Return to Transcripts main page
Quest Means Business
Yemen Ceasefire Due to Start; Devastated Nepal Hit By New Earthquake; Oxfam Assesses Fresh Quake Damage; Verizon Buys AOL for $4.4 Billion; US Markets Close Slightly Lower; OPEC Sees Higher Demand for Oil; Fuel Shortages to Worsen in Nigeria
Aired May 12, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: The market staged a remarkable recovery. Still ended lower when all was said and done, but well off the low point of the
day. And as the market -- as the bell rings, hit the gavel.
(GAVEL POUNDS)
QUEST: Yes! A brilliant way to bring trading to a close on Tuesday, it's the 12th of May.
Tonight, we're back in Nepal, where there has been more death and disaster. The head of Oxfam will be giving us an update on the latest
situation following the latest quake.
"Don't underestimate us." Britain tells Brussels it's ready to talk reform, and now a deal has to be done.
And you've got a merger. AOL is bought by Verizon. I'll be joined by the chief exec of Time Warner.
I'm Richard Quest. We have a very busy hour together, and I mean business.
Good evening. We'll bring you all the business news in just one moment. I must, though, begin with -- in Yemen, where a ceasefire that was
announced by the Saudi-led coalition is due to start just right now.
Saudi Arabia and its allies are fighting Yemen's Houthi rebels, who drove the president out of the country in March. It's not clear if the
rebels will observer the ceasefire. The Saudis say it's a chance for humanitarian aid to get to the people who need it.
Shortly before the ceasefire, coalition jets attacked Houthi positions in the capital Sanaa. Now, Sanaa Airport and runway has been damaged. The
key ports are damaged as well. There are fuel shortages, which are hampering delivery of supplies. And people in Sanaa say the situation
there is desperate.
(BEGIN VIDEO CLIP)
ABDULAH AL DUEIS, SANAA RESIDENT (through translator): We are all asking for a truce. We need fuel and diesel and flour. We need aid. We
need everything now. The people are dying of hunger.
(END VIDEO CLIP)
QUEST: The United Nations says hundreds of thousands of civilians in Yemen are vulnerable and trapped by the fighting raging around them. The
journalist Hakim Almasmari joins me on the line now from the capital Sanaa. Sir, the ceasefire was due to take effect just about now. How will we be
able to tell? How long will it be, do you think, before we'll be able to tell if it's holding and stuck?
HAKIM ALMASMARI, JOURNALIST (via telephone): Oh, the first day would be more than enough to tell if this will last or not. But the problem is
that right now, both sides, the Saudis and the Houthis, are indirectly blaming the other for breaking the ceasefire. So, it's --
(AUDIO GAP)
ALMASMARI: -- we don't see --
(AUDIO GAP)
QUEST: Ah, we are having some communications difficulties. Let me just see if Hakim can hear me. If he can, it's an important story, so
we'll most certainly stay with it. Hakim, can you hear me?
ALMASMARI: Yes, I can hear you.
QUEST: Excellent. We are having difficulties with the line. So, what's going to be the biggest difficulty in trying to get this Saudi-
Houthi ceasefire to stick and to hold?
ALMASMARI: There must be goodwill. Both sides must honor --
(AUDIO GAP)
QUEST: No, we -- I do beg your pardon. We will move on, Hakim. The line is breaking up very badly, but we certainly go the gist of what you
were telling us, first of all that both sides are blaming the other for breaking the ceasefire, a ceasefire which has only just happened.
And as he said, as Hakim said, we perhaps heard the important part, that it all requires goodwill on both sides. We'll watch it further, and
if we get a better connection, we'll be back there.
Nepal has been struck by another deadly earthquake, and it's only two weeks since the massive tremor which killed more than 8,000 people. Many
of the buildings that survived that disaster now crumbled to the ground. Take a look at this and you'll see just the seriousness.
(VIDEO CLIP)
QUEST: Obviously, buildings that had been greatly weakened by that first quake never stood a chance in standing up to this second tremor,
which happened to day. This latest quake's claimed the lives of at least 67 people in Nepal and India, and officials say more than 1200 people have
been injured.
It also triggered landslides like this one near Everest.
(BEGIN VIDEO CLIP)
(ROARING)
(END VIDEO CLIP)
[16:04:56] QUEST: And as you watch these pictures and video, bear in mind, of course, these are areas that have already been devastated. So,
people ran in fear to get out into the open. They looked for any place they could feel safe, obviously also concerned that structures that they
were running past and under were not about to collapse.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I think it's a really big hit of earthquake, because again, we go to --
(END VIDEO CLIP)
QUEST: A US military helicopter which was carrying aid near the village of Chautara has been reported missing, and there, as many as eight
people had been onboard. CNN's Ivan Watson has been reviewing the day's events.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): A mountain crumbles when the earth begins to shake in Nepal. For the second
time in a little more than two weeks, a powerful 7.3 magnitude earthquake strikes this mountainous country. Frightened people run out into the
streets. In parliament, lawmakers flee the assembly chamber.
Nepal was just starting to come to grips with the devastation caused by a 7.8 magnitude earthquake on April 25th. That disaster killed more
than 8,000 people and left many more homeless. CNN producer Manesh Shrestha was working as a volunteer clearing debris from the last
earthquake when Tuesday's earthquake struck.
MANESH SHRESTHA, CNN PRODUCER (via telephone): I think 7 or 8 houses fell right in front of me. We were very terrified a few minutes ago, but
we are OK right now. The volunteers were working day and night. They are too scared now. My volunteers, they are too scared to go to the village
and do the debris cleaning.
It's for our only safety also, we are not safe. We have to stick together and stay in the valley and stay in a safe place. So we are
mentally not prepared for this.
WATSON: But unlike the last earthquake, this time, emergency workers and aid organizations were mobilized and ready, assisted by foreign search
and rescue teams and helicopters from neighboring India. They're all helping evacuate those most recently wounded.
Many of the Nepalese people will sleep out in the open tonight, away from damaged buildings, fearful of the next time the earth may shake.
Ivan Watson, CNN.
(END VIDEOTAPE)
QUEST: CNN's Will Ripley is live in Kathmandu for us this evening. Will, the nature of today's tremor, we've seen some of the early pictures
showing collapsed buildings. In Kathmandu, in the capital and surrounding, what was the reaction or the effect?
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, the physical effect is what you see behind me, Richard. This was a five-story building
that was weakened by the first earthquake on April 25th and then came down this afternoon with this major 7.3 aftershock.
Since that aftershock just today, Richard, there have been three more recorded aftershocks, some 140 aftershocks since that large earthquake, so
you can imagine the terror that people here feel. They're afraid to be inside their offices, they're afraid to sleep in their homes. And you see
examples like this, so many buildings have come down, that fear is really justified.
QUEST: So Will, you've got this situation where there are more people homeless. Is there any indication that a proper pipeline of aid has now
been set up, a pipeline that has integrity to deliver within the country?
RIPLEY: The government here has acknowledged that it has been a struggle in dealing with the scope of this disaster. They have a relief
fund that has been established. At the airport, we saw aid workers trying to get in.
But keep in mind that some of the hardest-hit areas still have not been reached because the roads are closed. The epicenter for today's
earthquake is 140 kilometers east of here, difficult to get supplies and people in and to distribute it effectively. It's something that Nepal is
really working on, but hasn't fully accomplished yet, Richard.
QUEST: Will Ripley, who is in Nepal in Kathmandu for us this evening.
Now, there are already hundreds of aid workers in Nepal coping with the after effects. Join me at the super screen and you'll see exactly.
That's where Will is, in Kathmandu, but you have other major -- as we've been talking of course, Gorkha was one of the first places that we got
reports from and saw the devastation. And Nuwakot also has been badly, badly hit.
Oxfam says its staff saw buildings collapse in three different areas of Kathmandu alone. Now, if you take Sindhupalchok over here, it's
providing vehicles to the Red Cross to help move the aid. It's working out how the latest tremor affects those relief programs. You get the idea of
the scale of what we are talking about and how serious.
[16:09:54] Mark Goldring is the chief exec of Oxfam in Great Britain. Mark, we spoke before. The situation was bad. Today has made it worse.
What are you hearing from your people there?
MARK GOLDRING, CEO, OXFAM: Well, the situation was bad before, but aid was speeding up and we were reaching a lot of people in the most remote
areas.
What today has done has added dimension of need to that, because of course, much of the earlier damage was in the west, and this is in the east
of Kathmandu, so there are new sets of people affected. But in addition to that, it's really traumatized the population.
QUEST: Right.
GOLDRING: The strongest message I've been getting from my colleagues today is people who were trying hard to work, a huge amount of people
supporting their neighboring communities, and all of a sudden, everybody in Kathmandu and beyond is living in fear from these multiple shocks that have
happened today and reached --
QUEST: Right.
GOLDRING: -- three or four different countries.
QUEST: And I don't mean to sound a truism or facetious, but the truth is, with this, you simply can't know that there isn't going to be another
one tomorrow and the next day, or worse.
GOLDRING: That's absolutely true. And of course, every time it gets more difficult for people to respond. So today, many of our staff were out
in rural areas working to reach some of those hardest to reach. Their first thoughts then had to turn to what's happened to my families, and you
can imagine that happening right across the country.
We've been getting aid in in increasing quantities. Just today, one of the flights arrived with 35 tons of tarpaulins and sheeting to help with
protection and shelter, and it simply means we'll just have to carry on doing more of that for longer.
QUEST: When we -- now, put it in blunt terms. It's your chance, now, to tell us what is it you need? What does Oxfam need? What does the DEC
need? What do the aid agencies need? How can we help?
GOLDRING: Yes. The most important need is now financial. The logistics are there. We've got to recognize it's never going to be easy to
reach rural Nepal, but roads were being opened, helicopters were flying. We had trucks in the area, which today which diverted to use as ambulances.
But that kind of logistic framework is there. What we've got to recognize now is where there were millions affected before, there's even
more millions. And so, given that the agencies have got the people and the infrastructure there, the most important thing is financial support to keep
us working and allow us to scale up.
QUEST: Thank you, sir, for joining us and putting it into perspective.
GOLDRING: Thank you.
QUEST: We'll be following -- continue to follow this very closely.
And now to our main business story of the day. When we come back, AOL and Verizon have decided to team up. It's a case of you've got deals.
When we come back, we're going to be meeting the chairman chief executive of Time Warner, the man who split off AOL. Come and join us over here,
Jeff.
(COMMERCIAL BREAK)
QUEST: It's the company that brought the internet to millions of Americans and introduced us to e-mail. It went from a dot-com giant to an
also-ran. Now, AOL is being sold to Verizon, and the price tag's nearly $4.5 billion.
Look at how the market reacted to that today. Verizon was up just half a percentage point. Remember, Verizon is a very sizable, large
company, so this is a relatively small deal in the great Verizon world.
[16:15:02] But AOL, the possibility of now being part of Verizon saw the share price going up 18.6 percent to over $50 a share. Verizon's
looking to put more videos on mobile screens, and AOL produces tons of online content and also developed state-of-the-art advertising platforms.
So, put the two together, and the thinking goes it helps target different consumer groups in different ways.
But this deal has been a long time in coming, and has been painful in many ways just getting to where these two come together. Join me at the
super screen and rewind 15 years. It's the dial-up AOL of the late 1990s that Americans remember.
(BEGIN VIDEO CLIP)
(SOUND OF DIAL-UP MODEM CONNECTING)
(END VIDEO CLIP)
QUEST: Remember, it was a familiar noise and a familiar sight for the company's 35 million subscribers. And as for that famous catch phrase --
(BEGIN VIDEO CLIP)
COMPUTER VOICE: You've got mail!
(END VIDEO CLIP)
QUEST: It even inspired a Hollywood movie. AOL shares went stratospheric, and it used them as a takeover currency. Now, in a triumph
of the new media age, well, of course, America Online, AOL, America Online it was known, merged with Timer Warner.
In effect, AOL bought Time Warner, or -- there can be different views on exactly how that deal was -- would have been reviewed today. But the
view was, it was $164 billion in stock deal. AOL was supposed to deliver content, and Time Warner would go backwards and forwards.
The two of them -- we were told -- and I covered it -- we were told this was the deal of the future. This was where it was all going to be.
Distribution, content providers.
Well, the rest, as they say, is history. The predicted mega profits never came about. It was later called the worst corporate deal in history,
and the company reported a $99 billion loss a few years later.
AOL and Time Warner divorced amicably in 2009. And AOL reinvented itself as a content company. Now owns Huffington Post, with Arianna
Huffington being the chief -- editor-in-chief of content. The End Gadget, it also has Tech Gadget.
AOL's strength remains in mobile, video, and online advertising, and that is what Verizon is interested in. Sales in the platform unit are up
over 21 percent this year.
So, that's the history. That's the deal. Now, here's a man who certainly knows AOL. You, sir, split off AOL from Time Warner. Jeff
Bewkes --
JEFF BEWKES, CHAIRMAN AND CEO, TIMER WARNER: Yes.
QUEST: -- chief executive, chairman of Time Warner, who incidentally is also my boss. When you heard this deal this morning --
BEWKES: Yes.
QUEST: -- what did you think? Because you chose to split AOL off --
BEWKES: Yes.
QUEST: -- four or five years ago, five, six years ago.
BEWKES: Right. Big day for AOL and a big day for Time Warner shareholders, because maybe not everyone remembers this, but when you spin
a company off, you don't sell it. We wanted our shareholders to continue to participate in this growth of AOL that you're talking about there.
And so after -- over the last five years, the value of AOL is up more than two times. And if you count the billion dollars of patents that they
sold, it's almost three times. So, that's a huge day, not just for AOL, but for all the Time Warner shareholders who, hopefully, all own shares in
AOL.
QUEST: And this particular deal vindicates that deal?
BEWKES: Absolutely.
QUEST: Or creates a regret that you didn't hold onto it?
BEWKES: Well, we did hold onto it.
QUEST: Well, in a manner of speaking.
BEWKES: Yes, we did. No, it's vindicated. And whether it's the AOL deal -- let's take a moment about just how good this is for AOL and
Verizon, because what you have here is the marriage of AOL's content and its ad platform and its user base with Verizon's very large platform.
And Verizon has a billion and a half connected devices, many mobile devices, and they have all the data, which will be a great marriage with
AOL's user base and AOL's ad platform. So, that's AOL.
You go back to Time Warner, Time Warner shareholders, if they kept it, like I did, they enjoyed this ride over the last five years. And if you
look at Time Warner itself, which also spun its cable company, which is up sixfold over where it was. Or if you look at Time Warner, the company, I
hope, that you're happy to be part of Richard, five times or better growth in the last five or six years --
QUEST: But do you --
BEWKES: -- from the value of Time Warner.
QUEST: When I see Tim Armstrong's comments today -- and he talks about this shows that internet, mobile, distribution companies, telcos --
BEWKES: Right.
QUEST: -- everybody -- and he says big media companies all have to work together.
[16:20:01] BEWKES: Yes.
QUEST: If he's right, where does that put a large media company like Time Warner?
BEWKES: I think in the catbird seat. Because if you look at the world today, what do you have? An explosion of TV usage, TV viewing, and
TV viewing on the internet, on broadband. So, all over the world, everybody's getting used to watching their favorite show on demand.
And the biggest movie studio in the world is Time Warner. The biggest producer of TV series in the world and selling to net, is Time Warner. And
the biggest network company in the world, from CNN to TNT to HBO, Cartoon Network, Time Warner. I can't resist saying that.
QUEST: But you've got to also be involved with the Verizons, the distributors, obviously, at one particular level, and be, to some extent,
agnostic.
BEWKES: Yes. Well, we -- if you want to watch any of those networks, you can watch them over any provider, whether it's your internet provider,
whether it's your television provider, whether it's AT&T, Verizon, Comcast, whether it's Sky in Britain.
QUEST: OK, but then, answer me this, sir. Because I saw today also Warner music is now getting more revenue from its streaming than anything
else.
BEWKES: Yes.
QUEST: Why is it not better to keep many of those assets within rather than splitting out? Isn't a wheel that eventually turns?
BEWKES: Depends on which wheel. So, in television, movies, business, production, and networks, that's the business we chose to remain in at Time
Warner. It's the highest-growth business, it's the biggest business in media.
The music business, a fine business, and we wish our Warner Music colleagues well, but they're on their own and have been for seven or eight
years now. I think they've done quite well.
The real standouts, though, in terms of Time Warner companies that we made independent: AOL and Time Warner Cable, which is up sixfold over the
value when it was spun.
QUEST: So, you have now been chief exec -- I've got to finish here -- you've been chief exec, now, for some years.
BEWKES: About eight years, and it seems longer.
(LAUGHTER)
QUEST: What do you still want to do? Because you completely revolutionized this company.
BEWKES: Oh --
QUEST: You took the company, you spun off all these different parts of it, you took us into a pure content play company.
BEWKES: Yes. Well, I'll tell you what we want to do. We want to make better and better content, whether it's more authentic journalism, as
you do every day, or it's the most engaging movies or TV shows, we want to put everything on demand all over the world at a price that suits the
billions of consumers that can now get our programming.
QUEST: And you've still got your money that you got from AOL.
BEWKES: And -- yes. That's right.
QUEST: Good to see you, sir.
BEWKES: Thank you, Richard, thank you for having me.
QUEST: Thank you very much, indeed.
On Wall Street today, the Dow spent a few moments -- it flirted with positive territory. It couldn't gather steam. As you look at the numbers,
when all was said and done, just down 36 points. It was a sell-off in the bond market. The S&P and the NASDAQ were slightly lower.
Shares in the Gap were down nearly 4 percent because it missed expectations on sales. Old Navy and Banana Republic -- well, Old was old
and Banana Republic slipped.
The largest oil producer in Africa has run out of petrol as drivers in Lagos line up to fill their tanks. Nigeria's finance minister tells QUEST
MEANS BUSINESS why the country must start diversifying.
(COMMERCIAL BREAK)
[16:25:07] QUEST: -- says it expects to see more demand for its oil this year. It's thanks to a slight drop in supplies from other countries
and expectations of a stronger economic growth. Look at the numbers.
You can see how the share price -- well, you're familiar with the share price that's fallen, but now you're starting to see it coming back up
just a tad towards the -- where are we? We're about 65, 68, 69.
Any news of a lower crude is bound to support the price. Brent is up more than 2 percent. It's over $66 a barrel. Prices have nearly halved
since last year. OPEC says oil supply will still exceed demand.
Few countries have been affected by the collapse of prices like Nigeria, which is Africa's largest oil exporter, and has now run out of
gasoline. Petrol stations in Lagos and Abuja and the lines of cars waiting to fill up are blocking the traffic.
How can this be? Well, because many importers have stopped bringing refined fuel into the country. They're worried government subsidies are
about to be halted, and that would leave them with a loss.
The Nigerian government's under pressure to cut spending somehow. It gets most of its revenue from oil sales. And of course, you see what's
happened to the price.
So, CNN's emerging markets editor John Defterios spoke to Ngozi Okonjo-Iweala, the outgoing finance minister, who told him fuel marketers
are using the shortage to take advantage of the government.
(BEGIN VIDEOTAPE)
NGOZI OKONJO-IWEALA, OUTGOING NIGERIAN FINANCE MINISTER: It's a little bit of a complex story, but the point is that you have to verify
some of the claims of the marketer before they are paid. And because the government is coming to an end, they are getting quite nervous, and they
are pushing very hard.
And actually, they are using this shortage as an instrument to try to get the existing government to pay them quickly, without going through the
thorough verification. And we're not going to do that.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: We've talked for years about reforms at the Nigerian National Petroleum company or corporation.
Did it really take place to the level it should have taken place to root out this corruption?
OKONJO-IWEALA: The key to restructuring of the Nigerian National Petroleum Corporation is the petroleum industry bill, which has lain with
the legislature for almost four years, now. Once they pass it, the company will be restructured, it will become more commercialized, more open, more
transparent. And I think that's what all Nigerians want.
DEFTERIOS: Is there enough money spent on research and development? On health care? On building university clusters? Isn't that what's really
needed to unleash the power of Nigeria?
OKONJO-IWEALA: Nigeria is not really an oil economy. It's non-oil. I know people find this strange, but our GDP is very diversified, 51
percent services, 22 percent agriculture. Industry is 26 percent. And we even have the creative industries coming up.
So, what I want to say is, oil and gas is just 15 percent of GDP. That means that we have the chance to tap revenues from the non-oil sector
and actually decrease the impact of oil revenues on the economy. And that is what needs to be done in the next phase.
DEFTERIOS: When you see a 50 percent drop in oil prices, Nigeria's not growing 7 percent a year, but struggling to hold on to 5 percent. So,
the over-dependency is still there despite the diversification, as you suggest, in these other sectors.
OKONJO-IWEALA: First of all, 7 percent per annum growth was fantastic and phenomenal. Even the 4.8 percent is pretty amazing when compared to
other countries. Because it's faster than global growth. But we need to push the diversification. And we have been.
DEFTERIOS: Nigeria's included in the MINT acronym of Mexico, Indonesia, Nigeria, and Turkey. And then you have this divide between the
north and the south, and that level of crimes against humanity with Boko Haram, it doesn't add up.
OKONJO-IWEALA: Investors see something differently. They've not gone away --
(CROSSTALK)
DEFTERIOS: I don't disagree with you, but you still have that divide. That's the challenge.
OKONJO-IWEALA: No, the divide has been there. It was created by colonialism, and we haven't managed to overcome it. It's nothing new. We
need to focus on the fundamental lack of inclusion of the northeast and solve that. And it's solvable. The solutions are there on the ground,
they just need to be implemented.
(END VIDEOTAPE)
QUEST: Finance minister of Nigeria talking to John Defterios.
Now, I want you to take a good look at this footage. It's something we may not see for very much longer. A British finance minister arriving
to meet his European counterparts. How much longer will Britain -- well, you'll get the idea when we talk later.
[16:29:48] (COMMERCIAL BREAK)
[16:31:32] QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when Congress delivers a major blow to
President Obama's trade plans. We'll talk about that.
And pollsters in Britain are still licking their wounds and not surprisingly. They got last week's election very badly wrong. Before we
talk about those subjects, this is CNN and on this network the news always comes first.
A humanitarian ceasefire in Yemen was slated to begin half an hour ago. Saudi Arabia said it and its coalition partners would stop bombing
Houthi rebels for five days to let aid deliveries get through to civilians in danger. A Houthi spokes - military spokesperson - said the rebels would
respect the truce.
Nepal has been struck by another deadly earthquake. It's just over two weeks since a massive tremor killed more than 8,000 people. Many of
the buildings that survived that disaster came crashing down earlier today like this one.
(BEGIN VIDEOCLIP)
(SCENES OF DEVASTATION)
(END VIDEOCLIP)
QUEST: The latest quake has claimed the lives of 67 people in Nepal and India. Officials say more than 1,200 people have been injured in these
latest tremors.
The Russian President Vladimir Putin and the Russia foreign minister met the U.S. Secretary of State John Kerry in Sochi. They agreed to try to
avoid any actions that could further damage relations between their countries and they stressed the need for greater cooperation.
Relations had deteriorated sharply over the Russian annexation of the Crimean Peninsula in Southern Ukraine last year.
(BEGIN VIDEOCLIP)
JOHN KERRY, U.S. SECRETARY OF STATE: I certainly called attention to the fact that whichever side is responsible for firing the first shot,
there is not yet a full implementation of the ceasefire that was contemplated by Minsk and we need to work harder in order to try to see
that be put into full effect.
(END VIDEOCLIP)
Verizon has agreed to pay - to buy - AOL for $4.4 billion. Verizon aims to expand its content streaming capabilities. AOL was previously part
of Time Warner and now provides online video service and content and adds up to 40,000 publishers.
Speaking to me on "Quest Means Business," the chief executive of Time Warner, the parent company of CNN, said his decision to spin off AOL in
2009 was a good decision.
(BEGIN VIDEOCLIP)
JEFF BEWKES, CHAIRMAN AND CEO, TIME WARNER: Over the last five years, the value of AOL is up more than two times, and if you count a billion
dollars of apps that they sold, it's almost three times. So that's a huge day not just for AOL but for all the Time Warner shareholders who hopefully
all own shares in AOL.
(END VIDEOCLIP)
QUEST: Manny's back. The boxing superstar Manny Pacquiao has just landed in his home country of the Philippines.
Cable TV companies say the fight in Las Vegas more than a week ago between Floyd Mayweather and Pacquiao smashed records for pay-per-view -
4.4 million households paid a combined $400 million to watch the fight which of course Mayweather won by unanimous decision.
[16:36:34] The British Prime Minister David Cameron has put together the team he wants to negotiate the new relationship he's seeking between
the U.K. and the European Union. They are of course the Chancellor of Exchequer George Osborne, the Foreign Secretary Phillip Hammond - they will
have key roles and they'll be backed up by David Lidington who was reappointed as Britain's minister for Europe.
Minister Osborne's been in Brussels today for meetings with other E.U. finance ministers and said he was determined to get a good deal for
Britain. What does that mean? CNN's Phil Black has more from Downing Street.
(BEGIN VIDEOCLIP)
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: A referendum on whether the United Kingdom will remain part of the European Union was one of the
key promises repeated by Prime Minister David Cameron throughout the election campaign.
His intention was to hold it by the end of 2017. Now the government says if we can do it earlier, we will. But first the government must
deliver on the other half of its plan - renegotiating the terms of Britain's E.U. membership.
Among its goals it wants to bring some powers to the U.K. Parliament and make it harder for European migrants to claim welfare here. Tuesday
the U.K.'s finance minister began this process of renegotiation within formal talks in Brussels.
(BEGIN VIDEOCLIP)
GEORGE OSBORNE, U.K. CHANCELLOR OF THE EXCHEQUER: As we go into the negotiations, aiming to be constructive and engaged but also resolute and
firm and no one should underestimate our determination to succeed for the working people of Britain, indeed the working people of the whole of the
European Union.
(END VIDEOCLIP)
BLACK: Meanwhile, here in Downing Street, Prime Minister David Cameron chaired the first cabinet meeting of his newly-reelected
government.
This cabinet looks very different to the last - it's not a coalition so everyone seated around the table is a member of the Prime Minister's
Conservative Party after it won a parliamentary majority in last week's election.
Prime Minister told the meeting, "This means the government can deliver and be held accountable for its promises." Phil Black, CNN London.
QUEST: So one of the big issues in the election U.K. 2015 - that clear win for the Conservative Party - was something that none of the polls
had predicted. And if you want to see just how badly they got it wrong.
Join me at the Super Screen and you'll see. This was the last YouGov final prediction poll on May the 6th, 2015. It was with "The Times" and
the polls results. It's one day before the actual general election itself.
Two hundred and eighty-four for the Conservatives, 263 for Labour SNP, and so a clear coalition or a clear hung Parliament was being forecast with
these - with these - parties doing the balance.
Look at the actual results. Get in there - we'll go from one to the other. Go from there, and that's the - that was the last poll, and this
was the final result. The Conservatives did much better at 331, Labour did worse, the SNP came in where they were expected and the Lib Dems got wiped
out.
Pollsters have been doing a lot of soul searching for how they got it so wrong. CNN's Nina dos Santos looks at where the U.K.'s $5 billion
market research industry went wrong.
(BEGIN VIDEOCLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: I truly believe we're on the brink of something special.
NINA DOS SANTOS, CNN ANCHOR AND CORRESPONDENT: It was the election David Cameron won and the opinion polls lost.
Female: Britain will vote in a crucial election and right now it is too close to call.
DOS SANTOS: After weeks showing the Conservatives neck and neck with their Labour opposition, when it came to the day of the vote, the Tories
didn't just win the most seats in Parliament, they got enough to govern outright. A fact none of the surveys had predicted.
JOE TWYMAN, HEAD OF POLITICAL & SOCIAL RESEARCH, YOUGOV: What actually happened was the Conservatives were well ahead and so the polling
got it wrong. We all got it wrong. And it didn't matter whether we were conducting things online or by telephone or by face to face. Everyone got
it wrong.
DOS SANTOS: Accused of having misjudged the public mood, three of the four major party leaders were posed to step down after the sharp defeat.
But the fallout could also have major implications for the country's $5 billion market research industry built on the prestige of political
samples.
TWYMAN: There's no doubt that a performance like this in such a public arena is bad for both the company's (inaudible) in several ways and
for research in general. But as I say, we all got it wrong. We can point to our history of good performances, and generally speaking, it's accepted
that, yes, changes need to be made but I imagine that pretty soon we'll be able to demonstrate once again that we're - we are - accurate in many ways.
[16:40:07] DOS SANTOS: Well this isn't the first time that the pollsters have called it wrong. In 1992 they failed to spot the
Conservative John Major's path to victory over Labour's Neil Kinnock. And although they did manage to redeem themselves somewhat in 1997, the numbers
still overestimated the size of Tony's Blair's landslide.
And once again the electorate has been mocking the mistake. TV satirist Charlie Brooker asked his 930,000 followers on Twitter, "How are
the pollsters going work out what people think of them?" "They'll do it with a poll," offers one user. "With a 50 percent margin of error,
probably," adds another.
To sell digit's (ph) reputation, the British Polling Council which represents some of the industry's 3,000 firms has launched an inquiry. But
it'll take time before its findings will be published, let alone acted upon. Until then, the U.K.'s opinion of its own opinion polls is likely to
remain low indeed. Nina dos Santos, CNN London.
(END VIDEOCLIP)
QUEST: There was a sell off on the bond market and that had investors nervous in Europe. If you look at the numbers, they were sharply down.
London - well, the Xetra Dax was the worst at 1 and 3/4 percent, give or take. Athens was the exception.
There was a climb in the Athens market because the government made its 700 million euro payment to the IMF on schedule as planned (RINGS BELL).
The markets and the movers that we were talking about - EasyJet where the shares were down 10 percent - EasyJet. Although it made money in its
quiet period - in its slow period in the winter - it cut its 2015 outlook and it said that the French airstrikes in April hurt profits. More than
600 flights were canceled.
RyanAir's also getting more competitive and that's why you saw EasyJet off 10 percent.
Disappointment at the White House tonight. A fast track trade bill failed an early test and now President Obama's ability to negotiate two
very important deals - one with Asia, one with Europe - could become a lot more difficult. Next.
(COMMERCIAL BREAK)
QUEST: President Obama suffered a blow over his plans for a trade deal with Asia. Democrats in the Senate blocked the debate on the trans-
Pacific partnership the White House is championing the bill.
The senior White House correspondent Jim Acosta is with me from Washington. How does he get over this?
JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well I don't know if he does, Richard. You know the White House earlier today, they had
their press briefing with reporters and they were anticipating this defeat up on Capitol Hill and the White House Press secretary Josh Earnest
described what was about to happen as a quote, "Procedural snafu."
Now here in the United States, Richard, the word snafu stands for something that I can't say on television. I'll just say it's not a very
good thing.
[16:45:02] But I'll tell you how the President got into this jam. He's been trying to fight for this fast-track trade promotion authority for
several weeks now because he wants to fast-track this trans-Pacific partnership - this trade deal with these Pacific Rim countries that he
would like to see cobbled together to compete with China.
And this trade promotion bill in the Senate just wasn't going anywhere because of Democratic opposition. And over the last couple of weeks the
President tried mightily to convince those skeptical Democrats, but he made some critical mistakes along the way, Richard.
He described the chief opponent of this fast-track bill and of the TPP Elizabeth Warren, the senator from Massachusetts as being something of a
dishonest politician about all of this. Described her as being dishonest, said that she was being political about it.
And I think that raised the dander of liberals in the Democratic Party in the Senate and in the House. And I think what happened today was a
result of Democrats essentially standing up to their own president.
QUEST: Jim, thank you putting the position from Washington. Now the U.S. says this partnership could increase world trade by more than $300
billion a year. The 12 countries involved - the usual suspects - Japan, Australia, Singapore.
Joining me is assistant managing editor of "Time Magazine" Rana Foroohar Sitherbee (ph) to talk about it. If you can't - as Jim was saying
- if you can't even get your own people to support you, you don't stand much chance of getting everybody else.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: It hasn't been popular, you know, and on both sides of the aisle. I mean, Republicans have really
been against fast tracking because they see it as a threat to national sovereignty. But on the left a lot of Democrats - Elizabeth Warren,
Massachusetts senator has been a big opponent of this. So Obama's getting it from both sides really.
QUEST: It doesn't look as if it's going to happen.
FOROOHAR: No. I don't think it's -
QUEST: And if he doesn't get fast-tracked, the others aren't going to sit with him.
FOROOHAR: I think not. And I don't think it's - I mean you know - fast track is just totally politically contentious in the U.S. You know,
Elizabeth Warren has caused a big hoopla by suggesting that this could be a way around the Dodd-Frank financial rules.
If you had harmonization of standards, that could somehow subvert the efforts around financial reform in the U.S. This is a big touchdown,
particularly leading into the political cycle here.
QUEST: They've been negotiating the trans-Pacific for some time --
FOROOHAR: Yes.
QUEST: -- and indeed it's not there yet but it's well on the way. So how do you even negotiate something when you know that the largest country
is - doesn't have - the authority to put it for an up-down vote in Congress?
FOROOHAR: Well I think that that's why you have an increasing spaghetti bowl of trade deals. You've got China pursuing an entirely
different agenda in the region. The fact is that there are talks going on.
The left I know in the U.S. would like more time to hash out the details. They see this as potentially a way to really bring up labor
standards and environmental standards in Asia. But they don't see it being done in the next couple of years.
QUEST: And just to take this from the Pacific of course - the trans- Atlantic trade partnership tip - is also - they're having meetings. Well at some point he's going to have to get authority for that one too.
FOROOHAR: Absolutely.
QUEST: And he's not - and as time is running out in his presidency.
FOROOHAR: And to be honest with you, I don't think that's going to happen either. I don't think that we're going to see a major trade deal
signed by the end of Obama's tenure. I think that it's just too politically contentious on both sides for different reasons.
And also you've got a weak Europe that really is in a tough position standing up to U.S. demands right now.
QUEST: So, they failed to get an agreement in - I was going to say the GATT - I'm showing my age.
FOROOHAR: (LAUGHTER). It's all the same.
QUEST: They failed to get a WTO deal -
FOROOHAR: Yes.
QUEST: But now they're trying to do little nibbles -
FOROOHAR: Yes.
QUEST: Now the trans-Pacific is on the ropes, the trans-European or trans-Atlantic is unlikely any time soon - not in my lifetime. So what
does it tell us about trade deals?
FOROOHAR: Well I think it tells us three things. The low-hanging fruit has been plucked, they're increasingly contentious within countries
and globally and also the middle class around the world all feels threatened by these deals increasingly. Not just in the U.S. but in a lot
of other countries.
QUEST: I've just remembered the name of the round - the Doha Round.
FOROOHAR: The Doha Round! Yes, we forgot about it. (LAUGHTER).
QUEST: I know. Every communique would always finish with -
FOROOHAR: Yes.
QUEST: -- the leaders committed themselves to a successful conclusion of the Doha Round (RINGS BELL).
FOROOHAR: (LAUGHTER).
QUEST: And that's the end of that one. Thank you very much. Good to see you.
FOROOHAR: Thank you.
QUEST: Ahead on "Quest Means Business," it's a hands-off approach to driving. How many accidents Google says its self-driving cars have been
involved with. We'll tell you after the break. Not that many. And all (inaudible). "Quest Means Business."
(COMMERCIAL BREAK)
[16:51:29] QUEST: Google says that in the past six years its self- driving cars have been involved in a total of 11 accidents and all of them have been minor. Only 11. No injuries, light damage and put this into
context -- 1.7 million miles have been traveled. Also the company says none of the accidents were caused by their cars. It was human error -
either in the other vehicle or the person who was attempting to be at the wheel of the self-driving car. We have been trying self-driving cars for
ages.
(BEGIN VIDEOCLIP)
QUEST: You're seriously saying this car is driving itself?
Male: Yes, I don't do anything with my feet, you see my hands.
QUEST: Put your hands above - on - your head.
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: I'm being chauffeured around Las Vegas, not in the back of a limousine going down the famous
strip. I'm actually in the back of a car where the man behind the wheel isn't even touching the wheel.
QUEST: Samuel Burke is with me now to enjoy a motoring occasion in the - well without any drivers. Now, Samuel, what is it - what does this
survey tell us as we enjoy the view of our motoring day?
BURKE: Well look, I think at the end of the day what this really tells us is that the human beings are the problem - you and I - because
seven times a Google self-driving car was rear-ended by somebody else, two times somebody sideswiped them. So what you're seeing here is that the
humans are either hitting the driverless cars or it's the people behind the wheel and they're making a mistake.
QUEST: So is the driverless car here to stay? And if so, how does it develop from now on? Because 11 is a very small number.
BURKE: It's a lot less than a lot of people in my family and they've driven a lot less miles.
QUEST: Right.
BURKE: The car is here to stay.
QUEST: Oops (inaudible) (WAVING). Sorry.
BURKE: This is the future, Richard. It's going to start incrementally in a - at the end of this year you're going to see self-
driving cars - let's not call them driverless cars because you will still need to be behind the wheel a bit. Go on the highway just like we're doing
right now and you can take your hands off the wheel and start checking your text messages.
QUEST: But Samuel, is - because you've done a lot more. I did that one car through Berlin -
BURKE: Yes.
QUEST: -- where, you know, we were terrified most of that. But you have done several of these. Is the idea that once you have a self-driving
car you can engage in other activities?
BURKE: While you're on the highway. That's going to be the first place you'll be able to do that. But once you get off the highway, at
least at first, you're going to have to take the wheel like I might do right here. You have to take the wheel and then turn the corners.
But little by little that will change. And it's amazing to see how quickly it's all changed, Richard. Two years ago I was scared out of my
mind - almost crashing a driverless car. And now I'm going them, I'm having no problem, and for the first time a CEO told me he'll put his kids
in them.
QUEST: When Google has 11 incidents, they didn't seem too concerned about them.
BURKE: Actually at first the report was four. There was all this hoopla in the American press - four accidents. And Google actually came
out and said actually it was 11 accidents, emphasized the fact that it was never the car's fault, it was the human's fault. Eleven's not that much.
QUEST: And ultimately, Samuel, when we talk about this, when do you - because you also talked to the car manufacturers - when do you expect to
see driverless vehicles - no, self-driving -
BURKE: Self-driving.
QUEST: -- self-driving vehicles - when do you expect to see them fully coming on stream? When we get it in a meaningful way.
BURKE: The CEO of a major company told me by the end of this year. So we won't need a driver and soon, who knows? We may not even need an
anchor of a TV show.
[16:55:03] QUEST: Not an idea that will catch on. Samuel Burke, thank you for -
BURKE: We can shake. We don't have to have our hands on the wheel.
QUEST: Sorry?
BURKE: We can shake hands, we don't have to have hands on the wheel.
QUEST: Why don't you drive. We'll have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
(INTERNET DIAL UP SOUND)
QUEST: Whew - beep, beep. Those of us of a certain age will recognize that noise with great fondness and affection. It was the dial up
handshake as you logged on, usually with something like AOL because AOL was the means by which many of us gained that introduction to what Bill Clinton
and Al Gore called the information super highway.
Now AOL, a shadow of that giant of the internet era which had its own walled garden that we lived within and had our first online experiences.
Well now of course AOL is to be part of Verizon. And as you heard the chief exec of Time Warner say, it opens up a whole new vista where once
again it's all about content. AOL has the "Huffington Post," widgets and all sorts of content that Verizon needs as a distributor.
And for traditional companies like Time Warner, well, it remains the oldest rule in the book - content is king. We wish AOL well for those of
us over 40 that remember those (DIAL UP SOUNDS) days.
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) I hope
it's profitable. Let's get together tomorrow.
END
