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This is a rush transcript of 'Your World' from June 12, 2018. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Any moment for AT&T. It's about time, or should I say Time Warner? Will these companies be able to merge? They have tried for the better part of two years? Very shortly, we will know. Why every single entertainment conglomerate on the planet seems to have something at stake in this. We're going to bring it to you live. In the meantime, there is this.

(BEGIN VIDEO CLIP)

SEN. ROBERT MENENDEZ, D—NEW JERSEY: It seems to me that this not the art of the deal. But it seems to be the beginning of the art of concessions.

SEN. CHARLES GRASSLEY, R—IOWA: We ought to have the same caution are dealing with a country that we never had much dealing with, but be very hopeful.

SEN. DIANNE FEINSTEIN, D—CALIFORNIA: If he's going to denuclearize, we have to be sure that all the I's are dotted and T's are crossed.

SEN. MITCH MCCONNELL, R—KENTUCKY: If North Korea does not prove willing to follow through, we and our allies must be prepared to restore the policy of maximum pressure.

SEN. CHUCK SCHUMER, D—NEW YORK: It's imperative that we actually get action here, not just photo-ops.

SEN. LINDSEY GRAHAM, R—SOUTH CAROLINA: If Kim shakes Trump's hand and receives lavish praise from President Trump and tries to play President Trump, look what happened to Canada.

(END VIDEO CLIP)

CAVUTO: All right, well, after the sit-down, fallout. Welcome, everybody. Really glad to have you. I'm Neil Cavuto. So, what now? What happens now? We got former Obama Defense Secretary Leon Panetta, who says, well, talk is one thing, delivering quite another. National Security Adviser under George W. Bush Stephen Hadley on what would make this agreement even stronger. Also, Republican Senator Rand Paul, who sees danger not from Kim Jong-un -- get this -- maybe a fellow Republican senator. He's here to explain. First to John Roberts in Singapore on how this face-to-face is playing out across the globe -- John.

JOHN ROBERTS, FOX NEWS CHIEF WHITE HOUSE CORRESPONDENT: Neil, good morning from Singapore, where it's 4: 00 on Wednesday. In New York, in the United States, you're still into Tuesday. And Tuesday here in Singapore, the world was marveling, captivated by these images of the very first sitting American president sitting down with the North Korean leader, and the two of them appearing to get along quite well in the one-on-one meeting that they hadn't and then later in the extended bilateral meeting over lunch, and then signing, as you see here, a joint communique that came out of the summit. But since then, the critics have really gathered voice and are saying that President Trump gave away too much without getting anything from Kim Jong- un. President Trump saying in this communique that he is about to sign there that he is giving the North, North Korea, security guarantees in exchange for Kim Jong-un's commitment for complete denuclearization of the Korean Peninsula. But the critics are now saying that it's an empty promise from North Korea. There's no verification at this point. President Trump saying all of that will come later, that he gave up nothing, and that Kim Jong-un was willing to go further than either he or his father have with previous presidents. Why? Listen here.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE United States: We have never gone this far. I don't think they have ever had the confidence, frankly, in a president that they have right now for getting things done and having the ability to get things done. I gave up nothing. I'm here. I haven't slept in 25 hours, but I thought it was appropriate to do because we have been negotiating for literally around the clock with them. But we haven't given up anything, other than -- you're right -- I agreed to meet.

(END VIDEO CLIP)

ROBERTS: He agreed to meet. So, the president gave up his time to meet with Kim Jong-un. The president also saying that he was going to cancel the yearly joint U.S.-South Korea military exercises. The president called them -- calling them provocative, also overly expensive. A lot of his critics are now saying that the president shouldn't have given that up, but the president also saying in that press coverage you saw there, Neil, that if the negotiations don't go the way that he hopes them to, he will restart those military exercises. And where we go from here is a number of meetings that are planned with Secretary of State Mike Pompeo and the North Koreans, as well as Ambassador John Bolton. But the Republican Senator out of Louisiana John Kennedy suggesting that the administration has to proceed very cautiously in talks with Kim Jong- un. Listen here.

(BEGIN VIDEO CLIP)

SEN. JOHN KENNEDY, R-LOUISIANA: I think it's important to remember about this process that Kim Jong-un is a butcher. He's a butcher of his own family. He's a butcher of his own people. And working with him is like trying to hand-feed a shark. You can do it, but you have do it very, very carefully.

(END VIDEO CLIP)

ROBERTS: working With Kim Jong-un is like hand-feeding a shark. You can do it. You just have do it very carefully. The president saying he believes that Kim Jong-un is sincere about wanting to give up nuclear weapons in exchange for security and economic guarantees, but the president also adding in that press conference -- that press conference this morning, Neil, that he could be back here in six months and say, well, we got it wrong.

(LAUGHTER)

ROBERTS: I think the world is hoping he's not going to be saying that six months from now -- Neil.

CAVUTO: Yes, let's hope not. All right, John Roberts, thank you very, very much, my friend. Now, by the way there is this:

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM, R—SOUTH CAROLINA: The worst thing you can do to President Trump, if you're a foreign leader, is try to play him. So, if there's a cheating North Korea in the future, if there is a promise and not deliver, North Korea, then we're probably going to have a war.

(END VIDEO CLIP)

CAVUTO: Probably going to have a war? That was South Carolina Republican Senator Lindsey Graham this morning. Not long after saying that, he added this:

(BEGIN VIDEO CLIP)

GRAHAM: I'm a pretty hawkish gun, but I want peace. I don't want war. I'm willing to give him security guarantees and economic opportunity that I didn't think I would have given a year ago.

(END VIDEO CLIP)

CAVUTO: Now, a lot of people think he is actually responding to my next guest, who has criticized his hawkish stance, Kentucky Republican Senator Rand Paul. By the way, we did contact Senator Graham, something we do quite a bit. His office declined. But first to Senator Rand Paul right now. Senator, he's obviously dialed some of these remarks back. I think it -- the genesis was your criticism of them. Where do you stand on his kind of bellicose view of things?

SEN. RAND PAUL, R—KENTUCKY: You know, I think in the midst of a historic opening of President Trump actually having to face-to-face conversations with the leader of North Korea, Lindsey Graham trying to declare war in the middle of that is, I don't know, someone living in an alternative universe. But it's not real helpful in the middle of an opening to actually talk about, oh, yes, if we don't like this, we're going to bomb them or declare war on them. No, so I think we need to have a better understanding of the way the world works and see if we can actually achieve something here. But I think it's historic that President Trump has had this meeting. Nobody else would have done it. Obama didn't do it. Obama refused to meet with him. Bush wouldn't do it. They would have lawyered this thing to death and come up with a million reasons not to do the meeting. But in order to have a breakthrough, you have to have a meeting. So I think this is the very beginning, but I'm very hopeful.

CAVUTO: I would be remiss, Senator. Even though he didn't provide this statement directly to us, Senator Lindsey Graham did provide it to CNN and referred it to us. So, what he said: "When it comes to fighting radical Islam and bad actors, Senator Paul is constantly AWOL. There is no threat to America that Senator Paul will not retreat from."

(LAUGHTER)

PAUL: You know, I think he has a naive world view. And we have had this discussion going on for awhile. Also, he is very careless about war, but also very careless about the Bill of Rights. I have just come from the Senate floor, where he's objecting having the Fifth Amendment and the Sixth Amendment applied to people who are accused of crimes in the United States. I find it hard to believe that, in this day and age, there is someone, a senator, in public on the Senate floor saying, oh, no, if you're accused of a crime in the United States, and Lindsey Graham calls you an enemy combatant, he can send you to Guantanamo Bay or anywhere else indefinitely, no lawyer, no trial. If Lindsey Graham thinks you're an enemy combatant, he thinks the world, we're at war, and that somehow we're going to be under martial law under Lindsey Graham. That scares me to death and should care everyone who believes in the Bill of Rights to death. We're having that fight on the Senate floor as we speak, because he's blocking my amendment, which would say that no one accused of a crime in our country should ever be spirited away to another country and not get a trial.

CAVUTO: I will belabor this issue one more time, if you will indulge me, because I wanted to have Lindsey Graham on. But he constantly refuses coming on this show. That's fine. But the one thing that I did want to get from you is your take on his two extreme views of what can happen here. Either there is peace or there is war. There is no middle ground. What do you make of that?

PAUL: Well, think that's a typical of the neoconservatives. They see black and white. They think you're either Chamberlain or you're Churchill. There's no in between and there's no nuance to diplomacy, when, in reality, there's a great deal of nuance. And so we have to figure out a way forward to get to denuclearization. But, for example, John Bolton, another Lindsey Graham neocon, for him to say, oh, we're going to show on the Libyan solution, which was I guess you give up your nuclear weapons, then we kill you, is probably not good for diplomacy either. So we have to -- diplomats should think about what they say before they say them. And we need to be talking about how we can denuclearize North Korea and the whole entire Korean Peninsula. And that involves give and take. And this is what the neocons will never understand. They think it's either going to be Hiroshima and unconditional surrender, or that's what it is. It's either all or nothing. And really most of diplomacy is not about unconditional surrender. It's really about trying to figure out what can we give the North Koreans. So I think giving up the war games, which happens twice a year, is a perfectly appropriate thing to do, as President Trump said, as long as there is progress. It can easily be started again. But that's a great first step. And North Korea's has offered to do no more testing. Now, that's not denuclearization, but those are two good initial steps. The neocons would never offer any offer carrot, because they're all about the stick. And they want everybody to just kneel down and behave.

(CROSSTALK)

CAVUTO: But one of those neocons, Senator, is at the table. John Bolton was the table. I'm sure the president had that by design. Of course, Mike Pompeo was there as well and others were there. But why do you think he did that? Because, of course, the North Koreans were apoplectic over his Libya comments, as you alluded to. And yet there he was. What do you make of it?

PAUL: My hope is that he was at the children's table and that he wasn't influencing the discussion among adults.

CAVUTO: Hmm. I think he was at the main table. But let's step back from this. And you talk about what the North Koreans might offer down the road as far as more tests and all the rest, and what we are offering to do to stop the joint exercises for the time being. We could start those back up if we're not getting signs of progress out of the North Koreans. But a lot of people have looked at this and said, well, we must have that guarantee, that we must have verifiable proof that the North Koreans are denuclearizing, are starting to dismantle things. And that does not appear -- I stress appear -- to be in this agreement.

PAUL: Right. It's not. I mean, so that will come over time. They have been duplicitous in the past.

(CROSSTALK)

CAVUTO: So should we have volunteered, Senator -- I'm sorry sir, but I just want to clear. Should we have volunteered to go ahead and stop these exercises?

PAUL: Yes, because that can easily be restarted at any point in time. But it shows good will. It's nothing permanent. It's not like giving them money. And I'm not forgiving the North Koreans any money. I would offer them the allure of trade with Japan and South Korea and us, and expanded trade with China, and the allure of what trade and commerce brings basically to a country. He has to know. He's traveled the world. His people may not have ever seen the great opulence that there is in South Korea, but he and his leaders know that there is. And they know that there's starvation in their country. We offer them the allure of becoming part of the world of nations. But there have -- will have to be verifiable tests. And I think that the relinquishment of sanctions, even possibly bringing troops home, are all things that should be dangled out there. And if any of them are to happen, we have to verifiable nuclear -- denuclearization. And it would probably be a ratcheting down of things over a period of time as he shows compliance.

CAVUTO: Now, I know you have been a long critic, even during your presidential campaign, about all the troop commitments we have all over the world. I believe at the time you had commented on South Korea. The president is open to seeing that troop number reduced, maybe as part of a long-term deal with the North Koreans. Some in the South, in South Korea, fear that, that by the time we're reducing, the North Koreans are rearming.

PAUL: And I have proposed an in-between solution. About six months ago, I came forward with the possibility of making the forces along the DMZ, the deconfliction zone between the two Koreas, making that an international force, and actually making Chinese troops part of that force, because, one, China does not want us in North Korea. North Korea doesn't want us in North Korea. And I think they would see the Chinese as somewhat of a deterrent to us actually. If it were an international force with the Chinese in it, it would be very unlikely that we would come trotting up into North Korea for regime change. So I still think it's an idea that hasn't been fully discussed, but actually might be a way of trying to get to something that's not no troops, but is actually a more fully international set of troops, with the understanding that, as the Koreas get along over a period of time, and as they have verifiable denuclearization, that you actually could go to a time when there are not troops, not foreign troops in Korea.

CAVUTO: Are you feeling better today than you were yesterday? There were a lot of people who have criticized the president for meeting with this rogue dictator, as if we could pick and choose the leaders of countries.

PAUL: Right.

CAVUTO: And you have gotten into that with me before. But how do you feel today vs. yesterday?

PAUL: I think it's a good step for the world. And I think that people need to understand diplomacy is easy with people like England. I mean, we have such a long relationship. We have a very similar system.
It's much harder. Where diplomacy is really needed is when we have a great deal of disagreements and we don't approve of a great deal of what they do as far as human rights. Doesn't mean that we should condone any of that, but we still should have discussions and deconfliction, so we don't have war. And I think, over time, freedom is just an -- and capitalism are such an amazing thing, that, without forces, without anything, if you allow the North Koreans to see trade, if you allow their consumers to have the stuff that is made all around the world, stuff and economic prosperity makes people hunger for freedom more. And you won't need an army, if they're able to see that.

CAVUTO: Senator Rand Paul, thank you very, very much.

PAUL: Thank you.

CAVUTO: All right. All right, we could be just minutes away from finding out whether AT&T can go ahead and merge with Time Warner. Why so much hangs on the balance here, including what you watch on TV, what you download, what you stream. A lot hangs on this -- more after this.

(COMMERCIAL BREAK)

CAVUTO: All right, whatever your views on this agreement or the start of an agreement with the North Koreans, a lot of people said that the president was folding like a cheap suit. I might point out to you, since I follow the numbers part of this, the sanctions are still very much in effect. They are among the toughest on earth. So, whether or not you like the president, that has not changed. And freezing a military drill is not exactly like folding and foddering away here. I do want to get an exact read of this, though. What exactly is in place, remains in place against the North Koreans and how that reverberates.
Charles Payne, my buddy from FOX Business Network, bestselling author, on all of that. That is what brought Kim Jong-un to the table, if you think about it.

CHARLES PAYNE, FOX NEWS CONTRIBUTOR: Yes. That -- the U.S. sanctions, but also we have got to point out the Chinese sanctions also.

CAVUTO: Right.

PAYNE: China applauded the summit in a communique earlier today, and suggested, hinted that they may start to remove some of those sanctions. So, they're 75, 76 percent of North Korea's economy, when you measure export to imports.

CAVUTO: And China also was petitioning the U.N. Security Council to lift sanctions that are in effect from the world. Right?

PAYNE: Right.

CAVUTO: So what's going on here, really?

PAYNE: You have got the carrot and the stick going. And I think one thing that has been overlooked a lot in the lead-up to this and even overnight is the economic angle. Kim Jong-un, ultimately, if he does give up the nukes, the denuclearization, in addition to his safety, it has got to be something on the other side of this with respect to economic prosperity. And I even took the comment that President Trump made with respect to the beach and the condo. A lot of people just got offended by that. But I think that was another way to saying to Kim Jong-un, you guys are sitting on something that could be absolutely amazing. And my point -- the case in point, for instance, in 1950, the GDP per capita in South Korea was $850. North Korea, it was $750. Last year, it was $26,000 vs. $2,000. They understand what's going on. He understands what's going on. He was educated in the West. They're obviously -- from his point, vantage point, it's a lot to give up, that sort of power that most people would never understand, being born into a dictatorship. By the same token, he knows it's a system that cannot last forever.

CAVUTO: A lot of people have a problem, first of all, on the coastline question, since a fifth of it is useless in the condition it's in, although, of course, money can pay for a lot of new coastlines. Just look what we have done in our country. But, having said that, is there a sense here that this really bothers a lot on either side of the aisle, that we're propping up an evil guy? We can't pick and choose who runs a country. FDR couldn't pick and choose Stalin, who was running the then Soviet Union, just that he was the guy running the Soviet Union. And he was our partner in War II.

PAYNE: Yes, that -- it's very difficult. If we want resolution -- I just wish the critics would lay out the ideal way of getting this, because before we were prodding and taking advantage and pushing them into some sort of a nuclear war, which obviously didn't happen. And now we're dealing with a dictator. Yes, we're dealing with a dictator with a nuke. And the world...

(CROSSTALK)

CAVUTO: But I think, when we made overtures to Cuba under the Obama administration, we dealt with a dictator.

PAYNE: We dealt with a dictator. They did the wave. Our flags stood side by side. All of the criticisms that I'm hearing that divert really from the real issue at hand, how do we curb the nuclear ambitions of Kim Jong-un? Bottom line, how do we get him -- how do we lasso him in before we have to do something before where there will be serious collateral damage?

CAVUTO: All right, Charles Payne, thank you very, very much, my friend.

PAYNE: Thanks.

CAVUTO: Of course, we will soon find out, won't we? By the way, we have taken this trip before. In fact, we hope the third time is not the charm, judging from past failures. The former Defense Secretary Leon Panetta on how we avoid that, because he's been watching this -- next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CAVUTO: I would be curious how you feel in talking to either Barack Obama, if you have, or to Bill Clinton, with the constant comparisons this president continues to make as to the progress he's making and the mistakes he's avoiding vs. the lack of progress your old bosses had and the problems that they encountered, and it's a frequent theme of his, I'm getting it done, they didn't?

LEON PANETTA, FORMER U.S. SECRETARY OF DEFENSE: Frankly, I think I'm still waiting for President Trump to get it done. He's taken -- he's torn a lot of things down. He operates by chaos. And I understand that. A certain amount of tactical chaos is good strategy. But strategic chaos can be very dangerous. And, right now, I'm still waiting for President Trump to actually deliver on all of the things he's working on to show that he can actually make the deal happen.

(END VIDEO CLIP)

CAVUTO: All right, well, sign of a deal today. Former Defense Secretary Leon Panetta, though, weighing in on that historic North Korean summit, saying that the president does operate by chaos, even though he readily expressed almost admiration, that that chaos sometimes works. Former National Security Adviser to President George W. Bush Stephen Hadley. Stephen, very good to have you. What do you make of that, that this is rewriting the rules, especially if it succeeds, about how you go about this, much like slapping tariffs on trading partners, if it works, might rewrite the rules about how you conduct trade talks? What do you think?

STEPHEN HADLEY, FORMER U.S. NATIONAL SECURITY ADVISER: Look, I think President Trump was elected by the American people to be a disrupter. He was elected by a lot of people who felt that the system was broken, felt betrayed by their politicians and by the establishment. So, they wanted a disrupter in chief. And they got a disrupter in chief. And what he's been doing is breaking a lot of china, if you will, setting the table in a different way to deal with issues about trade, to get allies to take more responsibility for our common defense, and a different approach in terms of North Korea. And he got a lot of criticism for it. People said his rhetoric was bellicose. Well, it got China's attention. China started to lean on North Korea in a way they hadn't done before.They said his agreement to a summit before there had been a bottom-up process was a mistake. Well, he had an insight that maybe the only way to break through, given the decades of mistrust and past failures, was to start at the top. We will see. Look, he's a disrupter. And the first year or two, that's what he's going to do. He's going to try to set the table differently. The question will be then whether he can bring home a set of agreements that do things in a different way, but actually accomplish our objectives as a country.

CAVUTO: We will. Stephen, do you think that there was a message or a strategy to getting pretty rough with our allies, namely, Justin Trudeau of Canada, while at the same time pulling out all the stops for the leader of North Korea? Now, I know, of course, these negotiations were on, and then you have to make them work, but the contrast couldn't be more dramatic this past week.

HADLEY: Yes, I think it's unfortunate. I think some of the things that were made by the -- statements that were made by the Trump team afterwards to justify what the president had done were really kind of over the top. Special place in hell, for example, I think was unfortunate and I think has been retracted.

CAVUTO: Indeed.

HADLEY: I think what -- my sense is what got the president's attention was, Justin Trudeau went out, was introducing a statement that had been signed up to by all members of G7. He should have just said, we reached a consensus. Here was the statement. It's got these strong terms and stopped. He got some questions. And he made the point about how he was offended by the national security element of the trade. And we Canadians don't want to be pushed around. And it looked like he was trying to enhance his standing with own domestic politics, at the president's expense. Presidents don't like that. And President Trump's style is, when he thinks someone has dissed him, he pushes back pretty hard. And I think that's what happened. It's unfortunate. It's not irrevocable. I think we can knit it back up. But it clearly got out of hand, and it was unfortunate.

CAVUTO: Whether the tariff response or the tough trade talk response is the way to go, it has woke a lot of people up to the idea that some countries don't play fair with us. Now, net-net, of course, when it comes to our relationship with Canada, we still end up getting the better part of the deal and run a trades and goods surplus. But it has awakened people to the fact that there's some rigging going on, even among friends. How does this all get settled?

HADLEY: Well, the president is trying to use the threat of tariffs as leverage. And I think the trick of to fine, use the threat of tariffs as leverage, but the goal is not to raise trade barriers around the United States. It's to lower everybody else's trade barriers down to a reasonable area, so that there is more trade, rather than less. That is the problem here. And, you know, the president, offhandedly, apparently is reported at the G7 to say, well, let's get rid of all of our tariffs between the United States and Europe.

CAVUTO: Right. Right.

HADLEY: Well, why not? That's a pretty interesting idea.

CAVUTO: I thought that was a brilliant idea. Then you take the argument off the table for everybody.

HADLEY: Exactly right.

CAVUTO: And then may the best products win and compete, you know?

HADLEY: Exactly right.

CAVUTO: All right, Stephen, it's very good having you, my friend. Stephen Hadley, former national security adviser to President George W. Bush, so much more. All right. We're waiting to hear from a judge on that planned combo with AT&T and Time Warner. This was something proposed close to two years ago. But, man, oh, man, they have been dragging this out and a judge right now is weighing the pros and cons. This is bigger than those two companies, because a lot of other media conglomerates are hanging in the balance based on what this judge rules minutes from now. Stay with FOX.

(COMMERCIAL BREAK)

CAVUTO: It's nice when they happen, but it doesn't guarantee a win for the party in power. Yes, this North Korea summit with the president of the United States, in case you're looking for sort of like a new Carter deal, maybe not.

(COMMERCIAL BREAK)

CAVUTO: You know, they're momentous, they're historic. But in case -- events like these, where the leaders of two fighting countries or at least chilly countries sit down and talk with one another, in case you think that translates into votes or victories at the polls, history doesn't seem to bear that out. Former Deputy White House Chief of Staff, bestselling author Karl Rove on that. It's too soon to tell how November is going to sort out, Karl, as you like to remind me here. But I was amazed, looking back at the big summits and fallout in the nearest elections afterwards, most famously, of course, Jimmy Carter's Camp David accords in 1978, and they didn't and usually don't translate into big electoral wins. Is that because we move to other things or what?

KARL ROVE, FORMER SENIOR ADVISER TO PRESIDENT GEORGE W. BUSH: Well, first of all, the economy is always the dominant issue. But then also these things tend to either confirm people's opinion -- Jimmy Carter, by the time 1978 rolled around, he had a pretty bad reputation among a lot of swing voters and a lot of Americans as being weak and feckless. So, they looked at what he did with Anwar Sadat and with Menachem Begin and basically said, well, that's doesn't really move me deeply. And yet it was worthy of a Nobel Peace Prize and did begin to set these two nations, Egypt and Israel, on a path that has for the last several decades have been more productive than the decades leading up to Camp David. But, yes, the bottom line is, these things do tend to have some electoral performance. But they tend to be confirmatory. And as your previous guest, my White House colleague Steve Hadley said, this does confirm the view of Donald Trump as a disrupter. The previous four presidents have refused to give Kim Jong-un's father and his grandfather what they wanted, which was a meeting, a summit meeting where the president of the United States stood on the same level with the leader of North Korea. And President Trump has decided to be a disrupter and do it the other way. So we will see how it works out after a long period of time. But we shouldn't expect it to have a huge impact on the fall. Maybe move his numbers up a point or two, but the proof is going to be in the pudding, and the pudding is going to take a long time to cook.

CAVUTO: All right, now, we have some months obviously until the midterms here. And I'm reminded of other big events. And Ronald Reagan had a number of submits with Mikhail Gorbachev. How did they play out?

ROVE: Well, remember, the first one doesn't go well.

CAVUTO: Right.

ROVE: But it began to build some personal trust between the two men. But, remember, the two men had an obvious interest on behalf of their countries in moving the same direction. Mikhail Gorbachev had come to the belief that the Soviet system was not going to be able to sustain itself and that his country needed to turn West and needed to Democratize and open up. And so it eventually worked. Reagan was pushing him along the lines of arms control. You may remember President Reagan's view was, we ought to try and go for the zero option. Let's get rid of nuclear weapons. But, initially, the Soviets said, we don't want you -- OK, we will reduce our stockpiles, but you have got to get rid of your missile defense system. And Reagan refused to do that. But eventually it came to pass because they shared a common interest. The real question here is, what is Kim Jong-un's real interest? Is his real interest in the stability of his regime, as his father and his grandfather sought, which is -- that can only be guaranteed by having nuclear weapons, or does he have a radically different idea, that the future of North Korea depends upon being integrated into the world economy and opening itself up to trade and commerce with its neighbors and with the world? We will see. But it's going to require -- these things happen when there is a shared interest. When Menachem Begin and Jimmy Carter and Anwar Sadat came together, it was because two men, Begin and Sadat, were willing to accept Carter's leadership in bringing about a resolution of decades of war between -- and hostility between Egypt and Israel.

CAVUTO: And that lasted a couple of weeks at Camp David. This was about a few hours here.

ROVE: Right.

CAVUTO: But let me ask you about momentum events that occur under presidencies. I was thinking of President Bush's father, George H.W. Bush, liberating Kuwait. And he had for a while 82 percent approval. And, of course, it looked like he well was on his way to an easy reelection. And then the economy intervened. So, back to your point, what decides these things? It seems like basic pocketbook issues.

ROVE: Well, it -- largely. I mean, when you are in time of peace and war -- I mean, 2006 was impacted more by the war in Iraq, to the disadvantage of President George W. Bush, than the economy. The economy was sort of good. But the war was deeply unpopular. And that affected it. But, generally, these things are driven by two things, pocketbook issues, and then people's reaction to the sitting president. That's why in midterm elections 1982 for Reagan, 1992 for 41, 1994 for Clinton, these were bad results, because people, between both the economy and their views of the sitting president, wanted to send a message to that sitting president. Now, that doesn't keep the -- 1982, bad losses for the Republicans, Reagan wins reelection in 1984 -- 1994, bad results for Jimmy -- for Bill Clinton, 1996, he wins reelection. So there's no guarantee that a bad first midterm is evidence that you're going to be defeated for reelection, not at all.

CAVUTO: But it does -- let's say that this chaos, but maybe disciplined chaos approach, the president took to this and risked with this, if it works out, he could be OK. He could be really soaring here.

ROVE: Yes. Yes. But, look, even if things happen between now and November in the five months, the 146 days left before the election, let's not kid ourselves. Four times before, the North Koreans have said, we will give up our nuclear programs.

CAVUTO: Absolutely.

ROVE: And, initially, things -- things on three of those four initially went well for months and years.

CAVUTO: Absolutely.

ROVE: But on all four occasions, the North Koreans broke their agreement, one time within a matter of days, but the other times it took longer. But this is a process.

CAVUTO: All right.

ROVE: My sense is that it's going to be lengthy, but not resolved, in all likelihood, certainly to our standards, by the election.

CAVUTO: All right, thank you, my friend, very, very much, Karl Rove, the former deputy White House chief of staff. I do want alert you right now that the merger between AT&T and Time Warner has been approved, as was expected here. But it took a little while. Judge Richard Leon has gone and approved what would be the biggest media merger of our time here. But, again, it's always in the details. Charlie Gasparino following it all. Charlie, what can you tell us?

CHARLIE GASPARINO, FOX NEWS SENIOR CORRESPONDENT: We have to see those details, those conditions. Let's look at it this way. If the conditions are mild, OK, this is a huge win for AT&T. It's a huge win for Randall Stephenson, who's been left at the altar in the past. His job is secure. And let me tell you something. Tomorrow starts the bidding war for 21st Century Fox assets. Comcast is likely -- could put it in as early as tomorrow. Listen, if it's a clean approval -- and we have to see exactly how clean it is -- they may even put their bid in tonight for our entertainment assets that are slated to be sold to Disney. From what I hear from bankers, there could be others involved. But the devil is in the details of those conditions, if there are conditions. And I'll tell you, those conditions, Neil, could make an approved deal be in reality an unapproved deal, a bad deal.And what do I mean by that? If they make it -- if Judge Leon applies enough conditions to make this very onerous on AT&T to leverage the Time Warner
assets, so they can't really make a lot of money out of it, well, that's not good for this deal. And you will see this in the stock price. If this deal does get approved, listen, for the average person out there, if you own stocks in these companies, yes, they go up. But for the average person, it's going to change the way you consume news and entertainment. There will be two major companies out there, Comcast and AT&T, controlling much, I would say most of the content out there that you get on cable. I mean, it's going to be pretty amazing.

And do they have the ability to jack up prices, because these two companies have essential -- have a very large near monopolies, as the government was trying to argue? Judge Leon did not buy that argument, I should point out. He said essentially this. Technology is -- I mean, we have to read the decision, but if he approves, he's basically saying this. Technology is such that they don't have the pricing power that they used to. You have other options out there.

But, I'll tell you, Neil, we got to see the conditions of this thing. If
there are no conditions man, tomorrow's to be a wild day for deal-making,
because I think it starts.

CAVUTO: Just tuning in, a judge has gone ahead and approved the merger of
AT&T and Time Warner, including all its key media properties, including the
Turner Network, CNN, by the way, which was the genesis for some of the
concerns within the Trump administration that this didn't make much sense
to them.

GASPARINO: Absolutely.

CAVUTO: Now, we were talking as well, and Charlie was mentioning -- I
would beholden to mention it as well -- that other media stocks, including
Comcast and Fox Entertainment, our parent company, have been seen to be in
play here, given the heightened interest in merger deals that might pass
better muster now that this has gone on through.

GASPARINO: Right.

CAVUTO: Now, it's way too early to tell that, but they're all in play.

And all -- after trading -- they're all moving pretty smartly in after-
hours trading.

What are you to make of that and who and what could be next?

GASPARINO: I would say tomorrow is the beginning for the bidding war for
21st Century Fox's entertainment assets that are slated to go to Disney.

I mean, Comcast -- we were first report at the Milken conference on your
Fox Business show, I was first to report that said Brian Roberts, the CEO
of Comcast, was waiting for this decision. If it's a positive decision, if
AT&T is allowed to go through with the merger, he had enough confidence
that he could add to his massive media empire by going after our assets.

And he would do -- he would try to outbid Disney with a -- which he
essentially is doing -- he's planning to do with an all-stock bid that's
above what Disney is looking to pay for our assets.

Now, the question is, the question is, does Disney come back? Does another
bidder emerge? Bankers are telling me there's a lot of interest in our
assets. There's not a ton of content out there. And a lot of companies,
including tech companies, are looking to get into that space.

A lot of people thought Apple might actually bid on our assets. Our
sources inside Apple told FOX Business that they're not interested. But
that doesn't preclude Amazon or Netflix or somebody else.

CAVUTO: Very good point.

GASPARINO: So, there's a lot -- this is going to -- if this deal is clean
or if it's near clean -- and that's where we have to get into the details.

And I'll tell you, I talked to some of the people at Comcast today. They
said, OK, we want to read this to figure out exactly how to proceed, in the
sense that if there's a lot of conditions, they want to -- unless it was an
outright rejection, they were almost certain they were going to bid and
they were essentially formulate their bid on the type of conditions.

CAVUTO: Charlie, I don't mean to interrupt you.

There do not appear to be conditions to this.

GASPARINO: Well, oh, God.

CAVUTO: Now, it's still too early, I grant you.

But I'm showing you now how these stocks are trading in after-hours. Walt
Disney, of course, given the fact it wants to purchase these FOX
Entertainment assets, of course, that would be down, predictably, on the
notion they are going to cough up more dough. Comcast, presumably, for the
same reason, if it wants to compete with Disney to buy FOX Entertainment
assets.

GASPARINO: There you go.

I have Monica Mehta of Seventh Capital, also Leeza Garber, attorney on
these matters here.

It's going to be a battle royal. Right? It's everybody is in play, right,
Monica? What do you say?

MONICA MEHTA, FINANCE EXPERT: The floodgates have opened now.

We have set the stage for so many other merger talks, which have been
brewing for the last two years. And now it's really giving guidance and
opening the gate for a lot of big companies to come together for this big
survival of the biggest competition.

CAVUTO: In the course of this, Leeza, if you think about, AT&T's argument
was, how can you say this is anti-competitive, or you, the government, I'm
doing something to close out competitors, when in the course of the time,
big streaming players like Netflix, and Hulu, and Amazon and all that have
just dwarfed in size?

So, that was his argument. Look at these guys. Right?

LEEZA GARBER, ATTORNEY: It's true.

But really many of us were thinking -- and I'm honestly pretty surprised
see the decision. I'm excited to read what will probably be a very
lengthy...

CAVUTO: You thought the judge would slap it down?

GARBER: I thought he would allow the merger, but make it conditional.

So I know we're getting ready to see the really likely lengthy decision
this judge writes, 200-plus-page decision. And we will probably see the
condition arise.

And he was actually the judge in charge of deciding the fate of the
Comcast/NBC merger back in 2011. And as we know, the conditions for that
merger, which was allowed, but there were certain conditions, like you
couldn't price-gouge customers. There were other issues involved. They
couldn't separate out content, and say only Comcast/NBC...

(CROSSTALK)

CAVUTO: And there was concern about whether Comcast honored that, right?

GARBER: Exactly.

And there were definitely arbitrations that took place because of that
agreement. We don't know exactly they were. And those were part of the
terms of the agreement itself.

But now those conditions have fallen off this year. They are no longer
active. And it's really interesting to see what will happen now with AT&T
and Time Warner, because this is a whole new world.

And their argument that they're going against these huge players like
Amazon, Google, Netflix, Facebook even, really, we thought was a red
herring. We thought that these are in another field. These are techno
players. They're not these kind of networks.

CAVUTO: Yes.

They own the network, the means by which you get the stuff out and now the
content for the networks that their own. So, you could make the argument,
as some tried -- I think the government tried to do in this case -- hey,
you're way too big for your britches here.

Obviously, the judge -- and it's too early to say here -- but there do not
appear to be significant conditions attached to this, so selling any media
properties, including the Turner Networks or even CNN, and what -- does not
appear to be part of this.

But if that is the case, Monica, what does this say about the environment
for big deals now? Because this one was among the most closely scrutinized
and picked over I had ever seen.

MEHTA: Yes.

And I think this is very interesting too. And I was surprised that this
was happening as well. I mean, I think what is -- what you really have to
note is now you have a large distribution player, which is AT&T. That's
how you get your content, right, wireless phones, maybe how you get your
Internet at home.

Now they're going to have the opportunity to control content. And, as
technology changes, one of the biggest things the cusp for wireless is 5G,
so this ability to make your phone and the Internet on your phone go as
fast as the Internet that you get at home.

As soon as that happens, it changes everything. Now you're going to have
one company controlling not only how you get the data with the
distribution, but actually the kind of data that you can get in controlling
all of the content.

CAVUTO: I'm going to go back to Charlie in a second.

Leeza, as our attorney here, one of things that is interesting, where
Richard Leon was kind of heading in this, we got a few signs early on that
he was relentless with the government lawyers who were calling this
antitrust, anti-competitive.

And he would put them through the drills and the motions, prove it, prove
it, prove it.

Now, some have said he has a libertarian bent. I don't know if that is the
case here. But do you think that the government failed -- seemed to make
its case that this was unfair?

GARBER: I don't think the government failed in this case.

I think, by definition, this was a violation of antitrust law. It could be
considered predatory for customers if you think about it. AT&T now, as was
said, controls the pipeline for distribution and now potentially the
content, too, that they're putting out.

If you think about HBO -- I have a lot of friends that are "Game of
Thrones" fans. I'm not one of them necessarily right now.

But if AT&T says, at this point, we are going to give you HBO for free if
you sign up with us for our cell service, in addition to your home service,
that really doesn't allow a level playing field.

CAVUTO: So they get preferential treatment. That's the fear.

Charlie Gasparino, are you with us? Or...

(CROSSTALK)

GASPARINO: Yes, I'm here. Can you hear me?

CAVUTO: Oh, Lovely. Good. It's nice to see you.

So you have had a chance to digest a little bit about this. Play this out
from here. What happens?

GASPARINO: We hear there's no conditions or no significant conditions.
That's the first read out this.

Obviously, we want to see the decision. But if that is the case, the media
landscape is likely to change dramatically. This is a big rebuff to the
Justice Department. It will be interesting to see if the Justice
Department appeals this.

If you get smacked down by Judge Leon, do you go back and try to try it
again? You could have egg on your face twice, which wouldn't be good for
the Justice Department standing.

CAVUTO: Right.

GASPARINO: Would should point out that the Comcast conditions, I heard
someone say that they're over. No, they're still on. They're on until the
end of the year, or something like September.

The theory was that the government would go back, if they got a good
decision out of this, a positive government decision blocking this deal or
maybe keeping it with a lot of conditions, that they would go back and try
and reimpose the Comcast conditions, because they hate these mergers that
combine big distribution and content. They think it's bad.

CAVUTO: All right, buddy, thank you very, very much. I know you're doing
yeoman's work for FOX News and FOX Business on this.

GASPARINO: You got it.

CAVUTO: And on he goes to FOX Business. He's our legend.

In the meantime, I want to go to another legend.

Hillary Vaughn has been following this very, very closely at the
courthouse, where this judge was kind of an enigmatic figure. We didn't
quite know where he would come down. He was rough on both sides.

But I was mentioning a little bit earlier, Hillary, very rough on the
government side. Did I get that right?

HILLARY VAUGHN, FOX NEWS CORRESPONDENT: Yes, that's exactly right, Neil.

So, Judge Richard Leon, kind of an old-school guy, hard-line judge, he
ruled against the DOJ because he said they did not meet the burden of
proof, which was their responsibility in this case. He just didn't buy
what they had to say. He didn't think they brought another reasons to the
table of why this would be an antitrust violation.

So, he's ruling in favor of the AT&T/Time Warner merger, giving them the
go-ahead for AT&T to buy Time Warner here. But the interesting thing is,
he had the option to put conditions on this.

So, the fact that the judge said green-light all the way, go ahead, no
conditions show just how much he bought AT&T and Time Warner's case and
rejecting the DOJ's case.

But there is a wild card here. The DOJ, people who've been following this
trial very, very closely, have said that they would not be surprised if the
DOJ tried to appeal this decision. This merger is not set to take into
effect until later this month in June.

So, they do have some time. But the judge preempting that today inside the
court, basically saying it's not a good idea for the government to bring
this issue up again, because he just doesn't think that there is enough
there.

So we will see if the DOJ does try to pull a fast move here and try to
appeal this decision. But, for now, AT&T and Time Warner have the green
light.

And you're seeing this ripple effect really across potential media deals
that are kind of waiting in the wings. You have Comcast up in response to
this. You have AT&T, Time Warner stock up in response to this as well.

CAVUTO: Sure.

VAUGHN: So, positive effects rippling across the board to future deals
that could be waiting on the wings of this.

But the judge really telling the DOJ to sit down and to not bring this
issue back up again, because he doesn't think they have enough for an
appeal. So, as far as he is concerned, this decision should stand -- Neil.

CAVUTO: Wow. All right, thank you, Hillary, very, very much. Monica, looking at this, it's cliche to say content is king. But everyone wants content. There's only so many purveyors of content here. No matter
whether you own a traditional TV set or your iPad or iPhone or Android device, that's the future. The question is how high these price tags go to get a chunk of it. Right?

MEHTA: Well, we're in a new world. Content is getting fragmented. There's so many different sources for content now. Look at Netflix. Look at Amazon. We have changed so much in the past 50 years in terms of three channels to 250 cable channels. It's really getting very fragmented. But I think what this decision is telling you is that you are going to see a lot of mergers, you're going to see a lot of pressure among telecom companies who are going to need to combine and also get content players.

CAVUTO: Yes, I can see your point, Leeza, beginning about if you control all the piping and the stuff, and if you're an AT&T, or you own DirecTV and you own the means by which the cables and the fiberoptic lines, you get all this stuff, and then you have stuff to put on those, the fear would always be you're going to give preferential treatment to your stuff.

That was a rap I think you touched on, and Charlie did as well, with
Comcast, that it didn't play fair. Now, they have since tried to address
that. But is that your fear here?

GARBER: That's definitely my fear here. And it's shared by many senators and lawmakers across the U.S. And I know Senator Richard Blumenthal out of Connecticut is already pushing for more investigation into the Comcast/NBC the merger and what the after-effects have been right now as those conditions expire. And that's definitely something we're seeing here. It's problematic because the legal landscape, the law is constantly playing catch-up with technology. And we're seeing that in full play right now.

CAVUTO: You have a fiduciary responsibility as a company that is now
getting a great deal of interest, our company, FOX Entertainment, it's
among -- we're not part of this deal and the sale to Disney.

All of a sudden, there could be Comcast tomorrow at this time offering a
bid that is maybe a lot higher. So, you have to entertain that. And then
hence this not so mysterious reaction in both of those stocks today, in
Disney and Comcast falling, on the belief that they're going to have to
pony up more dough.

Now, how much more dough? I mean, this could get obscene, right?

MEHTA: Yes.

Now, it's this -- get everyone started, because there's a lot of room to
play now. So you're looking at Disney that was looking at a $52 billion
stock bid. And now, with Comcast coming in, it could be all cash, and
they're going to be running each other up.

CAVUTO: What about pairing up, companies pairing up? That's another thing
you look for, right?

MEHTA: You're going to see a lot of that.

Really, again, there's -- telecoms have pressures to get content. Content
companies have pressures...

(CROSSTALK)

CAVUTO: What about Apple? Apple comes to mind. There's a cash-rich
company.

GARBER: And then if you're talking about these companies getting together
to purchase, isn't that the definition of antitrust?

CAVUTO: Why would that be bad?

GARBER: Because they're coming together to really put those -- it's really
predatory on the public.

(CROSSTALK)

CAVUTO: How will I notice this at home? If I'm getting any of the Turner
networks or any of the affected...

(CROSSTALK)

MEHTA: Bill's going to go up.

(CROSSTALK)

CAVUTO: That's the fear, right, that you will pay for it, you will pay for it.

(CROSSTALK)

MEHTA: Right. And so that is generally the concern when you have fewer competition, fewer competitors in a marketplace. It's price-gouging. And so I think the other thing, as she said, is technology is moving very quickly now. So, the minute we start talking about 5G, and it's not you get your home cable access and everything is through your phone, all of this going to get even more blurry and even more dangerous.

CAVUTO: We will be streaming everything, won't we?

GARBER: It's true. But it's still a gray zone, and it's going to get more expensive. That was part of the government's argument. They said, in the next couple years, this could cost millions -- hundreds of millions of dollars. And even if you only see a dollar increase on your bill every month, what does mean in the months...

(CROSSTALK)

CAVUTO: But you think consumers will end up forking lot of the bill for this?

MEHTA: Yes.

CAVUTO: Is that the history on these things? Because some of these companies sort of leverage off of this, buy other entities, have other properties.

MEHTA: Well, that's what AT&T's argument was as part of this, is, oh, we're never going to do that, we're never going to raise the rates that much.But how can they justify that? How can they prove that?

CAVUTO: All right, so for consumers, taking in all of this stuff, you say they get higher prices, but will they get more choice? Will they get better streaming services? Will they get better technology in their favor?

MEHTA: Have you ever called customer service for Time Warner and been on the phone for hours and hours?

(CROSSTALK)

CAVUTO: That was a very dumb question. I didn't get that out.

(CROSSTALK)

CAVUTO: If you would like to wait less than 24 hours, press one. All right, again, thank you, ladies, very, very much. Again, just to bring you up to speed on this -- and this is something that hits all our lives -- a big media pairing, the largest to date, has been approved. AT&T's $85 billion merger with Time Warner, which includes everything from the all Turner Networks -- and there are a slew of them -- and I think another news network called CN -- CNN. Is that it? All right, but it's all big news here. And now everybody is in play. If this deal had not gone through, none of them would be in play. But they're all scrambling now in their offices and their conference calls and saying, we better be in, and we better open our wallet. We're on it. "The Five" is now.

END

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