mergers down the road. You to for noting my tenure on the commission. She mentioned that i dissented from every condition on every merger on the ground that i thought the sec had no authority to review the mergers at large. See that they have authority to review licenses just as they do for the license transfers that happen routinely every year. The issues that you think the sec specifically would address that the Justice Department doesnt . At the futureok of overthetop video. I now theyre looking at interconnections between the netflix networks, the pipes and wires to reach comcast subscribers. Having expertise in that issue is going to help them evaluate if time warner in the future will have the freedom to reach subscribers. It gets to look at the entire ecosystem and explore a deal through that lens. Author of captive audiences. Ahead, apple and ibm have put aside some longstanding differences to form a new partnership. We have details about the tech giants next on the best of bloomberg west. Welcome back to the best of bloomberg west. It did her rivals since the dawn of the personal computing era but companies have put their differences aside in the interest of growing both businesses. Apple and ibm teaming up to develop apps that should be tailored to work with the Data Analytics and cloud services. On what this deal means for both companies, we started asking about how big a deal this really is. It is how the tables have turned. A company that set the agenda for technology and apple and google do that. It is a very clear sign that we are seeing a much weaker ibm as a tech company. Have read a lot of stories about this being a great move for apple and the think it is a defensive move by apple because they were going to get jostled out of the market by android which is a lot more open and more flexible from an enterprising standpoint. So from that standpoint, this is a good combination for them. I said ibm is just another channel partner for them. Wanting to target walmart in the consumer market, they are using ibm to go into the enterprise. It is at standpoint, net positive for them. It still doesnt take away from the fact that android is more flexible and more adaptable for the enterprise. Will they be offering Android Devices in their enterprise solution . There was no indication about that. Every one of the fortune 500 Companies Sold an additional couple thousand ipads and iphones, it really wouldnt add to more than half of a percentage point of revenue. But it speaks to how big apple is. And what it could mean is the holdout of blackberry users that refuse to embrace any kind of apple product. That ibm and apple compete is a 30yearold notion that does signify Something Different than the last boundaries of apples reach have fallen. The shift to mobile computing has created a whole new class of leaders. Those companies that are looking toward becoming the people that set the agenda for enterprise computing, you see, dell, hp. These are the companies that have fallen behind and started on the wing, so to speak. I think this is a positive for apple. Lets face it, i that is the better tablet in the market. The new Surface Device is an impressive device that does a lot of things that a laptop could do in the past. Im impressed by tim cooks ability to strike up vital partnerships and do makefthebox things to sure the revenue stream keeps growing and i think it is very easy to forget that this is a company that is trying to become big. Apple is still trying to do something echo it is the Biggest Company in the world. A market share is not that great. And need to make more money justify their business, i guess. We see them strike a deal with beats, photos with dr. Dre, photos with the ibm ceo. Is this a new apple that is more perative than steve jobs . I think john gruber put it well that this is not steve jobs, this is tim cook. The imprints on the company already. Is executionis oriented on the idea of partnerships, more willing to be adaptive to the new world. Everybody looks to apple for new great product. Is smart to get the biggest retailer in the world telling your stuff. Big deal for very these guys. Its a big deal for these guys to be out there and this notion that ibm needs this rally. They need to have the best solutions available. Sure the corporate clients for saying we can get them somewhere else. Saw nine quarters where they didnt see sales grow at all. These ibm certainly needs a deal. Is not seene does very easily by the public. The tablets and the devices, they make all the technologies. We dont see it. That is the new apple. We have to get used to it. We think of it as just a bigger iphone but what happens underneath the screen is something that not a lot of other people do. Microsoft announcing the big round of playoffs, but what is next for the Software Giant . On the best of bloomberg west. Welcome back to the best of bloomberg west. Microsoft Just Announced the largest mass layoff in company history. The ceo tries to remake the company. As many as 18,000 jobs cut over the next year that amounts to 14 of their workforce. More than 12,000 cuts are coming from the newly acquired nuclear we talked about what this could mean for the company. At think it is less a focus on layoff and more on the quote that you just gave. We heard them redefine the strategy at a broad level of platforms and productivity. We started to see a change in the culture. It is exciting. Onits a much richer focus interacting with the communities the thing about culture and listening is you need to be able to execute this set of. Playoffs is about simplifying and streamlining and helping the company execute. 59 are no caps on loan. They said this is proof that it was a bad acquisition. Is there more to the gnocchi a cuts in particular . I was referring to the other 5000 jobs and the types of jobs they have now cut. The gnocchi a thing is different. Is more looking back to that strategy of platforms and product entity than how much do we really need to be that handset manufacturer in that particular Strategic Focus that we are moving forward. I think there is going to be a greater emphasis on cloud, in particular the azure stack. Fast and increasingly data, the role that datadriven Services Play over the next 10 years. We knew the layoff for coming. Abouthave been talking more modern companies have built huge businesses on much smaller numbers where Legacy Companies like microsoft and hp have tens of thousands of people. Just one hard choice but many hard choices down the line . I think it is early to tell, but if you give them another month, you can give them a review. We will see a lot of positive early signs. Nobody wants to have to lay off one person let alone 18,000, but it was this area. You mentioned open source software. What does that mean to you . What i think it means is that microsoft is going to listen to what is going on in the community. Thisre people looking at software that is not Microsoft Software . And how can we have a role . I wouldnt be surprised to see than embracing some of the emerging. World, weanalytics have already seen the background under server and tools that we will run the next on azure. If you dont know why its going on, how can you be relevant . That is a Culture Shift that is taking place. A huge Tech Community where you are. Impact, taking over the ripple effect. How will that be felt . We can look at the shortterm and longterm. It is hard for people to be forced into this kind of transition but i think they will have a hard time with those opportunities. I think everybody is rooting for and,soft, and five months people are very encouraged, cautiously optimistic that they are making some early good moves and trying to inspire through this focus on cultural transformation, the steps that can lead to microsoft being a relevant tech company for many decades to come. That was emily chang. Tweetedatched and during the world cup final, you werent alone. Record tweets and we will break down the numbers with twitters Vice President. Welcome back to the best of bloomberg west. To thes victory thirdhighest Television Rating on a espn. Of theseen in nearly 10 homes but television was not the only winner. Twitter had records of its own. They spoke with Vice President of global strategy and started by asking what made it such a big moment for twitter. Place where fans and professionals came together to celebrate. It was a huge deal. What is the biggest social tv event . Selfie . Donald sterling . Lebron . Always lebron. If you think about the selfie, it was 20