Reports:  AT&T Nearing Deal to Buy Time Warner; Cyberattack Shuts Down Several Major Websites
RICHARD QUEST, CNN ANCHOR: The closing bell is ringing on Wall Street. The Dow is down just 12 points. But it a raise most of lot of loses of the session was much heavily much further down. And we're going to have a gavel to end trading. All right, stop now, you can stop pushing the button. It was a long bell and a wimpy gavel, but trading is over. It's Friday. It's October the 21st. Tonight, ma bell is on the prowl, and the reports say AT&T may be looking to buy Time Warner. Don't blame Canada, Europe's trade deal, the giant deal is being walloped by the Walloons. And the internet goes out across America's East Coast. And we're tired of turning it off and on, and off and on and off. I'm Richard Quest. It may be a Friday, but I still mean business. Good evening, tonight a new media giant could be in our midst, quite literally and figuratively. AT&T, that giant of telecom that goes back decades in the United States, whose very catchphrase used to be, "reach out and touch someone" might be reaching out for new friends.</s>AT&T COMMERCIAL, 1970: Don't let those new friends get away. A telephone call now and then will bring them closer. They're wanting to hear from you. So, reach out and touch someone. Give them a call.</s>QUEST: A commercial from the 1970s, which goes to show the age, extent, and depth of AT&T. But the report is that AT&T is now in advanced talks to acquire Time Warner. And let's be blunt about this. Time Warner is the parent company of Turner Broadcasting. Turner Broadcasting owns CNN. The takeover would completely alter the media world as well as giving me a new boss. Adding a huge amount of content for AT&T over its vast distribution outlet. So, let us parse exactly who these two companies are. Well, Time Warner has the three big divisions. Warner Brothers Pictures, HBO, and Turner Broadcasting. Which has CNN, Turner Sports Cartoon Network, TBS and TNT. Time Warner is a pure content company having divested itself of Time Warner Cable, the magazines, the books and the records. On the other side of this equation, you've got AT&T. Now it used to be a telco, an old-fashioned telco. Now it's a model that still got landline, it's got broadband, it's got wireless. It's got U-verse and it's got DirecTV, which is satellite television. However, what it doesn't have is much content. And that is where you probably see the synergy and the genius, if such it be, AT&T and Time Warner. Is this going to happen? And bearing in mind we've made the calls up to the 19th floor in this very building and got absolutely no reaction from anybody. So, we can't tell you yes or no. But let's have a look at the Time Warner share price, which today closed 7 percent higher on Wall Street. The rumor is it could be a deal done by the end of the weekend. This is where it's been most of the time. Around the 70s. It hits a peak of 75 and now it's way up over 85. As for AT&T, it's not your average phone company. It has gone through all kinds of transformations, and AT&T having been broken up in the 1980s, reformatted in the 1990s. Completely turned itself around in the 2000s, has somehow managed to remain part of the fabric of America.</s>AT&T COMMERCIAL: Over the years we have seen the results of a successful formula. Planned research to anticipate the demands of a growing nation. Available resources plus the continued efforts of many people. This combination has given America steady improvements in telephone service. And the story of long distance dialing points the way to even better telephone service for you tomorrow.</s>QUEST: Brian Stelter, out senior media correspondent, and Paul La Monica our guru is here to put this into perspective. It is never easy talking about your own company, is it?</s>BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: They make it easier when they don't return our calls. And today as you said, Richard, we are in the dark. I think that is because the advisors and the executives are trying to get this deal done by Monday morning.</s>PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: AT&T, for what it's worth, did get back to me with a no comment. So at least it was something. Dallas more friendly to us than --</s>STELTER: But this is no surprise.</s>QUEST: We asked the 19th floor. We asked if Jeff Buckus, would come on the program. And we got a very nice "we'll let you know.</s>STELTER: But what we do know is this is no surprise. Time Warner has been quietly on the market, on the block for a little while now. We think about two years ago. Rupert Murdoch's bid, $85 a share for Time Warner. A failed bid. Time Warner rejected it at the time. I remember a very senior source at the time saying, Brian, this was the wrong bidder at the wrong time. Wait two or three years. Well, it's now been two years and it's time for Time Warner to sell.</s>LA MONICA: Think culturally. I mean, we all know the fundamental differences between the CNN network and the Fox network. And I think there are a lot of people wondering how those two can mesh. When you look at AT&T, you don't have that baggage. You talk about the content you had up there before, DirecTV has the NFL Sunday ticket. Even though there's a lot of concerns about declining ratings for the NFL this year, that's still a big driver of subscribers for AT&T. You throw in Turner and bleacher report and some of the sport assets that we have, you know CNN Turner, it does make some sense for AT&T to be interested.</s>QUEST: The core question is, why do we need them? Jeff Buckus turned this company into a pure content company. What is the advantage to a Time Warner other than premium on the stock price?</s>STELTER: What we see are several major players taking over content and distribution together in the U.S. Comcast is one of them. Verizon is one of them. You can argue Google is one of them, Facebook, and AT&T. AT&T believes it needs to own not just the distribution, but the content.</s>QUEST: But from Time Warner's point of view. Why does Time Warner want to do such a deal? I can certainly see the advantage from AT&T's perspective.</s>LA MONICA: When the price is right it's hard to say, no. And I think that people look at Time Warner, and you know this obviously, more than me. The reason why Time Warner is always in play because it's the major media company that isn't family run. You don't have some dynasty.</s>STELTER: And it's got a little bit of everything. It's got HBO. It's got the Warner Bros. movie studio. And it's got CNN and TNT and TBS. It brings a valuable number of assets. But let's think about strategically. Time Warner is looking smaller and smaller in a world where Google, Facebook, and Comcast and Verizon are looking bigger and bigger. So, that's why even a couple of years ago there was his view toward selling down the line. Once they shed the magazines and they shed other assets. This is a pure play video company. And it makes a lot of sense if you're AT&T to have access to that.</s>QUEST: So we've got Verizon. It's got a variety. It's got AOL. It's got Huff Post. It may or may not have Yahoo before we're finished. So, that would be very much a third also. Because Comcast, NBC Universal has got the television network and the studios, and of course NBC Universal putting more money into BuzzFeed in a variety of other things. So, that's moving forward. But this would catapult AT&T into a bigger league.</s>STELTER: Yes, I view it as on the same level of that has Verizon and Comcast in Google in terms of the future media. We should mention the serious regulatory concerns. If there is a deal announced on Saturday or Sunday, it is going to be reviewed by the government for many months. Whoever the next administration.</s>LA MONICA: I spoke to a fund manager at Mario DeBellis' firm that owns both AT&T and Time Warner. He thinks the deal is going to happen, but he pointed that out. He said it will be a year minimum before a deal is approved.</s>STELTER: And the government applied onerous conditions to Comcast's recent deals. So, you would expect conditions on this deal as well. AT&T has tremendous market power already. We have very intimate relationships with AT&T and Verizon and T-Mobile in this country because of our phones. It is probably the intimate connection you have as a customer with a company. So, I would argue that makes us very interesting, a lot of opportunities, but also a lot of challenges.</s>QUEST: You will -- we'll all remember around this table, I covered it. We all covered it. The debacle of AOL and Time Warner in the 1990s -- the turn-of-the-century. We were told and this that was the creation of a new synergy for a new era. Well, all it did was destroyed shareholder value. So, Paul, is this deal different because times are different?</s>LA MONICA: I think times are different. I think people have legitimately learned from the mistakes that were made in the early part of the 2000s. When, let's be honest, most of these media companies and tech companies we're talking about, it was so different than now. No one thought that the good times would ever end. I think people now have a little bit more of a sane view of what the future will be like. And that is a big difference between now and 2000.</s>QUEST: I always remember a boss telling me that covering stories on your own network or about your own network is a career limiting event. So, let me take the career man, you first, Paul. If the lifeboat going down you're in there with me.</s>LA MONICA: This is me begging for my job from Randall Stephenson you say?</s>QUEST: Just may be before we finish. Is it your gut feeling these rumors are true?</s>LA MONICA: Something I think has to give at this point. When the Fox rumors were around, I understood why there was a reluctance to sell, as Brian pointed out. Not the right company. Not the right time. But Time Warner, time is running out so to speak, I think on its days as in independent companies.</s>STELTER: If it's not AT&T it will be Google or it will be another bidder. No matter what, Time Warner is being sold. The question is to who? And if it's not to AT&T this weekend, there will be someone else. You have to wonder, if the rumors today are causing the phone lines to light up with other potential bidders tonight.</s>QUEST: Gentlemen.</s>LA MONICA: Thank you, sir.</s>QUEST: Wonderful to see you, thank you. We will have a new boss by this time next year. I'll be the telephone switchboard operator if it's AT&T. U.S. markets fell 100 points at the open before staging a light recovery. The market was down very sharply and then it sort of pulled back. If you really want to know the reason why, there isn't one. It was -- Paul La Monica I think agrees with me today. It was just one of those days where it starts down and pulls back by the close. The U.S. government is investigating a massive international cyber-attack that took down some of the biggest websites on the internet. The sites were out for several hours this morning in the eastern part of the United States. By the afternoon, it had spread to Europe. And among the websites were Twitter, Amazon, Netflix and Reddit. Samuel Burke Is in London for us. Who was behind it?</s>SAMUEL BURKE, CNN MONEY TECHNOLOGY CORRESPONDENT: Richard, nobody is pointing fingers quite yet. But this is a serious situation. They went after the middlemen. Companies like Dyn and possible also Amazon web services. Think of them like the telephone operator. You call up and they connect you to somebody else. It wasn't, actually, Twitter and Netflix that were hacked, it was actually an attack carried out against these middlemen. It's called the DDoS attack. Basically, they just overwhelm their servers with traffic and that's brought them down. I think what this highlights, Richard, is how vulnerable so many businesses can be to what is a relatively simple hacking attack. It makes you think you need, just like we have at our house, a spare key that these companies need a backup plan.</s>QUEST: So, if you like, the pipe, the route by which you get to these companies was hacked and therefore the companies themselves. But this is really, once again just emphasizing the fragility of the infrastructure. They like to portray it as robust, but the truth is, anything but.</s>BURKE: First they build it and then they think about the security plans later. The proof is in the pudding. Think about Sony. Here is a company that was attacked by North Korea, according to the United States government. They didn't even have a way of contacting each other. In fact, Brian Stelter, who was just done with you. Was reporting at the time that the company had to figure out how they would do chain text messages. All calling each other and texting each other that way. So much infrastructure has been built digitally, but nobody's thought what happens if it all goes down. Now you could say thankfully this is just Twitter and Reddit. Our economies don't depend on them. But imagine if this was your banking website or a major financial institution couldn't do business for a few hours, then may be a few days. And then you start to get into a very serious situation where stock prices could be affected, the way that Sony's was. So, I think that this situation right now has the potential to be serious. But it's giving us a window into some of what could happen in a much more serious situation.</s>QUEST: If you're right, Samuel, and I don't doubt that you are here, then is there an inevitability about these? I mean let's face it, we've now got to the situation that when we are told that our private data from a department store, a garage that we visited, or a gas station a gas station --</s>BURKE: Like Yahoo.</s>QUEST: Or Yahoo, has been compromised. Most of us shrug our shoulders and wait for any consequences, is it inevitable?</s>BURKE: Hopefully, these types of situations are a wakeup call to the CEOs of these companies and to the government as well to start thinking about a backup plan. After Sony, you and I both know very well that lots of major corporations started taking different measures, including our own. And so, I think every time this happens I hope and I pray that companies look at this and think about building better walls and having better backup plans.</s>QUEST: Samuel Burke, thank you for staying late on a Friday night in London. Go home and enjoy your evening. Samuel joining us from the U.K. Walloped by the Walloons. And a trade deal between Europe and Canada is now described as impossible.