Mario Gabelli, Gamco Investors chairman and CEO, speaks with CNBC’s “Squawk Box” about his take on the mega-merger between AT&T and Time Warner.
Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?
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Billionaire Investor Mario Gabelli On The AT&T-Time Warner Merger
That's a great question as always. Basically I think the notion of direct to the consumer Judge Leon's report in its first 50 pages coverage that whole landscape as well as anyone could do. You don't have to read the other hundreds of 100 all judges are as good as this guy the analyst and he even quoted Bob Dylan. I mean this is good independent of that Joe. The notion of a compression. Think back 100 years ago when the Model T Ford manufacturing. Jeff Bezos is doing the same thing contract thing. And what Judge Alito indicated was manufacturer intermediary retailer consumer you're going directly from the manufacturer to the consumer direct to the consumer and Netflix has demonstrated that that works. They have 120 million subscribers globally and they going to go to 140 million and go to 200 million in the next few years. That is a very powerful argument about where the money is going to be. But you know I wrote this in 1975 when it covered MCI gave the consumer what they want when they wanted to do it at low cost. And what you're talking about is the compression of the cost structure. For me the consumer to watch what I want when I want and what device sounds like you're saying it's defensive not necessarily because the free market system allows companies to come in and change the business. But look at Wal-Mart they bought jet. They anticipated what Bezos was going to do in part when they bought Whole Foods.
So you've got I would just you got to make that as a good thing. This is good for AT&T. If Comcast buys Well one way that's a different issue then you go through the metrics you know you get one point one billion shares coming out today of a of that have begun to be issued by AT&T. They've got absorbed that they've got a dividend coming up in about the first week of July. So you get a half a buck. How is the market going to absorb that. That's a different issue. What are they going to do about the debt. They have still a significant amount of relative cap ex relative to other companies and they've got to work their way through that. And then there's something different. Analysts are tough so tough people to deal with. But think about talent. Think about individuals that how do you deal with Tom Cruise. How do you deal so they don't have a learning curve because you think that's a culture issue for AT&T. That's a good word. Let me ask you separate questions related to that in terms of growing the HBO business for example to compete with Netflix or the like. How much même more do you think they're going to be able to invest in some of these businesses to try to be competitive at a time when you're talking about the debt and the dividend and all these other issues that then that could then back to the culture issue. Yeah but that's part of it from the point of view. Look what happened with DirecTV there were changes all the time in the consumer distribution habits.
This was a good deal for AT&T the wild cards are what you know without Verizon going to do. How did they put money into and greenlight. What they want to show. And can they do it cost effectively. And you've had companies in the movie business forever coming up with 200 billion dollar duds.
Billionaire media investor on a Comcast-Disney bidding war for Fox assets
Mario Gabelli, Gamco Investors Chairman and CEO, discusses how Disney and Comcast may proceed in a bidding war for Fox's assets, and whether another bidder could emerge.