Bending the Rules: Taking Stock (08/05)

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Aug. 5 (Bloomberg) -- On today's "Taking Stock," Pimm Fox helps you to think like a professional investor and discover the next "big thing." (Source: Bloomberg)

This is taking stock.

I am pimm fox.

On the show -- does everyone played by the same rules?

First come a new york yankee -- first, new york yankee alex rodriguez -- is his strategy for staying in the game going to work?

The rules of licensing -- team logos launched starter jackets.

They are back.

Using rules in advertising -- billboard-overload?

Get ready for more blimps.

Let's look at individual companies making headlines with olivia sterns.

Buyout firm hellman and friedman has agreed to buy chicago-based hub, in the largest takeover of the u.s. insurance broker on record according to data compiled by bloomberg.

Revlon has made an acquisition for $660 million in cash, giving revlon more access to salon- focused business.

Facebook has picked a veteran to be its first chief marketing officer.

Gary briggs, who worked with google and ebay, started today.

The jcpenney brand is getting a new marketing chief.

The department store chain has hired debra berman.

She will report directly to the ceo.

Thank you.

Jeff bezos is going to purchase "the washington post" newspaper assets for one quarter of $1 billion, $250 million.

For more on the details of what this means, we have cristina alesci and chief washington correspondent peter cook.

Cristina alesci, what is jeff bezos purchasing exactly?

A story and reputable name in journalism, and obviously, the latest billionaire to pick up a newspaper.

Perhaps a trophy asset.

We have a quote from jeff bezos saying "i understand the critical role the post plays and that will not change.

I am very optimistic about the future." the newspaper industry has been struggling with red -- and revenue and declining readership and circulation, so these billionaires providing backing has been a theme in this is just the latest.

John henry bought "the boston globe" and warren has spent over $380 million on newspapers over the years.

What makes jeff bezos standout is he is an internet billionaire, so he made his name in nontraditional, pushing media forward, and here he is going into a very traditional newspaper.

Peter cook,, in on -- come in on "the washington post," and give us some details -- a subscription and what is the reach of the paper?

Substitutions have been down this year alone 7%. this is a story institution.

I am a native washingtonian, and the fact that the graham family is selling this paper it is a huge deal in the city of washington.

I know folks at work at the post and there have been efforts to revive the company, improve the business outlook.

I put the building -- they put the building up for sale, for example.

A lot of people did not see this coming.

The fact that jeff bezos has bought this for $250 million, and from the early reports says there are no firings, 2000 employees -- no major changes in operations or management.

We will see if that changes over time, but this is the biggest institution other than the redskins in washington.

What role can he play for his $250 million -- does jeff bezos get more influence in washington because it is "the washington post" as opposed to another newspaper?

There will be talk about how jeff bezos the businessman will not influence the news product, but he becomes a bigger player he cause of this purchase whether he wants to be or not.

There will be some questions posed.

This is a paper, like a lot of papers around the country, looking for help -- new funding, ways to reach the gap from the old world of newspapers to the new world of newspapers and digital, and no one knows the new world better than jeff bezos.

It will be looking to him for ideas to make this profitable.

Thank you, peter cook and cristina alesci on "the washington post" selling newspaper assets to jeff asus -- jeff bezos for $250 million.

Major league he saw -- baseball has suspended alex rodriguez and 12 other players for using performance-enhancing drugs.

A-rod's suspension will last 250 games.

We are joined by a former executive with the memphis grizzlies and san francisco 49ers, a player's perspective with carl's -- carl banks.

Ira, what does this cover, and can he appeal question mark -- appeal?

He can appeal.

They are accusing him of using performance-enhancing drugs, although they do not have a positive test, and they are accusing him of obstructing the investigation.

This is more than the 50 game suspension.

It is not clear how they got to 211. andy, will be appeal work?

This is a pe referendum.

If you try to write this in a script, they go to boston next.

You can imagine what the fan experience will be at those ballparks.

This is important stuff in baseball.

The fact that alex rodriguez is playing, billy shakespeare would have gotten something out of this one.

Carl banks, you heard about the suspension.

What is your reaction?

From a professional sports standpoint and amateur sports, they need to be rid of the drugs.

How they got to the suspension, it seems like they are using a just cause clause among which will be challenged, -- clause, which will be challenged.

It has been collectively bargained, so they can use this clause to clean up the sport and say you are guilty by association.

I applaud major league baseball and the union for trying to clean up the sport and others should follow suit.

Ira boudway, what is the situation in other sports with performance-enhancing drugs?

Baseball is at the forefront.

None of them are up there with olympic sports and cycling.

We know what happened to lance armstrong.

Right, and in terms of the regime for testing.

In any sport, you will almost always be behind the chemist samba drugs, as -- the chemists and the drugs, as fay vincent said this morning.

It is a game of cat and mouse.

Andy dolich, the amount of money a-rod can or cannot make?

He signed contracts worth half of $1 billion.

You could buy third world countries for that.

He is putting himself in the game -- and the game through this because of this.

To the game of cat and mouse, it is like a laser pointing -- pointer to a kitten, no one has gotten close.

All players want is a level playing field, and if you do not have that, you are screwing with the essential nature of the business.

Ira boudway, a level playing field -- you talk about the chemist, will it not just result in coming up with something that cannot get the tactic?

-- detected?

There is broad this taste for alex rodriguez, and you want to think about before you say one strike and you are out, what if this is a young player who made a mistake and he did not know?

I think baseball is using the fact that alex rodriguez is not a popular player right now.

We would all like to see the end of him, but what if it is someone else?

Ira boudway, thank you.

We have more with andy dolich know?

I think from san francisco and we will be speaking to carl banks about a new fashion trend that has caught on in the bloomberg newsroom.

We will give you details.

That is next.

? first.

Bloomberg.

This is "taking stock." i'm pimm fox.

We have andy dolich with us.

He is a 50-year veteran of the sports marketing industry, also, an nfl legend, former new york giants defensive end carl banks and we have seth, who along with carl is bringing starter jackets back into the mainstream.

Carl banks, you won two super bowls under bill parcells with the new york giants, and he was inducted into the nfl hall of fame.

What was it like to play under his leadership?

He is a great coach, great motivator, but more importantly, he was the guy that made himself one of the guys.

We were one of his guys.

He would find a level where we are all operating on the same language.

Andy dolich, i wondered if you could come in on the idea that -- of the roll block coach plays.

What role does the coach play in preventing the stop from happening in the first place -- performance-enhancing drugs?

Great coaches are great teachers, and if they are looking the wrong way, they are part of the institutional problem, so they play an important role in what the players are doing what they are at cap or by themselves -- at camp, or by themselves.

Andy dolich, how come there is no follow-up to the apparatus of running these operations question mark it just goes after the players?

Sports is a great example of fire walling.

If we had as great of a security system in the nsa as we did in sports, no one would know secrets.

There is marketing, finance, the league, and they have created firewalls so that everyone is not necessarily aware of what is going on.

You talk about athletes getting on a pedestal and not wanting to be pulled off.

Thank you, andy dolich.

I want to turn to the business element with carl banks and seth horwitz.

Starter jackets were popular in the 1990s and now they are ready for a comeback.

Seth, how did you get hooked up with carl banks to do these jackets?

I would say great minds inc.

Alike.

-- minds think alike.

While carl banks was working with "beverly hills cop" movies, i was working to get them back, and the timing was perfect.

What kind of rules that you have to follow in terms of licensing?

Thankfully between g3 and icon nexts -- iconics , we were able to work out a deal.

Did you have a starter jackets?

I was one of the first endorsers.

The chairman then taught me the business and i got into the sports licensing business 20- something years ago as i was still playing as a result of his inspiration, and having the opportunity to partner with iconics to bring this jacket back was something i could not pass up on, and it was such an emotional attachment.

In my opinion, it is still the most iconic symbol in all of sports.

Seth horowitz, where they made, what do they cost?

The manufacturing is all in carl's hands.

Where are they made?

Vietnam and korea.

Cost?

They are $150, and we think they are at a good price and we are getting a good response.

And i saw one in your size, extra, extra large.

We have to have something i can wear.

Carl banks and seth horwitz, and andy dolich, thank you.

We'll introduce you to the billboard mogul next.

? we take you back to 1970, a new york city cab driver, the grandson of immigrant tailor, he gets an idea.

His cousin owns a billboard company, and figures he can do that as well.

He starts his own business, and now the company is the biggest privately held outdoor enterprise in the country.

Van wagner has evolved from bars and buses to kiosks and look in the sky, blends.

Richard, this must be the blimps season.

What is going on with blimps?

They are exciting.

Van wagner is all about ranting and it is just an extension of what we do.

We were selling signs in times square for a tremendous amount of money.

People love these signs, and blimps are just an extension.

People love blimps.

If you are at a racing event and you see one, honey, it must be an important place.

How did you put the company together.

Go back a little bit.

Billboards -- you cannot just put up a billboard.

There are rules and regulations you have to follow.

That is what makes real estate valuable.

Developers are successful when they finally develop a property.

In billboards, there are strict regulations about building new signs.

My company is expert in finding the exact zone and location where one could still build a sign.

They would not be as valuable if you could build loads of them, so restrictions are a deterrent for others to enter the business.

What are some of the innovative basis where you have put signage?

We changed from commodity type of billboards, and then wagner is all about ranting, signs in times square, the sunset strip, like -- branding, signs in times square, the sunset strip, behind the home plate in baseball -- ariel banners, now, blimps.

We are about getting the message across in the highest open space we can.

What about the connection with the actual customer.

Will this be actual signage opportunities where customers can text response?

They use it.

Interacting with a billboard -- there is a lot of talk about it, but digital signs are where the industry is going.

Tell us about that.

What does it mean?

Originally, they were -- what does it mean?

Originally, they were printed and posted, and now the biggest growth area is digital -- people are able to change copy.

I do not think it is even beginning to start where it is going.

If you think about it, the biggest advertising in newspapers are department stores.

Macy's will have an advertisement talking about different sales.

If you have a digital toeboard, you you can change the copy on a daily basis.

If people were going home and they knew who would be on the pimm fox show tonight -- like richard schaps.

If i knew tom hanks was on the david letterman show, i would watch it.

We do not see digital going to that extent yet.

Richard schaps of van wagner, thank you for joining us.

The dow jones industrial average loses .3%. the nasdaq gained three points.

Shares of qualcomm falling nearly 1% after piper jaffray analyst gus richard downgraded the stock to neutral and -- anticipated slowdown in smartphone scales.

? this is "taking stock" on bloomberg.

I am pimm fox.

For a look at headlines, mark crumpton.

Shares of hsbc dropped 4.5% after missing earnings estimate and the ceo said growth in emerging markets is slowing, subdued in western economies.

Service industries group in july at the fastest pace in five months according to the institute for supply management nonmanufacturing index.

The reports indicate the u.s. economy could improve in the second half.

History is made in london has two volunteers took the first public byte of a test to hamburger.

The testers said it was lacking in flavor, but it felt like a conventional hamburger.

It was founded by sir j brennan, who hopes the idea can fight hunger.

We will talk about the potential for a terrorist attack at 7:00 p.m. eastern tonight on boomer tv, "bottom -- bloomberg tv, "bottom line." thank you.

On friday, time warner cable blackout cbs programming from several markets including new york city, los angeles and dallas.

Time warner cable said they made a proposal to offer cbs on an a® la carte basis.

The time warner cable explained his company's position.

We are about connecting customers with the entertainment that they love.

We are not when you give up.

We cannot give up.

With more on what happens next, i want to bring in and rbc capital markets analyst and alex sherman.

This is a story that keeps on giving.

What is the story now?

Time warner cable has made an offer to cbs to do what?

One offer is what you talked about -- the idea that time warner cable is willing to carry cbs on an a® la carte basis, meaning customers that want cbs can pay for cbs, and those that do not do not have to.

That is a concept that has been thrown around for years among people who have an idyllic view of what cable could be -- paying only for the channels you want.

I putting this idea out there publicly, time warner is making a statement that providers are ok with the concept but the networks might not be.

The other option is we will go back to the terms we originally agreed to last week, he for cbs decided they did not want to deal -- before cbs decided they did not want to deal with them anymore.

They did not give the details, but basically they agreed to a price and limited mobile rights, so time warner does not have access to all cbs governing in and out of the house.

David, would you make of all of this question will this continue every nfl season -- this?

Willis continue until the nfl season?

You have the nfl preseason, the pga open, and my and -- mygut -- my gut and friends tell me the nfl season is probably the catalyst to bring this to an end.

I think it has very little to do with a particular agreement.

If you look at the research we have written, there is a clear argument that cbs has for demand in something that approaches two dollars a subscriber over time.

If you look at what they invest in programming, what their ratings are against top 10 cable that works which probably get a comparable subscriber fee, it would seem logical.

Two dollars almost seems like a bargain.

They are investing a times the amount in programming and have five times the audience, so why are we in this place?

The distribution industry is facing an never ending increase in program costs, and they are trying to draw a line in the sand in this one.

Alternately, they know they will lose, but they feel they have to push back at some point to win the battle.

Is cbs a good stock to buy?

It is our top pick.

Cbs is the closest thing to a pure play in content in big cap media, and we are bullish in content.

The reality is the monetization of content -- there is a massive opportunity here.

And can put that content on mobile, as you described, it could be a fight of putting programming on mobile applications.

In order for these companies to stay relevant they need access to programming in and out of the house.

Content companies say we will give you that, but you need to pay for it, which is part of the two dollars cbs is asking for.

Some would argue you should invest in content and programming.

Nbc universal, right?

Right.

Part of the increase is the utility -- they are asking for a material price increase, but let's talk about how different the world is in terms of three or five years ago in terms of the way we consume content.

Video-on-demand.

Video-on-demand, standard, pc-based viewership, tablet viewership -- this is all increased utility that we now use and arguably we are willing to pay for it.

I do not know how long that lasts.

For this cycle, we are using those things more and it makes sense we would have to pay more.

That could be the perspective from the walt disney company because they have the espn business.

Nobody is further ahead than disney with the watch espn and watch abc apps.

They are available all the time.

Is this something that les moonves of cbs is looking at, saying i want to do the same thing?

They are investing in a small company that focuses on being able to geo- target so that they can effectively monetize streaming content.

It is definitely what they are thinking about.

The consumer benefits, but you have to pay more for that utility.

Also, part of the time warner cable offer -- they said we will go back to these mobile rights, and it actually benefits time warner and cbs to get the mobile rights out there because the more cbs is watched on mobile devices the more they can monetize the content as nielsen gets more accurate ratings.

Eventually, cbs would earn more money by having the content out there on as many platforms as they can.

Alex sherman, david bank, thank you.

The california general obligation funds have been raised to an a by fitch with the outlook, stable.

Samsung and apple -- legitimate import battle, or tit for tat?

We have details next.

? first.

Bloomberg.

A new twist in the at dispute between apple and samsung -- the white house overturns an important than -- import ban on older iphones and ipads.

Megan hughes, a surprise or not?

Some thought it would happen, but it is rare, no president has overturned an itc ban since ronald reagan in 1987. a overturned an order from june toban older models of ipads and iphones to be sold in the united states.

They have wider concerns import bans could give patentholders undo leverage.

The appleview -- apple view was samsung agreed to license the patents.

That dovetails with what we heard from the administration had -- administration.

In january, it ministration sent itc standards to consider.

Four senators pushed to get involved.

A samsung spokesperson said they were disappointed, arguing apple was not willing to agree to a licensing deal, and samsung was negotiating in good faith.

In terms of what this means for apple, the iphone 4 -- it is an old model.

Does it matter?

It does, in terms of strategy.

It might seem ancient, but they are used as an entry phone.

It is the cheap phone people can get for free when they sign up for a new contract, all part of the strategy to get late- commerce to -- late-cine -- late- comers to sign onto apple, and it might maybe temporary.

When we release -- when they release the next four, the 4s becomes the next entry phone, and then the 5 becomes the entry phone, or the 6 becomes the high-end -- the time affect on the iphone 4 could be really omitted.

Pimm , the fight is far from over.

An itc decision is expected friday, and that is whether toban samsung -- to ban samsung products for violating an apple patent.

Thank you, megan hughes.

Google has pledged a four-day delivery window for the new smartphone, moto x . amazon is getting into the same day delivery business, and idc says global tablet shipments slowed in the second quarter.

What kinds of vehicles are targeted for delivery?

We have a consultant.

Always a pleasure to see a -- see you.

Is it possible these are political issues?

Do you not find it in the transport business, it comes down to apple, an american company, samsung, based in south korea -- as a result, the rulings are not unexpected?

Consider that apple is a big customer of transport companies like fedex and ups.

There is international volume that is down, and that is probably because of products that are not hot items.

It is seen by ups and fedex.

It could hurt business.

Talk to me about the trucking business.

We have talked about rules for most of the program, and the idea that rules can help to save a company.

Tommy -- tell me about rc worldwide.

They have a union presence.

About three or four years ago, they ran into financial trouble because of mergers and acquisitions that they did.

Putting it mildly -- "financial trouble," right?

Putting it mildly.

They had to make concessions, hold onto the shippers shippers, and two years ago they made a switch in the ceo, who had done a turnaround.

If you look at the company stock, it is gone from seven-to- 40. i have to push.

Explain -- where did you get this shirt and why are you wearing it?

I was in the corporate offices.

They gave you a free shirt.

Is their future tied to the overall health of the u.s. economy, because every time we talk trucking, we talk intermodal and jc hunter.

What is up with yrc?

They have gone back to the business of handling freight.

When you think about people making money hauling trash, freight includes plasma televisions, apparel -- it is good freight and the management is to be credited, and that teamsters, who gave -- the teamsters who gave concessions to save a company -- it is an example of management and labor working together for the good of the customer and employees.

We will work together to make people money.

More with satish jindel.

We will talk about washers, dryers, the housing cycle, and as that picks up speed, maybe it gives durable goods producers a leg up.

We will find out where to put your money next.

? today we have been focusing on how people and companies are using rules to their advantage, and in the midst of earnings season, it is a good time to see how investors are using rules to turn a profit.

We are joined by a chief portfolio manager and satish jindel.

Dan, we have been talking about the idea of people playing by the rules, not playing by the rules -- if you want to play by the rules professionals played by, you have to hire professionals.

You cannot be in the business of selecting a specific stock or strategy.

Talk about the strategy advisor ? we by managers.

We build diversified portfolios.

We cannot be experts in foreign bonds and domestic small caps and domestic large caps.

We cannot be value guys, growth guys, but we think there are some people that are the best in the business in each of those factors, so we will, for instance -- put $150 million, $200 million, with 18 in -- with a team in pasadena that do growth at a reasonable price.

They are growth investors but do not pay up for growth.

The fund we do with them is up 40%. we are believers in healthcare.

We cannot be experts in biotechnology, pharmaceuticals and service providers, but there is a team at wellington that runs a terrific fund and is up 30%. when do you sell?

In a funny way, what we do is something like they do with stocks in their portfolios.

If we are overweight, we will trim, take money off of the table from a good performer and throw it into a fund with a manager who might be under i think performing or out of favor at the moment.

You get a balanced asset allocation.

You want to be diversified.

People look at the stock market and it is up like crazy, so they say why do we own bonds at all, and we say you need a shock absorber in your portfolio.

You need to be able to take care of things when the stock market goes down -- they will provide a shock absorber and it is them business -- the old the business of reducing your losses a little bit, and making more money over a full market cycle.

Let's talk about the funds -- the prime cap odyssey, the vanguard dividend growth, the artisan.

And the hartford.

The hartford healthcare.

Satish jindel , when you look at the overall economy, a lot is tied to whether the u.s. economy grows.

From your look at the transport industry, is the economy growing?

Quickstart two segments to gdp -- -- there are two segments to the gdp, goods answered as.

-- goods and service.

The housing market has been a benefit.

It is showing up in people moving lumber and wood.

You mentioned the appliances.

Dryers, dishwashers.

They, few weeks, months after the houses get the shells up.

Whirlpool earnings were terrific.

They had global growth.

Sales and profits were up a lot.

They were looking for greater gains down the road, and the stock popped as a result.

That is your add-on to the housing recovery.

You have your appliances, and like the auto industry, people are replacing them, replacing cars and appliances.

You do not buy the notion that increased liquidity from the federal reserve is driving the market question increased -- markets?

Increased liquidity helps, and there is talk about the market being artificially inflated, and talk about the sequester hurting things.

The cutback in government spending.

Right, the cutback in government spending will hurt companies, businesses, the consumer.

Look at the employment numbers friday.

Over the five months since the sequester has been in place, we have added 200,000 more jobs than the same five months one year ago.

Jobs are being created.

Not all of them are great jobs, but they are being created, the economy is growing.

It is slow growth, not no growth.

We have set it for a long time and it still seems to stick.

Dan wiener, thank you.

My thanks also to satish jindel.

It is 56 minutes past the hour.

The s&p 500 down.

Dow jones industrial -- ?

This text has been automatically generated. It may not be 100% accurate.

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