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Quest Means Business
Brazil's World Cup Disaster; Brazilian Media Reaction; Brazil's Economy; US Markets Higher; Vatican Bank Shake-Up; Mixed European Markets; Illegal Spying Allegations; Prying Eyes
Aired July 09, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: A good day for the Dow, it's up more than 75 points. Still can't break 17,000 again. A group of serious-minded-looking men
ringing the closing bell. And hopefully -- it's all over on Wednesday, the 9th of July.
Tonight, defeat was just the beginning. Now, Brazil faces an economic hangover, and it might be related to the World Cup.
Also, from scandal to redemption. The Vatican vows to overhaul its bank.
And a blockbuster backlash. Moviegoers stay home, and we'll speak to the chief exec of IMAX to find out what went wrong.
I'm Richard Quest in glorious Technicolor, where I mean business.
Good evening. President Dilma Rousseff of Brazil says her country will bounce back even after the humiliation of Germany's 7-1 win over the host
nation on Tuesday. Across Brazil, the post-mortem is underway. It's one of the biggest World Cup shocks ever. And tonight, we look into deeper
underlying issues that Brazil is left to cope with.
The government spent billions of dollars preparing for this World Cup. After last night's stunning knock-out, football fans are asking what went
so badly wrong, and it was left to the president to answer some pertinent questions.
(BEGIN VIDEOTAPE)
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: There were so many demonstrations before this World Cup started, and all of a sudden,
during the World Cup, people were ecstatic. People said that it was the best World Cup, there were so many goals. Do you think that this defeat
will shape the national mood?
DILMA ROUSSEFF, PRESIDENT OF BRAZIL (through translator): Well, I do not believe that, because we have gone through the experience of staging the
World Cup. We have resilience, and all of these supporters that have come here, we know all too well that this has been a World Cup that has gone in
peace with a great sense of joy.
There is one hallmark and feature about football. It is made of victories and defeats. That's part and parcel of the game, and being able to overcome
defeat, I think, is the feature and hallmark of a major national team and of a great country.
AMANPOUR: Did you ever dream in your wildest nightmares that this would be the result of the semifinal?
ROUSSEFF (through translator): No. In honesty, in all honesty, no. Truly never. My nightmares never got so bad, Christiane. They never went that
far. As a supporter, of course, I am deeply sorry, because I share the same sorrow of all supporters.
But I also know that we are a country that has one very peculiar feature: we rise to the challenge in the face of adversity. We are able to overcome.
(END VIDEOTAPE)
QUEST: Now, the response to the game from Brazil's daily papers, well, come and have a look. The words at the super screen were suitably apocalyptic.
The Rio "Lance!" used words like "indignation," "anger," "pain," "frustration," "irritation," "shame," "disappointment." And that was only
some of them.
Look at the other ones. The other papers invited readers to add their own comments, and like many others, "Metro's" front cover is simply blackened
out in mourning for what happened.
As for "Agazeta," it goes with the faces of the fans, and the headline that simply says -- doesn't need to over that, in any language, it says
"Massacre."
Now, we'll talk in a moment about how that dramatic defeat could play out in the Brazilian economy. Because let's be honest, the country's problems
are running much deeper than just losing a football match. This phrase, "massacre," is merely symptomatic, some would say emblematic of what's been
happening in the economy.
First of all, you have the issues of fiscal and monetary policy that are unbalanced. The public sector is crowding out private investment, and as a
result, many say there needs to be some serious cutbacks in public sector jobs, that will eventually cut pensions and bring down, if you like, the
cost of interest rates.
Too much is being spent on wages, pensions, and public services, so education and health and the crucial services are suffering. But Brazil
succeeded in reducing poverty. So, there's your dilemma here: income's gone up, the middle class has expanded, but the other side of it is difficult,
too.
There is a lack of infrastructure in the country. Brazil's notorious for travel inefficiency. Some promised infrastructure projects haven't done
much, such as the renovation of Sao Paulo's airport. And of course, inflation remains high, productivity weak, the central bank is warning that
this will carry on for the next two years.
Put all these problems together, just take a look at them, and you think, well, how -- what's the relationship between these problems and yesterday's
defeat. Geoffrey Dennis of UBS is head of emerging markets. He's written extensively about Brazil's economic problems, the World Cup, and its
possible repercussions. Geoffrey, good to see you sir, thank you for joining us.
GEOFFREY DENNIS, HEAD OF EMERGING MARKET STRATEGY, UBS: Thank you.
QUEST: It was more than -- what this World Cup defeat and the collapse in the psyche, what did it show?
DENNIS: Well, the issue with the World Cup defeat, indeed, any result that Brazil had got would get in the World Cup has a tremendous political
connotation because of the elections that are coming up at the beginning of October.
So, the elections are three months after the World Cup ends. Dilma Rousseff, the president, is up for reelection. And given all that laundry
list of woes that the Brazilian economy is facing, Dilma is not popular, her approval rating has declined. And of course, the concern is --
QUEST: Right.
DENNIS: -- that this extraordinary defeat will actually make her problems worse and will reduce her approval rating further.
QUEST: Right. Because the thinking was if they won, it might have gone one way in the election, now they've lost. But it wasn't just the loss, it was
the tremendous nature --
DENNIS: Yes.
QUEST: -- of the loss. So, does that loss make it more or less likely that Rousseff gets reelected, do you believe?
DENNIS: I think at the margin, it makes it less likely that she'll be reelected. However, even if that seems strange today in the hangover of
that, as you say, extraordinary defeat yesterday, within three months' time, the defeat in the World Cup may not have much real effect on the
election. So, I think bottom line is she's probably still going to win, but I guess the chances have been reduced somewhat.
QUEST: On that issue, the -- what the defeat showed, of course, is in many ways a fundamental, perhaps, insecurity, a lack of confidence, not just by
the team, but that when you strip away what may say is the Brazilian economic growth, the miracle, underlying it, the litany of economic woes
we've gone through are much more serious than perhaps had been led to believe.
DENNIS: No, I certainly don't think the defeat yesterday makes them more serious particularly. They're very serious anyway. And I think that
obviously a bad result for Brazil in the World Cup was going to make people focus on those a little bit more.
I think the real difficulty Brazil has been facing in the very immediate past is that Brazil made tremendous gains as a result of the commodity boom
in the previous economic cycle. It was a massive beneficiary of the globalization of the global economy, of the emergence of China, if you
like.
And now that that commodity super cycle has ended pretty much, and China is slowing down, Brazil's really got to fall back on its -- more of its own --
QUEST: Right.
DENNIS: -- domestic momentum for growth, and that is what is lacking at the moment.
QUEST: Geoffrey, thank you. I very much enjoyed reading the note this morning from UBS. I appreciate you joining us tonight on the program. You
can hear the full interview with President Rousseff and her efforts to reform Brazil's economy.
It's on Thursday night's edition of "Amanpour," where she'll be discussing the reelection campaign of the Brazilian president and a moving account of
the torture the Brazilian president experienced at the hands of the previous ruling junta. It's Christiane's exclusive interview, and it is on
Thursday at 7:00, 8:00 in Berlin.
So, investors have been scrutinizing the Fed minutes. If I take a look at these numbers here, up 78, nearly 17,000. Alison Kosik is with us. What --
first of all, what did the Fed say?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, first of all, the Fed said that bond-buying program looks like it's going to really most likely wind
down in October. And what did that tell investors? Why did the market end sharply higher? Because it shows the economy really is improving if the Fed
is looking to pull the plug on that stimulus program that's been years in the making.
QUEST: Right, but once the bond buying is over, or at least the tapering has begun -- sorry, sullied that. Once the tapering has finished, they are
still extremely accommodative on a wide variety of other measures.
KOSIK: Of course. And also, this is all dependent upon how the jobs market does. Right now, it's gaining momentum. It depends on where inflation is.
You've got to get to that 2 percent marker where -- or at least close to that, where the Fed wants it. It's only going to pull the plug on the
program if that momentum continues. October's a long ways away.
QUEST: The market, 17,000. Now, you and I have talked many times on the issue of whether or not it's a psychological barrier. It got there, it fell
back, it couldn't get back up there again.
KOSIK: Oh, well, but not today, but tomorrow's another day.
QUEST: Ooh, you're an optimist!
KOSIK: And we saw the market certainly turn sharply higher after investors started processing what the Fed said in its minutes.
QUEST: Yes, look at that. You can see it absolutely, spot on.
KOSIK: Exactly.
QUEST: That's where the minutes come out.
KOSIK: That's where the thinking was happening, between that --
(CROSSTALK)
QUEST: That's the thinking.
KOSIK: Yes.
QUEST: That's the thinking. That's where the minutes come out, and whoosh! Like a rocket, off she goes.
KOSIK: Because -- you know what? What they said in June was overall positive. There were concerns, there were concerns about complacency in the
market, number -- the first thing that comes to mind is complacency meaning investors may be taking too many risks. That is worrying the Fed.
QUEST: Has the Fed worked out what they're going to do on that last month? There's a last month, isn't there, where there's something like $15
billion?
KOSIK: $15 billion.
QUEST: There's $15 billion, and are they going to do a 15 in one go, or are they --
KOSIK: Well, that's hard -- from what we can see from the minutes, it is 15 in one go, and that's it, we're pulling the spigot.
QUEST: Pull the spigot, turn off the fuse --
KOSIK: Yes.
QUEST: -- head out the door.
KOSIK: Exactly.
QUEST: Lovely to see you, Alison. Thank you. Still on QUEST MEANS BUSINESS, a shakeup at the Vatican. The pope sets his in-house bank on a new path
aiming to steer clear of the scandal.
(COMMERCIAL BREAK)
QUEST: Now, Pope Francis has named the men and women he wants to clean up the Vatican Bank. Their job is to banish the taint of scandal after
allegations of money laundering and tax evasion within the Vatican. The bank's already closed hundreds of suspicious accounts this year.
Now, the Vatican officials say it will be a model of transparency. A model. At the helm, Jean-Baptiste de Franssu, the former chief exec of Invesco's
European business, well, he certainly knows his way around the world banking system.
On the board, Michael Hintze, head of UK trading of Goldman Sachs, they certainly know the way around the banking system. The former Deutsche Bank
chairman Clemens Boersig, if he doesn't know his way around, then we're in trouble.
And there's also Lord Chris Patten. He is the former BBC chairman, and he's the last governor of Hong Kong, and he's had to beef up the bank's media
strategy, which considering he has been chairman of the BBC during some extremely scandalous times and been roasted left, right, and center, it
means he also knows something about his subject.
John Allen joins us now from Denver, Colorado, via Skype, our senior Vatican analyst and associate editor of "Boston Globe." John, good to see
you. So, a very experienced group by any definition. The question is, will the pope let them get on with the job?
JOHN ALLEN, CNN SENIOR VATICAN ANALYST: Well, Richard, he certainly indicated he plans to. I think one thing we might say about the lineup that
you just ticked off is that not only are these experienced people, none of them are clergy.
And if you ask me, that's the real revolution here, that one of the elements of the Francis reform of the Vatican's financial operation is that
never before have we seen such an injection of lay people, that is non- clerics, at senior levels of the Vatican with real decision-making responsibility.
So, I guess at the end of the day, Richard, I would say if this reform doesn't succeed, it's not going to be because the pope hasn't given these
people the tools to do the job.
QUEST: How much of these reforms is the pope himself, His Holiness, saying "I want to deal with this, give me a plan to deal with it"? Or is it other
people saying, "Pope Francis, you've got to deal with this"?
ALLEN: Well, on this issue, that is the money, I think there's no doubt this is coming from the pope himself. Remember, Richard, that Francis was
elected on a reform mandate. The papal election of March 2013 was the most anti-establishment papal election of the last century.
And in this case, what the cardinals were voting against was not the teaching of Pope Benedict XVI, that is Francis's predecessor, but the
business management of the Vatican during those eight years. They had seen one scandal after another wash through the system, and quite frankly, they
were sick to death of it, which is why they chose a Latin American outsider with a reputation as a good manager.
And so, in this case, what Francis is doing is he is delivering on the mandate that he was handed, and take to the bank, if you can pardon the pun
in this context.
QUEST: Right.
ALLEN: He is personally involved at the level of detail with the decisions that are being made these days.
QUEST: My next question I'm certainly intending to be in any shape, form, or description disrespectful to Catholics in making this analogy, so I'm
sure you'll understand, but can we say that Pope Francis, besides being a spiritual leader is, perhaps for the first time as a pontiff, he's being a
chief executive?
ALLEN: Well, I'd say certainly for the first time in recent memory, Richard. Basically, if you ask Catholic insiders about John Paul II and
Benedict XVI, what they will tell you -- that is, the two most recent popes before Francis -- what they will tell you is that they each had important
accomplishments during their papacy, but neither one of them was particularly invested in the internal governance of the Catholic Church.
That is, John Paul wanted to bring down Communism and he wanted to reunite Eastern and Western Christianity. He had these lofty global ambitions.
Benedict XVI was an intellectual who wanted to conduct a graduate seminar for eight years about the relationship between reason and faith, and
magnificent teaching and all that, but neither one of them spent much time dealing with the actual internal situation, the day-to-day management --
QUEST: Right.
ALLEN: -- of the church. Francis was elected to do precisely that, Richard.
QUEST: What we would call the bogs in the drains. Get down into the engine room and make sure the thing's working properly. John Allen, thank you for
joining us. Excellent to see you, as always, making sense.
Now, to the European markets, which had a mixed day of trading. The numbers are going to appear somewhere. The DAX closed up nearly four tenths of a
percent.
We can't be sure how much of that was down to Germany's 7-1 win at the World Cup, but I think we can say that, bearing in mind, the DAX showed the
largest gain of all the European bourses on our screen, except maybe from Paris. Well, even then, I figure it was probably the DAX's day. The FTSE
closed down by three tenths of one percent.
Now, when we come back in a moment, you might think a hacker trying to steal your password would have to wade through lines of code. When we come
back, we're going to show you a very simple, easy, and worrying way when the culprit could be just a foot or two away from you. This is QUEST MEANS
BUSINESS, live from New York.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: The United States is facing new accusations of spying on its ally, Germany. German authorities have discovered a second suspected case of
espionage, this time within its defense ministry. As Matthew Chance now reports, these allegations have strained this once very close relationship.
(BEGIN VIDEOTAPE)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): It's a spy scandal threatening to wreck one of the closest transatlantic
alliances. There's already been allegations of US phone-tapping and double agents. Now, prosecutors in Germany say they're searching the home of a
German defense official suspected of spying for the CIA.
Only last week, an operative for the German intelligence service was also arrested, accused of passing top-secret documents to his alleged spy
masters in Washington.
ANGELA MERKEL, CHANCELLOR OF GERMAY (through translator): If the reports are correct, it would be a serious case. If the allegations are true, it
would be, for me, a clear contradiction to what I consider to be a trustful cooperation between agencies and partners.
CHANCE: And if correct, it wouldn't be the first time the German chancellor has been betrayed by her American allies. It was the revelation that her
personal phone calls had been tapped by the US National Security Agency that sparked this embarrassing friends-spying-on-friends scandal in the
first place.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And the leaders of our close friends and allies deserve to know that if I want to know what they think
about an issue, I'll pick up the phone and call them rather than turning to surveillance.
CHANCE: But it seems the extent of US spying on Germany may go far deeper than simply eavesdropping on private calls, raising the question of whether
these close NATO allies are really friends at all.
Matthew Chance, CNN, London.
(END VIDEOTAPE)
QUEST: It's not only world leaders and governments that need to worry about people spying and getting secret information. Next time you're using a
digital device in public within sight of someone wearing Google Glass -- the ones where you go, "Go, Google" -- you'd best thing twice before typing
any private information.
It's a startling new report in which researches say that with the wearable gadgets, it's possible to steal passwords from people using keypads nearby.
You don't need the NSA, you don't need the CIA, you just need old Google Glass. CNN Money's Laurie Segall has our story.
(BEGIN VIDEOTAPE)
XINWEN FU, CYBER FORENSIC EXPERT, UNIVERSITY OF MASSACHUSETTS: Five one two zero.
LAURIE SEGALL, CNN MONEY CORRESPONDENT: You're right. That's the password.
FU: Oh!
SEGALL (voice-over): He didn't see me type it, so how did this security researcher figure out my iPad PIN number? Let's take a step back. You're at
a coffee shop reading the iPad. You enter your password and start browsing. Pretty basic protocol these days.
FU: You ready?
SEGALL (on camera): Yes.
SEGALL (voice-over): Welcome to a brave new world. Ten feet across from you, a hacker could steal your password using new technology.
FU: They see the screen, they see your finger, then pretty much your pass code is stolen.
SEGALL: Using Google Glass, or any other recording device, like cell phone video, security researcher Xinwen Fu can crack your PIN. He's developed
software that can break down hand movements from video.
You type, he records. Doesn't matter if there's a glare. Doesn't even matter if he can't see the screen. The process is now easier by the rise of
wearable tech, which makes it simple to discreetly record hand movements.
FU: Google Glass is on your head, so people can easily adjust the angle.
SEGALL: Here's how it works.
FU: If we know you're putting your finger there, then we know the putting of finger on the keyboard, we call that touchpoint. Then we can actually
map this touchpoint to a reference keyboard, and we get your key.
SEGALL: We put it to the test using this same device Xinwen used when he was developing his software, Google Glass. We put them on a robot and then
a real-world attacker. Each tried to hack us.
SEGALL (on camera): So, you have just analyzed --
FU: Yes.
SEGALL: -- the data that you guys took via Google Glass.
FU: Yes.
SEGALL: You were far -- you assure me that you didn't see the actual numbers I was typing in.
FU: No. No.
SEGALL: But you say that you have my pass code.
FU: Yes.
SEGALL: All right, hit me with it.
SEGALL (voice-over): He told me it could take him two guesses.
FU: For the first one, it's five one two zero.
SEGALL: It took him one.
SEGALL (on camera): You're right. That was my password.
FU: Oh!
(LAUGHTER)
SEGALL: You don't have access to my device, so what is that going to do?
FU: We only use the pass code, as one example, to demonstrate the danger. What if you actually used mobile banking, you tried to type in your
password and access your banking at your bank account. So, that's very dangerous. We may steal your password, your bank account password.
SEGALL (voice-over): The vulnerability, Xinwen says, is that keys are always in the same place. There are tools for randomizing the location of
keys on a keyboard, and that would make something like this impossible. But those tools aren't widespread. Xinwen hopes exposing the dangers will lead
to solutions.
Laurie Segall, CNN Money, New York.
(END VIDEOTAPE)
QUEST: Hollywood's packing up and moving to Asia, after the break.
(RINGS BELL)
(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.
Israel's prime minister says attacks on Hamas targets in Gaza will intensify. Benjamin Netanyahu visited an army base as Israeli airstrikes
killed at least 19 people in Gaza. Militants continued to fire rockets into Israel. The Palestinian president Mahmoud Abbas said he was willing to
negotiate, but a political solution might not be possible.
It's been another violent day in Iraq. Security officials say at least 50 unidentified bodies were found in the town of Alexandria. In a separate
incident in the town of Hilla south of Baghdad, car bombs killed at least 5 people and 17 more were wounded.
Ray Nagin, the former mayor of New Orleans, has been jailed for ten years for bribery. He's also been ordered to pay nearly $85,000 to the tax
authority the IRS. A court fond him guilty of taking hundreds of thousands of dollars in bribes and other favors from local businesses.
What a difference 24 hours makes. Nil-nil in the second semifinal of the World Cup. How boring after yesterday's fireworks. Argentina are taking on
the Netherlands in Sao Paulo. The winner will play Germany in Sunday's final.
And staying with football, Brazil's president says her country will bounce back even after the humiliation of Germany's 7-1 win over the World Cup
hosts on Tuesday. Dilma Rousseff says she shares the sorrow of all Brazilian football fans at the inquest into the team's worst-ever defeat
gets underway.
The reviews are in and the critics agree -- summer 2014 has been a major bust for Hollywood. The crowds who usually turn out for seasonal
blockbusters are staying away in droves. U.S. box office figures are down nearly 20 percent. Now, if you look at the number, just three movies have
raked in more than $200 million this summer. This time last year there were seven over $200 million mark. The one bright spot in 2014 -- China's
appetite for Transformers. The new movie in the sci-fi franchise was on release around 600 IMAX screens and now it's the number one movie ever. Not
partially -- ever -- in China. IMAX's chief exec is Rich Gelfond. Where else would you be, sir, but in the C-Suite joining me?
RICH GELFOND, CEO, IMAX: It's the place I'd most rather be in the world, Richard.
QUEST: (LAUGHTER). Good to see you as always.
GELFOND: Nice to see you too.
QUEST: Let's see what July the 4th -- what went wrong do you think?
GELFOND: With the -- with the July 4th weekend I think you had the World Cup this year, and I think people underestimated how much the World Cup had
appeal, particularly in the United States. As you know, this broke all the television records and everyone was watching, not only the U.S. but all the
teams. So I think that was one thing that was going on. I think another thing that was going on is people are too focused on the U.S. box office.
So while the U.S. is down and it wasn't great, the rest of the world is up, and I think that's partially because movies are being made for the global
world right now, not just the U.S. world.
QUEST: Is that true? I mean, we still think of it being the U.S. still dominates as a single market over anywhere else, and therefore it
determines what movies are made.
GELFOND: Now I think that's changed though, Richard, because box office used to be one-third international, two-thirds domestic. Now it's typically
two-thirds international, one-third domestic. So Transformers is a great example. About a third of the movie takes place in China, the world-wide
opening was in Hong Kong, and in China I think the studios have a different philosophy. This will be the first film to ever cross a billion dollars in
box office that had probably only 30 percent of its box office was domestic --
QUEST: Right.
GELFOND: -- probably (ph) that's a guess going forward. But that's a trend because international is where you see all this big growth.
QUEST: But that means -- but that means that people like yourselves and moviemakers have to think more carefully about the movies and be more
aware. And I'm not being uncharitable here when I say that the U.S. market and Hollywood can be the most parochial in the world.
GELFOND: I couldn't agree with you more. I mean, we're in 58 countries, way more than half our box office comes internationally right now, not
domestically. We have a backlog of theaters to open -- 80 percent international, 20 percent domestic. We conducted a seminar in Napa with the
exhibitors of the world, and we said the industry needs to think more globally. It needs to make more films that appeal overseas, it needs to
have local marketing in the local territories, and I think that's the way Hollywood is starting to respond. I mean, Paramount responded that way with
Transformers and it's performed very well globally.
QUEST: So do you see any point of a sort of a battle between the parochialists in Hollywood who say, 'Nah, Los Angeles wants this, New York
likes that. Middle America wants a gunfight.' And you saying actually in China they want this, Europe prefers that. Go back.
GELFOND: I think the battle's already been decided, Richard.
QUEST: Really?
GELFOND: I think that's global. So in the old days when you green-lit a movie --
QUEST: Right.
GELFOND: -- which means say let's go ahead and put the money in. There used to be a box that said 'DVD Sales,' and you had to put a number on it. Now
in those green-light meetings, there's a box that says 'China.' How's it going to play in China? Europe --
QUEST: Really? So that's a real decision that you now actually have to take? How's it going to play in China?
GELFOND: The studios make that one of their top thoughts -- how's it going to play in China and how's it going to play overseas elsewhere?
Russia's the third largest film market in the world. You know, in the old days it was Japan and Great Britain. That changed to Russia and China is
going to have a profound effect on the kind of movies that get made.
QUEST: So, looking to the summer -- well, no because you're already be on the summer now, aren't you? You're looking towards Christmas and the
holiday season. I can't believe I just mentioned Christmas. The summer's not even over and I think I take the record for mentioning Christmas. What
are you looking at for the rest of the year?
GELFOND: Guardians of the Galaxy is a Marvel movie --
QUEST: (LAUGHTER). Yes.
GELFOND: -- that opened up in early August. And as a matter of fact, we just previewed on it on IMAX screens all over the world -- 17 minutes.
It's a little bit of a sleeper, Richard, but you can never sell Marvel short. It's a bit funky, it's funny, it's a really good movie. Watch out
for it -- unexpected. Expected but going to do better than people think. There's a movie called Interstellar which is Chris Nolan filmed around half
of it with IMAX cameras.
QUEST: Right.
GELFOND: A futuristic space adventure. Chris did the Batman movies as you know. It's going to be a real success. And then The Hobbit which it --
QUEST: Ah.
GELFOND: -- Hobbit 2 did better than 1. People who liked --
QUEST: Hobbit made by -- ?
GELFOND: It's made by Warner.
QUEST: -- which of course obliges me to say part of Time Warner which is parent company of this network.
GELFOND: Ah, yes, and it's going to be a great movie. Peter Jackson, employee of this great network and this company, has made another great
movie.
QUEST: It's good to see you.
GELFOND: Good to see you too.
QUEST: Now, coming out West in the Rocky Mountains, a small town is playing host to some of the biggest names in technology and media world. It's the
annual get together and several mergers have stemmed from this Sun Valley get together. In the past including Jeff Bezos' $250 million purchase of
"The Washington Post" last year. "CNNMoney's" Cristina Alesci is there for us in Sun Valley. Are we expecting deals or just talk?
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: We're expecting a little bit of both, Richard. And it's like New York and L.A. descended on this very small
town in Idaho. Just this morning kicked off a session the biggest media including 21st Century Fox president Rupert Murdoch, IAC's chairman Barry
Diller. They were all filing in for this morning's session to hear co- founder of Google, Larry Page, give a talk, and they were all very impressed.
Now, after that I actually had a few minutes to catch up with Tim Cook. A lot of questions about how that company moves forward, what's going to
propel growth going forward. Obviously he didn't answer too many of those questions, but remember Apple has taken a little bit of a different
strategy since Tim Cook has taken over and has made big deals. One of them was a $3 billion acquisition of Beats Music.
Another big theme here is the pipe companies -- the distributors -- that actually get this content into homes. Those guys have been (AUDIO GAP)
coming to get (AUDIO GAP) between Time Warner Cable and Comcast. That has been the talk of the conference this year, specifically how it impacts
content creators' leverage to charge for that content, and one of the big content providers here was Disney -- well it was actually -- Disney was
here -- but also Discovery's CEO David Zaslav. He talked to me about what happens next with the content providers. Take a listen.
(BEGIN VIDEO CLIP)
DAVID ZASLAV, CEO, DISCOVERY COMMUNICATIONS: In general, consolidation presents some real -- presents challenges. It also presents
opportunities, but consolidation in general presents challenges.
ALESCI: What are the challenges?
ZASLAV: When there's -- we're a big investor in content. We were investing eight years ago about $400 million in content. This year we'll invest over
$2 billion.
(END VIDEO CLIP)
ALESCI: So a lot of money going into content there. When you listen to him talk about the challenges, what he's talking about is the regulatory
challenges in getting content providers together because the regulators will take a very close look at that. Richard.
QUEST: Cristina Alesci in Sun Valley, Idaho. Thank you. Now any cabbie will tell you that taxi drivers are the best drivers in the world, and after the
break, we pit a New York cabbie against London's finest. We test their knowledge on the knowledge and who wins? The New Yorker or the London
cabbie. (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: Now time for today's and this week's "Business Traveller" update. Well after the U.S. warned passengers over traveling with uncharged
electronic devices, Britain -- the United Kingdom's following suit as well. It's telling passengers on flights in and out of the U.K. to keep
their devices powered up or risk losing them at security control. At the moment, if you want to see what transatlantic travel looks like and the
sheer scale of this operation for airline and travelers alike. This is a speeder bus (ph) 3 o'clock in the morning, and obviously this is a
Greenwich Mean Time. This is as all the eastbound flights leave North America on the various tracks across the Atlantic, some of them heading way
across over to Asia. But it shows you the sheer numbers of flights involved. And as the day moves on of course, then they'll start going West,
back across there.
Any one of those passengers could have lost their Blackberry, they could have lost their phone, their laptop, their iPod. So, just want to now show
you what I think you need to have with you if you're traveling, to be always concerned to make sure they are charged up. These are the
essentials. First of all, obviously make sure you have your charging cable, preferable with USB. You'll want one for every device. You may also need a
charging plug so that you can charge up in the airport. But that's useless if you're traveling, so make sure you have a multi adapter pin as well,
that way you won't get stuck wherever you're traveling.
And if that's not enough, make sure -- I always have one of these with me. It is a separate little battery pack which can be charged up very
quickly. So if you've left your phone on during the flight and stupidly it is no longer charged -- bish, bash, bosh -- switch it on and you will
be charging before you know it. Some of the things that frankly, undesirable though they may be, you're now going to have to have with you
when you fly.
Now, when we also fly, one more bit of news to bring you. The taxi booking service Uber says it's undercutting one of New York's most famous icons --
the Yellow Cab -- as it tries to get a foothold into the market. Uber's promising a 20 percent fare cut for a limited time. According to the
company, a fare from Grand Central Station to the Financial District will cost you $22 with Uber, a Yellow Cab will cost you $24.
Cab drivers will tell you they're the best in the world, and it doesn't matter if you're in New York or in London. But which is the best?
(BEGIN VIDEO CLIP)
QUEST: Gary, how long have you been driving a cab?
GARY TOBIN, LONDON BLACK CAB DRIVER: I've been driving now just short of 20 years.
QUEST: Twenty years! Do you remember when you took the knowledge?
TOBIN: You never forget when you do the knowledge.
QUEST: Black cabbies must pass one of the toughest taxi driver tests in the world -- memorizing 25,000 streets and some 20,000 landmarks. Time for
some quick questions. London Stock Exchange -- where is it?
TOBIN: On Old Broad Street now.
QUEST: You've been driving eight and a half years. The New York Stock Exchange -- where would that be?
AMEER KHAN, NEW YORK YELLOW CAB DRIVER: In Manhattan and Broadway in Wall Street exchange -- near Exchange Place.
QUEST: The (inaudible)?
TOBIN: Which one do you want?
QUEST: Ah, I got it. Ha. Ha. Metropolitan Museum of Art.
KHAN: It started from 84th Street.
QUEST: Could you describe a run to Paddington Station?
(TOBIN: You would say leave on the right Oldwych (ph), right Strand, right Aldwych, left Drury Lane --
QUEST: What do you think about the cab drivers?
KHAN: Forty percent of them are not so good driver at all.
TOBIN: -- Forward to New Oxford Street, right Newman Street, left Eastcastle Street, right --
QUEST: Who drives cabs?
KHAN: It's immigrants. You're rarely going to find an American person driving a cab.
TOBIN: -- (Inaudible) Road, left on Harrow Road, can follow Harrow Road 'round about toward Bishops (ph) Street. Paddington Station's on the left.
QUEST: (CLAPPING). Rather good, this chap. Who are the best tippers?
TOBIN: Typically the Americans.
QUEST: Who are the worst?
KHAN: The French giving you even -- maybe they might give you 50 cents - - maybe.
QUEST: The number one destination?
TOBIN: You get a lot of Harrods.
KHAN: If it's guys, some of them want to go to strip clubs.
QUEST: Do you like driving a cab?
KHAN: No.
QUEST: Oh. We're about to pass Buckingham Palace. It's a pretty cool job, isn't it?
KHAN: People come to this from the other side of the world, and I get to work in it every day.
(END VIDEO CLIP)
QUEST: London cabbie versus the New York cabbie. When you get off the plane, a taxi is often the most convenient way to get to where you're going
-- and one of the most expensive. Research by Digital Hot House and ourselves, we can compare city for city. Looking at theirs from major --
(SOUND OF CAR HORN HONKING)
QUEST: Thank you (MAKES HORN SOUND). So from in New York, JFK to Manhattan, it's a fixed fare -- $54, 30 kilometers and that of course doesn't include
the tolling road. In Rome, you will pay $81. A fare into the city -- it's shorter, it costs seriously more money. Shorter and you pay more, welcome
to Rome. The price really ramps up in Heathrow. What happened? (MAKES HORN SOUND).
(SOUND OF CAR HORN HONKING)
QUEST: Thank you. A typical journey -- 29 kilometers costs a hundred and (inaudible) dollars -- costs $105. So you've got New York cheap, Rome
more expensive, London starting to get crushingly expensive and finally --
(SOUND OF CAR HORN HONKING)
QUEST: Moscow. The run in from Moscow Airport -- dig deep -- it's 46 kilometers and its $159. It's something that might just be worth, in other
words, taking the bus.
(SOUND OF CAR HORN HONKING)
QUEST: Absolutely. Get all that traffic -- get out (inaudible).
(SOUND OF CAR HORN HONKING)
QUEST: Have you finished? The weather forecast now. Tom Sater is at the World Weather Center. Are we typhoon-ed over?
TOM SATER, CNN INTERNATIONAL METEOROLOGIST: (LAUGHTER). Yes, it's -- we're now in tropical storm. But great research -- I love the
information. If you're taking a taxi in Tokyo, I still think they can get you to the airport. We're not looking at major delays, and even in Osaka,
as a tropical storm it's going to move across mainland Japan. Here it is. We're within 150 kilometers now of landfall, and it will make landfall. Our
concern has been the rainfalls -- it's never been the winds or the storm surge. Winds which at one time were up to 250 kilometers per hour, we knew
weakening would occur, down to 100. So there still will be some strong gusts that could maybe knock down a couple of trees, a power outage could
happen here or there.
This is our concern of rainfall. When you look at all of Japan in the last week, over 300 millimeters. So that's why this has been a concern. Let me
show you some video from just a couple of days ago just to kind of give you an idea of why the concern is what it is. The flooding from thunderstorms
from the last week has been so intense, the rivers can't take any more at all. These are historic structures and bridges. They've been sandbagging.
There was a big concern of a breach of these rivers on levies and riverbanks. So any rainfall on top of this is going to be a big problem.
Here's our path now. It still takes it through almost the entire mainland Japan, but it slides out very quickly. The good news is with that track,
most of the rainfall -- even though this is where the flooding came from -- the pictures that you just saw -- most of the heavy rainfall should
stay offshore and into the waters. Now, this is a computer model. They're not always perfect when it comes to rain because the radar right now from
Japan's Meteorological Agency showing the heavy rain occurring now, and we still have a few hours before landfall. The good news is it's going to pick
up in some speed, and so therefore hopefully less rain. They have the rain on stage 5 in the tour.
Nothing goes well together like -- well, it doesn't go well together at all. Rubber tires and cobblestones that are wet. Number of crashes today -
- 20 in London right now, Paris is at 15. Of course that was up in Belgium. Let's take a look. You can see just the conveyor belt of moisture
that's been coming across the low countries, so not only will the Tour de France have rain today at stage 5, they're going to have it tomorrow at
stage 6, they're going to have it tomorrow -- err -- Friday in stage 7 because an area of low pressure isn't going to move very far.
Even though it hasn't been tremendous amounts of rain, for the thousands that'll be lining the route, well, you're going to be looking at a little
bit more of it. And so here it is up to the north. The forecast calls for rain to begin the stage at 21. It'll end the stage 23, and we're talking
about a total of 194 kilometers. But, Richard, this is going to continue to slide across Europe. We've had heavy hail in parts of Bulgaria --
lightning and thunderstorms in Germany. So we're going to keep an eye on it for you for the next couple of days.
QUEST: Tom Sater, thank you, sir, for that. Now there's one World Cup Final spot left to fight over. Argentina and the Netherlands -- they're
battling it out. We'll be in Brazil for the latest just after the break.
(COMMERCIAL BREAK)
QUEST: Oh. Will it be an all-European World Cup final or will South America be represented in the second World Cup Semi -- the Netherlands and
Argentina tied nil-nil at halftime. Alex Thomas is live for us in Rio tonight. Has your blood pressure, sir, gone down? I was very concerned
about you last night as this match between Brazil and Germany was going on.
ALEX THOMAS, CNN SPORTS CORRESPONDENT: Well, watching you samber (ph) in the studio, Richard, it's been a darn sight more entertaining than watching
the Netherlands and Argentina in their first half. What a difference 24 makes. This time yesterday we'd had five goals and an historic half an hour
of World Cup Football. Now we've got a nil-nil result currently between the Netherlands and Argentina.
Only one shot on target the whole 45 minutes as these two teams battle it out for the right to face Germany in Sunday's World Cup Final at the famous
Maracana Stadium shrouded in the darkness behind me here in Rio, Richard. But, yes I've just about recovered from that astonishing and historic 7-1
thrashing of Brazil.
QUEST: Last night we alluded to this, and reading "The New York Times" and all the coverage. Alex, it was the total collapse of the team on the pitch
that was the remarkable nature. And I wonder whether that total collapse had nothing really to do with football and everything to do with
psychology.
THOMAS: I would completely agree. You hit the nail on the head there, Richard, because let's not forget that this is Brazil's 64 years on from
failing to win the World Cup the last time they hosted it in 1950. They still talk to this day of losing to Uruguay as being a national tragedy.
Now they've got an even bigger national tragedy on their hands because given the chance to reprieve themselves, they've blown it again. And
they've blown it under Brazil coach Luiz Felipe Scolari who led them to glory in 2002, but without their star player Neymar and their captain
Thiago Silva, I think they got caught up too much in the emotion. They tried to use the willpower of a nation to spur them to victory. Instead
they drowned under it.
QUEST: Alex, thank you very much, sir, and we'll talk more tomorrow hopefully about how things will look for the Final. I need to remove a bit
of Vexillology myself, remove the Brazilian flag. Perhaps we'll keep it here for the moment. I'll update the "Quest Means Business" Footy 32 index.
We've been following it right the way through you'll be well aware of that. Let's look at Brazil -- and you see straightaway the value of the team I
suspect that is going to go down in the fullness of time.
But as of course Brazil has managed to win some goals and lose a lot of goals, so the value is now down to zero. The value of the two remains
exactly where it was. I'm going to delist Brazil from the contest. Those are the last three.
We look at how the fortune and the value of Brazil has gone up and down as the contest has gone. This I think shows better than anything else. That's
the high point for Brazil -- it was the high point. They had scored 10, but they conceded only 4 goal. Score 10, conceded 4. The low point -- and
this is -- I mean this is why it's like what we put values in the stock markets to make it clear. Up it goes and then of course by July the 8th,
the low point -- the lowest of the contest -- scored 11, conceded 11 and that's why Brazil of course is looking as it is, and we still have
these three to consider ourselves. I will have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Britain now is the latest country to say that it will follow the U.S. guidelines in terms of making sure phones
can be charged up and you can prove that they work. And so, I'm afraid to say for global travelers the world over, it means just get used to being
prepared. It means having the necessary cables so that you can quickly charge something up if you have to. It means having the adapter packets and
the adapter sockets with you. It means having a spare battery that you can quickly give a boost. And it means making sure that when you're on a
connecting flight, you're not stupid enough as I have been too often, to leave your phone on so it's searching, searching, searching, searching,
searching, and when you get to the other end, it's all run out of juice. It basically means you can no longer just sit and not care. You've got to
think about these gadgets and devices. The alternative is not pleasant. It means you'll lose the lot. So, be prepared like the Boy Scouts.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) hope it's
profitable. I'll see you tomorrow.
END
