tv Squawk Alley CNBC September 17, 2019 11:00am-12:00pm EDT
good tuesday morning, welcome to "squawk alley," i am carl quintanilla we'll go to bob backish, viacom ceo. we'll start with we were delaying its ipo as you know amid questions over its valuation and corporate governance lesley pickers has more back at hq what do we have today? >> we were convene employees for an all hands-on deck it is unclear exactly what the purpose of this meeting is but most expect to hear more from the status we'll bring you relevant details as we get them in the meantime i have been
chatting with sources on the deal exactly what happened to cause the delay and told they realized based on feedback from investors they needed to sharpen the story, they were not ready to have those conversations with investors on a formal road setting. this delay would give the company time third quarter numbers in the marketing we were saying in a statement that expects the deal to be completed by the end of the year the important thing to note on that timing is that if the ipo does not happen before december 31st or if it does not raise $3 billion, we work with jp more january a morgan expiring. pushing a deal of 2020 would mean of $9 billion that we need to fund out. it is unclear what the delay at this point much will change in the next few months that would allow us to
boost valuation beyond give or take and of course the risk guys that the market conditions could turn and investors would bulk even more at a money losing company have not been retested in a recession before guys >> lesley, you touched on this a little bit given some of the backlash for potential public market investors, how much more can it actually change by pulling off on the ipo >> that's the question valuation is a big question here i am told they did almost done a preroad show where they went to the big market center like boston and did this lose meeting with investors kind of gauge interest before launching this road valuation is the key question here if investors feel like they are
getting enough of it deal, perhaps they can get big ticket investors to buy in at a decent amount of the ipo. as you mention on the corporate governance front, they added a woman to the board of director, after pointing out they did not have real diversity on that board. additionally they roll back a lot of corporate governance. they could initiate more of a single one vote per share class structure. it is unclear whether they'll be going that far morgan >> we'll see where this one goes lesley picker, thank you >> now let's head out to david faber, he's at the conference sitting down with special guest. david. >> thank you, i feel like i have been at all 28 at this point very happy to have repoobert b k backish with me.
how long, the merger is not a change in control, a lot of people say the regulatories are going to move faster than the typical deal >> we believe so we'll close sometimes in december things are moving along. we benefited as you say for common control in the context of emerging process >> december will be upon us very soon it has been a month since you announced the deal the stock did not react particularly well given the weeks and months and years of speculation and many waiting for a positive response. were you disappointed in the market response? >> clearly we are disappointed of how stocks are reacting i spent the last two weeks talking to investors and making sure they understand the tremendous opportunity ahead of viacom and cvs, you look at the asset of this company unites whether it is paramount picture and the power house cbs and
broadcasters and show time which is preempted and a story coming forward in the last five years we think that's a tremendous opportunity. you look at it, a library of 145,000 television series. 3600 films and participations and news and sports on a global bases, it is a tremendous opportunity. it positions us to be a preemptive content provider to the world. we'll be focused on maximizing the value of that content both through our own platforms and third partiy. you will see execute that strategy as we close and it is going to accelerate our transition to the next generation platform.
we are tremendous excited. >> you mention speaking to investors which you will be doing as well. i spoken, they were disappointed by the $500. many pointed to that seems much lower than we anticipated. we are not sure why they chose that number. what do you tell them? >> that was a topic conversation with investors as well here is what i would say $500 million, it is a synergy number that'll drop to the bottom of the line that's a bankable number i would also, discussions i want to talk about. we have higher number, we'll look at more opportunity and as we get into this process, i would not be surprised that we didn't find it the revenue side is zero >> ultimately -- >> net 12 to 24 months >> the reason you do this deal is revenue of synergy.
we see substantial distribution revenues in this deal. on closing will be on the market leader intelligence market share in the united states that makes us a partner that video distributors need to have as part of their offering. we think that's a substantial opportunity. like wise in the advertisement space, we are not only 22% of primetime, we are number one on every demographic. you add to that, the advance marketing solutions that viacom brings to the table and we as a solution product provider for advertisers are the clear market leader we think that leads to substantial synergy in the ads space. this company used to be together and when it was together, it licensed films and television product together that's an tuopportunity that we
see in the market as well. that's a place where the combined asset will enable acceleration and substantial process. >> right i wonder whether investors will look at the added scales of this hey, you are still in a business that's being eroded everyday yes, it is great to be 20% of the market that market is getting smaller and smaller in terms of what we have dealt with for many years streaming is sort of where they want us to focus in terms of potential growth opportunity yes, you may grow synergies, are you facing a declining market overall? >> no. what we see is a consumer market segment. we have seen that for the last couple of years. still majority of consumers today in the united states are big bundle consumers >> they are going away >> we have smaller bundles have opened up. at the high end, over the top
bundles that are substantially that's a growth segment in aggregate and below that you have players like netflix which is also a growth segment, one we are supplying directly through our studio production. we have the market leader. we see that segment in the marketplace, we are focused on a company that's different than other companies focusing on the widest assessable market consumer perspective you look at us today of the big bundle and small bundle segment. you look at us supplying the space, we are major supplier of original content to that we are making hits every single one of the services that are in the market today are announced or doing business with us on a traditional production bases, we are in clear demand as
other people cut back from that. again, we think the free space is substantial opportunity >> what you see is the growth path there taking a tremendous content asset which includes both assets in the library as well as new production, maximizing the value across the poll distribution >> what about the investment i ask that because todd younger, you have brought him in and explained things to him. he came out of that and continue to say viacom and cbs must take one of two neither scenario, the stock is going to under perform because it is going to cost so much darn money if you have to invest. >> look, if you look at this scale of spending combined
viacom and cbs, we are spending $13 billion. that scale spending puts you in a club where you have a flow that ensures that you have state of the art capabilities in terms of content and a flow of talent in terms of wanting to work with you. viacom and vbs gets you that the other thing is you look at how you spend that money we spend it across film and television the film space we are on a nice trajectory at paramount. they'll have 16 films in 2020 starting with gemini and terminator and the next two months very excited about that television space very substantial ongoing production and we are going to focus on again through our own operated product. where you put new production and importantly how you feel partner
dema demand we spent the last three years working closer and closer with our distribution partners and this distribution partners are important over the top space as well that's where we see the substantial opportunity going forward. todd is certainly entitled to his opinion. i talked to him quite a bit about this notion, i am 100% on vinced that the viacom strategy will get us to the market and enable things like mobile. that unlocks extraordinary values for this company. >> there are still those who says the scale is not enough, having heard all the scales that you have, they're saying you are still too small to compete overall. whether it is with a robust streaming service or the point you are making and hitting all the different area i assume you disagree with that. what do you say when others say you are not big enough to compete with disney or some of the other giants that are out there. >> i disagree with it.
i think there are a number of things of the streaming space. we do -- you can bring in the widest assessable number >> you got all access on cbs side and pluto >> yes, we are lunching bet plus later this week. we think that integration is a tremendous attractive. >> we'll see how the portfolio particularly on the pace side evolve overtime. >> peacock is taken overtime >> i heard it this morning point one is it is a hybrid of free and pay point two is look at the content of collection in it. not only scripted but unscripted we are a leader in both. we have news contents. we have sports content all of that is national content.
we have local content. by the way, we serve every demographic. we'll bring substantial content, breath and depth to this space the third thing is this notion of partnership i fundamentally believe in partnersh partnership. i think it is missing the market opportunity. look at what we did with pluto, no one understood that now they're working. on some levels it is and some levels it is we are working today with comcast and cox. >> is that real programming on pluto that a lot of people want to watch on? >> absolutely. when we announced the deal in january, we had 12 million monthly after users. our third quarter in august, that's 18 million monthly active users. 50% increase in six months u.s. only. if you look at times spent per active user, it is growing faster you got 160 contents including
the nfl on the platform and we are rolling internationally. it is tremendous demand and we start to monetize it aggressively in the market that play is tremendously valuable and a piece of our streaming strategy >> we are running out of time. you mention the nfl. the contract is still a bit away are you confidence that cbs is going to keep the nfl? >> i am confident we have a high commitment with the nfl. cbs, broadcast breach. the nfl, that's important. second thing people don't talk about is high quality production cbs produces multiple games per week in the season that's the way their product is exhibited to the american consumer they care deeply about that and viacom you got two other things that are important to the nfl you got young audience breach. we have both linear and on
demand and so as you look at viacom and cbs, four things come to the table. that package is very hard. >> although something else they care about is this >> sure they'll want a bigger check and you can pay it >> bob, we are out of time today. look forward to talking to you again in the future. good luck or so. thank you for taking some time >> bob backish, president of viacom and cbs >> david, thank you. a big day for media industry news dom chu has those details back at hq as we focus on the rates the federal reserve took steps to stabilize u.s. dollar lending and barrowing markets. what happens was the u.s. fed
conducted an over night repo operation. that was an effort to bring down borrowing rates that was affected the last couple of days the move were driven by shortage of dollars available in the financial system it was caused by the timing of things like corporations needing cash to make some payments and bond dealers and positions with certain clients. the new york fed ended up closing a $53 operation to put cash in the system to solidify that over night lending rates. the focus of tomorrow's big fed meeting. that rise in dollar funding rate spiked a lot which sent effective borrowing rate at the feds higher as well. it may flow through to other parts of the overall credit
market which may in turn lead to credit market getting tighter and causing stress on certain corporate borrowers or hedge funds or other financial institutions no signs of contagent yet. that's why so many folks are paying atextention to it. looks like for now it is contained. >> good explainer, dom thank you for bringing that to us >> "big bang theory" on hbo and "seinfield," nbc explaining more is coming. dow is down 38 points. ayitusst wh i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here,
welcome back to ""squawk alley. >> nbc universal streaming service in the works are calling peacock and it will launch in april of next year with more than 15,000 of contents and combinations of news and sports and live tv series and as well as new original. there is no word on pricing. i am hearing it will be less than $12 a month originally reported when the services first announced. now in addition to "the office,"
peacock will be the exclusive home of "cheers," "saturday night live," "will and grace" and among others its library will include classics such as "et" and "jaws" and films from "fast and furious" franchises. it will have new original comedies from lauren michael and jimmy fallon and seth meyers along others this announcement is the latest in the content war of these new services get ready to take on netflix. also today at&t announced it struck a deal for "the big bang theory" after 12 years on cbs. warners paid half a billion dollars to stream the show five years on hbo max and another
$100 million to air reruns on tbs.net fli tbs. "seinfield" reportedly paying $500 million for that deal worldwide. the fight for the popular tv show of the past several decades is turning out just as pricey and competitive as what we have seen for deals with big content creators that are being snapped up in a land grab for the content that's going to vote the draws and keep subscribers on various platforms. >> it is going to be a fun fight to watch >> after the break, 30 jobs up for grabs today. it is prime day for jobs amazon is posting a nationwide career day a lot of report omq is xt, stay with us dmother's docto. we can do the screening at her house.
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amazon is hosting a career day in six cities across the united states. hoping to fill 30,000 jobs at the site of hq 2 deirdre bosa >> reporter: well, first of all, these are not just warehouses. amazon is looking to fill marking and i.t. and engineering and operations as well amazon moves beyond its core business of ecommerce, it has become the number two largest employer in america after walmart. guys, while 30,000 jobs are a large number and a nice headline it represents less than a 20th of amazon's global work force. look at this, the start of 2018, amazon work force for 60% year over year.
at the start of this year, it grew 12% year over year. it is also reflective of amazon slowing growth and online sales here in north america. amazon is moving into new businesses from groceries to advertising devices. when you look at their career website, take a look at behind me on the website there are nearly 12,000 open positions and another team where amazon is hiring aggressively, this one right besides me although there is not anyone here this is the amazon alexa this may tell us where amazon wants to go. as it struggles to replicate that growth overseas back to you.
>> what has it been like in terms of traffic into these booths >> reporter: it has been extremely busy the first person to line up was at 5:30 this morning the lineup, there are many people waiting outside i was at amazon's career day a few years ago, i felt like there was a lot more people there and lines around the block a few years ago. >> deirdre bosa, thank you seema mody >> hello, morgan the move today enlarge part due to the knee jerk reaction. energy stock being the best on monday to one of the worst performing group in europe today. how some of europe yeoil
response -- it comes as prime minister modi is expected to meet with houston this weekend we are getting some encouraging news on germany. economic sentiment bouncing back in the past month as some concerns start to ease around u. u.s./china trade tensions. the results still some what bleak business moral sitting near an eight year low carl, sending it back to you all right, seema, thank you very much. let's get a news update this morning. sue herrera is back in hq. >> thank you very much contract talks between gm and the uaw are set to presume after a pause over night this is a strike by nearly 50,000 employees extended into a second day a uaw spokesperson says process
is being made. britain highest court is in session. it is a struggle to control the course of brexit a lawyer told the court that prime minister johnson illegally suspended parliament a moscow court rejected appeal of an american businessman accused of spying. whelan's addressed insisting his innocence. our long time political reporter at nbc news has died as a result of complications from breast cancer. she was the daughter of two members of congress from louisiana. cokie roberts was 75 years old
you are up to date carl, i will send it back downtown to you. >> sue, thank you very much. we'll keep an eye on these markets and more headlines regarding saudi arabia facility out of reuters don't go away. at work is brought to you by workday, build for the future. at verizon, we're building the most powerful 5g experience for america. that's why the nfl chose verizon. because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans... can experience 5g all at once.
these days is iphone's latest version enough >> both of you wrote reviews which i read this morning. it sounds to me like you are saying it is another step ahead in the race here if you gotten your android phone, you are not going to switch here. you guys seem to like a camera a little bit more than you expected based on your initial take of the event. >> the cameras definitely a big upgrade here whether whatever phones you are coming from i did a lot of comparison testing which are the main people upgrading iphone 6 and iphone 7 my take away, the main reason upgrade here is battery life that i think where we are seeing the biggest leap and that's what
most people care about >> so do you think that is any different from your typical year of an iphone update? the processors are always faster battery life is something. >> power is sort of reduce expectations apples came on stage and they did not make any grandiose proposition. they said the camera lasts a lot longer and camera is better and screen is brighter all of those things are true i think just meeting those expectations with joanne written agent are things what people care about these phones great you want to buy a phone and weigh out the rocky transition these ones will last you a long time >> mattis it going to be rocky
most of the people who cover the company for the street argues it is going to be man or heaven from next year >> when we get 5g. when we get the 2020 iphone. >> yes, when it lands right here >> i think the 5g transition could be very rocky given the state of the carrier situation in the u.s they're now moved to the tick-tick-tock recycle now the toughest decision this year if you brought that a couple of years ago, everyone rushed out to get that brand new 10 and new face id and new design now you are like i need another phone to two years or three, so i can get that heaven sent iphone 20 or whatever. >> throw your 10s in the trash >> the 10 has a horrible camera.
the one thing that you can never buy that you can never spend money is a better picture after the fact if you have a kid and you have a pet that you love, five years from now, you can't go back and be like okay i am going to throw some cash in this photo and make it better for you. >> better camera and better battery life, what didn't you like about the phone >> they're boring. it is my job to be excited about technology and they're boring. i think the iphone 11 is basically iphone 10 rs there is nothing for 11. >> basically slap another camera on the back of this thing, otherwise, if you had looked at an iphone two years ago, you pretty much knew what this phone was going to look like do you think we'll get back to the point where apple is blowing up the design of something and
gets an ear or a nose or something. we used to get those things. have we reached the level of good enough. >> i think we reached it for sure johnny, i left because they made these phones thicker and battery life better. i am sure he rolled over when that happens they redesign the chargers and it is a lot bigger i can't imagine that made them happy. i think we are there with phones it is hard to get excited of a l laptop upgrade i personally get excited about that with phones, we are heading to a new time one day a television set or whatever they want to make, that'll be the next big thing where they really redid this thing. >> i think that's true in this market apple is a global company. the phones, we fight for this every time i am here you are not going to switch from
e i-message. i am not going to leave my friends behind i am not leaving joanna behind apple has a huge market in china. the phones are alter competitive and hardware design are a llter competitive. there is a little bit more to go in those markets where they are doing that >> now you guys have any picture trying to track this voice over. this year's iphone is slightly thicker, i can't do it >> you guys are terrible >> now we are never going to get iphones. >> it is not all good news for apple today. they go to court with the eu for
a two-day hearing over this $14 billion worth of back taxes. our josh lipton is in san francisco watching that. hey josh >> apple is in court today and tomorrow the brawl here is over a big tax bill back in 2016, the european commission slams the iphone maker saying the company owes ireland $14 trillion in back taxes. tim cook's company under reported profits in ireland thanks to illegal tax benefit. this selective tax treatments of apple of ireland is illegal. appa apple has denied any wrong doing here apple follows the law and repay all the taxes we owe that disputed 14 billion currently sits in an escrow account until the legal fight is finished, though that may take some time. the court ruling here could take months and appeal to the eu's
highest tribunal no doubt of $14 billion is a big number remember apple's net cash position at last count at $102 billion eu commissioner vestager has big tech in her site for some time now. she hit google about $9 billion in fines president trump criticized her and saying she hates the united states in his words. since the european commission made this decision back in 2015, much has changed american regulators and lawmakers are much more engaged with the doj and ftc and house judiciary committee and 48 state attorney general investigating big tech guys, back to you. >> we need a huge table now to keep track of all the probes, thank you josh when we come back. coetororl inmpit ntejos us right
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public and unusual activities and the call of the day, we'll hit it all at noon we areless than 15 away. we'll see you then >> a ton of news today, we'll see you in a few let's get to the cme hey rick >> good morning, carl, all of this excitement about what's going on in the repot market, short term funding i look up on the board, i don't see anything out of the ordinary i see 179 in tens, lower remember last week we hit 190. how could there be so much excitement and nervousness yet general market seems to calm i will tell you how. even when it was drexel drexel,a going to explain to you what happens over the last 48 hours
quickly. taxes due. we all have to pay taxes an ironic situation? when was tax day it was yesterday what happened last week? we had some options, how much were the option soptions? we h that came out to be $78 billion. the problem is that's only about 24 billion of security matured where i come from, that's called a $54 billion shortage now, next page dollar demand. how much contadodollar demand du this i when this occurs, you have a shortage of these and you will have buckets of securities and you have to pay taxes.
so what happens? a repo market, you swap around securities and make some extra dough more than the interest the demand is so high and the amount of money they demanded are rights within the bounds of effective fund rates it is skyrocketed. we have been talking about dollar funding issues for a while. here is a bit of a factor there. if you are in euros or pound in emerging markets, that's what you need you need dollars, too. so all of that and pushing extra cost into how much it costs over three months in a currency swa to convert that pretty much brings us up to speed except for the feds know what they need to do they need to inject and cash into the system. they did repurchases and buying security and handing out cash. it was a bit of a glitch but it looks like that. that's a good measure to secure
the marketplace. repo rate as the feds repurchase going on, yes, you guessed it, they did a swan dive back to you. >> thank you, watching shares of altrium. wall street journal has report sales of juul have been halted in china that's all i have for the moment we'll keep our eye on it it's been an eventful couple of weeks in the e cigarette space they have a large stake in juul. just ahead, concerns over the business model causing a weak company to delay the ipo. what does it mean for the acheler competitors in t spe? we'll ask one. that's next. your money should always be working harder. that's why your cash automatically goes into a money market fund when you open a new account. and fidelity's rate is higher than e*trade's,
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only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ welcome back swirling questions over evaluation and business model causing we work to delay the upcoming ipo what does it mean for competitor in the space joining us now is the cofounder and ceo of nutel taking the evaluation up past a billion dollars. thank you for being here let's start right there wework aspirations is that a good thing as a competitor or a bad thing in the sense it could cast a
shadow on sentiment for the industry more broadly? >> kind of a circus isn't it i think before all this stuff the biggest insight was the business about big enterprises and capital efficiency in that echelon in the characteristic of that business you'll see even more recipes that we try to build a business as entirely different. it's just about enterprise it's five times more capital efficient. >> when you talk about five times more capital efficient, i guess break down how different the business model is and why you're convinced that their business model work even though there's skeptics about flexible office space in general. >> those guys got a lot from saudi arabia and soft bank i think they raised $13 billion so far to get something like $3 billion in revenue $4 invested for every $1 of revenue. our model is moreverse. we're five times more efficient. we serve enterprise.
that's 100% of what we do. it's a question you ask the ceo. the ceo has to walk to the head of tmg and say what happened to the data centers we used to run. what is the cloud thing. you grab the person by the neck and ask the c fo, why are we doing it the old way real estate. >> it's a concern downturn hits and you can back and forth on short term leases and try to low ball you down further and further. does the model work with the supply between you guys, wework, industrious on the market? >> we serve large companies. they're not moving every day or every week i started my first company in 2000 a mobile phone business it was a deep recession and ended up going public for t-mobile and regis did better than goldman sachs and citibank. even we're operating in london, which is not a relaxing market
brexit is as much as you'll see. we're ten times bigger than a year ago i feel confident that they'll come to flex away from leases. that's something no one loves. >> do you think it's more about the business model challenges or the typical corporate governance, ownership structure, asks they're coming to market with >> i'm not sure it's typical it's highly unusual the stup that is happening over there we are just a plain vanilla company. i've built so many companies over 20 years. we're doing the old fashioned way which is making something new. it doesn't involve a bold vision of the future and moving a industry a thousand years old. it won't be easy there are problems, i don't know i mean, we built our thing totally different and i see it in the numbers when i go into the office every day that's the essence of it. >> thank you for joining us today. we're going to stay on top of wework, obviously if any developments we get between now and, i guess,
october. we'll have to wait to see. there's a look at the dow. pretty tight range today despite the drama regarding repo rates obviously oil and the conflicting headlines we get don't forget, don't adobe, chuy, and fedex. it will be busy. karl, thank you. front and center the push to new record highs is this the week to sets the course for stocks to hit a new milestone? it's 12:00 noon. this is "the halftime report". the fed needing to decide on the next move. and taking a major step ahead of that to control soaring rates. what it means for this market. virgin georgalactic holding the investor day and former twitter coo weigh in on the state of the ipo market home depot, one of the best performing stocks in the dow this year. but it just got
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