tv Bloomberg West Bloomberg April 22, 2014 1:00pm-2:01pm EDT
>> and live from pier three in san francisco, welcome to bloomberg "west" where we come innovation technology in business. against major broadcasters. arguments today at the supreme court. golden warriors purchase and make plans for a new arena. we will talk to peter gruber. first, a check of the top tech
headlines. nokia handset division will be renamed microsoft mobile once the sale closes friday according .o a leaked memo obtained the memo states the existing agreements with partners will remain in place. agreed to lease an entire building under construction in san francisco neighborhood. the 26 story building is scheduled to be finished in 2017 according to people with knowledge of the deal who say linkedin is expanding to attract talent for those that want to live in the city. this after salesforce signed a major agreement in the same neighborhood. haschinese smartphone maker changed his international domain name. it means rice. the reason is they have big expansion plans and says the new domain name is for --
international audience and points out it is an acronym for mobile internet. now to the lead u.s. supreme court. they will hear the arguments and what could be one of the most important media cases ever. american broadcasting companies versus vaereo. use antennas to broadcast to subscribers without paying for it. the network says it is copyright infringement. verio -- they claim they are not subject to subscriber fees. they are currently available in 11 u.s. cities, including new york homage houston, atlanta austin and dallas. it isloses the case, likely finished. joining us from washington, betty liu at the supreme court all day long. i know court just let out. what is happening on the ground? >> moments ago oral arguments
were finished. an interesting dynamic just play out. the lawyers for both sides came out and made closing statements to the press. in the crowd was very diller, eo. you know backs aer whatnted to listen into the lead attorney wanted to say. i guess he did not get enough information in the court room. i asked him, how do you think england in the courtroom? he said i think they went well. said he did not want to make any more statements but listened in on the broadcasters and then walked off. a lot of people thought very, the most high-profile ceo, that perhaps he would slip out the side door and not be seen but could not help himself. >> tell us who the players are. very diller and the
broadcasters on the other side and the obama administration has come to their support. the department of justice came down on the side of the broadcasters. aer ook, google also port eo. dish network, they have the technology very similar. dave wrote a brief in support of the company saying this is basically what we have, which is we allow people to get broadcast content in whatever way they want. they can record it. essentially new technology doing the same thing that a vcr used to do. down for an exclusive interview with the ceo ahead of today's argument. is the a lot about what vcr never existed. what did he have to say in particular? >> it was interesting that he did not want to say anything.
did not take any questions after court let out. he did sit down exclusively yesterday and said he was optimistic that he will win. he said the law is on his side. beenis whole thing has about making sure the consumer gets the signal. not about making a couple of guys rich. and we come. completely different technology. broadcastingsed in and antenna. none of them can dispute the facts because unfortunately in this case they do not have a way to dispute facts because the technology works the way it did. there is all this concoction and basically false narratives being created that somehow it is a copyright problem. it is not. it is a business model problem. the world is changing and they are reacting with what they know, which is litigate and kill new companies that come in test they are making far too much money and continue to make far
too much money and have no incentive to change. theyn you understand that fox, nbcing, abc, spending millions of dollars in programming that basically you are charging people a dollars per month to access? that whate -- you see you are talking about is innovation, they say is theft? do not apply the technology to a cable channel like hbo, there is a reason they are called free to air broadcast television. the a central bergen with the consumer and congress is the program in public interest convenience and necessity, free to the consumer. they make money, billions and billions with advertising. that bargain is preserved. 60 million people in america
today according to the national association of broadcasters uses uses an antenna. are they fringing on copyright? >> no, they are not. every antenna manufacturer out there makes money. all of these companies make money by selling technology. >> you are more than just an equipment provider even if it is in the cloud. you want to be more than that. ask the question is what are we on a factual basis? get intosay you original programming. let's say you develop your own channels. does that change who you are? >> i think tivo is a great example. you can get a retail tivo box and plug and antenna into it and they will sell you video on demand movies from the internet side-by-side. where does the copyright infringement? it is only copyright infringement because i have located the box and made it simpler for the consumer to get it?
kenojia not backing down. what happens after today's hearing? how does this play out? >> for the broadcasters nothing happens. i am sure there will be some drinking done tonight as it has been a long journey for both sides. for the court, like any other case. justices will retire to their chambers and then vote on it, a tentative vote. at the end of june is when we are likely going to hear a decision on this case. or more on this, i want to bring and rich greenfield. the media and entertainment analyst, because he was in the courtroom when all of this was playing out. great to see you today. tell me first tell you think things went. >> what is very clear is the overall case was very hotly
decided. there was no clear one direction. we heard two cases. one was clearly slanted one way. among thefear justices part for how you write the decision if you are to think they argue legal come how do you write the decision without impacting cloud computing. a lot of concern about how you keep this from impacting other industries? chief justice went after the plaintiff attorney and saying isn't it like using a public parking garage? you are renting space for x amount of time. how is that different if you go home and build a garage? i think that is the key challenge the court is grappling with, is it simply the same thing renting versus buying, or is there something special about broadcast television? >> those are a lot of questions we expected from the justices. terms of curveballs,
probably not. there was some concern when you think about what the overall impact could be on why the system is the way it is. there was a comment from justice ginsburg is the only reason you are creating million of individual copies to circumvent copyright law. i think the pushing on why is the system built this way am only built this way to circumvent copyright law was a key theme. >> thank you for joining us. rich greenfield, the media and entertainment analyst. back eu. >> we will be waiting for this decision at the end of june. barry diller himself has said if they lose, it is over. experts tell us it is really 50/50. liberty b does have a distribution agreement with -- bloomberg tv does have a distribution agreement with aereo.
>> welcome back. i am emily chang. the golden state warriors have abandoned plans to build a new arena on san francisco's waterfront. instead, they struck a deal with salesforce. they will on the land outright and plan to build an arena with private i'm dancing. us ceo and co-owner joins from away. also with us, jon erlichman. not long ago you were looking at a spot not far from where i am sitting on the waterfront. uses the bay bridge.
you spend 20 million on plans for it. because we control our destiny. we own it. our relationship with the city is one as an owner, not a tenet. we feel it offers us very attractive elements. the venue will be for the city, for the san francisco bay area. one of the top 25 markets that does not have a venue like this and believe it can be activated very successfully. accessible by all sides and offer strategic advantages. right in the city still. it has its own location. spend all thatl money privately. we wanted something that we actually owned. you bought the land privately out right from salesforce.
i am curious how that conversation started. did he personally try to recruit you to that part of the city? him -- my partner met with him. together we fashioned an arrangement and looked at the variables. it offered us a higher degree of certainty and a time when most effective and really the kind of a coach or monster in that location that were hard for us to have it other places. like when you talk about being privately funded, how do we where the money comes from and that whole process? >> when you get a rotator cuff intoy and rotate your hand the back pocket and pull it out, it is privately financed by the ownership and by the partners .nvolved with the enterprise
without looking up public funds, we are going to be an active participant in the city, a good listener in the marketplace. we are going to be very responsive. the idea is we are a private citizen building a private venue for the benefits and purpose of all san francisco bay citizens. it really gives us the opportunity to control the destiny. >> what about what will be unique about this? what do you want to be the signature thing tied to this? >> everything will be unique. are casting a line over the horizon. have it really be an original venue. a venue that is an attraction and lightning rod to bring the best and brightest to the world and attract the best and brightest. there will be a whole theater element of this. a whole public performance element of this, to.
the point is we have a digital organization. we are very successful at oracle with this. kind ofhave the right visual display. interactive video. notill make the audience passengers but participants in the experiences there. we have the relationship with bringn valley to really those challenges to bear. a metaphor will be madison square garden out west. it will be a kind of venue that people, artists and performers are going to say i want to perform there. comeat about the people the players and people in the golden state warriors association. how do you see this of the draw in terms of recruiting on and off the court? >> we are sold out in the current site.
we are high up in the league standings in terms of attendance, merchandise. very successful. is what has allowed us to take this proposition. the audience is san jose in both sides of the bay and equally all around. they played their first seasons in san francisco. they were the san francisco warriors, so in a sense, we are coming home. >> coming back home. own jonber and our very erlichman. thank you. at&t teaming up with peter turn into rollout its own online tv service. can a broadband divider take on big players like amazon and netflix? that is next. ♪
>> welcome back. i am emily chang. comcast reports big first-quarter earnings because of the olympics on nbc. a surprise growth in tv subscribers. sales rose 14%. profit rose 30% to one point $8 billion. comcast added 24,000 customers in the quarter bucking of broader industry trend. morecould add a million subscribers if the merger with time warner cable is approved by regulators. at&t getting into the online tv game as well. teaming up with the turning group to invest 500 million in the digital tv service. fox are led by former executive group peter chernin. i would like to bring in cory
johnson. >> interesting partners. investing in on-demand video. the question is are these companies like netflix and other beditional networks going to challenged by this? it is in all partnership. not like at&t is a company that needs a lot of cash. >> the partnership began about a year and a half ago when at&t and the turning group -- chernin group tried to buy hulu. at thatnership was made point. at&t wants to get into content. yet another large company that wants to get into content. we have heard yahoo! wants to get in there. amazon has made a much bigger play. now at&t ones to get into the game. who wins? the content companies when. they want to get together and potentially buy new were content
companies and build this out to compete. on inre is so much going l.a. within the past week. talking to truck drivers and everyone is working and cannot believe it. pilot season does not even exist anymore because there is new privates being filmed all the time. >> we see all sorts of different companies in the industry. maker.made an offer for in relativity makes an offer for maker. nook companies that want to get into online content. -- new companies that want to get into online content. accompany you do not need to pay for your table for -- cable for. at&t sees the writing on the wall. so does comcast. even comcast and not during the earnings call to say we are not against us and we would get in over the top streaming game if the market the tape's that is the direction we're going in. >> alec sherman, fascinating
stuff. happening fast. >> thank you very much. >> coming up, we will go inside aereo. we have been talking about it all day. we will show you just how the technology works. you can watch a streaming on your phone, bloomberg.com and amazon fire and apple tv. ♪ work,minutes past our which means bloomberg television is on the markets. take a look at where the indexes are trading right now, up across the board with the s&p 500 adding .6%. the dow up 108 points. 16,000 557. the nasdaq gaining more than one percent as well. looking at citigroup. the ceo faced shareholders at the annual meeting and said he expects more employees to face discipline at the mexico unit.
>> new are watching bloomberg "west. -- you are watching bloomberg "west." i'm emily chang. making arguments of the supreme court today. how does the technology behind work?really jon erlichman went inside the company to find out. >> at this manufacturing facility in salem, new hampshire, machines are manufacturing hardware.
this is an area antenna. >> we have achieved great performance. give us an inside look at the busy factory where the final product comes together. product that is revolutionized in the way we watch broadcasting be. the technology works is different than using old-fashioned rabbit ears. they rent and individual antenna to an individual subscriber. they slide into a box that can accommodate five thousand to 7000 antennas and mount them on rented rooftops and cities across the country. the antenna sends it to a you toder and allows stream online and pause, rewind, and record. this takes all of the spectrum and pushes it down the wire am a
whether you want it or not. this is a model where you only listen to what you want to. >> what is the capability of what you can manufacturer? >> many more than what we put in the field already easily. >> they plan to operate and 22 cities by the end of the year and have built the business to accommodate whatever level of demand comes its way. >> as demand grows, we can grow with that. the conventional model says i will go the out and hope they come. i do not think they're capable of being successful. >> senior west coast correspondent inside the company. for more on how they are disrupting the landscape, i want to bring back betty liu at the supreme court. cory johnson in new york.
mike morehouse covers entertainment and media for the research firm magna advisers. where do you fall on the attempt to disrupt the traditional tv business? do they have a good argument? >> i am not blow your -- i am not a lawyer and did not play one on tv. i am a media guy. cable pays for retransmission. you can do over the air antenna. thatis clearly a service goes beyond traditional antennas. >> isn't it just an extension of rabbit years? -- rabbit ears? guest earlier on bloomberg television, a law for fester who compared what they sourceng to crowd providers like dropbox and said if the supreme court rules against, that could put the whole crowd into question. what do you think about that? >>
an intriguing argument. lots ofthey are giving credit for technological innovation is a stretch. clearly they are trying to innovate around the mall. not trying to find new technology. also providing something broadcasters are not providing. we know john roberts asked those about the cloud and impact on other businesses to rule against it, i think aereo really is just that. we will see what the court decides. >> when it comes to consumers, there is still obviously complaints about a lack of choice and lack of meaningful competition. to pay for hundreds of channels we do not necessarily watch. what do the incumbents have to say about that? >> i want to pick up on what cory was just talking about.
reflectthe justices what the consumers are worried about. so justice sonia sotomayor y they were concerned about the future of the cloud computing business. that seemed to be their biggest worry. on the chiefs -- opposite side cheap justice john roberts who came down hard on them. a said isn't your technology way to skirt copyright laws? in this hour-long hearing so to speak, there really was -- there was no give to either side. there was a lot of pressure to really prove their case. it is a hard case to prove forae-- hard case to prove for aereo. it is very hard for them to say we should be able to get off retransmitting signals without having to pay for them when
there is precedence by cable providers and satellite companies that they have to pay billions of dollars for the content. the technology companies disrupted an established industry. any other disruptors out there that we should be watching when it comes to the cable business and traditional television? >> there are quite a few. tv. the top not just disruptions but also temptations. clan, you cannot get enough of it. gaming on the smart phone and tablet. tv is not the dominant primary medium for entertainment. matter-of-fact, below the digital devices and 18-34-year-olds. tv has a ton of challenges. tv content in great shape. the traditional tv distribution methods are absolutely heading towards disruption. will not happen overnight.
>> do you see any parallels between this and other industries, other traditional incumbents like amazon did and what google is doing for taxi? i do not. i think this is a fairly unique case where -- where clever people have trying to find a way around this rule. airwaves were given out of the companies could make a lot of money with them with the promise to provide a service for free. the notion that there is a cost and someone else pays for it. the airways were given away for the purpose of the fighting of benefit to the local community. this seems a technology invented to get around the law, not just technological problem. for that reason i think they are unique. feel about that?
>> one thing i find interesting is if they were allowed to live, it really pushes the focus -- television,us the cable television broadcasting retransmission model. not so much that tv is dead or dying, because you see a lot of digital content migrating to a television platform but the whole retransmit on a going away. core cutting going to eventually replace that. one thing i thought about as i was reporting on the case was getan get areereo and your netflix or amazon and the shows you want, and instead of paying re-hundred dollars per month for your cable bill come at you pay $25 per month. when consumers really start to figure that out and get access to the tech knowledge he more and more, that is when the whole entire business model will be in danger.
>> i am emily chang. est."is bloomberg "w be theonardo dicaprio next pixar to play steve jobs? the oscar-winning director has approached him about starring as jobs. withs said to be in talks sony pictures to direct the movie based on the biography about walter isaacson and has a script written. now to the special series on how
technology is changing the entertainment business, wiring the world. since the june 2012 arrangement chairman of disney studios, alan horn has had "froz en" topping the box office. we asked him about the secrets of this box office success. >> alan horn has been a very busy guy since he joined disney. the marvel in pixar brand. within a few months they bought lucasfilms to get their hands on star wars. we start with "frozen." lifeviously breathes new into the animation business. i asked him about success from this movie. it has been a
phenomenal success. the highest grossing film in number six of all time. this is a gigantic success. there has been millions of albums sold. number one on the charts. have you seen it by the way? can you get that song out of your head? >> you have done it before. going to make a sequel? >> we have not talked about a sequel because we announced we are making a broadway show in new york. we have the music and just need four or five new songs.
we will write those songs. we have notalked about a sequel, although i do have a title for a sequel, which was "thaw."raced, >> i am so glad you picked the plotto reveal the specifics of the star wars film. you headed to london to look at >> i have learned to be very careful about star wars. , for example, that there will not be skateboards in star wars then the internet says sam starr boards -- skateboards for star wars. it is like a headline. even something that does not
happen gets news. i am being very careful. we really cannot talk about it yet but we will be very soon. you have all the confidence in the world in the direct or. shape.in very good >> there will be no skateboards? [laughter] >> you did say recently the casting is almost done. an update on that, is casting now complete? >> almost complete. be very shortly announcing what we're doing. >> hugh had said shooting had started. >> we did some work and although abu dhabiome work in go toe we had to different places to film it to give us the right look and feel. we did have second unit work shooting already. >> primary location in the u.k.
and another location you have been using? >> yes. >> when you take all of the movies, the big movies and global audiences available to you today, a larger number of people than ever, should we offset ant helps to industry source bot like >>lining dvd revenue? >> getting an estimate of what it will generate from each of the revenue sources. component of the revenue stream has been cut in half. >> we know dvds have been a tough market. we know cd sales have struggled. there is an interesting trend is that final has been doing quite
well. we went to one of the few remaining manufacturers in the country to find out why. here is what we found out. >> long before there was digital downloads, this is how you made the announcement. changed.e has not from the final pellets melted down into bubblegum. >> the process of heating up the dye, the hot vinyl and hydraulic pressure. goes under 1800 pounds of pressure. it is like making waffles. dozen inside one of a facilities in north america still pressing records. just four years ago they were down to producing only 5000 per day area and likes our average is 22,000 to 25,000 per day. lex 25,000 records per day? >> six days per week. >> 6 million were sold in the u.s..
but 140rsus total album four percent growth in four years. compare that to 54% growth for digital albums. vinyl isnt to know why hot, look no further than macklemore. releasend a half of the of his hit album, they are is he manufacturing the final version. >> when you buy the physical one today, they will give you the digital copy as well. lex that is very common. >> they made it available at retailers like wholesalers and urban outfitters. s and urband outfitters. not only selling the album but they have a 12 inch by 12 inch picture of themselves in the store. >> rainbo scrambling to meet
the new demand with old equipment. the newest record rest dirty five years old. album testing takes place on a vintage turntable. >> this is a cd machine converted for vinyl. >> that tells you where we are going. jon erlichman, senior west coast correspondent. coming up, right back with more bloomberg "west." ♪
i think probably more demand than we can for filled this year. i think long-term we will have hundreds of service centers in china. my instructions to the team in china is to try to build those as soon as possible. we will build them at a very rapid rate. >> in addition to service centers, he hopes to build tolas in china and three four years. time for the bwest byte where we focus on one number that tells a whole lot. are both in new york having lots of fun without me. >> 5706. that is the number of finals we had -- miles we had to travel to be together in new york. took a tesla. must in the backseat. backseat.sk in the
>> when the hyperloop happens you will get there in moments. >> there is a lot of media and tech stories going on right now relevant to what we're doing. is a big one. big software component to it, too. there is a certain amount of software -- at the bloomberg enterprise technology conference later this week. ,> i have a question for you what is going on with the beard? >> playoffs. allowed? is he allowed to do whatever he wants? >> the boss may have made a comment about it earlier today. the beard will be here for a while. i was on vacation last week. it just kind of happened. >> you guys have fun out there. i will try to hold down the fort. and williamng
shatner making you blush. >> that is impressive. like william shatner, love that guy. william shatner, bill shatner guide. cory johnson editor at large in new york this week as well. thank you so much. thank you for a great show today and thank you all for watching this addition. we will see you later. ♪
>> from bloomberg had an -- world headquarters in new york, this is bloomberg " bottom line." i am mark crumpton. today the u.s. supreme court hears arguments in the copyright case between aereo and broadcasters. signs of cooling in the u.s. housing rebound. >> to the viewers in the united states and those of you joining us from around the world, welcome. full story of the stocks