Return to Transcripts main page
First Move with Julia Chatterley
Streaming Wars Move To A New Level As The Content Juggernaut, Disney, Enters The Space; Nissan Profits Dropped A Shocking 70 Percent In The Last Quarter; WeWork Might Be Replacing CEO Adam Neumann With T-Mobile CEO, John Legere. Aired 9-10a ET
Aired November 12, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:14]
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Coming to you live from the New York Stock Exchange, I'm Zain Asher sitting in for Julia Chatterley and here is
what you need to know.
Disney's Debut: Streaming wars move to a new level as the content juggernaut enters the space.
And out of gas. Nissan profits dropped a shocking 70 percent in the last quarter.
And long hair, don't care. WeWork might be replacing CEO Adam Neumann with T-Mobile CEO, John Legere. It is Tuesday, my friends and this is FIRST
MOVE.
All right, welcome to FIRST MOVE, everyone. It is so good to have you with us. There was so much to get to this hour. Of course, I want to begin
with a check of markets here in the United States. Let's see what futures are doing now.
Futures look to be pointing to a mostly flat open. The stock -- the Dow begins today's session in record territory, yet again, but the S&P and the
NASDAQ fell from record highs yesterday. The big event for investors today could be President Trump's speech at the Economic Club of New York.
Traders are hoping to get an update on the U.S.-China trade war negotiations and Trump could also announce his decision on whether to slap
tariffs on European auto imports ahead of tomorrow's deadline. Reports say he will delay imposing those tariffs for another six months.
In the meantime, in Europe, all the major stock indices are trading higher at this hour. Asian stocks posted higher, too. Hong Kong stocks grows
half a percent gaining back some of the losses they suffered on Monday after violent demonstrations there.
All right, let's get to our main story now. The House of Mouse has entered the streaming wars and it's relying on a pipeline of Disney magic to put it
ahead of the pack. Frank Pallotta joins us live now.
So Frank, Disney certainly does have a very impressive catalogue when it comes to movies, certainly, no denying that. But will that be enough to
move the needle when it comes to market share against Netflix?
FRANK PALLOTTA, CNN MEDIA REPORTER: I mean, they are coming in with some of the most popular brands of all time, but the big question is, is this
going to be something that you're going to need to replace Netflix or is it a companion to it?
Right now, it looks like it's a great companion to the other streaming services, everything from Netflix to CNN parent company's upcoming HBO Max,
because this is really skewed towards families, and the young and the young at heart.
Now mind you, you get Marvel, Star Wars, National Geographic, all 600 episodes of "The Simpsons." That's a huge roster of brands and
programming.
But the question really is, is this something that you're really going to want to turn on when you come home at night? Or is it more kind of like
this event type television? Disney is hoping it's the former.
ASHER: So now just in terms of how Netflix responds, what changes will we see from Netflix as a result of Disney's move here?
PALLOTTA: I think Netflix keeps doing what it's been doing. It has a hundred -- it has a nearly 160 million subscriber head start. It is said
that it welcomes the competition because its idea is that this whole kind of streaming war that is going on you see on the screen right now, all of
these different prices for all these different services both upcoming and just launched.
Basically for Netflix, they think that all of these services are not going to destroy Netflix or each other. They're going to eat into the linear
bundle, the cable bundle as we've come to know it and then basically think of it this way, a rising tide lifts all boats.
So Netflix feels it not only has years of experience, it also has a huge head start globally in terms of subscribers, so it's not really that
worried. I doubt it really changes much of what it's doing. But it will keep an eye on Disney because it's hard not to.
ASHER: And I want to touch on something that you just mentioned, the cable industry, what changes will we see from the cable business as a result of
several new players in the streaming game?
PALLOTTA: I mean, the cable business, you're seeing it right now, you're seeing it today. The cable business is quickly becoming the streaming
business.
Disney for a very long time was defined by ESPN and the amount of subscribers that ESPN had. Every time that went down, people kind of on
Wall Street went a little bit crazy. Now, they're shifting their business focus to the whole new world of streaming.
You've got to remember, this is a company that built its empire on things like ESPN, theme parks, movies, and Mickey Mouse plush dolls. Now, they're
hoping that the future of this business is going to be Disney Plus and today is the first day of that future.
ASHER: All right, Frank Pallotta live for us there. Thank you so much. Japanese car giant, Nissan is trying to pull out of a crisis, but the
latest figures show that that crisis is only getting worse.
[14:05:05]
ASHER: The disastrous last quarter seeing profit plunge by 70 percent and it is warning that profits and sales for the full year are slumping as
well. Sherisse Pham joins us live now. So Sherisse, you know, part of the problem here is just what car sales around the world are experiencing
globally. And also you have several management upheavals at Nissan. Just walk us through the results today.
SHERISSE PHAM, CNN BUSINESS REPORTER: Nissan is really struggling to move on from the dramatic ouster of Carlos Ghosn which happened late last year,
right, Zain?
We've seen a company that has been in turmoil for the better part of a year, not only like you mentioned, we've got a worse than expected global
economy slowdown that has affected car sales worldwide. They've also been hit by a stronger yen and they've also been hit by stricter environmental
regulations, especially in Europe -- all of that combining to Nissan reporting some of its worst profits.
But interestingly enough, it was rock bottom as they said a couple of quarters ago. The previous quarter, Nissan reported a 99 percent drop in
operating profit. So this quarter, a 70 percent drop from that perspective is a little bit of an improvement.
But again, Nissan really struggling to move on and draw a line under the scandals and trying to present a new face and a new management team.
Right? And I think one of the things that was really emblematic of how this company is really trying to turn things around. You see it on your
screen right there, Stephen Ma, he is the incoming Chief Financial Officer. He was the one presenting earnings today because the CEO is not yet in
place, the second CEO that they've had in two years -- Zain.
ASHER: All right, Sherisse Pham live for us there. Thank you so much.
Outgoing BP CEO, Bob Dudley says the world needs natural gas to solve the planet's energy problems and to suggest otherwise is irresponsible.
Dudley, who is stepping down in February, also described how he fought to save BP after the Deepwater Horizon spill nine years ago.
John Defterios joins us live now. So what else did Bob Dudley say when it comes to the energy transition that the world is experiencing and also how
things will be disrupted?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, you know, Zain, he doesn't mince words. He is a pretty straight talker. But I would
say even more so now in his final three months as Chief Executive Officer, but overall, both Dudley and the other CEOs I spoke to acknowledge the
energy transition.
We even had the Prime Minister of the UAE and the ruler of Dubai come and visit because of this major move into renewables and the role of oil and
gas going forward.
But according to Dudley, there's a danger of dumping all of the hydrocarbons in one bucket if you will -- oil, gas, and coal -- he thinks
that's a drastic mistake. They're also going heavily into U.S. shale as an investor. Here is his view on natural gas and its role in that energy
transition.
(BEGIN VIDEOTAPE)
BOB DUDLEY, CEO, BP: As the world turns its back on nuclear, we need lots and lots of renewables, so natural gas has got to play a huge role in this,
and that's why I've seen some very, very intelligent people talking about how we have to stop natural gas, I think it's irresponsible.
DEFTERIOS: Michael Bloomberg did so in a speech. Elizabeth Warren is campaigning on shutting down shale in the United States. Is it getting too
political, and we're losing sight of the end goal?
DUDLEY: Well, I think that does sound very, very political to me, because we just simply cannot get there. Now, we do need to take methane detected,
keep it from flaring, keep it from leaking, and we'll do that. The technologies are rolling through really, really fast. With satellites and
drones, we will be able to do that.
Put that technology solution aside and it's there, natural gas has half the CO2 emissions as coal, and there's a coal fired power plant being built
once a week in eight countries in the world.
DEFTERIOS: You came into the position of CEO during Deepwater Horizon. What's the biggest thing you learned yourself as a leader? And then how
has BP changed after the biggest test you could ever imagine?
DUDLEY: Well, that was an event that was a tragic accident that shook the company to its core and at one point, it almost -- we almost didn't make
it, you know, financially it was very close, touch and go. So how do you deal with something like that? I think you try to stay calm, have the
group of people around you stay calm, absolutely dedicated, meeting the commitments, we didn't run away from it.
The total cost -- the bill of that is up over $68 billion dollars today. Just keep a team, keep the engineering going. Just step by step, one foot
forward in front of the other to move through it and you have to have a lot of patience and perseverance and a really committed team working on it.
(END VIDEOTAPE)
DEFTERIOS: Bob Dudley, the outgoing CEO is going to step down to February 2020. Another theme that emerged here though, Zain, if I had to pick 2019
is the idea from the emerging markets, particularly in Africa, Zain, is Western colonialism and their view on the energy transition not to invest
in oil and gas.
So he says, if you're not going to fund us in hydrocarbons, then you have to come up with funding for us to make a quicker transition with the use of
natural gas. There is a very intense debate and a changing narrative this year, clearly over last year.
ASHER: So given the changes, John and just sort of the headwinds for the sector, what's the biggest concern that people have now?
DEFTERIOS: You know, it's interesting that you say that because you would think would it be energy security and the attack that we saw on Saudi
Aramco September 14th, that's still in the back of their minds.
But all the CEOs I spoke to and some of the ministers who are on the ground, they want the cloud to lift over the U.S.- China trade dispute. I
know that the President is going to be speaking at the New York Club on this.
It is important, but it's holding back demand and as the CEO of NE told me -- of Italy -- it is the volatility of demand. You can't plan on
investments if you don't know if the demand is going to be consistent. And it's the 10th year of the economic recovery next year, and there are
concerns whether demand in economic growth can indeed hold up -- Zain.
ASHER: All right, John Defterios live for us there. Thank you so much. Okay, so these are the stories making headlines around the world.
Palestinian militants have fired dozens of rockets into Israel forcing authorities in some cities, including Tel Aviv to close schools and
businesses.
The strikes come after the Israeli Defense Forces killed a commander of the Palestinian Islamic Jihad. He was targeted in an airstrike on the Gaza
Strip this morning.
Let's bring in Oren Liebermann, who is joining us live now. So Oren, just walk us through this. We know the IDF killed a commander of the
Palestinian Islamic Jihad and that group vowed retaliation. Set the scene for us.
OREN LIEBERMANN, CNN CORRESPONDENT: This all starts as you point out early this morning, about four o'clock in the morning when the Israeli military
carried out a targeted assassination against Palestinian Islamic Jihad leader Bahaa Abu Al-Ata. They say he was responsible for planning and
carrying out attacks including some in the immediate future.
They also say he was responsible for some of the rockets attacks. The most isolated rocket launchers we've seen over the course of the past few months
from Gaza into Israel. It is for that, that they say they carried out this targeted killing against Bahaa Abu Al-Ata.
That triggered a response, at this point more than a hundred rockets have been fired from Gaza into Israel, some of them reaching some 50 miles away
or so as far as Tel Aviv and beyond as well as into central and southern Israel.
Because of that, Israel has ordered schools canceled for the day and non- essential work as well canceled. In addition, we just got a statement from the Ministry of Defense saying that for the next 48 hours unless cancelled
earlier, there will be a special essentially security situation up to 50 miles away from Gaza. So that indicates this isn't over yet.
As of this point -- and we just heard a loud explosion behind us -- you can see there a plume of smoke. I don't know which way that fire was coming,
but a loud explosion, a plume of smoke, a strong indication that this isn't over yet. And the nighttime, as evening approaches is certainly a chance
for escalation here.
As of this point, according to the Palestinian Ministry of Health -- and there, another explosion and another explosion, three so far in the last
few seconds here. The Palestinian Ministry of Health says four Palestinians have been killed in Gaza as well as others injured. There
have been several injured in Israel as well.
Where does this go from here? Well, it certainly isn't over and those plumes of smoke seems pretty obvious explanation of that. Where does it go
from here? At this point, this is a fight between Israel and Islamic Jihad.
Hamas has not entered the picture yet, and that may lead to a way to contain this, but if Hamas enters the picture, enters the scenario here,
this could go to a severe escalation here. Nothing is off the table anywhere from de-escalation to this spiral into a much larger fight, even a
war as we see and hear more explosions. We are going to pack up and get moving.
ASHER: All right. Oren Liebermann, do stay safe. As you mentioned, you want to pack up and get moving. Do stay safe. Thank you so much for being
with us. Just incredible there. Oren Liebermann on the escalation intentions where he is right now.
All right, officials in Australia fear fires ravaging the East Coast will take at least several more days to contain. Homes have been destroyed and
capital, Sydney is surrounded in smoke as dry and windy conditions hamper fire fighters' efforts.
Protesters and riot police are facing off once again in Hong Kong, but compared to the violence on Monday, the streets appear to be relatively
calm. Police have arrested a man who they say shot -- who they shot yesterday for unlawful assembly and attempted robbery. Hospital officials
say that he is in critical condition.
All right still to come here on FIRST MOVE, WeWork eyes T-Mobile CEO. We ask what Softbank has to do with it.
[09:15:07]
ASHER: And hide the likes, Instagram tries a new policy that won't be getting hot from influencers. That's next.
(COMMERCIAL BREAK)
ASHER: Welcome back FIRST MOVE live from New York Stock Exchange. I'm Zain Asher where futures continue to point for a mostly flat open for U.S.
stocks. Stocks could actually trade the relatively narrow range until President Trump delivers his speech on the economy about three hours from
now.
Traders are going to get an update on U.S.-China trade talks. A new survey by Bank of America to be bullish -- a bullish sign for stocks that said
fund managers are making big moves from cash to stock to global equity allocations at their highest levels in the year.
Meantime, the bond market is up and running again after Monday' Veterans Day observances. The yields are ticking lower, but the yield on the U.S.
10-year Treasury is still sitting at nearly three-month highs.
Joining me live now is Tony Crescenzi. He is the Executive Vice President and Smart Market Strategist at PIMCO. Thank you for being with us.
TONY CRESCENZI, EXECUTIVE VICE PRESIDENT AND SMART MARKET STRATEGIST, PIMCO: Good morning. Thanks for having me.
ASHER: Okay, so let's just talk about stocks before we get to bonds. We have seen this sort of week of record highs in the stock market. What
would you say was on the horizon right now that could really put a dent in that?
CRESCENZI: A lot of the rally has been because of this reduction in policy uncertainty. The policy uncertainty remains very high on many fronts, and
even if there's a trade agreement with China, they won't get rid of the underlying hostilities.
In other words, there will be tensions with China, probably for many years to come because there really is a big power struggle with its military,
geopolitical, economic -- so now and then, investors will begin to worry about that.
But for sure that policy uncertainty related to China is down a bit. One thing investors though will have to start thinking about, is the rise in
interest rates going to disrupt the stock market? And our answer to that is no.
[09:20:02]
ASHER: No. So despite the fact that we're seeing these three-month highs in the 10-year, you don't think that's going to put a dent in the stock
market?
CRESCENZI: No. If the stock market is going to weaken, it's more likely to come from fears of a recession, which we think won't occur. Yields
probably stay low globally. In fact, for Europe, the highest level that PIMCO expects the European Central Bank to put its policy rate at any time
in the next five years is zero.
For Japan, also zero over the next five years. For the U.S., probably stay in the current zone. Yields on the U.S. 10-year today are probably in what
we would call fair value zone that kind of roughly represent where the U.S. policy rate is likely to stay for a little while, one and a half to one
three quarters of a percent with some downward bias.
So if the stock market is to be interrupted, it's more likely to be from something on the economy and that would have to come from some policy
related issue more than likely at this point.
ASHER: Do you anticipate a Fed rate cut early next year?
CRESCENZI: We think there's a reasonable chance of an additional rate cut, but the odds of a cut at the December meeting is probably a little low
because the Federal Reserve has indicated especially through the Fed Chair, Jerome Powell, that will take a material change in the outlook, their words
for the Fed to consider any interest rate change up or down.
But the economy in the U.S. probably slips a bit in the first quarter due to lagged impact of policy uncertainty and the higher interest rates that
we used to have, and that may prompt the Fed to say, well, let's give another policy insurance to the markets.
But we wouldn't suggest that the rate change odds matter much to investors. If there's another rate cut or not, it probably really won't change the
overall picture for investing in credit instruments, real estate, equities, private equity, a quarter point in yield isn't a lot in the broader scheme
of things.
ASHER: And when you think about just the political headwinds, obviously, we've got public impeachment hearings coming up from tomorrow onwards, why
isn't the market looking at that? Why isn't the market being affected by that?
CRESCENZI: Well, it's another dollop in the heap of policy uncertainty, and it is a big issue, but it's -- and this is from someone who -- me --
who was alive when these -- during the Nixon period.
ASHER: Okay.
CRESCENZI: I remember in class being asked about it. So we've seen three impeachment hearings since the 70s, it's not as if the markets are now used
to it. But it recognizes that the capitalism, democracy, these are the things that last and that one individual while still exceedingly important,
won't disrupt the capitalist dynamic that shapes the movements of financial markets.
ASHER: But do you think about just how much the conversation has shifted in the last few months? I mean, three months ago, everyone was talking
about inverted yield curves and fear that there could be a recession in 12 to 18 months from then. That's really changed, you don't really sort of
hear that word recession thrown around as frequently, right? Go ahead.
CRESCENZI: Well, just thinking about the stock market and its gains. When it moves almost five percent given that is valued in 40 plus trillion
dollars, it's a meaningful amount of change in wealth.
Now, consumers don't necessarily spend the $2 trillion or so increase in wealth, there's several trillion, when looked over a broader period of
time. They spend a percentage of that. What percent? It tends to be three to five percent.
So some of the reduction in fear about recession reflects to the fact that stock market has increased in value, and there will be some sort of wealth
effect. It at least makes people feel better.
And it's very important in the U.S. financial system and the global system that there be a leap of faith because the world is indebted, nations are,
households are, companies are, it always takes a leap of faith for people to go out each day and say, yes, I'll invest in that company, that country,
this product, this plant, this equipment.
And so the leap of faith is being made again because of policy uncertainty being down a little bit.
ASHER: All right, Tony Crescenzi live for us there. Thank you so much. Appreciate it.
CRESCENZI: Thanks so much.
ASHER: Okay, so the CEO of T-Mobile is in talks for the top job at WeWork. The move would come at a crucial time for the wireless carrier. John
Legere is currently overseeing T-Mobile's merger with Sprint.
Let's bring in Clare Sebastian who joins us live now. So Clare, what is it about John Legere's record at T-Mobile that would make him an attractive
candidate for WeWork?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, he's one of the most colorful CEOs out there, Zain, literally and figuratively. He is known for
not only living and breathing the T-Mobile brand but also wearing it. He has never really seen without the signature magenta.
But it's not just as colorful style, it is his record when it comes to turning around T-Mobile. He has made it in the past seven years the
fastest growing mobile carrier in the U.S. The stock is up some 600 percent since he started.
He has got this irreverence style which may be attractive to WeWork, with of course, still probably sees itself as something of a maverick despite
its botched IPO and now rescued by his parent, Softbank, and that brings me on to the final point which is the Softbank connection.
[09:25:10]
SEBASTIAN: T-Mobile CEO, John Legere has been in talks with Softbank, which is of course, the majority owner of Sprint about that merger which
has yet to be finalized. Softbank is also now the majority owner of WeWork and the same Chairman runs the two companies, Marcelo Claure, they have a
history, those two, Marcelo Claure famously called John Legere a con artist on Twitter in 2016.
But clearly, he is the man pulling the strings here, but he is only one of the few candidates who are in talks according to a source familiar with the
matter. So nothing guaranteed as of yet -- Zain.
ASHER: So for the next CEO of WeWork, what would they have to do just in terms of coming up with a clear strategy to turn that company's fortunes
around?
SEBASTIAN: Well, I think they'll definitely be running a smaller, slower growing company. That was clearly the problem with WeWork is that they had
so much funding and so much ambition that they grew faster than their profits could catch up.
But I think if you look at what John Legere has done at T-Mobile, he really rebranded the company. He called it the uncarrier. He took on his rivals.
He continues to do that. I think we can show you a clip where he was recently trolling AT&T and Verizon on Twitter carving himself in a pumpkin
and accusing them of price gouging while doing that.
But look, he rebranded T-Mobile. It seems to have worked and I think that's what the next WeWork CEO will need to do, come out fighting, but
with a different kind of perspective.
ASHER: All right, Clare Sebastian, live for us there. Thank you so much. You are watching FIRST MOVE. The opening bell is right after this short
break. Don't go away.
(COMMERCIAL BREAK)
[09:30:00]
ASHER: All right, that was the opening bell here on Wall Street on this Tuesday. As expected, we are probably going to begin the session with a
mostly flat open. There you have it. The Dow Jones is only up about 16 points, so pretty much flat despite all the sort of records we've seen.
All the major averages remain close to record highs right now as traders await President Trump's speech today at the Economic Club of New York.
Fed Chair, Jerome Powell begins two days of closely watched testimony on the economy tomorrow on Capitol Hill. It is pretty quiet just in terms of
earnings, but all of that will change later in the week when major U.S. retailers will begin reporting their results.
Walmart is out with earnings on Thursday. JCPenney Friday. We get our latest book on retail sales in the U.S. as well.
Time for a look now at some of our Global Movers. Shares of Rockwell Automation rallying. The manufacturing giant is reporting better than
expected earnings and profits as it sees double digit growth and its key information services business.
Shares of meat processing giant, Tyson Foods are also higher as well, up about two and a quarter percent. The company's fourth quarter sales and
earnings missed expectations, thanks in part to a more than four percent drop in beef sales.
Boeing shares are trading just a little bit lower, down about a third of one percent. The Boeing shares actually rose more than four percent on
Monday after the company said it hopes to be flying the 737 MAX again in January. It says deliveries could begin again next month.
Shares of Craft Brew Alliance are soaring. Anheuser-Busch had a 31 percent stake in the big conglomerate. It is buying up the rest of the company in
a deal worth some $16.00 a share, more than double Monday's closing price.
Disney invented happily ever after, and now it staked its own dream ending on winning the streaming wars. Disney Plus launched in three countries
today in a move that hopes will net 90 million subscribers over the next five years.
Joining me live now is Tuna Amobi. He is a senior analyst at CRFA. His company has a buy rating on Disney and he also covers Netflix and Amazon.
Tuna, thank you so much for being with us. So just in terms of Disney launching today, how do you think that's going to disrupt the streaming
sector?
TUNA AMOBI, SENIOR ANALYST, CFRA: Now, you know, Zain, I've got to tell you, there's a lot of excitement in the air. There's a lot of
expectations. This has been highly anticipated. So I think Disney's launch today is going to take this streaming war to a whole new level.
The company is all-in. They are investing heavily. They've got a huge trove of content, more so than anyone else, I would argue. They're
launching in three countries today. They're going to have a quick international rollout pretty soon. And expectations are pretty sky high.
Pricing is very aggressive. Investors are you know, fingers crossed.
ASHER: You know, content is one thing and it's hugely important for sure, but it's not everything when it comes to winning the streaming wars.
Netflix already has such a large footprint. I mean, what is the marketing strategy to win people over?
AMOBI: Oh, you know, talk about market and you couldn't miss you know, Disney Plus -- anywhere, you know, Monday Night Football yesterday, they
had a blitz, and radio, all platforms online, all of the affiliated Disney properties are going to be marketing this heavily, and that's to be
expected.
I think the awareness should be built in up front. You know, I think as I look out over the next four to five years, it seems to me that the estimate
for 60 to 90 million subscribers is quite -- it could be conservative when you consider the impressive array of distribution partners.
If you are a Verizon customer, they are actually giving it to you a year for free, so that's a way to lock in the mobile customers.
ASHER: Yes, that partnership with Verizon. Right, right, right.
AMOBI: That's right. And you've got other partners like Google, you know, Apple, Microsoft, Amazon, Roku, and Samsung, LG -- all of these guys are on
board with the launch.
ASHER: So what do you make of the price? $6.99, extremely aggressive. How will that change the landscape having a price like that for a major
competitor?
AMOBI: You know, that price I've got to tell you, really, you know, ratcheted up the price competition that we see out there in the streaming.
Apple, as you are aware, just a couple of weeks ago came to try to undercut that at $4.99. HBO Max coming at $15.00, but I think more importantly,
what Disney is trying to do is to, you know, come out with a bang, right? And remember, they're also offering Disney Plus as part of a bundle with
Hulu and ESPN for $12.99. So that is even a more compelling proposition when you think about all the different kinds of content that's available
from --
ASHER: Meantime, Netflix recently raised prices.
[09:35:06]
AMOBI: That's right. Netflix is $12.99, which is almost double what Disney is offering, and think about Disney coming out on day one today with
about 500 movies, 7,500 TV episodes, 12 original shows, including " The Mandalorian," which is exclusive on a Disney Plus platform and that number
will ramp up very significantly in the next few years.
ASHER: When you think about it, I think that it's important people to remember that when it comes to streaming, it's not like television where
you watch one show at a time. When it comes to streaming, there's room for multiple winners in the sector to coexist as in, somebody could have a
Netflix subscription and at the same time for their children, have a Disney subscription as well. So that's an important dynamic to remember as well.
AMOBI: That's a great point, Zain, and a lot of investors think that this is a zero sum game, it is not. And while the core TV universe is actually
decelerating, the cord cutting, more and more people are signing up to these cheaper over the top video alternatives which are significantly less
expensive and to your point, allowing consumers to sign up to multiple subscriptions.
Not necessarily as a substitute, in some cases, complimentary to the traditional TV, which they already paid. But a lot of the younger
consumers actually go in all into streaming, and just picking and choosing the whole ala carte argument, pick and choose the streaming offerings that
you want, which is really where the industry is headed to.
ASHER: So on other side of the coin. What does Netflix -- Netflix sees Disney launch today and thinks what in terms of how they're going to step
up their game?
AMOBI: We also cover Netflix, and we have it at buy. You know, our thesis is that the streaming landscape is just in the early innings. It's just
getting started.
You know, the secular trends that we see are favoring the migration from traditional television to internet television. And Netflix, I would argue
will be one of the potential winners. Remember, they have the first mover advantage.
As we look at the next several years, the streaming war is actually playing out on various fronts. Netflix is in the subscription video on demand
space. Some others are focusing on advertising and support it. Others are in sports, news, et cetera. Netflix is obviously on demand as opposed to
live entertainment. So we think Netflix really has a pretty good chance.
ASHER: But, you see that disruptor has to guard against being disrupted, you know? Netflix obviously famous for disrupting Blockbuster Video, how
can it guard against being disrupted itself?
AMOBI: Netflix is a handwriting on the wall for quite some time. They have significantly ratcheted up their spending on original content. This
year, we estimate spending north of $15 billion in cash spending just on content. That number will increase 20 percent next year.
So I think what they've seen coming is that a lot of studios are pulling off of their shows on Netflix. Disney has already made that decision
starting with Captain Marvel. You know, NBC and all the guys, "The Office, "Friends" are all coming off of -- you know, Netflix is going to have to
invest in original programming.
So what that means is that they are, you know, kind of preparing for what will likely be a significant level of competition from the likes of Disney
and HBO and Comcast, by the way who are launching their own Peacock.
So I think Netflix really is in a good position to kind of pick out a niche for itself as the streaming war continues to unfold.
ASHER: And as the streaming war continues to unfold, as you say, what will it mean for the cable business?
AMOBI: You know, Zain, so the secular trend affecting the cable business and the pay TV market for that matter, including the satellites that we've
seen a deceleration of pay TV subscribers. That's been going on for over a decade now. It just accelerated in the last few years.
So that phenomena which is called cord cutting and in some cases cord nevers for the younger generation that never ...
ASHER: Yes, I know.
AMOBI: ... really signed up for that. So that is happening as the streaming war continues to unfold and more of these subscribers are moving
on to streaming. The secular trends are favoring the streaming and when you consider broadband penetration in the U.S. north of 88 percent. In a
lot of the international market, broadband penetration is actually way too low. So that kind of gives you the idea of the potential upside that a lot
of these streaming, you know, outfits are going to get from international markets.
ASHER: Tuna, thank you so much. Appreciate you being with us.
AMOBI: Thank you so much.
ASHER: All right after the break here on FIRST MOVE, as violence worsens in Hong Kong, we will hear from a pro-democracy Union Federation on what
can be done to break the standoff between police and protesters.
(COMMERCIAL BREAK)
[09:42:29]
ASHER: All right, riot police are again on the streets of Hong Kong. You are looking at live pics from Hong Kong where it's just gone 10:45 in the
evening. They fired teargas early on Tuesday as protesters tried to block roads with makeshift barricade. Some universities and schools are closed
and five months of repeated protests have hammered the economy of this Asian financial market.
The latest figures confirm it's now in recession. Output shrank 3.2 percent in the third quarter. Exports were down more than seven percent
compared to a year ago and tourist numbers went down a massive 37 percent.
I'm joined by Lee Cheuk-yan, the General Secretary of the Hong Kong Confederation of Trade Unions, which is taking a pro-democracy stance. So
thank you so much for being with us.
So Hong Kong now in recession. Obviously, there's sort of no end in sight when it comes to violence between police and demonstrators. What sort of
long term effect do you think this will have on the economy there?
LEE CHEUK-YAN, GENERAL SECRETARY OF THE HONG KONG CONFEDERATION OF TRADE UNIONS: Of course, on the short term already, the economy is going down,
but I think on the long term, I have to think it is about confidence, and the one thing is very, sort of a problem is that this government who used
to be very, very sensitive to business confidence, they don't really care now.
You know, they are trying to get the police out, completely out of control, invading the university now, at this moment, and then rounds and rounds of
teargas. Live real bullets, you know, pointblank shooting at the protester injuring protesters already and one mysterious death during one of the
clamp down on one of the housing estate.
You know, the problem with the situation now is that it seems that the government who used to be very sensible basically, really don't care and
want to just suppress the protest. And when there's some de-escalation on the part of protesters, they try to -- you know, they try to do something
very horrible and outrageous to really enrage the people.
For example, when there is some de-escalation, then suddenly they put out the anti-mass ban with the emerging regulation, and then enraging the
people and then they shoot at the protesters.
So they are really completely out of control. And the question now is why this government really don't care about the economy and just want to clamp
down and suppress?
Is the Chinese Communist Party behind and they want to unleash the police on the protesters?
[09:45:22]
CHEUK-YAN: If we don't solve this problem, the political will on the part of the Hong Kong government and the Chinese government to really calm down
the situation, you know, we don't see any solution in the short term or long term, unless there's a political will.
So the problem is, why are they so much of unleashing the police violence out and the brutality ever escalating against the protesters?
ASHER: What would you say? I mean, we just actually showed a graphic on the screen of the five demands of the protesters. We know that obviously,
Carrie Lam ended up after months of pressure withdrawing that controversial Extradition Bill, but what would you say was the most out of the remaining
four, the most important demand that the protesters have from this point forward?
CHEUK-YAN: Actually, the most important demand is justice. You know, when they unleash the police out and beating up people indiscriminately and
shooting at the young protesters with very much of a use of excessive force, the people are asking where's the justice?
So we have always been demanding that there should be an independent committee of inquiry and those who are responsible for the excessive forces
and brutality against the protesters, you know, they are those who say, you know, talk about gang rape. There are of course already shooting and all
this horror around this act on the protesters.
You know, where's the justice? You know, we have been asking for an independent committee inquiry since day one, but then there is response
from the government and they don't want to respond to calm down the situation and that's a problem.
ASHER: Lee, how are these ongoing demonstrations, sometimes extremely violent, actually affecting just economically the lives of ordinary
citizens in Hong Kong? We know that some companies have deferred long term business decisions like hiring, like investment, that sort of thing. We've
seen stores that have been closed for weeks at a time because of these protests, but how have these protests actually affected people on an
individual level economically?
CHEUK-YAN: Of course, you know, economically, individuals and workers are now facing may be a wave of lay off that will be coming. You know, but the
problem now is people feel that the anger, they want justice and more than anything else, and unless there is justice, the situation will not calm
down.'
And then when you look at the protesters, they have a saying which is very characteristic of the whole movement is that, we will burn, you will vote
with us. Why are they saying that? Because they don't feel that they are really sharing in this Hong Kong economic growth or prosperity. They are
always in the bottom.
So, they want to change. They want freedom. They want no intervention from China, a real respect of one country, two system. And so they feel
that they have nothing to lose. And that exactly is the problem that the whole political and economic injustice is there in Hong Kong and the people
really want to have a change and maybe the individual in the process will have an employment problem, but they were saying that we want a long term
solution and real autonomy.
ASHER: And Lee, unfortunately, we have to leave it there. Lee, I'm running out of time though, but it was an absolute pleasure having you on
the show. Appreciate it.
CHEUK-YAN: Thank you.
ASHER: All right, coming up on FIRST MOVE, like it or not Instagram is hiding one of its most popular features -- all the details in just a
minute.
(COMMERCIAL BREAK)
[09:51:16]
ASHER: All right, welcome back to FIRST MOVE. Let's take another quick check of the markets. The dow is inching a little bit higher now and it is
once again in record territory. The S&P 500 and the NASDAQ are up about a quarter of one percent. The NASDAQ is also on track for a record close as
well.
Here is today's "Boardroom Brief." Instagram is saying farewell to likes. Well, some of them. It has a test out, an option to hide likes for
selected users across America. It is something that is already tried out in seven other countries.
To give us a better picture of what's going on, let's bring in Hadas Gold, so Hadas, are likes toxic?
HADAS GOLD, CNN BUSINESS REPORTER: Well, Instagram is testing out this new feature. This comes after there have been several criticism of how social
media, specifically Instagram affects people's mental health, especially young people.
So this is how this is going to work. Beginning this week, some users in the United States will start to see that their likes are going to be hidden
from public view. Now, if you are affected, you will get a message on your Instagram.
Now you'll still be able to see how many likes you yourself got, but the public facing part of your Instagram account, they will not be able to see
how many likes there are. They might see that some of their friends have liked the post, but the total number will not be.
Now some critics are saying this doesn't solve everything. This has been tested out in certain countries like Canada and Ireland and Australia. But
critics are saying that some of the most toxic aspects of social media and Instagram are actually A, the post themselves that are portraying these
sort of perfect lives that don't actually exist.
But then also the comments and that's where we're seeing some of the criticism, especially coming from people like celebrities, rapper Cardi-B
is saying that she doesn't agree with this and that she thinks that most of the toxic culture on Instagram actually comes from the comments section.
Other celebrities like Kim Kardashian-West and Tracee Ellis Ross say that this is a positive development. Of course, there's also a business impact
by hiding these likes as well because as we all know, the influencer arena of Instagram is huge business and a lot of influencers are selling their
ads and sponsored contents based off of the number of followers they have. And of course, the number of likes they are having and some influencers are
worried that if you're not going to see the number of likes that they have, it's somehow going to change the algorithm and it's going to change their
business of getting people to sponsor them, to run ads on their Instagram.
Now, of course, this isn't only coming from public pressure. Part of the reason that Instagram and other social media companies are starting to do
this move towards doing this they think will help users' mental health and wellbeing is because there's also pressure from governments.
Here in the United Kingdom, there is a proposal to make it a law that will hold social media executives themselves personally accountable for any harm
that may come from their platform -- Zain.
ASHER: All right, Hadas Gold, thank you so much. And actually I caught up with Instagram's co-founder Mike Krieger in the Paddock Club at the U.S.
Grand Prix. Krieger is no longer at Instagram, but said phasing out likes was actually a good thing for the platform. Take a listen.
(BEGIN VIDEO CLIP)
MIKE KRIEGER, COFOUNDER, INSTAGRAM: One of the things we talked about the most and worked on the most internally, even before our departure was
wellbeing and so I think this fits into that same sort of character which you have to ask yourself like, what is Instagram for? Like, ideally, it's
for sharing stuff you're excited about and connecting with people over it.
I think, over time, like the, you know, the likes were efforts, an easy way of saying like, cool, like, thanks for sharing that. You know, like, I'm
glad you saw that. I'm glad you're experiencing that. And I think over time, it became like a number that people compare against.
So I think it's interesting. I'd be excited for them to roll it out. I think that's probably a positive step for the feed. I think that's also
why stories work pretty well or really well, which was, you know, you don't have public metrics at all on stories, like you're there and you're
experiencing it and you're not like how many people saw this and we explicitly chose not to do likes for stories. So yes, I think it's a
positive move within that sort of frame of wellbeing.
(END VIDEO CLIP)
[09:55:09]
ASHER: And stay with CNN. All eyes will be on the Economic Club of New York. President Trump is going to be delivering a speech on the economy in
about two hours or so from now.
Investors hope to hear a little bit more on U.S.-China trade talks as well as the President's decision on European auto tariffs.
And a quick programming reminder for tomorrow. The House impeachment hearings begin in Washington. Top U.S. diplomat in Ukraine, Bill Taylor
and Deputy Assistant Secretary of the State Department, George Kent will both go before live cameras and testify together publicly.
CNN's special coverage will begin at eight o'clock in the morning Eastern time. That's 1:00 p.m. in the afternoon if you're in London. Be sure to
tune in to CNN for extensive live coverage throughout the day.
That's it, my friends. You have been watching FIRST MOVE. I'm Zain Asher. "CONNECT THE WORLD" starts after this short break. Enjoy your day.
(COMMERCIAL BREAK)
[10:00:00]
END
