Will be buying eddie bauer in cash and shares.
It is going to start at $65 a share -- joseph a bank buying eddie bauer in cash and shares and it will include a termination fee of less than three percent of the equity's value.
These are the headlines coming up.
They also have some numbers in terms of adjusted eps for 2014, from $3.20 per share up to $3.40 per share.
Not like the time warner and comcast deal but it is fascinating.
Eddie bauer -- may i editorialize?
Adam, help me here, how long?
A very long time.
I remember when they had to shut down the store on madison avenue because there was not in the business.
Who are the guys and make the fluffy ugly boots?
06 -- uggs.
You are wearing a pair.
I'm not wearing uggs.
$554 million deal, that is what it works out to.
Men's wearhouse to by joseph a bank, no, it is a bank by when -- men's wearhouse, no, then enough of it, we will go by eddie bauer.
Our guest host, marshall sonenshine has seen it all.
From time warner cable, disney, abc, comcast, the big boys, and maybe we can also get a comment on him as joseph a bank jake -- takes out eddie bauer.
What is the why?
Joseph a bank at eddie bauer is really hard for me to add to what you said because eddie foul has been long a tarnished brand.
Joseph a bank itself is a discount brand with a good ups -- upscale image.
What i do think is interesting about this particular deal.
This is small relative to what we are looking out -- looking at.
This is yet another strategic deal.
You know my schtick -- m&a is strategic and not financial.
It is valentine's day.
We need some math.
Let's go to the screen here.
I lost it.
Oh, my word.
There it is.
Let's go here to brian roberts.
This is department of justice.
Small start up operation in washington.
They have a saying, -- they have an index which is at&t and t-mobile's most best worst nightmare.
Constantine, bring on the valentines map for marshall sonenshine.
This is a big deal.
This is something every cfa learnds, marshall sonenshine teaches it.
This is brian roberts's worst nightmare.
Keven ruse nailed it in new york magazine.
This is more consolidation in at&t and t-mobile according to him.
I am not sure if it is true.
With all due respect, i want to take the other side for a moment.
First, i want to be clear, you don't learn about herdfendahl at brown but you learn about law school -- judge stephen breyer, my professor.
It is long been a staple of antitrust analysis and it is in a portal but not the only tool.
In this particular situation, comcast has already agreed to divest 3 million -- getting out in front.
Secondly, comcast which has experimented a little bit in some smaller markets with the idea of holding back some services on the speed of transmission which is what net neutrality is all about, comcast knows it will cut a deal with the fcc which lost a round in federal court in washington over net neutrality.
Federal court in washington said we don't need net neutrality but, guess what, the fcc i think will cut a deal with comcast saying we will protect this.
Brian roberts, most important employee this morning as melissa maxfield the chief lobbyist in washington, they had a conference call yesterday.
What is their number one task against ed markey, chuck schumer and all of the others pushing back against this transaction?
Sell the deal by positioning it as not bad but actually good for consumers.
Why is it good for consumers?
First of all, i don't think her friend all matters that much of the market place like this where cable companies do not compete in markets, they have their own monopolies.
They were pretty powerful and they have been close to 30% before.
That is not what this is about.
This is really about how is content being distributed with reference to not just cable but also satellite and other modes of transmission including, by the way, the web.
Fascinating, diverse push back.
Would have to get into this a little later on but we do want to bring you headlines and company news.
When a charter communication left in the dust with the tidy up -- tie up.
And john malone, a mr.
The cable company reported fourth-quarter sales below analyst estimates.
Sales increased 71% thanks to a string of acquisitions, including a buyout of virgin media.
Japanese internet retailer rakuten the visual distribution buying an internet messaging service for $900 million.
Viber would give the company is distributional channel for it digital products.
Job cuts at aig, eliminating 1500 jobs, about three percent of the staff.
The cuts will come from the property-casualty unit and will reduce earnings by $255 million before taxes, according to the company.
You mentioned chartered -- we will talk about that and a bit.
Goldman sachs, another loser in this transaction.
Goldman sachs not one of the advisers.
Jpmorgan one of the winners and -- cul-de-sac stopping to ace -- goldman sachs dropping to 8th.
The number is 160%, the increase of netflix's share price and the first dared house of cards.
How it affects the bottom line, coming up on "bloomberg surveillance." ? good morning, everyone.
"bloomberg surveillance." coming up, chad goodstenin on the merger, former ovation tv chief operating officer -- chad gutstein.
This is "bloomberg surveillance ." i'm tom keene.
With me, scarlet fu and adam johnson.
We will stay on the continent seen.
I already know what i am doing this weekend.
Two and half hours ago, netflix served up season two of "house of cards." i am not giving away any spoilers but they also announced a third season to follow.
We don't know how many people watch "house of cards." they don't say anything about it.
We do know the stock price has reacted positively and netflix gained a lot of surprised -- subscribers because of "house of cards." what is interesting is how netflix moves forward with other programs, other original content, because they need to bring down the content costs which is in excess of $7 billion the next couple of years.
Kevin spacey is expensive, right?
He got a back end deal, not a lot of money up front.
William shatner deal -- $100 million per season one.
Ordered it, sight unseen.
That was the cost to produce it.
They committed to it.
They heard about the concept is that we are on board because the big data analysis showed them a political thriller involving human species would be a big hit.
Our "surveillance" analysis, we have to cut to someone -- go to someone cut and shouldered -- chiseled.
Scarlet would not speak to you again if you let it out.
Howl house of cardsy is watching tim?
They even started petitions on tuesday when he recognized it would be a snow day, to get them to release "house of cards" a day early.
Top washington officials just assume that netflix is going to have to respond to a couple hundred washingtonians who want to watch it early.
I kid you not.
I have staffers e-mailing me since 3:00 and 4:00 in the morning, everybody waking up.
Government does not open until 10:00 a.m. this morning, meaning everybody getting an x to jump on it, tom.
Big deal down here.
You talk to a couple of people about what they thought about "house of cards." what did they tell you?
We took a camera and we wanted to see what lawmakers had to say about "house of cards." take a listen.
The only unrealistic thing about the show is a democrat could represent gatsby, south carolina, it will never happen.
Unfortunately i think kevin spacey makes it look a lot more exciting than it is an allotment devious, but will be interesting to see what they do with the new season.
He's probably a composite.
None of us are quite that interesting.
I am one of the few living americans who has not watched it.
Obviously, guys him and not just the staffers watching up at all the lawmakers as they head out of town this weekend they claim they plan on spending this week and binge watching this like anything else.
You look at this -- and you know a lot more about this than i did -- the morality, or the ethics.
How does a fold over to washington?
Tell me it ain't so.
I think it goes a little extreme.
I think everybody with a technology may be a little bit further dan where -- what it actually is.
And not everything is so planned out in d.c. / they make it seem like that there is a puppetmaster.
You really need to watch the house republican conference to recognize these people do not have everything planned out 5, 6 that's ahead.
A lot of times they are making things up as they go.
Also something else.
Not just capitol hill pays attention to it of the white house as well.
President barack obama ossie official organizing fractions would account weeded out "house of cards" no spoilers.
No spoilers for you and me but i will give you guys one little hint -- late in the entire season, keep an eye out, my colleague white house cheaper sponsor extraordinaire julianna goldman makes an appearance, according to sources familiar with the show.
Phil mattingly, thank you so much pretty important bloomberg television information.
You love it.
That content chief guy over at netflix says the show has international appeal.
Not just in washington.
Greed and corruption, of course, that is a very global theme.
You know what it is?
These people are just so manipulative, and you see celebrate -- you celebrate them, right?
They do the nastiest up and you love them.
And you get -- they get things done, not like in washington.
On the cover of the next "bloomberg businessweek" we talk about the new minimum wage -- the fight over the new minimum wage.
This is "bloomberg surveillance" on bloomberg television, on your tablet, smartphone, and bloomberg.com.
? it is lantern festival in asia, the end of the celebrant -- new year celebration.
A live shot out of taipei with the taiwanese president leading the lantern festival.
A lot of revenue there.
We're not when read in new york and art of the chinese new year?
The end of the lunar new year festival because lunar new year began and you go 14 days and many of the lantern festival and everyone moves on with their lives.
I make a joke of it, it is the year of the doughnut.
What is it officially?
Year of the horse.
On the horse means exactly what in this context question mark the chinese zodiac.
I am not a horse so i don't keep track of it.
The horse is expensive.
It will be a debt year.
A valentines "bloomberg surveillance." we have top headlines with your valentine, adam johnson.
Europe's to business -- two biggest economies top forecaster to gnp in germany grew zero point four percent in the period and france posted a 0.3% gain and both have been slightly better the forecasted exports help drive the growth, especially in germany.
France's pickup in domestic consumption boosted that economy.
Italy mina -- meanwhile getting a new government yet again.
Prime minister enrico letta is out, giving into pressure from his own party and his resignation is expected to clear the way for his political rival matteo renzi and he will try to form a government.
Enrico letta lasted just 10 months as prime minister.
President obama is offering millions of dollars of aid to california farmers, ranchers, and communities hit by one of the worst droughts in the state's history.
The drought has forced farmers to leave thousands of acres idle and the state may have to truck in drinking water for some communities.
A whole new level.
I saw a snow chart yesterday that showed the snow destruction and the glacier destruction north of california in the glacier national park.
They finally did get rain and about two feet or 18 -- or eight feet drop in the top area but not enough to get weight back to where they were.
A great morning must-read.
Here's adam johnson with the economic outlook.
Martin wolf, economist at the "ft," here is what he has to say.
Interesting lesson for all of us here.
An expansion of private borrowing to buy every more expensive houses is sometimes -- is deemed good but an expansion of, boring, roads or railways is not -- none of it makes sense.
With the flooding in the united kingdom.
The tone in the last couple of days is that it is getting worse.
Caroline hyde has been floating around in a boat.
But no joke.
And tremendous damage to all the infrastructure, from railroads to the utilities and erosion on the coastline, a real problem.
It is a busy, busy morning verrilli front and center, scarlet.
The pushback there the comcast time warner cable deal.
Cheap cash is helping that as well.
We will talk about how cheap cash is fueling m&a overall coming up on "surveillance" with our guest host martin sonnenschein.
? fireworks going off in taiwan just outside taipei where they are celebrating the lantern festival that marks the end of the lunar new year.
Her family's front yard.
We do this every year.
Off of the terrorist in the penthouse.
You can -- have to see the view from the other side.
Is a correctness of the only landlocked county and city in taiwan, where the water is a distance away -- is that correct?
It looks like it.
It does not matter either way, i want is in a bowl format.
Scarlet fu on taiwan.
My parents are celebrating.
"bloomberg surveillance." it is valentine's day.
I'm a little confused.
I am buying chocolate at 10:00 a.m.. stocks, bonds, currencies, commodities.
The euro dollar, 1.37. we will talk to hans nichols in rome.
Nymex crude under 100. let's leave it there.
Janet yellen not testifying to the senate.
Back to the big news, but the merger.
And this is mr.
Roberts at comcast, comcast, they are acquiring time warner cable.
It is an all stock transaction.
Even with that, and implied cash value and cash is cheap.
This is wpp ceo sir martin sorrell yesterday.
It goes back to cheap money.
You can borrow money and 30 year bond market like we did last year, three percent net of tax.
By something at 33 times early in the best of earnings at least in theory without feeling the whip.
Long-term cheap money, good management, and opportunities means more consolidation.
I know he is out in sochi.
Maybe he is watching from the g5. when the chairman of sonnenschein partners.
Comcast was already a fairly levered company.
Time warner cable has a little bit more in terms of debt to ebitda that they can afford this, money is cheap and these deals are able to come together fairly quickly because the debt side of transaction is absolutely manageable.
New regulators look at that angle?
I think what they are concerned with, is it good or bad for the consumer or fair or not fair to the consumer?
With all the pushback at politico with all the major papers pushing back, everybody complaining, fine, what is the mages that's major complaint?
Is it bad for consumers.
I did not think it is, by the way.
Time warner stock is trading well off of the deal price but that is also partly -- is brian roberts'trump card -- this is for the global audience -- you have to live in new york to be so unhappy with time warner cable.
Two of the most reviled companies on the planet.
Is brian roberts trump card is everyone can't stand time warner cable?
Nor does it hurt that brian roberts himself is a very likable man.
He is not a larger-than-life egomaniac.
He is actually one of the nicest guys you could talk to.
My morning must-read deals with the idea that it is bad for consumers -- not just to they can choose for the cable writer but infrastructure.
One article in "bloomberg view" at high speed connections are like infrastructure -- she says that comcast will be making less investment in its network because it is not subject to competition.
I am not sure that is true at all because i think it ignores the reality of competition from satellite and web.
Comcast has made huge investments.
This is a 150 billion dollar market cap company that can afford to.
The question is what is fair and unfair and what deals can they cut with the fcc to get approval.
You understand how these things get done.
Help me understand the difference between the department of justice effectively saying to sprint and t-mobile if you guys combine and you have 30% marketshare in no way are we going to make it happen.
A squad of the deal before it got going.
Yet here in the cable industry -- bringing together comcast and charter, same market share, 30%, they have not raised any flags.
In fairness, there is a healthy debate that is going to be had here and a "wall street journal" op-ed said is fine and "new york times" skepticism -- that is a -- that wall street journal and new york times did not agree.
[laughter] there is not a bar at a specific percentage point.
We know in the 30's some of that is where it feel saturated and that is what you run into problems.
And these are two different industries.
And the phone industry, you don't have the multiple lines of competition you have an cable.
That is what is different here.
In other words, there is a directv and dish tv.
Even though they are smaller players and less and less significant.
There are more modes of distribution, number one, and as i said earlier, cable companies are not competing with the markets.
They always it had monopolies in markets.
The question is whether 30% on a national level is a difference that makes a difference.
We need a chart with comcast and time warner cable.
An attractive chart will help us on this valentine's day.
I am sorry.
To the moon.
There is the gross at time warner cable out there.
We have not talked about -- enough about management of time warner cable that actually has done the right thing for shareholders.
They should be taking a massive victory lap.
I think they are.
They got to $160 a share.
I think it is their victory lap.
I think they are doing the right thing.
I think this is a valid vat.
I do not think it is like at&t or t-mobile -- i said on bloomberg, i think it was an over-the-top that and the fact that at&t was able that's willing to pay a 3 billion dollar break fee was silly.
I think this is a more realistic bet.
Wearing stripes, adam did not get the memo.
But i did not know about the red bowtie.
My youngest brought me this years ago.
You obviously wearing it for valentine's day.
And if you are doing the right thing, buying a little chocolate for perhaps ms.
Fu, chocolate cost more and it is likely to keep rising.
The price of cocoa is up nine percent, it has not been this excited since of the 11 and the problem is the farmers cannot keep up with a man.
A trade group says it is not likely to change for another five years.
keene, stock up now.
Last year the retail price rose faster than inflation.
That is a shock.
What are we going to do about this, tom?
I don't have a christmas club account at my local bank, i have a valentine's day account.
It is like a club.
You put money aside every week to get ready for the onslaught.
Our twitter question of the day at "bloomberg surveillance." and massive amount of sensitivity when into this.
What are you spending this valentine's day?
Let's get right to it.
It has become huge.
It is an extravaganza.
Usually card and then chocolate and flowers.
We did not even mention flowers.
If you don't do anything, you look really bad.
You know, -- you don't want to be the chump that does nothing.
We are going to look at diamonds and champagne later.
Also, another day and another change in italy's government.
Prime minister and enrico letta is resigning and italian bonds arising.
We will get you caught up on all the latest out of italy next.
This is "bloomberg surveillance ." ? good morning, everyone.
This friday morning, it is valentine's day.
Don't forget it.
I'm tom keene bit with me, scarlet fu and adam johnson.
johnson did not forget valentine's day and he has top headlines.
Right police and antigovernment protesters clashing as the police moved to take them derek is that it can set up around government offices.
Blockade have been in place for weeks as of the government complex and other points around the city are dealing with the fact that these protesters are trying to force thailand's prime minister to resign.
Moving slightly north to china, where inflation remains a stable last month but consumer prices rose 2.5%, the same as we saw in december.
Food prices gained 3.7%, however, the smallest increase since may.
China's economy can be distorted in january and february due to the week long lunar new year holiday that began january 31. with all things data and chinese taken with a grain of salt.
Yesterday was opposed to be the worst air travel day of the winter so far.
About 7000 flights were canceled as ice and snow battered states from georgia to maine.
I don't need to tell you that everyone is aware of it.
So far, 75,000 flights have been canceled due to the strangled winter storms, according to a flight tracking service.
Those are your top headlines.
Really beginning to see comparisons in the greater new york area to hurricane sandy.
The impulse and the amplitude of the tragedy was great but the flights are becoming a big deal.
We have a single best chart with an appendix, an addition, and that would be adam johnson.
For we actually show you the single best chart i want to show you another chart that sets it up.
The legendary market timer created this as sort of a fun chart, a comparison of a prime discussion showing the current market versus 1929. he never intended this to be a series chart the people took of the series.
It is in and along chart where you just see the absolute values.
Our single best chart put to the comparison into context by spotting percent return.
The single best chart is from, and roche who published it on his blog pragmatic cap of -- pragmatic capitalism.
Dow jones industrial average in percentage terms and the yellow line that showed what happened over the last two years.
Certainly that shows we are nowhere close to what happened in the late 1920's. this is a law and analysis, henry briggs dying in 1630. -- this is a log analysis.
So, don't panic, anyone.
Not on the verge.
When in doubt, go to logs.
The eurozone, europe, their growth is back, i guess.
The currency bloc find its footing.
Investors cheer, fourth-quarter pickup.
Euro moving out to 1.37 and some could -- suggested to go stronger.
He is on a roman holiday, doing a gregory peck imitation, chief international correspondent hans nichols.
This is good news for europe.
Marginal good news.
These are rounding area -- errors.
Germany, 0.4% versus 0.3, france -- if he wants to understand the european economy, take me oder river that divides germany and poland, take it south along the danube and everything to the east around one percent and everything to the west, less than one percent.
The question is, is germany part of western europe or eastern europe?
The growth the story is in eastern europe?
-- the growth story is in eastern europe.
I counted 11 political parties in italy.
I believe we have two in the united states.
How can anyone govern with 11 political parties question mark -- parties?
Gelato, everybody has gelato before noon and everything is together.
This is napolitano's town, napolitano has to have consultation with all 11 parties.
He has those parties.
He will receive letta's resignation in about an hour and then he will cobble together some sort of religion.
Renzi is obviously the most likely candidate.
After that, they have to figure out who gets the finance ministry and who gets all the various ministries and then they can start to try, as you point out, govern from a minority position.
Until you have a strong election result, it is going to be hard for any party to govern in italy.
You simply don't have a mandate from the people.
Are the people in italy engaged in this moment or are they just worn out and tired of it?
There's a little fatigued, right?
But i think the more important thing -- and this is the question for matteo renzi, who will be the new prime minister -- does he have a democratic legitimacy?
He is the third prime minister, if he takes to power, who will be in that position without being democratically elected.
Remember, this is the mayor of florence, a lovely town.
Nothing against florence.
A town of 336,000 people.
He will now be the prime minister of a country of 60 million.
Thank you so much.
Try to get back to berlin in one piece.
If you see audrey hepburn, say hello to her.
Hans nichols, our chief international correspondent.
How did he win that?
That is a very impressive title.
But you are coming back?
Something of an a to point out because here's the market take of what he just told us.
The 10-year in italy is 3.70, 10 basis points worse than state.
-- intense pain.
In spain, 3.60. a big deal.
The fact that italy is in worse shape then spain.
Maybe they can make mario draghi the new president.
I am sure a lot of investors will like that.
It is valentine's day, after all.
Shopping for a diamond ring got a lot easier.
Trends emerging in luxury.
We will get you up to speed.
Right here on "bloomberg surveillance." ? i'm scarlet fu here with tom keene and adam johnson.
Let's get you some company news from the files of "bloomberg west." sony grabbing the lead in the videogame console wars.
Combined sales of the new lay station and its predecessor were better than all other gaming platforms, all this according to research firm npd group.
Job own raising 300 million dollars, the maker of web connected devices -- jawbone.
One of the largest investors in twitter may lead the financing.
Pandora is set to rollout a new ad servers leading political organizations target list and is based on the music they listen to.
The service will match election results based on zip code with music choices of subscribers in the zip codes.
That is today's company news from the isles of "bloomberg west." what do you listen to and what will they find out?
I listen to basically country music and jazz.
I listened apple iradio and i am buying more music.
It is the gift.
You go to the radio, i like that, and then you click a button, and you own it.
Way too easy.
Lexi get the bill -- i bought 18 songs?
Not like 50 years ago and trying to get the courage up, for $.86 to buy a beatles 45. all about dimples purchases.
Let's have a -- let's have a moment of silence for yours and my pocketbook.
I am still waiting for the chocolate, but it did get a lot easier especially if you are splurging on diamonds.
A company is changing the way we buy the stones.
It was founded 15 years ago as a hotel entity.
The emerging clicks and brics trend.
Ritani is called one of the most promising company the 2014. brian, welcome to "surveillance." the sabr how it works.
It is not just disrupting the diamond and jewelry business but also forming partnerships with existing stores.
Ritani is a leading designer of -- and manufacturer.
Clicks to brics.
One-of-a-kind piece of jewelry.
An option, shape it like a regular e-commerce transaction or ship it to a local independent we tell her where they can walk in obligation free in a safe and secure environment and make the purchasing decision.
It has become the holy grail of retail today.
A distinction here is that people buy diamonds differently than, say, how they buy books or shoes or clothes.
Most of the purchases at the end of the day have to come at a store face to face with a customer service person, right?
Diamonds have been online for a while now, but when you really talk to the consumer it is a very tricky process because you want to touch and feel the product.
You want to see if it sparkles.
How much are you going to save me?
20% to 40% by shopping online but then when you integrate the local jewelry store you get the best of both experiences.
You can get the price and selection on my competition has.
Let me translate that into my world and adam johnson's world.
We start lower down fifth avenue, we work our way north and it is outrageous until you go to the diamond district and all that.
Am i still going to the diamond district or will i go to you?
New york has always been kind of a unique market because it has 47th street and the diamond district but you want to come someplace and ago stress-free, obligation free, walk in and get educated.
Buying diamonds, we don't make it easy in this industry.
When you have a website that takes the pressure away and you get educated first and you can see the entire selection, you can make a more informed decision.
You talk about partnering with the jewelry stores.
What is in it for the jewelry store?
Why introduce you, a competitor into their own stores?
We don't look at it nearly as a competitor but truly partners.
90% of all engagement ring purchases start online.
Less than 10% actually end up online.
You are looking at the rest of the consumers aware they are going, they are going back to the retailer to make a purchase.
Our goal is to have the brand raton he -- ratani --we are bringing a customer in.
When a customer buys an engagement ring in a jewelry store there is a 50% chance they will come back for the wedding ring in the lifetime value is precious.
Imagine it is a retail store, i have a qualified customer i will drop into the store.
How much do you want to pay me for the customer?
What i find fascinating is there is a fragmented market for a diamond engagement ring, all the fine jewelry.
The use jewelry seller in the u.s. as walmart, tiffany only has one .5% market share.
Independent julie stores are fairly resilient.
Martin sonnenschein, in mna, does it prevent an opportunity?
I think what brian is describing is very cutting edge but we did a deal years ago, where we put one-800-contacts inside walmarts of the foot traffic would end up on the web.
We still drug store.com to walgreens so their foot traffic would also use more of the website.
I think it is on the right track.
I just bought a pair of glasses.
Happen to be available in england but i want to the website, went to my optician and said would you order this, and he got them for me.
Do i need a trophy ring or is it a more subtle age?
I always go back to classic diamond jewelry.
Diamonds studs, pendants, bracelets.
Of the key thing for a jewelry purchases by something she is going to wear.
This is not meant to be a collection piece in a museum.
We wanted out in the open.
Can you explain it to me why it is a tennis bracelet and not a hockey brasileira -- bracelet?
It rolls around on your wrist.
Yet to go back to chris evert in the 1970's and 1980's, she used to wear a diamond bracelet and it became nicknamed tennis bracelet.
I never knew that?
This talk of diamonds kind of freaking me out.
[laughter] brian watkins, thank you, president of ritani.
Let's do a forex report to figure out how we can pay for the next diamond ring.
A stronger dollar-yen.
Euro-yen, is what the pros look at, the euro, 1.37. or olivia sterns, on her way to sochi, the ruble basket, she will be able to buy suntan lotion in sochi.
She's going to need it.
It is 60 degrees.
Getting up to 70. our guest host also, martin -- marshall sonenshine.
Coming up in the next hour on television and radio, a new m&a deal, just of a bank agreed to by eddie bauer, we will talk