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Quest Means Business
Bank of Israel Fiasco; European Markets Mixed; US Stocks Ease Back from Record Highs; Facebook's Stock Soaring; Zero-Hour Contracts; Kellogg's Manchester Crackling With Activity; Dollar Down; Test Tube Burger
Aired August 05, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: The central bank with no governor. Israel struggles to replace Stanley Fischer at the head of the bank.
Casual staff on permanent standby, and no work means no pay. Tonight, the rise of the zero-hour contract.
And the BBC's director of drama tells me how "Doctor Who's" won over the United States.
I'm Richard Quest at the CNN Center, where I mean business.
Good evening. Call it the job that nobody wants. Israel simply cannot find someone to run its central bank. Prime Minister Benjamin Netanyahu is planning to change the selection process after his number two pick dropped out in a cloud of controversy.
(RINGS BELL)
QUEST: The man they are replacing is Stanley Fischer. He resigned at the end of June. But he had warned them that he was off at the beginning of the year. Jacob Frenkel was the first man who was picked. He was the previous governor from 91 to 2000. But he came under attack for a Hong Kong incident where he was wrongly accused of shoplifting.
Frenkel said he received huge amounts of abuse from the accusation and from the way he was treated, and so he withdrew from the race.
(RINGS BELL)
QUEST: Next was Leo Leiderman. He withdrew his application on Friday. There were reports in his case -- he's an economist -- of sexual harassment while at Deutsche Bank. He's denied any complaints made against him. He's also been mocked by various commentators for saying that he has an interest in astrology.
(RINGS BELL)
QUEST: Now, currently running the bank is Karnit Flug. She is Stanley Fischer's -- or was Stanley Fischer's deputy. And because she has been passed over twice for the same job, the top job, she's already said she will resign once the new governor has been found. But she remains in post at the moment and is dealing with what has to be done.
Stanley Fischer says whoever takes over the job may have a harder time than he did. As he prepared to leave the bank, he spoke to Fionnuala Sweeney about his concerns for the Israeli economy that he was leaving behind.
(BEGIN VIDEO CLIP)
STANLEY FISCHER, OUTGOING GOVERNOR, BANK OF ISRAEL: There's a developing one, which is the global economy is slowing down, and we're very dependent on the global economy. And I think that Israeli growth is slowing down. We see it in the data.
FIONNUALA SWEENEY, CNN INTERNATIONAL CORRESPONDENT: Is there anything for your successor to be concerned about as he takes over?
FISCHER: My successor will have to deal with an economy that has -- is facing more headwinds than I had to face most of the time except during the Great Recession.
(END VIDEO CLIP)
QUEST: Stanley Fischer. Now, earlier I spoke to David Horovitz, the editor of the "Times of Israel." With such a crisis at the top of the central bank, and in a small economy, it is of crucial importance. I asked him if the government really could take the blame for the fact that, frankly, when all is said and done, the candidates just didn't fancy it.
(BEGIN VIDEOTAPE)
DAVID HOROVITZ, EDITOR, "TIMES OF ISRAEL": It's not unfair entirely to blame -- I think most especially the prime minister, because he's been the key player in these appointments. It's more the process, and the process is I think all politicians, people in spotlights, public positions, know that the scrutiny of these jobs is very, very thorough these days.
In both cases, these candidates as they approach the vetting by the appropriate panel, faced all kinds of complaints and decided to pull out.
The question is whether Israel ought to have changed that process, given the way the world is, and maybe have a few candidates vetted first, and then make the choice from among those who have faithfully cleared that hurdle. And that, I suspect, is what may happen. But meantime, Israel has a vacuum at the helm of its central bank.
QUEST: Now, the deputy governor, who has been passed over twice, now, for the job, she is doing the job and nobody doubts that Israel Central Bank is being run properly in this interim period. But the issue, surely, becomes for a country like Israel, which often suddenly finds itself almost on a war footing, the governorship takes on a disproportionate importance. Is that fair?
HOROVITZ: Well, I think all aspects of leading Israel take on disproportionate importance because this is a very small country, nine miles wide at its narrowest point. On the western edge are the -- at the moment, drastically, utterly unstable land mass. Revolution after min revolution in Egypt, civil war in Syria, Iran closing in on the bomb.
So, all aspects of Israel's leadership are highly, highly sensitive, especially when you think that despite those conditions, Israel has thrived. Thrived economically, thrived socially, thrived democratically.
But all the positions are critical, and having a vacuum at the top of a well-regarded financial hierarchy is perhaps more of a problem than it would be in a less-threatened country in a more normal, easygoing, tranquil environment.
QUEST: So, final question. Your gut feeling, who's going to get the job?
HOROVITZ: Yes, well, I can't answer that, I'm very sorry, because I don't think anybody has the answer. You rightly said that the heir apparent, the number two, the acting governor of the bank, a lady called Karnit Flug, who's worked for most of her career at the Bank of Israel and who was recommended as his successor by the eminent, well-respected Stanley Fischer.
Well, Netanyahu doesn't want her. And having passed over her insistently twice for two candidates who pulled out, he's still looking elsewhere, he's got an economic advisor who he'd like to take the job who doesn't want to, a Professor Eugene Kandel.
There are all sorts of other names, but anyone who's making a prediction is really guessing, because I'm pretty sure the prime minister doesn't know himself yet. And even if he does, he doesn't know if the candidate is going to clear the trauma and the vetting committee.
(END VIDEOTAPE)
QUEST: A story we will continue to follow in the days and weeks ahead as Israel tries to find a governor for the bank of Israel. Perhaps we might even invite you to apply if you felt so necessary.
European markets at the end of the session. The banks led the gains and the declines. The HSBC -- this was a really strong 4, 4 percent after worse-than-expected first half results. Successful cost-cutting was overshadowed by caution on growth in Europe and China.
Lloyds TSB closed up more than 2.5 percent after the chief exec, Antonio Horta-Osorio, said the bank may pay up to 70 percent of its earnings in dividends within the next three years.
US markets, start of a new week, and after all the energy, the verve of last week's peak, things have gone a bit different. Zain Asher is at the New York Stock Exchange. Now, we mustn't get too excited at the fact it's not been a roller coaster or a barn-burner of a session. It's natural, isn't it, that there'll be a bit of a breather, and it is August.
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: That's exactly right, Richard. We saw these record highs last week, and now stocks are certainly taking a breather. They're trading down about 56 points right now, basically pulling back after the S&P 500 and the Dow closed on Friday at record highs.
Now, there's another reason as well. If you look at the economic calendar in terms of earnings and data, there's not really too much going on, so that's exactly why they're taking a bit of a breather and using this as a time to take some profits off of the table and digest the info.
But we did get one report out today from the service sector showing that the pace of growth of the service sector was much stronger than expected in July. It's good news, but not really that much of a surprise because we saw last week from the ABP report and the employment report that the service sector was growing, so not too much of a surprise. But again, investors are certainly taking a breather, Richard.
QUEST: Facebook has been the talk of the market last week, when it got to $38, the IPO price.
ASHER: Right.
QUEST: Now beyond that. What does one say? It's back to where it was, but where's it going next?
ASHER: Yes, that is the $1 million question, and people don't really know. I called analysts today and I said do you think it's going to get to $40, $45 a share? They're not entirely sure. But it has been quite the comeback story, Facebook. That is what everybody's excited about. The stock has been on a major roller coaster ride, hitting as low as $17 a share, Richard, back in September.
But what has really been key for this company was the second quarter earnings we got just a couple of weeks ago showing a big boost in mobile ad revenue. Take a listen.
(BEGIN VIDEOTAPE)
ASHER (voice-over): After slightly more than 14 months, investors who bought Facebook stock at the debut price of $38 a share have broken even. It was supposed to be a home run, a can't-miss investment for the lucky few who were able to get in on the ground floor.
MARK ZUCKERBERG, CEO, FACEBOOK: This is an awesome moment.
ASHER: But within days, the stock had sunk. But since then, Mark Zuckerberg has gotten married, dipped is toe into politics and philanthropy, signing Bill Gates and Warren Buffet's giving pledge to one day give away more than half of his fortune, which is growing right along with Facebook share price.
The Facebook comeback accelerated last week after its second quarter earnings report exceeding all expectations. Shares have surged about 40 percent since the release. Since the IPO, the company has worked to move ads from the side of its page and into the news feed, making them more mobile-friendly.
DAVE KERPEN, CEO, LIKEABLE MEDIA: And so people are seeing the ads the same way that they see their friends' updates, and that's what's gotten a lot of great responses for advertisers.
ASHER: How effective the ads are depends on Facebook's 1.l billion users, 819 million of whom now use the mobile app every month. A year ago, Facebook was getting less than 15 percent of its ad revenue from those mobile users. Today, it's 41 percent, enough to turn one of Facebook's biggest naysayers into a Facebook shareholder.
MATTHEW MCCALL, PRESIDENT, PENN FINANCIAL GROUP: I was probably one of the harshest critics of the IPO and of the stock, and I was telling people to stay clear of the stock. However, as the company changed, as they moved to making money off mobile ads, it then became a very attractive stock. It actually became an extremely different company.
ASHER: Other new developments, including plans for a new gaming platform and video ads both announced this week have kept the momentum going.
MCCALL: It is a stock I want to continue to watch. Growth is accelerating, and it really is one of the leaders of social networking.
(END VIDEOTAPE)
ASHER: And Richard, another thing we learned from Facebook's second quarter earnings is that there are more people -- get this -- there are more people on Facebook during primetime hours than there are watching TV here in the US, which is why the company will probably -- is probably going to be able to charge $2.5 million for those 15-second video ads I mentioned.
But I do think that Facebook does need to be careful, though, because you have too many ads -- if you have too many ads, you start to scare users off. Don't you think, Richard?
QUEST: Am I alone in almost shunning Facebook? I think I must be.
ASHER: Well, given that it has 1.2 billion subscribers, 800 million of whom use Facebook regularly on their mobile devices, I think you might be alone, Richard.
(LAUGHTER)
QUEST: All right, well. Don't sugar-coat the pill before you decide to hit me over the head with it. Thank you very much, nice to see you.
ASHER: Nice to see you, too.
QUEST: Nice to be called Billy No Mate.
Imagine, getting ready for work every day, knowing you may not be going. And even if you do go, knowing not how many hours you will work. And even then, whether you'll be back the day after. A million British workers could be living like this, according to new research. It's the zero-hours contract.
(RINGS BELL)
QUEST: It's after the break. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Now, a fifth of UK employers are hiring staff without giving them any guarantee of work, according to the Chartered Institute of Personnel and Development. The institute says up to a million UK workers could be on what they call zero-hour contracts -- extraordinary concepts, these -- at about 4 percent of the workforce, that's four times the national estimate.
Under these contracts, employees must be available to work but have no guarantee of as much on how much they will get. So, shifts can be canceled or cut short. Many don't get any form of sick or holiday pay. You literally get up in the morning, go to work, maybe you don't even get called in that day. You don't know how long, whether it's going to happen again tomorrow.
And the polling said 148 workers on zero-hour contracts, 14 percent of them said they were not getting enough hours to maintain a basic standard of living -- 14 percent could not maintain a basic standard of living on these so-called zero-sum contracts.
Let's talk more about this. Mark Beatson is the institute's chief economist and joins me now. The core first question: why and where did these contracts come from and when they became so popular?
MARK BEATSON, CHIEF ECONOMIST, CIPD: Well, they've been in existence as far as we can tell for some time. And certainly for at least 15 years.
I think this one point about the contracts that I ought to state, which is that although, of course, the employment contracts are often -- differ very much from employer to employer, typically, although the employer's under no obligation to offer work, then often the employee is under no obligation to accept that work.
So, this sometimes means that the employer will have work there and actually the employee will decide that --
QUEST: Right. But that's fair enough in a sort of a buyers -- or a seller's market. But this isn't a seller's market at the moment, is it? It's a buyer's market, and to some extent, as the argument goes, these contracts are now being used to the disadvantage of the employee rather than, if you like, the proper smooth running of employment.
BEATSON: They can be used to the disadvantage of employees. They can also be used to their advantage as well. And I think, certainly our view as an institute would be that they have a place in the labor market, but is part of building a stable employment relationship and part of good business management. Not about just simply cost-cutting for its own sake.
QUEST: And is it your gut feeling that these contracts are not being used for those purposes but rather are being used now as a way of manipulating the labor force to the employer's advantage. In other words, making sure you've got employees when you need them, but when you don't, boot them off?
BEATSON: Well, I think that's -- it's quite difficult to say. We need to do more work on this. The existing evidence we've seen suggests that the most common reason given by employers is that it's about managing peaks and troughs in the workload and the flexibility.
QUEST: Right, but for that --
(CROSSTALK)
BEATSON: And the cost-cutting is a less important --
QUEST: -- for that -- if that is the case, you would expect to see the number of people on those contracts relatively small that would be that adjustable factor for managing peaks and troughs. You would not expect to see these larger numbers in the workforce, would you?
BEATSON: Well, in most cases, in more than half of the cases, the number -- what the employers also said was that the number of zero-hours contract workers was a very small percentage of their workforce, less than 10 percent. And certainly that fits very much with what you're suggesting in terms of this being a sort of flexible margin.
I think, actually, that in the very small number of cases where a lot of workers are on zero-hours contracts, that prompts, I think, a more of a pause for thought and thinking about actually what's the right employment strategy for this business?
Yes, there are peaks and troughs in flexibility, but also it's important to build a stable and committed workforce. And how do employers balance those? How do they make sure that they're tapping into the diversity of the workforce?
QUEST: As I understand your report, you're suggesting, finally, that although there is not necessarily rampant abuse at the moment, it is a clarion call for the future that this is not a way one would wish to go.
BEATSON: What we're saying at the moment is that zero-hours contracts do have a place, but it needs to be well understood first of all their legal position. Secondly, when is it sensible to use them? And thirdly, what types of employees are these contracts suitable for?
And responsible employers will be sort of balancing these various competing demands and actually using these flexibly to get people in.
QUEST: Thank you very much, sir, for joining us. Much appreciated --
BEATSON: Thank you.
QUEST: -- you talking to us. Many thanks, indeed. Now, are you one of those people who is on a zero-hour contract? As always, we want to hear both sides of the point on this one, whether you're an employee or an employer and whether you'd like to have the flexibility of that.
As always, @RichardQuest is the tweet. I haven't been tweeting as much as usual lately. Been on my travels, and so we need to get that started again and have our conversation to continue.
Now, as we continue on QUEST MEANS BUSINESS, the UK's economic prospects are improving, according to the Body, which represents manufacturers. EEF has raised its overall growth forecast for this year and it's warning of a lack of investment, which could threaten to stall the recovery, especially in manufacturing.
In the north of England, one factory is crackling with activity. It's Kellogg's in Manchester. It's been in the business of breakfast for the past 70 years. Today, 1 million boxes of cereal -- 1 million boxes of cereal every day come off the production line.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Before his toast and tea, give him a good, big plate of Corn Flakes. No cooking, no messy washing up, eaten and digested like lightning. Delicious. After a breakfast like that, his wife needn't worry.
JONATHAN MYERS, UK MANAGING DIRECTOR, KELLOGG'S: I'm quite sure that sentiment played a large part in the love and affection that many of our consumers feel for our brands.
UNIDENTIFIED MALE: Start your day the Kellogg's way.
MYERS: At over 100,000 square meters, this is the biggest dedicated cereal factory in the world. It was our first factory in the UK, built in 1938, and today it employs 1,200 people, along with our head office -- UK head office just down the road.
When it started, it was just 27 people, but we need the hundreds that we have in the factory, because we produce over a million packages of cereal every single day.
I think the most interesting thing about the process, particularly on a product like Corn Flakes, is the simplicity. This is simple as a large kitchen operation translated into a factory scale.
UNIDENTIFIED MALE: It's Corn Flakes in the making. It takes approximately six hours. Get your grits, put them into an oven for the cooking process, if you like to start that. This is a big pressure cooker. That takes approximately two hours.
Your pressure cooker is anything up to about 180, 200. So it's very, very hot. We have availability of 26 cookers, and that's approximately eleven tons per hour corn that we can cook in that process.
We're on the second stage of the corn process. Behind me, we have to dry it. And approximately 20 tons of corn is within that dryer at this moment in time. After it's been through a dryer, it goes through a milling or a forming process so they're given their distinctive shape, and then it goes through an oven, gets toasted up, and then it works the way down to our packing line.
We're looking to make about 35 million kilos of Corn Flakes here. It took me a long time to become part of Kellogg's. For that, I've had to work very hard. But now I am part of Kellogg's, I need to look after it.
(END VIDEOTAPE)
QUEST: The production line of the humble -- or maybe not-so-humble Corn Flake.
Tonight's Currency Conundrum. Look at this. Now, you toss an American penny, of which we have plenty of them here, and you have a 50 percent chance of getting either heads or tails -- 50 percent chance with the American penny. Is that true or false? Do you have a 50 percent chance if you keep doing heads and tails? After all, there's only two of them. It could be. The answer later in the program.
Tonight's currency rates for you tonight: the US dollar is down against the pound and the yen. It's rising against the euro. Those are the rates --
(RINGS BELL)
QUEST: -- this is the break.
(COMMERCIAL BREAK)
QUEST: The world's first test tube beef burger costing a whopping $330,000 to produce. Well, that has been cooked -- well, first of all, it was grown, then it was cooked, and now it's been eaten in London. Scientists say they grew the meat entirely in a laboratory. They used stem cells extracted from a cow.
The billionaire co-founder of Google, Sergey Brin, bankrolled the whole project. CNN's Dan Rivers has more.
(BEGIN VIDEOTAPE)
DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): It looks like a burger, it cooks like a burger, but this beef patty was grown in a lab, not a cow. Perhaps the beginning of a revolution in meat production.
Of course, its critics have already labeled it "Frankenburger," arguing it should never replace conventional meat. But what does it actually taste like?
HANNI RUTZLER, NUTRITIONAL RESEARCHER: There is quite some intense taste. It's close to meat. It's not that juicy, but the consistency is perfect.
JOSH SCHONWALD, FOOD WRITER: The bite feels like a conventional hamburger.
RIVERS: Not a ringing endorsement, but this is a first attempt. And of course, it lacks the all-important salt, pepper, and ketchup.
MARK POST, PROFESSOR OF PHYSIOLOGY, MAASTRICHT UNIVERSITY: People need to understand that there are major issues with current meat production. Everybody has to ask themselves the question 10, 20 years from now, if you enter the supermarket and you find these two products that are exactly the same and they taste and feel the same but one has environmental issues and animal welfare issues and the other has not, what are you going to choose?
RIVERS: It was made by taking stem cells from a living cow, which are multiplied to create muscle tissue, which grows in strands, 20,000 strands have gone into this one proof-of-concept burger, or about 40 billion cells.
It took three months to grow, which is quicker than a cow, but at this prototype phase, much more expensive, about $300,000, making it the world's most expensive burger.
RIVERS (on camera): It may be 10 or 20 years before you can buy a cultured beef burger like this in a supermarket, but it could be a vital weapon in combating global warming.
Cultured beef requires less than half the energy of beef produced in a field, and less than a twentieth of the greenhouse gasses are emitted as a result. The problem is the marketing, getting past the yuck factor and convincing people this is OK to eat.
Dan Rivers, CNN, London.
(END VIDEOTAPE)
QUEST: Coming up after the break, the escalation of tensions over Gibraltar. Spain keeps drivers waiting in line and threatens to charge them for the privilege. We'll tell you why in a moment. QUEST MEANS BUSINESS, good evening.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Turkey's former army chief has been sentenced to life in prison for his role in a plot to overthrow the government. Ilker Basbug is among several people convicted in the case. Prosecutors say they were part of a network that was conspiring to topple the prime minister.
The king of Morocco's reversed his decision to pardon a convicted pedophile after protests over the weekend. According to his website, the king did not know the details of Daniel Galvan Vina's case and has since fired prison chiefs. Galvan was convicted in 2011 of raping 11 children.
New Zealand's Fonterra Dairy Company has apologized for its botulism scare. The company said it found bacteria in three batches of whey protein, an ingredient used in soft drinks and baby formula. It says there are no reports of illness but botulism can be fatal.
The U.S. Joint Chiefs chairman Martin Dempsey has been meeting U.S. Secretary of State John Kerry in Washington, where they're expected to discuss the current embassy closures. Nineteen diplomatic outposts in the Middle East and Africa are shut down until Saturday over concerns about a possible Al Qaeda attack.
In Zimbabwe, the opposition is preparing to challenge the results of last week's election. Long-time President Robert Mugabe was reelected with 61 percent of the vote. Media reports quote an opposition spokesman as saying the challenge will be filed before Friday. Zimbabwe's stock exchange fell 11 percent today.
(MUSIC PLAYING)
QUEST: The Spanish government is being accused of saber rattling on a par with North Korea as a dispute over Gibraltar flares up again with the United Kingdom. Spain has beefed up border checks, and that's caused long lines in and out of the Rock.
Spain's foreign minister suggests that it was time for a tougher stance on the U.K.'s claim to sovereignty over the region, saying in his words, "The party is over." The British prime minister says he's seriously concerned, in his words, at the prospect of further sanctions.
The Spanish government is planning to slap a $66 charge on every vehicle entering or leaving the territory and threatened to stop planes that are heading for Gibraltar from using Spanish air space. It's all in response to an artificial reef being constructed to the west of the British territory's airport.
The Spanish government says that project has damaged Spanish fishermen's grounds and that compensation must be paid.
U.K. foreign office say there will be no disproportionate measures to solve this dispute. CNN's Jim Boulden is in London, joins me now.
Jim, why now?
JIM BOULDEN, CNN CORRESPONDENT: Because Prime Minister Rajoy in Spain is having problems at home.
You know, Richard, over the last 300 years, Britain and Spain have been battling, if you will, over the sovereignty of Gibraltar and it does seem to flare up whenever the prime minister of any stripe in Spain gets in trouble trying to deflect the attention of the voters to something that's very easy for them to pick on.
And so they looked at this barrier reef being built by the Gibraltarians and decided right, that's going to hurt our fisheries; therefore, you're going to have to pay by going through -- going across the border.
Now I've been to that border. It usually flows pretty quickly, Richard. So the fact that it had people sometimes people waiting six, seven, eight hours to get across is very, very much done as an example just to upset everybody.
QUEST: It's worth reminding ourselves that even though the U.K. and Spain are both members of the European Union, this is not extended to Gibraltar in the same way. So the U.K. can't claim freedom of movement and labor.
BOULDEN: No, they can't, because the U.K. is not part of the Schengen agreement. So while Gibraltar is part of the European Union, unlike some other British territories, it is exempt from certain things, including the customs union. It also doesn't have a VAT. Its income tax is very low.
Its corporate tax rate of 10 percent is, of course, why you see a lot of the financial services companies from the U.K. relocate and put their operations in Gibraltar. A lot of online gambling companies are based in Gibraltar while using U.K. law. It's a unique area as far as a lot of British people living there.
And the last time there was a referendum, I think it was 99 percent said they want to stay as part of the United Kingdom inside this arrangement that they have. So there's all that issue. But there are a lot of companies based there, a lot of people who work on online gambling, for instance. And so it's a very interesting place to be.
But the Spanish would love to have some of that income tax. The Spanish would love to have the people who live in Spain and work in Gibraltar to pay some money to the Spanish government. They need that money. But of course a lot of Spanish people who live in that region, very poor region, work in Gibraltar and go across that border every day as well, Richard.
QUEST: So how is this one going to solve? I mean, the British government dare not -- Gibraltar's one of those issues that the British government dare not give ground. If you're right and your cynicism is correct, the Spanish government is going to flimflam these flames for all they're worth. And eventually it -- my guess is -- everybody goes home.
BOULDEN: Yes, they might make a complaint, a formal complaint to the European Union, which will interesting to see because Gibraltar's also not part of the fisheries agreement. So they can do these kind of things.
They think they have sovereignty in the area for the fisheries. And of course, you know, like Iceland or wherever, when it comes to fish, you do get these VATs inside the Europe area, even if it's not part of the European Union. So it could rumble on for a while but I would have to say that, in the end, as you know, the U.K.'s simply not going to back down.
QUEST: Jim Boulden in London, thank you.
Sci-fi fans are sounding on the latest "Time Lord." It's the 12th incarnation of the Doctor. And after the break, you'll hear why.
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Now the answer to today's "Currency Conundrum," earlier in the program -- that is a tails -- earlier in the program I asked you if you had a 50-50 chance of getting heads or tails on the American penny, that is a head -- we could keep going around all this all day. Well, the answer is - - is it true or false? It is false.
The answer is it's more like 51 percent to 49 percent in favor of tails. Apparently the side minted with the image of the President Lincoln's head is slightly heavier and so the coin will tend to land on it more often. Try that one out at home and see if anyone pays any attention.
A television franchise that has spanned more than five decades is now onto another new front man. Sci-fi fans -- we're now talking about "Doctor Who" and its makers have cast a new "Time Lord."
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Please welcome the 12th Doctor, a hero for a whole new generation, it's Peter Capaldi.
(APPLAUSE)
(END VIDEO CLIP)
QUEST: As an extraordinary announcement, watched by millions on many continents, well, the 55-year-old Capaldi is one of the oldest actors to take the role of Doctor Who, best known for playing the foul-mouthed spin doctor Malcolm Tucker in the political satire, "In the Thick of It."
I spoke to Caroline Torrance, the director of drama at the BBC, and I asked her why "Doctor Who" was now so popular. Its DNA is almost 50 years old.
(BEGIN VIDEOTAPE)
CAROLINE TORRANCE, DIRECTOR OF DRAMA, BBC: I think that people love that DNA and what's not to love about a guy in a blue box flying around the universe, flying through different areas of time, saving the universe.
It's just a fantastic universal theme, no matter what country you're in. And the fact that we can keep reinventing it, refreshing it, Steven Moffat's scripts are so fantastic, they're so exciting. I think it's just bringing in a new audience all the time.
QUEST: Has the BBC learned much from doing this, both as a commercial aspect and as a production aspect?
What has the corporation learned about how it can take some of its prize properties and exploit them further globally?
TORRANCE: Well, this is one of our -- what we call our super brands. And that's also "Dancing with the Stars," which is very well known to U.S. audiences, another one, "Top Gear," similarly. And I think it shows that we can take these programs and these formats, sell them around the world, make local versions and make them big international hits.
QUEST: The difference, of course, with "Doctor Who" and with "Top Gear," of course, is that it is the same version that is being shown as opposed to a format with "Dancing with the Stars," which is -- we'll see -- has been remade.
So when you're now making a program for a British audience in the U.K., are producers, are production staff, are they -- do they have one eye these days on the salability for the future?
TORRANCE: Certainly they have an eye and we're always talking to them about casting that can really increase the appeal internationally of a show. But fundamentally what they are doing is making a fantastic show for their audience. And I think it's really important that it has a really strong offered perspective.
Often if you try and create something that appeals to lots of different countries and all try to do that, then it doesn't actually work. You've got to keep your eye very firmly on your audience that you're appealing. But certainly we think about casting; we think about international profile of casting. We think about the look of the program certainly.
(END VIDEOTAPE)
QUEST: So, "Doctor Who," the new Doctor, Peter Capaldi, who will of course take the world by storm and the world will take him, too, no doubt.
Now to the weather forecast, Tom Sater is at the World Weather Center, joins us now.
Where do we begin?
TOM SATER, AMS METEOROLOGIST: Let's begin in Europe. Let's begin in the U.K. and more rainfall. And may I say welcome to Atlanta, Richard.
QUEST: Yes, now here's a question. Here's a question, since you've been kind enough to welcome me.
I'm told it was supposed to be boiling hot. It's not as hot as it has been. I mean, I've been in Atlanta here at the CNN Center where one's really been schvitzing before now. Now it's sort of -- quite a pleasant August.
SATER: It's not bad. In fact, last summer, we were in extreme drought. This summer, however, 300 percent of average rainfall, which has kept us slightly cooler, Richard. So the heat wave that you had over in London, that was brought to an end by good rainfall, has now come to us and we're seeing it, of course, with the rain, keeping the excessive heat out of the picture for now.
QUEST: I have yet to work out why that Ferris wheel has now suddenly materialized in downtown Atlanta. I think that's going to be one of life's great mysteries (inaudible).
(CROSSTALK)
SATER: (Inaudible) overnight, literally overnight. It was assembled just for your arrival, in fact, Richard, just $13 U.S. and get yourself a little trip on there.
QUEST: Before the week is out. All right. How the weather in Europe, please.
SATER: Yes, let's take a look. We have some severe weather in parts of France. We've had some good rainfall, although not the best of rainfall for Australians when it comes to the ashes doing so well at the beginning of the third match of the Ashes. And then of course the forecast holds true and you get the rainfall and we call it a draw here.
But you can see where Cardiff is, now this is where the film, "Doctor Who," for those of you who have been following the latest news on that, all the rain has moved out and wouldn't you know it, after getting some good rainfall in Manchester, (inaudible) it clears up as well, 18 degrees in Cardiff if they were going to do some filming, they'd have absolutely perfect weather, average 21 degrees. That's the high for the next three days.
The severe weather, in the form of some large hail, again has made its presence known in parts of France. We had a level 2. It was very rare to see level 3 activity. But we had that over the weekend. We actually had it last week a couple of days as well, of course that tornado, we saw all the debris in the suburbs of Milan.
We've had large hail and damaging winds in parts of Austria to the Czech Republic. Look at the high temperatures. Where we find the severe weather and then south and southeastward, the numbers extremely warm. Rome you have been over 30 degrees since July 5th. And it continues to be excessively hot for a number of areas.
Vienna, you're in that as well. You've seen temperatures unseasonably warm since the 14th of July. We do have scattered shower activity which will keep temperatures a little bit at bay. But you can see the peak here. In fact, Rome is still in on this, no real cooldown until we can get a cold front strong enough to act like a giant windshield wiper and just kind of wipe everything out of here.
But the heat's going to continue to build where you see the numbers. In fact, Belgrade unseasonably warm, upper 30s, 27 is your average. Vienna, you're up to near 40 degrees. You're going in the wrong direction. But it looks like the heat will continue to build in this area as well. Rome, 32, 33. But we're going to keep it cool just for you, Richard, as long as you stay here.
QUEST: Thank you very much.
SATER: (Inaudible).
QUEST: Cool, but not cool. It'll be winter soon in (inaudible), one of those people that refuses to complain when the weather is warm in the summer.
SATER: Very good.
QUEST: He has baseball's biggest salary and now he's caught up in its biggest scandal, Alex Rodriguez is in serious trouble to put it mildly. We'll explain what happens to the man they call A-Rod next. QUEST MEANS BUSINESS. Good evening.
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QUEST: Now one of the best paid sportsmen in the world could be banned for life tonight over claims he used performance enhancing drugs. Alex Rodriguez is one of the biggest names in Major League Baseball. CNN Sport's Joe Carter with me now.
This is complicated.
JOE CARTER, CNN CORRESPONDENT: Complicated, yes, very complicated.
QUEST: So.
CARTER: Shall I give you the headline?
QUEST: Please.
CARTER: The headline is that he will not be facing a lifetime ban, but Alex Rodriguez, according to our sources, will be suspended for the rest of this season and all of next season, which is 214 games, for his connection to a biogenesis clinic, an anti-aging clinic in South Florida, one that not only distributed performance enhancing drugs, but also injected a number of baseball players and other athletes with these performance enhancers.
QUEST: Is he accused of owning or being involved in the facility? Or using its products?
CARTER: Using its products. Using its products as well as recruiting other players to its products as well as --
QUEST: Does he admit this?
CARTER: No. No. This is what baseball says that they have against the highest paid player in the league. These are all allegations. But baseball says, quote, "they have volumes of evidence that links this guy to this clinic."
QUEST: So if they come out with this suspension, of the rest of this and into -- and next year as well, he'll obviously appeal it, he says, if he believes it is erroneous. He will appeal.
CARTER: You're exactly right. Alex Rodriguez, through the collective bargaining agreement, has been given the privilege to appeal. There is an appeals process, which means he would take his case in front of an arbitrator. And that would be sometime middle of September or end of September.
But when he appeals, that means he can still play baseball. And he's expected to return for his first game of the season, because he's been out with injury this entire season tonight with all this looming over his head.
QUEST: Of course, if he doesn't play for the rest of this and for next, he obviously loses out handsomely in terms of his money.
CARTER: Yes, the New York Yankees right now are on the hook to pay him over $100 million. That's guaranteed money. See in Major League Baseball, contracts are guaranteed; where in the NFL and other sports leagues here in America, they are not guaranteed contracts.
(CROSSTALK)
CARTER: So he gets paid. But if he's suspended, any games that he missed for suspension, the Yankees do not have to pay him. But during the appeals process, he can not only play, he also gets paid.
QUEST: But if he doesn't play during the process, does he get paid?
CARTER: If he doesn't play?
QUEST: Yes.
(CROSSTALK)
CARTER: -- if he's hurt.
QUEST: Yes. So basically, the Yankees will pay him and he'll play.
CARTER: Correct. Correct. The only way they wouldn't have to pay him is if he's suspended for this performance enhancing drugs situation. If the only way they get out of this --
(CROSSTALK)
QUEST: OK. Back -- flip the allegations around. From a purely -- from a pure performance in baseball, which would the Yankees prefer, to have him play or to have -- and pay him the money -- or to save the money and not have him play?
CARTER: Well, again, this is pure speculation.
QUEST: Go on. You're a sport expert.
CARTER: The Yankees would rather not have him. I mean, he's 38 years old. He's --
QUEST: I'm 51, please.
CARTER: -- he's in a less than productive at 3rd base for the last few years. He's been hurt all of this season. They paid the guy $28 million this season. They're on the hook to pay him, like I said, close to $100 million for the remainder of his contract. It's guaranteed money. They'd much rather buy a younger player, maybe two or three younger players, for the same price.
QUEST: Do you think there's somebody secretly thinking, whoa, we could save $100 million here?
CARTER: Yes, absolutely.
QUEST: And we could buy a better player.
CARTER: And Rodriguez has definitely implied that. He feels like there are more than one party out to make sure that he does never play baseball again, Major League Baseball, because they want to make him an example for all their players to say, hey, if we can go after this guy, we can go after you all.
QUEST: This has got everything. It's got performance enhancing drugs, it's got money involved. It's got one of the top players and it's got skulduggery and possibly people wanting the worst for some other people.
CARTER: And this guy was -- there was a point where this guy was it. I mean, he was supposed to be the face of the post-steroid era. He was supposed to be the guy who could throw for power, hit for power and do it all cleanly. And now he's wrapped up in what could be considered the biggest widespread sports scandal in the history of the game.
QUEST: One final question, Lance Armstrong has had, of course, there was no evidence; he would fight it all the way, continue to do so for many, many years. Until finally that report came out from cycling information which basically did him in and the evidence was there.
From what you're hearing, is the evidence there?
CARTER: Our sources from Major League Baseball say they have plenty of evidence to link him. The one thing they don't have, Richard, is one thing they need, and that's a positive test. They say they have text messages, they have emails.
They have enough to prove that he's connected in recruiting, and impeding the investigation and also coercing witnesses not to present their evidence against him. So they believe they have enough.
QUEST: One hundred million if he doesn't play. Thanks so much.
CARTER: Thank you. You, too.
QUEST: (Inaudible).
Now from one of the tweets that's just coming to us, we were asking about zero hour contracts.
Tony Crutcher (ph) tweeted @RichardQuest, "Zero hour contracts are a disgrace to workers, typical of the approach of British management that leads to industrial disputes."
Barbara Applebee joins me and says you're not alone. I don't use Facebook either. No interest in avatar friends being one for one.
I'm not alone at the moment. "Profitable Moment" after the break.
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QUEST: Tonight's "Profitable Moment," the Bank of Israel's next governor won't wield as much as power as Ben Bernanke or Mario Draghi. But when you think of the region's geopolitics, you see how it's a job that comes with disproportionate end boards (ph).
Israel's almost on a war footing (ph) constantly. The fact that no one seems to want the top job is all the more serious. The scrutiny on our leaders and the pressures of getting these top jobs, Janet Yellen and Larry Summers will find out this year as they look to become the next head of the Fed. No job can be decided based on the numbers of skeletons in an applicant's closet.
But ultimately nominees need thicker skins and those vetting panels need to be more understanding and the rest of us need to remember that the applicants are human. And that's QUEST MEANS BUSINESS for this Monday night. I'm Richard Quest in Atlanta. Whatever you're up to in the hours ahead, I hope it's profitable.
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QUEST (voice-over): The headlines: it is the top of the hour.
Turkey's former army chief has been sentenced to life in prison for his role in a plot to overthrow the government. Ilker Basbug is among several people convicted in the case. Prosecutors say they were part of a network that was conspiring to topple Recep Tayyip Erdogan.
The king of Morocco's has reversed his decision to pardon a convicted pedophile after protests over the weekend. According to his website, the king did not know the details of Daniel Galvan Vina's case and has since fired the prison's chief. Galvan was convicted in 2011 of raping 11 children.
New Zealand's Fonterra Dairy Company has apologized for the botulism scare. The company said it found bacteria in three batches of whey protein, an ingredient used in soft drinks and baby formula. It says there are no reports of illness but botulism can be fatal.
In Zimbabwe, the opposition is preparing to challenge the results of last week's election. The long-time president, Robert Mugabe, was reelected with 61 percent of the vote. Media reports quote an opposition spokesman as saying the challenge will be filed before Friday.
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QUEST: Those are the headlines. Now Christiane Amanpour is next.
END
