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CEOs of AT&T and Time Warner Speak to CNN; Soldiers Forced to Repay Enlistment Bonuses. Aired 8:30-9a ET.

Aired October 24, 2016 - 08:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[08:30:00] (BEGIN VIDEO CLIP)

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Let's talk, Randall, why buy Time Warner?

RANDALL STEPHENSON,, CHAIRMAN & CEO, AT&T: Its seems to us like a very natural extension of what we do. We're in an environment where our customers are demanding more and more video, more and more entertainment content, not only on the TV, but on the mobile device. And we have a really large customer base in mobility. And the ability to take really premium quality content to our customers in the mobile environment is huge for us. It's huge for our customers.

And as we made the scan and looked for premium content to bring to our customers, this is the premium content we think on the planet right now. And so the ability to do something special like this with Time Warner is just a very natural extension for us.

ROMANS: Why sell now, Jeff?

JEFF BEWKES, CHAIRMAN & CEO, TIME WARNER: Well, it's not really selling, it's joining.

ROMANS: All right.

BEWKES: And so this is our biggest customer. It's our biggest partner. DirecTV, AT&T and then all these mobile customers that we now will have together. And what allows us to do is just move faster with more innovation, better consumer offerings, more different price points, more effective advertising and, therefore, people are going to see that more of the cost of content can be borne by advertising and the experience of watching television can be better.

ROMANS: So what changes for the consumer, for somebody watching us right now. Randall, what changes for them with these two companies together?

STEPHENSON: Oh, I think you're going to see the pace of innovation in terms of delivering meaningful premium content to the customer on mobile devices. That pace of innovation is what's going to change. And - and we all are trying to innovate in this way. And our experience is, when you're trying to do meaningful innovation and bring new product and capability to market, doing it in arm's length contracts is always really, really hard. And so you put these two companies together, now the two companies are working together to change how the customer experiences entertainment, how the customer experiences CNN, literally. That's what we think will change. The customer's demanding not only the entertainment, not only the content, but the ability to integrate social, doing clipping and posting and social interaction with their content. So these are the kind of things we really want to move fast through.

ROMANS: Talk to me more about how you see the future audience consuming the stuff. You know, you've got this young millennial who does - in many cases they don't want to ever have a cable package, right? They're viewing this content differently. How does this deal see that or feed that?

STEPHENSON: So the millennials, and - in fact our customer base in general is not consuming less content. Our customers are consuming more premium content today than they've ever consumed. But they're consuming it in different places. They're not consuming it just on the television in their living room. They're consuming it now on their tablet. They're consuming it on the mobile device, on the go, and they're consuming it everywhere. And it's - it's really stark if you look at the - the amount of volumes, how they're increasing traffic going to these mobile devices.

ROMANS: Right.

STEPHENSON: That's video driven. And so where - we see that continuing. But we see that if we can actually innovate and curate to content differently and bring to the customer differently, we actually think this doesn't slow down, this accelerates. And this is the really important thing here because we're really excited about, as this accelerates, as this demand for premium content on these mobile devices continues to grow, it gives us more and more incentive to invest more and more in infrastructure.

ROMANS: Right.

BEWKES: Right.

STEPHENSON: And innovate in infrastructure. This idea of 5G technology.

ROMANS: What is that?

STEPHENSON: It's the next generation of mobile technology. So think about the fastest Internet speed you get from the cable company is a gig, right, that we - you can buy a gig of speed. 5G will allow us to provide a gig of speed to you wirelessly. And as we innovate this kind of content, having a 1 gig wireless network, so our customers can stream any kind of content, any kind of video anywhere. Ultimately, we think we'll be competing head to head with the cable companies with a wireless offer. We can hit those kind of price points, combine it with this kind of content. We think this is exciting.

ROMANS: You know, we were talking about that cable-free customer or the customer who wants to be cable-free and Time Warner - well, you and I have talked about some of the things that Time Warner has already been doing to sort of see this Film Struck (ph) for example. BEWKES: Yes.

ROMANS: You know, talk to me a little bit about how this deal, how this deal fits into that.

BEWKES: Well, we've had a progression for years. We wanted to have more video on demand. That was launched at HBO about 15 years ago. And then progressively we've seen broadband delivery give us more VOD service. Think of Netflix. Think of Hulu. Think of Amazon. And we added Film Struck, which is for film buffs. We've got HBO now available. So you can subscribe to that without adding anything else. You can do it a number of ways. And I think what we're going to see is with this kind of a platform and, you know, we believe this will be essentially a catalyst to more competition, more innovation and what we'd like to see is all the distributor companies basically doing more choices, more experiments. And we think this will, if consumers like the kind of packages and more competition leads to more - it leads to lower prices, it leads to happier consumers and it tells us where to go.

[08:35:26] ROMANS: So eight weeks ago you first met in this building to start kind of talking about this. That's pretty quick for such a big merger. Tell me a little bit about the timing here because we are in the midst of what is, I think, the most populous presidential election in modern history where, you know, big is bad and I'm wondering if that timing play had any effect on you guys.

STEPHENSON: No, it had no effect on it. I - I came to see Jeff because our businesses, obviously, do a lot together.

ROMANS: Right.

STEPHENSON: And we buy a lot of Time Warner content. And so we see each other regularly. We get together regularly. And came by to see Jeff. We had lunch. And as we began to talk, me about where I saw the world of distribution going, 5G that we've spoken of here this morning, and where he saw the world of content, of premium content moving and we just really came to an agreement that these things are converging and they're going to converge very, very quickly.

ROMANS: Just think how - I mean a movie studio and a phone company. I mean you think about how quickly things have really changed in terms of both of your - both of your businesses. I'm wondering about the regulatory scrutiny. I mean you look at the front pages of the papers today and, you know, immediate opposition is almost in every single headline first paragraph. We've heard folks on the campaign trail talking about Hillary Clinton, have said that she will - you know, her spokesman said that they will, you know, give it scrutiny if she is president.

STEPHENSON: Right.

ROIMANS: Donald Trump says it shouldn't be allowed to happen. Are - and there will be hearing in Congress, no question. Are you worried about the regulatory scrutiny at all? STEPHENSON: Well, obviously, we're very attentive to it. We - we've

announced a lot of big deals and this - this is not too much different than what we've seen in the past. This deal is unique, though, from any deal that we've ever done of any size. And, in fact, it's unique in this regard. This is a true vertical integration of two companies.

ROMANS: Explain what that means. It means - it means it's not as if two companies do the same thing already.

STEPHENSON: Yes. Yes, so think about AT&T. We've tried to buy T- Mobile.

ROMANS: Right.

STEPHENSON: That was a horizontal integration. That was a concern that the government had is that a competitor was viewed to be taken out of the market. This transaction is not horizontal. We don't compete. In fact, it's vertical. Jeff is a supplier to AT&T.

ROMANS: Right.

STEPHENSON: His content is part of our package we buy.

ROMANS: Right.

STEPHENSON: Vertical integrations have a very standard review in the regulatory process. And there's not a - there's not a competitor being taken out and, in fact, you're hard pressed to find in either one of our industries a time when a vertical integration was shot down by regulators. Generally what happens is where the regulators have concerns with the - a merger like this, they'll put conditions on it and impose conditions to help remedy the concerns that they may have.

ROMANS: And you're ready for that?

STEPHENSON: Yes, we're - we're ready for a review. We expect it to be a vigorous review. Like you said, we're sure that we'll get a chance to visit with Congress and tell our story there. But we feel like the information and the data will drive this and the law will drive this.

ROMANS: This has been compared - some have been raising the Comcast/NBC merger and saying, you know, that there was some - you know, it's been (INAUDIBLE) to keep some promises that it had made under that deal. Do you - does that hurt you? Does some of the arm chair quarterbacking after that deal, does it hurt you here at all?

STEPHENSON: No, I mean, look, when the regulators looked at Comcast/NBCU, the biggest concerns at that time - there were two of them, right, net neutrality, needed to insure that they protected net neutrality -

ROMANS: Right.

STEPHENSON: And over the top video. And I think if you look at this transaction, six years after that, the net neutrality debate, I think it's over. I think the case was settled by the circuit court and I think net neutrality is behind us. Over the top, I think Netflix is somehow going to make it. I think they're going to pull through. I think they're going to make it, right?

ROMANS: Let me ask you about CNN and its independence here because CNN is just one of the many, many name brands that are in the Time Warner stable. But you have said that AT&T will not be reaching into how CNN does its business or tells its story.

STEPHENSON: I watched how Jeff manages this business today and I think it's a model for how we want to manage it in the future. And, look, I - I think of a brand like CNN and the key variable of your brand is your independence. And when people watch CNN, are they getting an independent assessment and reporting of the news. The last thing we want to do as AT&T is in any way taint that in the slightest bit.

ROMANS: And you're sure - they understand the separation of all that?

BEWKES: Yes. You know, you've been at CNN for many years and it's been owned by Time Warner. Has it been interfered with? I think no.

ROMANS: No.

BEWKES: And why? There are two things. People watch news channels if they trust them to be independent, honest and objective. That's always the challenge. And when you're looking for the best journalists in the world, you would only work at a news channel that lived up to that standard.

[08:40:09] ROMANS: What changes for the Time Warner brand? You stay on for how long?

BEWKES: Well, at least a few years after the - we'll all - we'll all do it as long as we're useful for the new company and -

STEPHENSON: This is great. This is the first time I've heard you say a few years. This is a really big moment.

ROMANS: And you have the tape. You can always reroll the tape.

BEWKES: Well, we've got a year to get to the - to get to the close and then we need some period of time, but we have some tremendous executives in both of our companies -

ROMANS: And you think -

BEWKES: That are going to be, you know, we've - we're always trying to build the next generation.

ROMANS: Trying to build the next generation. So you keep Time Warner sort of operating those brand as they are now with the leadership they have now?

BEWKES: Yes.

STEPHENSON: Absolutely.

ROMANS: And move forward. At what point, you know, they operate as two sort of separate companies, AT&T and Time Warner?

STEPHENSON: Yes. I mean you should think of Time Warner becoming a wholly owned subsidiary of AT&T. And, look, I mean, Jeff has built an amazing company over here with some amazing brands and I don't envision us stepping in here and, like, we're going to fix this. I mean this is a well-run company. I said at the very beginning, I think this is the premium content brand company in the world. So I don't envision us changing a lot with it.

What we do want to figure out, and this will be the management art that we have to figure out, and that is, how do we begin to think differently about curating this content and formatting this content in new ways that we can get it to our customers in different ways and different formats and getting that seamlessly working across the two companies, that will be the management art we have to figure out.

ROMANS: So tell me again, I mean what we're talking here is how - what content is going to look like in five years and how together you guys can harness it and get it to people. But for consumers, you know, they want to know what's going to change for them. Their Bills? You know, their phone bills, their cable bills? What is the

biggest thing that they'll notice differently, do you think?

BEWKES: They're going to have more choices of different channel packages. If they want a big package of a lot of channels on their big screen TVs and they can watch the show and walk out of the house with a tablet and have seamless connection, or maybe they don't want that. Maybe they've got - it's a young couple that wants to use mobile devices to watch. Maybe they don't want the full package of channels. There will be more choice, I think better prices for consumers. There will be -

ROMANS: You think better prices for consumers?

BEWKES: Yes. More competition usually leads to more price reductions.

STEPHENSON: I'll give you a classic example of this. You'll see this actually next month, and that is, one thing we've been working on since we closed on the DirecTV acquisition is a purely over the top -

BEWKES: Yes.

STEPHENSON: Content package.

ROMANS: Right.

STEPHENSON: We're calling it DirecTV Now.

ROMANS: Right.

STEPHENSON: This is a mobile centric, purely over the top package that's going to our consumers. This is going to be a radically lower price point than what the consumer is expecting or has typically paid. And it's going to be 100 plus channels. We're not talking channels that nobody watches.

ROMANS: Right, right, right.

STEPHENSON: This is 100 plus premium channels. All of this content will be on there. ESPN, the Disney content. This is a very, very different experience. Mobile centric is designed for the tablet and the smartphone. Now think about having an anchor tenant like Time Warner whose content is in here and HBO and that content and how you can begin to integrate social into this. And social interaction, and can we clip the content and send it to friends, and interact with our friends on this. These are the kinds of things that we think are going to iterate much, much faster and change how the consumer experiences content.

ROMANS: Jeff, let me ask you about your legacy, this company. I mean you've - I mean you've been - what are your thoughts, I guess?

BEWKES: Well, I think it's our company.

ROMANS: Forty (ph) years, right?

BEWKES: It's - you're in it, too.

ROMANS: Yes.

BEWKES: Look, this company invented the magazine.

ROMANS: Right.

BEWKES: It invented satellite delivered non-ad sported TV at HBO. It invented 24 news at CNN. And so we're very proud of the information of informing people, of telling authentic stories. And this will help us to do even more investment, even more variety and keep evolving the distribution system. That's what this is about is making sure that the breakthrough content that we're seeing an explosion, not just in our company, but in all the television companies. We need to get this out across the world in a way that harnesses the 21st century of mobile devices, broadband delivery, VOD. There's so much programming, you need a good interface to figure out what is it, what do I want to watch. And that's what this will help.

(END VIDEO CLIP)

ALISYN CAMEROTA, CNN ANCHOR: Our thanks to Christine Romans for helping us with that.

Well, in our next story, they put their lives on the line to serve our country. And they got bonuses to re-enlist in the Army. Now, the government wants that money back, with interest. Next, we talk to a soldier dealing with this troubling turn of events.

(COMMERCIAL BREAK)

[08:48:28] CAMEROTA: In 2006, the military was under enormous pressure to increase enlistment, so they relaxed age limits and they offered thousands of dollars in bonuses to get soldiers who were ready to retire to re-enlist instead. Now, the government is ordering some of those very soldiers to pay back that money with interest. That happened to our next guest, former Army Captain and Iraq War veteran Christopher Van Meter. He had to refinance his home to get the $46,000 the Pentagon said he owed.

Chris, welcome to NEW DAY.

CHRISTOPHER VAN METER, U.S. ARMY AND NATL. GUARD RESERVIST (RET.): Hi. Good morning. How are you?

CAMEROTA: I'm well. So let's give people a little bit of your history.

VAN METER: Sure.

CAMEROTA: In 1995 you went into the Army.

VAN METER: Yes.

CAMEROTA: You served three deployments. You went to Bosnia.

VAN METER: Yes.

CAMEROTA: You went to Iraq. You went to Kosovo. You got the Purple Heart for your injuries in Iraq after you were thrown from an armored vehicle.

VAN METER: That's correct, right.

CAMEROTA: By 2007, you were ready to retire, but the Army asked you to re-enlist. So what inducements did they give you to make you want to do that?

VAN METER: Sure. And it was actually 1992 to about 2007 I was in for about 15 and they entice you. They entice you with another re- enlistment bonus. Those bonuses were in and around $15,000. As you know, we were in the Iraq and Afghanistan War at that time and they wanted to keep soldiers in, in the military to do great things. So they entice you with that $15,000, and I accepted that in February of 2007.

CAMEROTA: OK, and you used that $15,000, obviously.

VAN METER: Of course, yes.

[08:50:01] CAMEROTA: And then when did you figure out that they said they had never offered you $15,000?

VAN METER: Well, they did offer $15,000 and I received a letter in the fall of 2012 that said I should pay it back, plus another student loan repayment, and an officer accession (ph) bonus in 2009 for a total of about $46,000.

CAMEROTA: And why? Why did they say - I mean a bonus is a bonus. You know, you don't pay back - that's not a loan, it's a bonus. So why did they say that you had to pay back what you believed was a bonus?

VAN METER: Sure. Yes, this was - it's a really complex story. I received a student loan repayment in the time frame from 2001 to 2004, and they deployed me twice after - during that contract time and they said I didn't go back to the job I was supposed to go back to. You have to understand that bonuses and student loan repayments are given to high demand positions. I was in a high demand position at that time, and their arguments was is after two deployments, or because they deployed me, I didn't go back to the job I was supposed to, and they had every right to take that student loan repayment back. The re- enlistment bonus I signed in February of 2007. I accepted a direct commission as an officer in March of 2008, giving me about a year and a month time frame.

CAMEROTA: Yes.

VAN METER: And they said because I accepted the direct commission as an officer, I was no longer eligible for that re-enlistment bonus.

CAMEROTA: Oh, my gosh, even though you accepted the commission as an officer after the fact a after you had gotten money -

VAN METER: And served another six years, yes I did, yes. Yes.

CAMEROTA: Right. And so when you got that letter where this totals up to $46,000, what -

VAN METER: That's correct.

CAMEROTA: What did you think?

VAN METER: Well, it was heart-wrenching. You know, you read this and you're - you're floored. You're - you're - you're very surprised. You think it's a joke. And it obviously was not a joke. And - and it's gut wrenching because you have to figure out what you're going to do and how you're going to survive. I had a young family at the time and I was expected to pay $46,000 back.

I called the National Guard Bureau, or the California Army National Guard, and said, hey, wait, I have all these contracts that say I should have - I should have had that money, and they said in the fall of 2012, while until we actually start charging you, there's nothing you can do. Wait for - to fight it out with the lawyers. So they were - they were literally just processing paperwork and then hope you would fight it back later.

CAMEROTA: Here's what the California National Guard says about your case and others.

VAN METER: Sure.

CAMEROTA: The bonus audit and recoupment process is a federal program governed and adjudicated by the National Guard Bureau and the Department of the Army. The California National Guard does not have the authority to unilaterally waive these debts. However, the California National Guard welcomes any law passed by Congress to waive these debts. Until that time, our priority is to advocate for our soldiers through this difficult process."

When you got that letter, I know that you were so demoralized - VAN METER: Yes. Oh, yes.

CAMEROTA: And stunned by what was going to have to happen. Did you reach out to anybody? Any local lawmakers for help?

VAN METER: We did. We reached out to a local legislator in the state of California, Kristen Olson (ph), and other lawmakers. Not much traction. The Army had a response. We put a petition together and they had a response. I actually fought this for two years, from 2012 to 2014. I fought this with the JAG officers in the state of California. We petitioned the National Guard Bureau to provide an exception to policy. There was circumstances why I should have received those bonuses and student loan repayments. They didn't want to hear it. We then petitioned what they call the American Military Board of Corrections. They called the ABCMR in Washington, D.C. We petitioned them twice to no avail. They didn't want to talk to us or look at our case.

CAMEROTA: Huh.

VAN METER: You know, the unfortunately thing about this, Alisyn, is there's thousands of soldiers here in the state of California. I ended up paying it back. The $46,000 in 2014. But there's thousands that are still running through this process.

CAMEROTA: I appreciate you saying that, Chris -

VAN METER: Yes.

CAMEROTA: Because you had to refinance your home.

VAN METER: I did, yes.

CAMEROTA: This caused so much stress for your young family -

VAN METER: I did.

CAMEROTA: You had to refinance your home to get the money.

VAN METER: Right.

CAMEROTA: But it's not an isolated incident. There are thousands of people still wrestling with this.

VAN METER: That's correct.

CAMEROTA: So we sure hope that we're getting them attention - attention to it.

VAN METER You - you have to understand that when I - when I retired in 2013, they just transferred it over to the federal government. And the federal government's response is, you must pay all loans back in three years. So, $46,000, divided into three years, and they had tacked on a 1 percent processing fee.

CAMEROTA: Oh, my gosh. VAN METER Into that. And we were paying upwards of $1,300 a month back on that loan. Or not loan, back to that recoupment.

CAMEROTA: Yes.

VAN METER: And we paid that for about four months and my wife and I sat back, we were trying to balance bills. We weren't able to afford everything, you know, food for the kids.

CAMEROTA: Oh.

VAN METER: A day care. And at some point we had to say, there's something we can do. We can refinance our house. We were blessed that we had some equity in our house and that was our only recourse.

CAMEROTA: Well, Captain Van Meter, thank you for your service to this country -

VAN METER: Thank you.

CAMEROTA: And for bringing attention to what thousands more people are dealing with. Hopefully we will get some answers on this. We appreciate you sharing your story.

VAN METER: Thank you, Alisyn. Thank you so much.

CAMEROTA: Let's get over to Chris.

[08:55:01] CHRIS CUOMO, CNN ANCHOR: The early word is that when Congress gets back in session, they're going to address this. But how? And what do you do about people, like this man, who's a veteran? How are you going to get him his money back? How are you going to deal with everything he has had to go through? It's a big problem. We'll stay on it.

All right, a lot of hard news. What do you say, some late night laughs, next.

(COMMERCIAL BREAK)

CUOMO: "SNL" taking epic swipes at the final presidential debate got epic ratings. Here are the late night laughs.

(BEGIN VIDEO CLIP)

ALEC BALDWIN, ACTOR, "SNL": And people are just pouring into this country from Mexico and a lot of them are very bad hombres.

KATE MCKINNON, ACTRESS, "SNL": Oh, bingo. Bingo. I've got bingo. I've been playing along here and I - I got it. I have "bad hombres," "rapist," "Miss Piggy," "they're all living in hell," and "if she wasn't my daughter."

I'd be happy to talk about the last 30 years.

TOM HANKS, ACTOR, "SNL": Oh, no, not again. MCKINNON: Back in the 1970s, I worked for the Children's Defense Fund.

HANKS: Yes, yes, yes, we know -

MCKINNON: Then I was a senator in New York on 9/11.

HANKS: Yes, we get it. We get it.

MCKINNON: And then I was secretary of state and, I don't know if you've heard this before -

HANKS: We have.

MCKINNON: But I was instrumental in taking down a man by the name of -

HANKS: Osama bin Laden.

MCKINNON: Osama.

HANKS: Bin Laden, yes.

BALDWIN: This whole thing is rigged. All of the newscasters are making me look so bad.

[09:00:00] HANKS: And how are we doing that?

BALDWIN: By taking all of the things I say and all of the things I do and putting them on TV.

(END VIDEO CLIP)

CUOMO: I love that one and I love I apologize.