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Quest Means Business
Airbus Launches Neo; Boeing Fights Back; Costa Concordia Floating, US Markets Take Off; European Markets Up; CitiGroup Settlement; China Broadcaster Detained in Corruption Crackdown; Suspected Child Labor at Samsung Plant; Malala Day; Future of Soccer in the U.S.; Israel-Gaza Conflict; Executive Innovator; BitTorrent's New Charge; Twitter Breaks Records
Aired July 14, 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)
PAULA NEWTON, HOST: So close to more records on Wall Street. Who would have thought in the dead of summer we'd be looking at this kind of a
market. It's Monday, the 14th of July.
New life in an old plane. The CEO of Airbus tells us the A330 can compete with Boeing's Dreamliner.
The wreck of Costa Concordia is refloated.
And World Cup players, world-class prices. The latest on the transfer market.
I'm Paula Newton, and this is QUEST MEANS BUSINESS.
And good evening. Airbus has just upped the stakes in its battle with Boeing. It's unveiled a new range of lighter, more fuel-efficient aircraft
to try and steal the thunder from Boeing's 787 Dreamliner. Tonight, the CEOs from both sides tell QUEST MEANS BUSINESS why their aircrafts are
best.
Now, the A330 Neo was announced at the Farnborough International Air Show in England. It's one of the biggest events in the aviation calendar.
Now, Boeing insists its 787 Dreamliners remain the best in class and are technologically far more advanced.
Now meantime at the show, Russia has told its delegation to leave as the diplomatic row over Ukraine continues to escalate. We'll have more on
that later in the program.
So first, though, we go to Airbus, who definitely don't believe the phrase, "if it ain't broke, don't fix it." Now, the successful A330 is now
getting a makeover, creating the Neo, as it's called, and it's a lot cheaper than designing a whole new aircraft.
Now, the new version will have greatly-improved gas mileage, so important to airlines right now. And that's not just down to new engines.
The Airbus CEO, Fabrice Bregier, explained how it's all going to work to our own Jim Boulden.
(BEGIN VIDEOTAPE)
FABRICE BREGIER, CEO, AIRBUS: It's not limited to re-engining. We also improved the aerodynamics, the wing of the aircraft. We put wing
tips, which are very similar to the ones we have on the 350.
So, all-in-all, we'll have a reduction of fuel burn of 14 percent, which puts us at the same level as the 787, but with a mature aircraft,
with lower cost of maintenance, and lower cost of capital. So, it will be very competitive on this market.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: And customers have been asking for this new kind of A330 Neo because of the fuel efficiency they've
seen coming through the A350 and obviously the A380.
BREGIER: Do you know, for the last five years, we sold more A330s than Boeing sold 787s? But the customers were telling us the new aircraft
is fantastic, but you need to improve the fuel burn. And we listened to them, and this is what we have announced today.
BOULDEN: And who will be the launch customer? How many A330 Neos do you expect to be rolling off the assembly line in the next year or so?
BREGIER: So, the launch customer is ALC. Steve Hazy has always supported the A330 Neo. And we'll announce an order for 25 aircraft. But
we'll have other lessors, we will announce those orders during the show. So all-in-all, we'll get probably very close to a hundred aircraft.
BOULDEN: OK, a hundred aircraft, the A330. Let's talk the A350, which is on display here, launch customer Qatar, of course. Are we on time
with launch, and when will that be?
BREGIER: We're on time. We have almost completed the flight test. We still have around 300 hours of flight tests, 2,200 have been completed.
So, certification on track, and then we are assembling the first two Qatar Airways aircraft, which will be ready for delivery by the end of the year.
BOULDEN: So, the end of 2014. So, this plane, we've been waiting for for a long time, the A350, finally comes off the assembly line.
BREGIER: Not finally.
BOULDEN: No?
BREGIER: It has not drifted away for the last two years, which in this business, I can tell you, is unusual.
(LAUGHTER)
BOULDEN: I think your competitor wishes they had the same luck with the 787 launch. I've been reading about a little bit bigger has been
better, so not talking about the A380, but your A321 doing very well. But everything's stretching a little bit more, isn't it? Is that coming from
the customer saying, we just want 20, 30, 40 more seats?
BREGIER: Yes, you are right. There are many reasons for that: fuel burn efficiency, but also congestion of airports. Let's take Heathrow.
BOULDEN: OK, yes.
BREGIER: I'm sure the A380 will be progressively the aircraft of choice for aircraft -- for landing to Heathrow. So, we can see this trend,
and you're absolutely right. In the single aisle segment, 321 will account for close to 50 percent.
BOULDEN: Wow. Yes.
BREGIER: When five years ago, it was only 20 percent.
BOULDEN: Twenty, yes. We have the A380 behind me, so I have to ask you, has it been -- is it profitable yet? Has it made you money?
BREGIER: Not yet --
BOULDEN: Not yet.
BREGIER: -- but I hope next year will be break even.
BOULDEN: Ah, break even 2015, so everything after that, some good profit.
BREGIER: Let's take the bet, yes.
BOULDEN: OK. Thank you, sir.
BREGIER: Thank you very much.
BOULDEN: Appreciate it.
(END VIDEOTAPE)
NEWTON: I'm not sure that was very definitive. But despite the attempts of Airbus, Boeing insists it's its 787 Dreamliner that is the best
in its sector, now especially when fuel burn remains such a critical factor for so many airlines.
Now, Boeing today announced a leasing deal which includes six 787-9 Dreamliners valued at more than $2 billion, that's if you go by the list
price. Now, the CEO, Jim McNerney said the Airbus Neo is a "worthy adversary," and he actually said that, but he also says it still doesn't
come close to --
(BEGIN VIDEOTAPE)
JIM MCNERNEY, CEO, BOEING: There is no question that the A330 Neo will be an improvement over the current A330 family. It'll have modern
engines. I believe there will be some wiglets --
BOULDEN: Yes.
MCNERNEY: -- all of which help. But it doesn't get you anywhere near this airplane. So, it's going to be an interesting competition over the
years, but we think we're on a different technology platform with different levels of not only fuel efficiency but maintenance. And so, that's what
they thought their response had to be. I like our lineup a lot.
BOULDEN: OK, we're halfway through the year. How would you describe the year? Are we fully back from the recession? A lot of the airlines
that may have delayed orders are now really into the market again?
MCNERNEY: Yes. I think we're seeing steady demand. We're already halfway through the year at a book-to-bill of about one. So, the rest is
gravy in terms of staying above that one-to-one book-to-bill.
BOULDEN: Yes.
MCNERNEY: There's a big technology replacement cycle going on, and that's why aerospace sector commercial is growing a little faster than GDP
in general, because planes like this are replacing planes that used to be like that before they're ready for the scrapheap --
BOULDEN: Yes.
MCNERNEY: -- because these economics are so compelling, you're sort of replacing them a little faster than you used to.
BOULDEN: OK.
MCNERNEY: And that's why we're a little disconnected and a little favorable to GDP growth.
BOULDEN: Haven't seen the 777X yet.
MCNERNEY: Yes.
BOULDEN: Just been reading a little bit about it. What's that going to bring? It was a fabulous plane when it came out in the early 90s, but -
- so this is another incremental step, would you say?
MCNERNEY: Yes, well, it's -- the 777X, we're in a position now of taking the hard-fought technology maturation on the 87, which had its
issues --
BOULDEN: Yes.
MCNERNEY: -- and now we're flowing it into the 777 family.
BOULDEN: OK.
MCNERNEY: And specifically, we're taking composite wings and adding it to the current fuselage on the 777.
BOULDEN: OK.
MCNERNEY: And adding new engines.
BOULDEN: Yes.
MCNERNEY: And the numbers are astounding. Now, a composite wing the size of the new 777 is the largest airfoil ever built.
(LAUGHTER)
MCNERNEY: And it's the largest composite airfoil ever built.
BOULDEN: Yes.
MCNERNEY: And it offers not only huge weight advantages, but tremendous aerodynamic efficiencies.
BOULDEN: As you said, the 787 had a lot of issues. So you're saying incremental is now the way to go, because you've done this technology, and
now you can add it to others?
MCNERNEY: But he impact isn't incremental.
BOULDEN: Right.
MCNERNEY: OK? In terms of technical risk, it's incremental, because we've done it before.
BOULDEN: OK. Yes.
MCNERNEY: But in terms of its impact on the 777 family, you're getting that same step function improvement that we had -- that we're
getting with this airplane over and above the A330, over and above the 767. So, we're now in a position of over the next 20 or 30 years off this higher
technology platform of improving the entire fleet.
(END VIDEOTAPE)
NEWTON: The Costa Concordia cruise ship is floating for the first time in two and a half years. Thirty-two passengers were killed when it
capsized off the coast of Italy, and it could yet take another two years to dismantle the ship once it's towed into a nearby port. Now, the total cost
of the wreck could yet reach $2 billion. Erin McLaughlin has more.
(BEGIN VIDEOTAPE)
ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT (voice-over): After two and a half years of intense preparation, the Costa Concordia is finally
floating.
MICHAEL THAMM, CEO, COSTA CONCORDIA: The ship is on even keel, the ship is afloat again, and all technical systems are working very well, so I
think we've seen a great start of this refloating operation, and let's move forward.
MCLAUGHLIN: For the past ten months, engineers have been hard at work attaching metal boxes to either side of the ship. Monday morning, they
pumped compressed air into those boxes, raising it some two meters off of massive underwater steel platforms.
Next, they began to tug the Concordia about 30 meters to the east. It was a dangerous and tricky procedure. The ship is rotting, and there was a
real risk the bottom of it could give way.
Once the ship was afloat, underwater divers went to work to find the remains of a 32-year-old crew member. Russel Rebello is the last missing
casualty of the disaster.
Over the next few days, divers will begin to attach chains and cables to help secure the ship's vulnerable underbelly, and they'll lower some of
the metal boxes on the starboard side of the ship. Then the full refloat begins, lifting the Concordia up deck by deck, clearing any debris along
the way.
(END VIDEOTAPE)
NEWTON: That was CNN's Erin McLaughlin reporting.
The Obama administration is continuing to seek justice over the 2008 banking crisis. One of the world's biggest banks has its second-quarter
earnings nearly wiped off the books. The details of the CitiGroup settlement. That will be up next.
(COMMERCIAL BREAK)
NEWTON: It was a good day for traders on Wall Street. The Dow is back over 17,000 and hit another all-time high. For more on how the US
markets performed, Alison Kosik joins me now. Alison, I'm having trouble figuring this market out. You knew going into it early on, because of the
results from Citi, which we'll get to in a moment --
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Right.
NEWTON: -- that things were really going to take off and -- but this really is a bull market to outdo all bulls.
KOSIK: It really is. And you talked about the high for the Dow. It did rally. Didn't get to a new record high, but we did see a new intra-day
high for the Dow today.
NEWTON: Which is a distinction. We go back and forth on this all day. The point is, it hit record terrain, but then settled back down.
KOSIK: Right.
NEWTON: So -- OK.
KOSIK: But it had a great day today --
NEWTON: Yes.
KOSIK: -- in part because earnings are fueling stocks at this point, and then the even bigger reason -- Goldman Sachs came out and said you know
what? This year the S&P 500 is not going to hit 1900, it's going to go higher. It's going to go to 2050.
And everybody went whoa, let's continue buying in, because you know what that means? It means the bulls have room to run, that stocks are
expected to go higher, at least based on this analyst. And that's what you're seeing.
Now, the one problem that could certainly through a wrench in this rally is if earning start to disappoint. Today was a good day, but it's
one day of many. Earnings season has just gotten started for the second quarter. If earnings start to show some stress, some strain, you'll see
the market pull back, because the market is looking for an excuse.
NEWTON: Which may not be borne out, but at this point, people being cautiously optimistic about all those --
KOSIK: Right, exactly.
NEWTON: -- earnings coming down. Alison, thanks so much for coming in.
KOSIK: Thanks, Paula.
NEWTON: Appreciate it. Now, European markets closed higher after last week's dramatic fall sparked by worries about the Portuguese banking
sector. But as you can see today, all arrows up. The FTSE closed up nearly one percent, and Germany's DAX, well, you know, it might have gotten
a World Cup bounce, you never know. It finished more than 1.2 percent higher.
CitiGroup, as we were saying, is paying the price for selling bad mortgages. Now, the bank has agreed to pay a $7 billion fine. The bank
had been accused of misrepresenting the quality of mortgage-backed securities. Now, those securities later failed and helped to spur on the
crisis in 2008. Now, US attorney general Eric Holder says his office will continue to hold banks accountable.
(BEGIN VIDEO CLIP)
ERIC HOLDER, US ATTORNEY GENERAL: Citi is not the first financial institution to be held accountable by this Justice Department, and it
certainly will not be the last. In the investigations that remain open, we will continue to move forward, guided by the facts and guided by the law,
to achieve justice for those affected by the financial crisis.
(END VIDEO CLIP)
NEWTON: A popular Chinese broadcaster left his fans watching an empty chair Friday. Just hours before his show began, prosecutors detained Rui
Chenggang on corruption charges. It's the latest twist in a widening anti- corruption crackdown in that country. Now, last month, the head of the news channel was detained for allegedly accepting bribes. David McKenzie
has more on this growing scandal.
(BEGIN VIDEOTAPE)
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT (voice-over): On China's most-popular business show Friday, there was one major thing
missing: its star male anchor. Just an empty chair.
Controversial anchor Rui Chenggang is known for fast cars and big interviews, but he was taken away on corruption allegations by
investigators right before air. Dubbed a shameless self-promoter, Rui has never missed an opportunity for publicity. Here he is a few years back on
"The Daily Show."
RUI CHENGGANG, CHINESE BROADCASTER: We have probably 2 to 400 million viewers.
ROB RIGGLE, "THE DAILY SHOW": Two to four hundred million?
MCKENZIE: Unashamedly pro-China, he helped kick Starbucks out of the Forbidden City and likes to bait senior US diplomats.
RUI: I would like to begin by asking Ambassador Locke, you flew coach from Beijing to Dalian. Was that a reminder that US still owes China
money?
MCKENZIE: Even taking on President Obama.
RUI: Unfortunately, I hate to disappoint you, President Obama, I'm actually Chinese, but --
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Well, it's wonderful to see you.
RUI: But I think I have yet to represent the entire Asia.
MCKENZIE: With two popular memoirs and more than 10 million social media followers, he's the most popular personality on China Central
Television. He earlier denied he's being investigated.
Senior executives at CCTV, an arm of the Communist Party government, have already been detained by investigators. The party says no one is
immune in their anti-corruption crackdown.
MCKENZIE (on camera): Even one of China's best-known TV personalities, Rui was known as the new face of China. For now, he won't
be getting much face time at all.
David McKenzie, CNN, Beijing.
(END VIDEOTAPE)
NEWTON: Now, Rui is not the only high-profile figure to be arrested in China's corruption probe. One of the country's most senior retired
generals is accused of taking bribes. General Xu Caihou is China's highest-ranking military official to be publicly accused of corruption in
the last 36 years.
Now, businessmen have also been targeted. Jiang Jiemin, former chairman of the state-owned China National Petroleum Corporation, was found
guilty of extortion and taking bribes, according to Chinese State media.
Now, the government is also cracking down on the private sector and foreign businesses. State media reports that prosecutors have charged two
foreign investigators with obtaining private information illegally. Now, the couple was hired by the drug maker GlaxoSmithKline to investigate a
former employee amid bribery allegations.
After the break, a labor rights group points the finger at Samsung after finding child labor at one of its suppliers.
(COMMERCIAL BREAK)
NEWTON: Samsung has suspended its business with one of its Chinese suppliers due to suspected child labor at the plant. Now, a US-based
watchdog reported evidence of at least five child workers last week and called Samsung's attempts at monitoring working conditions there
ineffective.
Kevin Slaten is the program director of that group, China Labor Watch. Kevin, thanks so much for coming in. You've been very, very blunt about
Samsung's monitoring here, that it's ineffective, that it failed. Do you not believe that they're making an honest and earnest attempt to root out
child labor?
SLATEN: They may be making an attempt to root out the child labor, but I think the efforts that they're showing the public aren't necessarily
taking care of the root problems. It's sort of like taking medicine for a symptom without taking care of the disease that's causing those symptoms.
And the root problem here, the disease so to speak, is that Samsung is giving unrealistic prices, low prices to these factories, and a very
demanding, stringent production time that's forcing these factories to adapt by, unfortunately, breaking the law, including child -- hiring child
labor.
NEWTON: How pervasive would you say it is in Samsung's case?
SLATEN: We found three cases of child labor in the past two years, and we've only done about 15 investigations -- or 15 factories in Samsung's
supply chain. Samsung has roughly 200 factories. So, it's difficult for me to say exactly what percentage, but this isn't a small number of cases.
And each of these factories had multiple child workers.
NEWTON: Now, in terms of -- Samsung says that look, they've suspended their connection to the supplier, that they're investigating, that they
continue to investigate, they continue to do their best. Is it not acceptable that companies just say sometimes, look, we were misled from
people who were not working in our company's best interest?
SLATEN: Yes, the problem is that every investigation we've done of the Samsung factories, it's either directly controlled by Samsung or its
supplier factory, has had a large number of labor violations, not just child labor, but unpaid overtime, 200 hours of overtime a month, just
incredible labor violations.
And yet, we see these things continually repeated, despite us revealing this two years ago and other people revealing this. So we ask,
what is Samsung doing to take care of the root problems, not just the symptoms?
Are they just going to continue to do audit reports and report that they're watching these problems when they're being hidden the factory? Or
sometimes, Samsung knows that they continue.
NEWTON: At some point, though, does it not become incredibly difficult to actually monitor this when you have so many people, perhaps,
lying about children's ages? In a lot of those situations, it's difficult for Samsung to do its own due diligence.
SLATEN: Again, the reason that the factory -- or one of the reason the factory would lie about it and that they would still be willing to hire
child labor or student workers or not pay people the wage that the law requires is because they have demands, time and price demands.
When you have to get a production out and you have to increase capacity by 30 percent in a matter of a week, you're going to hire whoever
comes in the door, and you can't pay them what you might otherwise pay them, because you have a very stringent price demand. The profit margins
for these factories are sometimes one to two percent.
NEWTON: One to two percent?
SLATEN: One to two percent. There's been other electronics industry reports by scholars that shown that it's one to two percent at, for
example, Foxconn. So, what are these smaller factories that aren't even as prestigious as Foxconn going to do when they're trying to adapt to these
demands?
NEWTON: OK, Kevin, appreciate you coming in here to discuss this with us.
SLATEN: Thank you.
NEWTON: A story we'll continue to follow. Appreciate it. And from taking a stand against child labor to supporting a child's right to learn.
The United Nations is campaigning for all children worldwide to be given the education they deserve as part of Malala Day.
Now, the young education advocate has been meeting with the Nigerian president, Goodluck Jonathan. Isha Sesay joins me now from Abuja, Nigeria.
I know you've been covering this story for quite a while, Isha, and I know it must strike you as well, so many criticisms leveled at the Nigerian
government about what they have been able to do to keep children, especially women and girls, safe in terms of their learning environment in
Nigeria.
And then, here is this international figure, Malala, with so much international credibility, going there and meeting with him. Why? What is
at the heart of what she wants to get done there?
ISHA SESAY, CNN INTERNATIONAL CORRESPONDENT: Well, hi there, Paula. It's quite simple in the case of Malala, she's lending her very high-
profile and her incredibly potent voice to this battle to get all children in school.
And more than that, in the case of Nigeria, also lending her voice, her visibility, to the fight to bring back those more than 200 girls that
were kidnapped on April 14th in a northeastern part of Nigeria.
I think you hit the nail on the head that to a lot of people, this has been going on now for more than 90 days, and it has somewhat dissipated in
terms of public attention. It's kind of shifted off the front pages and away from center stage.
But I can tell you, Malala being here in Nigeria has moved this issue -- I'm talking about the girls, now, and their abduction, firmly center
stage, and it has really reminded people of the plight of these missing girls. And in addition to that, what those that are connected to them,
their families their loved ones, what they are going through, Paula.
Malala met with some of the girls who managed to escape from that April 14th attack during this visit. She also met with some of the parents
of the girls still in captivity. And she was able to hear firsthand their constant fears, but not only that, their great frustrations at the fact
that more than 90 days have gone by, and these girls still aren't back.
She pledged to convey those emotions to Nigeria's president when she met with him today. After that meeting, I sat down with her, Paula, to ask
her whether she came away convinced as to whether Nigeria's president really is taking these abductions seriously. Take a listen to what she had
to say to me.
(BEGIN VIDEO CLIP)
MALALA YOUSAFZAI, TEEN EDUCATION ACTIVIST: He made me two promises. The first promise that he made was that he will definitely meet the parents
of those girls and he would listen to what the parents say. It's very important, because the parents need support, and he hasn't met the parents
yet, so it will be the first meeting with the parents of those girls.
And it's a great success for me, because I want to raise the voices of those parents. And I'm hopeful that the president will listen to their
voices.
And as for the second promise was that he would make sure that these girls are soon released and he would try his best. He said that he has
many solutions, he will find the best solution for it, and they would try their best.
SESAY: So, let me be clear. Did you come away convinced that he's taking the abduction of these girls seriously?
YOUSAFZAI: He was very serious and he was a little bit emotional as well, and he said that he feels the same for the girls as he feels for his
daughters. As far as I have heard from his words, he was very worried about it, but he said that he would make sure that the girls are released
soon.
(END VIDEO CLIP)
SESAY: And Paula, Malala said she wasn't just interested in the words of the Nigerian president. She was also interested in seeing action, as
she would continue to call for the return of these girls.
To that end, we're now hearing from sources close to the president that the president is preparing to meet with some of those parents of those
girls still in captivity on Tuesday here in the nation's capital. Paula?
NEWTON: Yes, Isha, we appreciate you being there to cover this. I know that Malala would feel this intimately, that she understands what it's
like to be kept from that kind of opportunity and that education. And as you say, continue to keep this story front and center. Isha Sesay for us
in Abuja tonight. Appreciate it.
We'll be back with more QUEST MEANS BUSINESS right after this.
(COMMERCIAL BREAK)
NEWTON: Welcome back, I'm Paula Newton, and these are the top news headlines we're following this hour.
Egypt has offered to broker a cease-fire between Israelis and Palestinians in the conflict in Gaza. Palestinians say Israeli airstrikes
have now killed 185 people. Israel says its forces have struck more than a thousand "terror targets" across Gaza, including hundreds of concealed
rocket launchers.
Kiev says a rocket that downed one of its military planes was probably fired on from within Russia. The plane went down in Luhansk in eastern
Ukraine. That's as the government in Ukraine tries to attack the rebel stronghold of Luhansk.
Two and a half years after it ran aground, the Costa Concordia is moving again. Salvage crews have successfully lifted the wrecked cruise
ship two meters using huge boxes filled with air. Thirty-two people were killed in the accident in 2012. One victim is still missing.
The Church of England has moved to allow women to play more important roles in the clergy. Leaders voted to let women become bishops in the
church. It says the first female bishop could be appointed by the end of the year.
The Nobel prizewinning author and activist Nadine Gordimer has died. A close friend of Nelson Mandela, she was a prominent speaker against
apartheid in her home country of South Africa. She later won the Nobel Prize for Literature in 1991 for works including "A Guest of Honor," "The
Conservationist," and "July's People." Nadine Gordimer was 90 years old.
(MUSIC PLAYING)
NEWTON: Team Germany is on their way home from Brazil with the World Cup trophy in tow. They're due in Berlin early Tuesday for, yes, you can
imagine, a big hero's welcome. It's the nation's first World Cup title since 1990.
Now Germany needed extra time to beat Argentina; the match was goalless until the 113th minute. Substitute Mario Goetze put a dazzling
display and finally found the back of the Argentinian net. Yes, the 10- year old that was watching the match with screamed about as loud as that stadium.
There was a great deal of concern leading up to the World Cup about construction delays and social unrest, but the tournament went off without
any major problems.
So how will Brazil be graded on its performance as host? Shasta Darlington takes a look back.
(BEGIN VIDEOTAPE)
SHASTA DARLINGTON, CNN CORRESPONDENT (voice-over): From the Amazon to Rio de Janeiro, ecstatic fans. Despite last minute stadiums, predictions
of angry protests and transportation chaos, Brazil pulled it off. And fans from around the world enjoyed more than just good football.
Everywhere they went, big-hearted Brazilians made them feel not only welcome but loved.
UNIDENTIFIED MALE: They hadn't chosen the Amazon region for one of the matches, I just think it would have been unfair. This is such a boon
to them and they've been responding in the most unbelievably welcoming of fashions. It's been one of the richest experiences I think I'll ever have.
DARLINGTON (voice-over): Many airport expansions weren't finished, but flights were largely on schedule. That doesn't mean there weren't some
very serious problems.
Two people were killed in Belo Horizonte when a overpass collapsed, part of a World Cup transportation project that wasn't finished on time.
The toll could have been higher if it were game day.
Rio banned a breached security around Maricana Stadium on more than one occasion, smashing into the press center. And there's still the
question of what will happen to the multimillion-dollar stadiums built in cities like Manaus without any real football tradition.
But let's face it: Brazil and the world were bracing for much worse. President Dilma Rousseff talked to CNN's Christiane Amanpour.
DILMA ROUSSEFF, PRESIDENT OF BRAZIL (through translator): The fact is that Brazil has organized and staged a World Cup which I do believe is one
of the best World Cups and that is largely due to the Brazilian people and their ability to offer and extend hospitality and welcome supporters from
all over the world.
DARLINGTON (voice-over): All of which could bode well for the 2016 Olympics to be held in Rio de Janeiro. The venues are notoriously behind
schedule and transportation links barely begun.
One of the biggest challenges will just be moving people around this chaotic city. For the World Cup, they just had to get them to the stadium.
But if that's any indicator, they might just pull it off by the skin of their teeth -- Shasta Darlington, CNN, Rio de Janeiro.
(END VIDEOTAPE)
NEWTON: The Olympics in two years, can you believe it? Now no sooner had the fireworks finished in Rio and talk turned to money. Now as a
reward for winning the World Cup, FIFA will give the German Football Federation $35 million -- that's $5 million more than Spain got in 2010.
Now Team Brazil is already making personnel changes and that's starting at the very top. After a devastating failure to win on home soil,
the Brazil manager, Felipe Scolari, he's got the boot; the team took fourth place, as we all know, after their hopes were dashed in the semifinal
blowout against Germany. It was epic.
And then there was that 3-0 loss to the Netherlands in Saturday's consolation match. And Adidas in the end might be the biggest World Cup
winner of all, after outfitting both Argentina and Germany in the final. Adidas has landed one of the most prized sponsorships in sport.
The company inked a $1.3 billion deal with Manchester United that will keep the Red Devils in Adidas gear for the next decade.
Now the World Cup final was the third most watched World Cup game in United States history and Team USA didn't have any skin in the game.
American soccer fans have been showing they're prepared to turn out in numbers; 64,000 fans turned up to watch the Major League Soccer Seattle
Sounders beat the Portland Timbers on Sunday night -- 64,000. That's amazing. Now the star player for the U.S. team cup, Clint, he scored the
winning goal for Seattle, making visions of that American team come back again.
Now Don Garber is the commissioner of Major League Soccer, the MLS for the rest of us. He joins us now from the Nasdaq, where he's just finished
ringing that closing bell.
Thanks so much for joining us. Appreciate it on what must be an incredibly up moment, up month for you and your league. I'm sure that
you're hoping that to really capitalize on this. But I have to say there are doubters out there, after every enthusiastic World Cup, you know, we
all got our kids out there on the play fields here. And yet soccer does not really follow through, to use the term.
What do you think will happen this time?
DON GARBER, COMMISSIONER, MAJOR LEAGUE SOCCER: Well, you know, it's interesting; the -- first of all, what happened over the last month is
unprecedented. We really captured the attention of all of North America, Mexico and the United States and in Canada in ways that I think we really
didn't expect would happen in our lifetime.
Our challenge is to convert all of that interest into day-to-day following of your local MLS team. Last night, 64,000 is an example of
that. Clint Dempsey playing in our league and also playing the World Cup's part of a strategy to try to ride that momentum a little bit.
But I think the most important thing -- and it speaks to your child, who's playing youth soccer, all those families and kids who grew up with
the game are now Millennials. And Millennials are following our sport and our league in record numbers. We're the second most popular sport after
the NFL among young people.
Our attendance now ranks on an average basis after the NFL ahead of the arena sports, the MBA and the NHL. That's a great accomplishment.
So I would have said years ago, you know, it would have been much of the same; big event. Americans like the red, white and blue. But I do
believe it's different today. And more and more people are just growing up with the game and they care about it and they want to follow the sport and
they want to follow a pro game. They want to watch it on television and they want to be a supporter.
DARLINGTON: But what has to happen next, do you think, to get to the next level?
Do big American players need to go play in the big leagues, to use a term, do they need to go play in Spain or the U.K., where they're going to
get that, you know, that famous sport going around the world?
Or is it different than that?
Does the MLS need to be the place to go? I mean, we've had obviously Mr. Beckham here, now we have some star players playing for Toronto.
I mean, which way do you see it going?
What has to happen next?
GARBER: Well, you know, really it sounds like you're really knowledgeable about the sport and the knowledgeable people understand it's
a global game and there are times that players are going to move from one team and one league to another. And in our business, you're going to have
a situation where players are going to leave the league and they're going to go perform abroad.
But (INAUDIBLE) very stated and focused strategy. We want certainly the best American players to be here. We want to be a league of choice for
the top American players. We want to be a choice for American, Canadian soccer fans, because we're right here and we want to show that you can
support a local team no different than you were supporting the U.S. national team.
But if one of our players was a star player for ManU, for Man City, for Real Madrid, for Barcelona, and was one of the those players like Messi
or like Neymar, and he was an American, why, I think it would give our league and the sport here in our country a huge boost.
My strong opinion, though, if they're not going to be that person, they're just going to be sitting on the bench or they're going to be
playing in one of the middle leagues or a middle team, I'd rather have them here at MLS being a hero for young kids that are playing and living the
game in the United States and Canada.
NEWTON: It's interesting that you say that because it is a double- edged sword, right. And the people laughing right now are my son and my husband, that said you were knowledgeable about soccer.
I am not. But I'm just one of those people who's been asking you and I'm glad you've given us the answers about what's going to take soccer to
the next level, because we all spend so much time on the pitches here at home, where we call them fields, of course.
(LAUGHTER)
NEWTON: Go ahead.
GARBER: You know, one thing I would say is the sport is so much different than it was years ago. We are a soccer nation and I know it's
sounds clicheic (sic) but what we experienced over the last couple of weeks, that was soccer. Those were people following guys that are playing
at MLS like Clint Dempsey and Michael Bradley and Graham Zusi and Matt Besler playing in Kansas City. That kind of experience was right here in
our country. Frankly, I did not think that that would be happening like it did over the last couple of weeks.
People crowding bars, doing these giant viewing parties --
(CROSSTALK)
NEWTON: It was incredible.
GARBER: -- we held our collective breath. And that's going to elevate our sport in ways that we've got to work hard to capitalize on so
it happens again four years from now in Russia.
NEWTON: OK. Some will continue to watch from the sidelines. Appreciate your time today.
GARBER: Good. Keep it up.
NEWTON: Now after the break, how BitTorrent plans to create original content and have its users pay the bill.
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NEWTON: Now more U.S. cities are throwing barriers in the way of ride sharing apps like Uber and Lyft. And it's reported attorneys in Arkansas
and Memphis has sent warnings out to those startups. Now you might think technology is the only way to stay ahead in the taxi industry. But in
Indonesia, it's down to the drivers as Anna Coren found out.
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ANNA COREN, CNN CORRESPONDENT (voice-over): From above, it looks like a delicate dance. But on the streets of the Indonesian capital, the crush
of congestion can be maddening. In a city where you almost need a pair of wings to get anywhere fast, one road warrior has found innovation by
keeping the business in the family.
NONI PURNOMO, BLUE BIRD GROUP: Hi, I'm Noni Purnomo. I'm the president director of Blue Bird Group Holdings. I've been working in the
family business since I was 3 years old.
COREN (voice-over): Blue Bird was started by Noni Purnomo's grandmother over 40 years ago.
PURNOMO: Many companies in the beginning, they aimed straightaway for profit. But for us, we aimed really on the building the foundation of the
company itself.
COREN (voice-over): And that foundation was the innovative notion to treat drivers like extended family. Blue Bird considers its 36,000 drivers
to be its partners, not employees. Each driver earns a daily commission of 30 percent to 40 percent based on performance.
On slow days, drivers are guaranteed a minimum wage and benefits include free health care at company run clinics and even low interest home
loans for those who perform well.
PURNOMO: I'm not good enough to be an innovator. I'm an industrial engineer by education background. So for me to look at things to improve
every new process, every day, it's always in my mind. Whether you call it innovation or you call it creativity or I think that what drives me every
single day.
If you want to excel, then you have to show that you have new ideas.
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COREN (voice-over): But not every innovation has worked out the way Noni Purnomo would have liked. A program to give drivers a chance to own
their cars didn't receive enough interest.
PURNOMO: Not every idea can be implemented. And that's something that you should not discourage us.
COREN (voice-over): Perhaps Blue Bird's biggest challenge, how to expand without sacrificing its core values.
PURNOMO: Number one, what's important for us is the reliability of the driver. The background of the driver, the attitude and the behavior
we're not going to make an adjustment on that.
COREN (voice-over): As a result, the company has scaled down some of its domestic growth plans. It's even put the brakes on invitations from
Malaysia, the Philippines and Vietnam to set up business.
PURNOMO: It is difficult to say no because it's a huge opportunity for us. We strongly believe that, yes, we can have a short-term profit,
huge profit short-term. But is it sustainable because we don't want to enter into a new business if it's not sustainable for us.
COREN (voice-over): For Blue Bird's third-generation leader, innovation means sticking by her grandmother's vision -- Anna Coren, CNN.
(END VIDEOTAPE)
NEWTON: Now Egypt has offered to broker a cease-fire between the Israelis and Palestinians in the conflict in Gaza. Palestinians say
Israeli airstrikes have now killed 185 people; Israel says its forces have struck more than 1,000 so-called paratargets across Gaza, including
hundreds of concealed rocket launchers.
Wolf Blitzer joins me now for the latest.
Wolf, what are you hearing about this possible cease-fire? Is it just an idea that was thrown out there? Or does it have some credibility behind
it?
WOLF BLITZER, CNN HOST: Well, from the Israeli perspective, it has a lot of credibility. We are getting some breaking news into CNN right now,
Paula. The Israeli cabinet, the security cabinet will meet; Prime Minister Benjamin Netanyahu has ordered that the security cabinet meet first thing
Tuesday morning to review the Egyptian proposals which a senior Israeli officials tells me the Israelis are taking very, very seriously. They're
looking at these proposals and they're going to review them in the Israeli security cabinet.
They presumably are encouraged by what they're hearing. If the Egyptians put forward this proposal as they publicly already have, the
Israelis are -- seem to be inclined to go ahead and accept it. We have no reaction yet from Hamas. But basically the outline is pretty simple.
Hamas will stop firing rockets and missiles into Israel. Israel will stop its airstrikes going against Hamas targets in Gaza. No ground invasion or
anything along those lines. They can also talk about some other issues.
But I'm told by a senior Israeli official that they are taking this Egyptian proposal very seriously and if, in fact, the Israeli cabinet were
to accept it, Hamas were to accept it, it would very similar to the agreement they worked out at the end of 2012, when they went through
another very bitter military exchange. At that time, the Egyptian government of President Mohammed Morsy, who's now in jail, he'd put
together this cease-fire plan. It worked, at least for the time being, now let's see if this new Egyptian plan works.
But the Israelis apparently are encouraged by it.
One other note I just want to point out the top of the hour in "THE SITUATION ROOM," we're going to have a special report on what's going on
here between the Israelis and the Palestinians in Gaza. The chief spokesman for the Israeli Prime Minister Benjamin Netanyahu, Mark Regev,
was supposed to be one of our guest. He has now canceled. The Israelis are going into a silent mode right now in advance of that emergency cabinet
meeting tomorrow morning. We'll see what happens in that meeting.
But clearly I think from the Israeli perspective they like what they see in this Egyptian proposal -- Paula.
NEWTON: Yes, which is surprising, considering how heated it's been. Wolf, you've covered this issue so much, not just from "THE SITUATION ROOM"
and in Washington from there in the country.
How is it different now that they believe that they can broker anything with Hamas?
It seemed that the tone was different this time, that Israel felt that they had to go as fast as possible to be able to end that threat from those
rockets once and for all?
BLITZER: Well, I think from the Israeli military perspective, from what I've heard, they think they've made some extensive damage. They've
degraded significantly Hamas' missile and rocket military capability over this past nearly one week. Hamas has really suffered and we know the
Palestinian people have suffered the major deaths, the injuries in Gaza, awful images that we're all seeing.
The Israelis have suffered at the same time, when you have sirens going off, nearly 1,000 Palestinian Hamas rockets and missiles coming into
Israel, sirens going off, even though there have been no deaths here in Israel, there have been some people who have been injured. So the
Israelis, I suspect, if this Egyptian proposal is what it appears to be, it would be something that both sides, for their different reasons, would be
inclined to go forward with and maybe there will be a little element of a cease-fire.
The Egyptian proposal which the Egyptian foreign ministry put out publicly, Paula, stipulates that it would go into effect as early as 6:00
am Tuesday morning Greenwich Mean Time. I don't know if the Israeli cabinet will have met by then. But these late-breaking developments that
we're reporting right now seem to be offering a little bit of daylight now in what has been an awful, awful week for the Israelis and the
Palestinians.
NEWTON: Yes. Also many people hoping for more of that peace deal, a lot of detail already on the table. We know you'll have a lot more detail
for us at the top of the hour.
Wolf Blitzer will be in with "THE SITUATION ROOM" in about 10 minutes.
Wolf, we'll join you then. Thanks so much.
We will be back with more meantime on QUEST MEANS BUSINESS in just a moment.
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NEWTON: Now it's the technology more associated with Internet pirates than original content. But now BitTorrent is not only trying to make its
own programs, it's asking its users to pay for them. BitTorrent was once so controversial thousands of its users were sued by film studios. Now
it's reported it wants to raise money by crowdfunding and pay walls.
Matt Mason, the chief content officer for BitTorrent, joins me now.
Thanks so much for being so patient and waiting for us to do this interview.
This concept, though, I have to ask you, what makes you think that it will work?
Now you've got a great user base up there, upwards of 150 million at least.
But why do you think anyone's going to pay you to make an original program?
MATT MASON, CHIEF CONTENT OFFICER, BITTORRENT: Yes, it's a great question, Paula, thank you.
So just to be clear, none of our users have been sued for piracy by any studios. No one using BitTorrent, our website or any our products, if
you're just using those things, it's literally impossible to find legal content. We're not about piracy as a company. Our problem stems from the
fact that BitTorrent's also an open source protocol that people like The Pirate Bay users, part of the back end of their operating system, simply
because it's the best way to move a large file.
Facebook also uses BitTorrent to update Facebook. So lots of people use it.
If you look at BitTorrent bundles and our users, we've had over 100 million downloads of bundles in the last year. And we've seen people pay
to go to concerts, pay to buy things on iTunes, pay for merchandise. The next natural step for us was to put that payment option right there in the
file where they're coming the legal content.
NEWTON: But getting back to the point at hand -- and I take your point, but, no, there's been a lot of controversy over what your company
does. And legally it's still a point of contention. But I want to put that aside for a minute.
Content: why? Do you think you're going to become the next Netflix with this?
I mean, what is the business model here going forward?
MASON: So the point is not really to become the next Netflix, but to become something that's quite different from Netflix. If you look at the
digital content space as it stands at present, we've got lots of streaming services like Netflix, like Spotify, like Beats. We've got stores like
iTunes, places like Best Buy.
It's really hard for an artist to connect directly with a fan to sell something directly to that fan and most importantly, perhaps, to get the
data back on that fan so they can continue to work out what they should make for those fans.
We're trying to create something that helps people get more directly to their fans because that really plays to sort of the value of BitTorrent,
which has been the fastest connection between two points on the Internet.
NEWTON: But just so I'm clear, you're saying that you want your customers to determine what content they want to see and then they can pay
for it?
MASON: So that's very much the spirit behind this project we're embarking on with Marco Weber, "Children of the Machine." Marco's making a
pilot, which he's going to put out as a BitTorrent bundle and then he's going to ask BitTorrent users to pay $9.95 if they like the pilot. And
he'll then make the entire rest of the season, eight more episodes, and deliver those eight episodes back to those users as a BitTorrent bundle.
NEWTON: And do you think this will do for BitTorrent what? What will it do to help you guys elevate your business model to where you want it to
go?
MASON: Yes, I think -- I mean, for us it's about helping figure out what's the best way forward for digital content creators. One thing that's
very clear is there is one business model for digital content. It's not just Netflix or it's not just Spotify. It depends what works. It's really
up to, you know, who you are as a publisher, who your fans are and we want to create a system where people can tweak their business model and
customize it that best helps them reach their fans directly.
NEWTON: Well, it'll be interesting to see if it works and we'll continue to follow the progress. Thanks so much, Matt. Appreciate it.
MASON: Thanks, Paula.
NEWTON: After the break on QUEST MEANS BUSINESS, Twitter breaks records of its own during the World Cup.
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NEWTON: I was just saying I'm really getting into that music.
Twitter has smashed records during the World Cup final. Official figures showed there were over 618,000 tweets per minute during the game.
I could certainly believe it. And over 32 million tweets about the match worldwide. And to prove their point, Twitter released a so-called heat
map, showing the hot spots around the world for tweets as the match went on and on. You could see the surge from the Americas, Europe, Asia and parts
of Africa.
After the victorious Germans thousands took to the streets of Berlin to celebrate the victory in the roads around the Brandenburg Gate on Sunday
night. Look at them party. That party continued; the team arrived in Berlin on Tuesday morning for a victory parade.
And that's QUEST MEANS BUSINESS. I'm Paula Newton in New York. "THE SITUATION ROOM" live from Jerusalem is up next.
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