Good morning, it is 10 00 a. M. At at t headquarters in dallas, 11 00 a. M. On wall street, and squawk alley is live. Welcome to squawk alley for a monday morning, john ford and myself along with ceo terry and Senior Editor peter cofta. Good morning to you both. Our top story fairly obvious, at t buying time warner for 85. 4 million. A deal uniquely different than anything theyve done before. Regulators already raising red flags, possibly putting an end to the deal before it begins. The senate and Consumer Rights is looking to schedule its first hearing on the merger next month, and its not just washington, the competition also warning against the deal with one disney spokesperson saying, a transaction of this magnitude obviously warrants close scrutiny. Time warner ceo says the focus is vertical and mobile. We were talking about whats happening in media, all these new products like subscription v. O. D. Networks, all the increase in mobile consumption of video, and as we got into it and were talking about what the Media Companies were doing, what the Distribution Companies need to do, we realize that if we had ourselves together, that we could create more innovations for consumers, so they can have more choices, going to end up with more competition, therefore, lower prices. Shares of both Companies Moving lower on that news. Wow, theres a lot of skepticism up front. How high is this hill going to be, peter . I think at t thinks its a big hill, the breakup fee is a mere half a billion. When they tried to buy tmobile the breakup was 4 million, signals at t knows this is tough to get through. Do you agree, terry . Yeah, we learned, this is deja vu all over again and the last time there was a very extended period of time before close, and i think people, shareholders, are thinking this is going to take a while. But why . I know its not popular to like Big Companies now and again these days, i think politicians cant come out this early and say im in favor of it in this environment, but these are two companies that dont compete. Were talking about vertical integration here, im getting into trader arguments people who say i dont want fewer options. What option is being eliminated by this . I dont see one. Youve made their argument. You know what this experience is like, comcast beat Nbc Universal and that is the case for that, theyve already done this once. Even in that case, comcast actually had monopoly power in cable in certain geographic areas. Wireless is one of the most competitive spaces, and so is content. The difference here is comcast had a regional footprint, only affect customers in certain parts of the country, at t can do this across the u. S. And for that matter in mexico, latin america. But it is a vertical integration deal. At the end of the day, do consumers have less choice . The Competitive Dynamics are different. Going forward, mobile, video streams everywhere, the competition looks broader than just cable. Its google, facebook, amazon, netflix, and that is a wide berth for them to make that argument that this is far more competitive. As said this morning, i think netflix is going to be okay. He said i think amazon is going to make it in the end. You buy that . You buy their line . I do. I think this thing happens. Will it take time, will there be a lot of looking at it . Absolutely. But at the end of the day, this deal goes through. There will be a ton of restrictions, the government will make it very hard, and the market will, as well, for at t to treat their content or netflixs content any differently. You dont mean necessarily divestitures. Might be, but the idea to pay less for game of thrones through at t versus verizon or comcast, thats not going to happen and frankly a lot of folks are worried on a Broadband Wireless case they are going to treat that differently. Socalled zero rating. But there is a risk in this environment because theres a mistrust of institutions of Large Companies that they just decide, you know, government decides were not going to allow it and then sort of figures out a justification backwards, that our Regulatory Regime becomes more like europes. Even under the european regime which protects competitors, its hard for me to construct comcast and time warner, but they are really the same deal, so sort of depends whos making the argument and what day. Time warner cable charters youre saying. Theres always a political undertone to these considerations and thats a function of the time. What period are we in, what era, what do politicians and policy makers have to make a stand about. A lot of discussion about what boou kas sees are different. Are the challenges to the landscape more acute . Why now . The price is that different. He hasnt changed fundamentally what time warner is doing. Its still the same company. Its still fundamentally the same company. This is as good as its going to get, im out. And they are not selling murdoch empire. I think that plays a lot into jeff buccas, a guy thats spent his entire career in the media industry. He was against the aol deal, for this deal. Look at where the stock is. We may look back at this in five years and say wow, good job jeff bewkes. Any notion who moves next on either side, distribution or content side . This puts cbs in a bind, this is something he wanted to do for years, much rather do that than a vai ya come deal. Youve been hearing for deals the amcs of the world on the content end are going to look for bigger owners, thats certainly going to intensify, as well. This mornings Historic Deal follows a string of moves into media, the largest did not work out as well as hoped. What does that say about the media strategy . Julia watching that in los angeles today. Hey, julia. Hey, carl. At t slooking to time warner, as you mentioned, vertical acquisition for growth and diversification after buying another distribution company, directv failed to jump start video subscriber growth. Directvs modest gains failed to compensate for losses at at ts uverse, resulting in the companys net loss around 200,000 subscribers since at t closed its acquisition of directv in july 2015, just as concerns about cord cutting in a new generation of cordnevers was growing. Now instead of buying another distributor, at t is counting on buying one of its content suppliers to give it an advantage as it puts together more direct to consumer options, including a new over the top service directv now, which is in the works. At ts ceo saying owning a content company will enable true innovation of new platforms and video experiences, while time warner ceo says at ts data will be valuable to know what content to create and ads to better content consumers. At t has already been investing in premium content. In the past month making exclusive deals with taylor swift, as well as garth brooks to offer their music and concerts to their customers. At t partnered with peter turnen two and a half years ago to create otter media, which owns Youtube ContentCreator Network full screen and have a combined 1. 2 million paying subscribers. While buying directv showed at ts confidence in the tv bundle, buying time warner is a bet its content assets will be appealing across all platforms and a la carte. Guys . Julia boorstin thank you very much for that, julia. One thing is for sure, when the deals are denied, it hurts. Its hurt players for years. Thats a lesson absorbed and learned . Sure, but youre not going to get over the finish line unless you cut the deal and announce it. I think they are giving this the college try. Like i said, i think this deal goes through. Peter, this combined company would have tremendous insight into where people are and when they like. Thats what googles got already, facebooks got some of it, too. Netflix. Well, netflix probably less into where they are. Part of the argument here is addressable content, addressable ads, make the fantastic ads where we know who you are and what youre doing. The industry has been promising this for years, one day it might happen, dont know. The netflix idea is happening now, which is we know what youre watching, were going to give you more of what you want and use that information to buy more of what you want. Thats happening today. Thats a realistic goal. Netflix doesnt know where i am in manhattan at 2 00 p. M. And have an ad strategy. Weve been waiting for that scenario to pan out for years. One day it might happen. I think the data play is an interesting one, especially to see how they treat the known data about their known users on the at t network and what will be allowed from a privacy standpoint, but at the end of the day this is a lot about defense, Distribution Companies making a bet in content as distribution changes and changes dramatically, so we saw it with comcast and nbc, so, you know, you could call that a pair of queens. Then along comes verizon. Jack hie maybe and at t is hoping this is a mitt full of aces. Do you believe the price action today in google and facebook at alltime highs is related to any of this, and if so, why . I doubt it. Im not making that bet, but if youre google and facebook, you feel okay today. If your core Business Today is still selling advertising, this doesnt threaten that. Right. Fascinating. Were going to have this one to kick around if a while. Peter, terry, thank you very much. Thank you. When we come back, tim cook and company on the hot seat when they report earnings tomorrow. Why some on the street are warning apples win streak could be coming to an end. Later on, they prefer to work in the shadows, but executives at some of the Biggest Private Companies are breaking their silence when it comes to the election and their donati donations. Plus, more on this mornings deal, analysis you dont want to miss when squawk alley continues in a moment. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Apple stock has been on a tear recently, but can ceo tim cook keep that momentum . Josh in San Francisco is going to take a look. Josh . Well, john, over the past three months apple stock has now surged nearly 20 , so when the tech giant reports tomorrow, the streets going to be on the lookout here for a few big themes. One, apple will give us guidance for its december quarter, and that will be the first real read on demand for those new iphone 7 models. Investors want to know whether the 7 can return this iphone franchise to growth. Pipers jean munstrom notes there are 275 million active phones older than the 6, so how many of those users will upgrade, and when they do, are they moving to the iphone 7 plus models . And rival samsungs big blunder with its note7 could provide a tail wind for apple. Can cook capitalize on samsungs pain and gain share in that Super Premium smartphone category . Expect a lot of interest in apples business in china, too. Remember when apple last reported that regions revenue dropped more than 30 . Cook pinned that pressure on slower Economic Growth and currency headwinds, but bulls want reassurance there isnt something structurally wrong with the business. For example, why more chinese consumers simply moving to Chinese Brands than most attractive features and cheaper prices. And finally, its not just hardware, apple makes a lot of money from services, too. In q3, that business, which includes the app store and music, grew 19 to 6 billion. Thats a relatively small part of apples total revenue, but investors appreciate its fast growth and high margins. Cook said services will be the size of a fortune 100 company next year. Were going to find out tomorrow if that forecast is still on track. John, back to you. All right, thank you, josh. Were going to stick with apple for a moment. Mixed panel tracks the actions users take in web and mobile applications and gathered analytics on apple users and are going to share that with us today. Ceo of mixed panel joins us now. Good to see you. Good to see you, john. So, what can you tell us about ios 10 and the adoption there, versus ios 9 . This, of course, important to apple because it makes the argument to developers its going to be easier to build apps on our platform and work with the latest features. How does it look . Yeah, the best thing to do is actually to compare ios amongst users against android, and what we usually see with android is its heavily fragmented. To give you an example, when ios 10 was launched, its now more than 70 of people that use ios actually use ios 10, whereas the remaining is either ios 9 or some older version of ios. Are you able to get insight into how many people have adopted the iphone 7 and 7 plus versus, say, the se, which is also relatively new in this cycle . Hows the mix look for apple thus far . Yeah, typically when you look at iphones, they are typically adopted a bit slower than, say, users adopting an operating system, mostly because you can simply upgrade. Its easy, whereas you have to buy an iphone. Right now the way we see it is about 10 of global usage ends up being people that use an iphone 7 or iphone 7 plus compared to the rest of the older iphones that are available for sale right now. And for a month or so into this cycle, is 10 pretty good . Can you compare that to last years cycle or the year before . Yeah, 10 s pretty good. I think that in previous years sometimes it can be slower, but this years pretty good. Also a note that its a whole new version, its not just iphone 6 going to iphone 6s or Something Like that, so that means a lot to consumers. A lot of discussion last week whether or not the samsung problem was big enough for people to overcome their hesitancy to switch ecosoystems. I wonder if you think thats true. Yeah, i think its not just samsung. I actually think its a combination of the iphone 7, in addition to googles newly launched phone, which is the pixel, so a lot of people are saying they are going to switch to one of those phones. So what are you seeing in terms of peoples reaction to various news about hacking . We had yahoo come out in its Earnings Report and say, look, when we announced the hacking problem, people engaged more and there was speculation they were going on to change their passwords. Have you seen a shift in patterns on mobile networks based on some of these very well publicized bouts of hacking that weve reported so much about . Well, ive never seen a product actually increase in usage as a result of a hack. Generally, you have to log people out or change their passwords, but usually youll see decrease. Mobile is certainly an area where theres a threat. I think mobile is brand new, so a lot of people dont know yet what the vulnerabilities that exist on mobile might be, so i think it will require some time before were able to know. All right. Suhail, ceo of mixed panel, thanks for being with us. Thank you, john. When we come back this morning, why ceos of some of the Biggest Private Companies are breaking their silence and opening up their wallets. Well break that down. First, shares of amazon getting a boost this morning. Analysts at Goldman Sachs hiking their target from 920 up to 1050, citing performance in retail and growth in web services. Well talk about that when squawk alley comes back. They may want the latest products and services, but they demand the best shopping experiences. Theyre your customers. And by blending physical with digital, cognizant is helping 8 of the 10 largest u. S. Retailers meet their demands with more responsive retail models. Ones that transcend channels and locations, anticipate expectations. Creating new ways to engage at every imaginable touchpoint. Its a new day in retail, and together, were building the store of the future. Digital works for retail. Lets talk about how digital works for your business. This man creates software, to protect this customer, who lives here and flies to hong kong, to visit this company that makes smart phones, used by this Vice President , this little kid, oops, and this obstetrician, who works across the street from this man, who creates software. They all have insurance crafted personally for them. Not just coverage, craftsmanship. Not just insured. Chubb insured. From starbucks Howard Schultz to hps meg whitman, ceos have weighed in on the election, but theres a huge group of private ceos who prefer to work and donate behind the scenes. Kate kelly has details on that. Hey, kate. Hey, carl. Its definitely true some well known names have spoken out on behalf of Hillary Clinton and fewer perhaps have advocated publicly for donald trump, but when it comes to the big money donors, we got a lower profile roster on both sides of the aisle than usual this cycle. Take a look at some of the givers top five in dollar terms in terms of their support for either candidate, according to totals from the center for responsive politics. Fairly known quantities, but Donald Sussman is number three with 32 million to democratic causes, a big chunk having gone to priorities usa, the clintonsupporting super pac. Part of his object is to get the money out of politics in a bipartisan way. Bob mercer gave much to ted cruz, but this summer he and his politically active daughter rebecca pivoted to donald trump, helping shake up their campaign staffing, as well as donating millions to the candidate. Mercer, a mathematician and coceo rarely speaks publicly. In fact, during a 2014 award acceptance speech that lasted 45 minutes, he said thats typically more than he talks in a month. The sixth biggest donor not pictured is fred icahner of news web in chicago. A supporter of causes related to gay rights, as well as supporter of Hillary Clinton, his company lacks a website, even his phone number can be hard to find, but hes put over 20 million towards democratic causes, ranking him just a hairs breadth away from paul singer, the conservative hedge fund manager.