Return to Transcripts main page
Quest Means Business
United Airlines CEO Admitted to Hospital; Dow Closes Up Despite Afternoon Downturn; London Court Rules Uber Lawful; Modest Gains Across European Markets; China Slowdown Hits Western Earnings; Energy Companies Unite to Battle Climate Change; Clinton Calls Benghazi Investigation Partisan
Aired October 16, 2015 - 17:00 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 closes at the end of a long week. Something weird happened around 2:00 in the afternoon, the Dow took a bit
of a tumble. But overall for the session, up half a percentage point. And the man at the Exchange -- the woman at the Exchange --
(GAVEL POUNDS)
QUEST: Well, she did hit the gavel. It brought trading to a close on Friday, the 16th of October.
Tonight, United Airlines' new chief exec's in hospital after reportedly suffering from a heart attack.
Western companies are taking a walloping from China's slowdown. We've got the numbers.
And fighting climate change one oil exec at a time. Energy bosses and a show of force in Paris. But what can these men promise?
I'm Richard Quest. It may be Friday, but of course, I mean business.
Good evening. We begin tonight with a major blow to an airline which has already been through an enormous upheaval. Oscar Munoz, the new chief
executive of United Airlines, only been in the post a matter of weeks, has been admitted to a hospital. The reports are from "The Wall Street
Journal" it was the result of a heart attack.
United is emphasizing it was operating as an airline normally, confirmed he was hospitalized, but did not say what the cause was. Mr.
Munoz took over the carrier in crisis. The former chief exec, Jeff Smisek, was forced out after a federal investigation into the airline and its
dealings with the Port Authority of New York and New Jersey.
Smisek's replacement, Oscar Munoz, had been head of the transportation company CSX. He'd been a long-standing member of the board of Continental
and United. And after arriving, he pledged to boost morale and clean up the airline's image.
(BEGIN VIDEO CLIP)
OSCAR MUNOZ, CEO, UNTIED AIRLINES: Implementation of the United and Continental merger has been rocky for customers and employees. And while
it's been improving recently, we still haven't lived up to our promise or our potential. That's going to change.
(END VIDEO CLIP)
QUEST: CNN Money's Paul La Monica has been following this story, joins me now. I mean, obviously, thoughts and best wishes to Mr. Munoz,
but do we know -- tell me what more you know.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: All we know right now is that he's in the hospital, as you mentioned. United has just told
CNN that he was hospitalized but did not confirm or deny the reports of a heart attack. We do hope that he pulls through this.
It's more bad news for a beleaguered airline, Richard. United has been struggling for years, since they did the Continental merger in 2010.
They haven't been able to integrate things as effectively as other airlines that have gone through mergers. Customer satisfaction is abysmal. They
had the big technical glitches this summer as well that grounded flights. It's not good news, obviously.
QUEST: Right. And of course, Munoz comes in, he immediately, as you just heard in that sound, he immediately says, look, we recognize we've not
done well enough. And he's created this unitedairtime.com, where people are asking some very pointed, very blunt questions.
So, if -- and again, we obviously wish Mr. Munoz the best, whether he remains CEO or not, but for United, they could be in the position of having
to find another chief exec. Or at least an interim chief exec.
LA MONICA: It is certainly possible. We have no idea how long Mr. Munoz is going to be in the hospital, how severe this health issue is. But
if United has to find someone else to right the ship, get them back on track, how long is it going to take?
QUEST: And remember, the way he was appointed was in a cautious way - - or a cautious period of time after Smisek obviously knew he was going.
LA MONICA: Yes.
QUEST: They put him in place. To suddenly find a new chief exec in extremis will be difficult.
LA MONICA: It'll be extremely challenging. You would have to think that they would need to look internally, that trying to find someone from
outside the company hastily could be a big problem. But you could argue that United Continental really does need someone from without again to
really just shake things up. This is a company that is lagging --
QUEST: Right.
LA MONICA: -- all of its major competitors.
QUEST: Now -- you're seeing pictures there of Jeff Smisek, the former chief exec. One of the questions -- and here, I'll admit, I'm a frequent
United flier -- one of the questions I've asked people when I'm flying, or crew and staff, is -- the question everybody asks is, did you cheer --
LA MONICA: Right.
QUEST: -- when you heard Smisek was going? And just to a person, from a flight attendant to a captain to check-in agent, they all say yes.
If we look at how United shares fell as soon as this news was announced, what does that tell you about the importance of Munoz to United?
[16:04:56] LA MONICA: I think that even though he has only been on the job for a few weeks, he's been benefiting from that honeymoon effect,
if you will. New CEOs often get cheered by Wall Street. At a bare minimum, he's got to be better than the last guy, especially since we had
that scandal being such a big reason for the departure for him, not just the poor performance.
So, I think if Munoz cannot recover and United needs a new CEO yet again, there are going to be so many questions about what this airline can
do to finally prove, not just to its customers --
QUEST: Right.
LA MONICA: -- but investors that it can get back on track.
QUEST: Have a good weekend.
LA MONICA: Thank you, Richard.
QUEST: Now, as we announced, United shares were down. Look at how they off closed --
(LAUGHTER)
QUEST: The closed off, I beg your pardon, 3 percent at the end. As for the big board, an interesting day except for that wobble in the middle.
Paul is still here. Paul, in a sentence, do we know why the market wobbled just after 1:00?
LA MONICA: One word: no. It felt like a summer Friday today, despite the temperature, to be honest.
QUEST: All right, there we go. That's what happens. A wobble on a Friday. GE was up 3 percent after it beat earnings.
When we come back, Uber gets a green light in London. A high court decision has the ride-sharing firm revved up. We'll explain what that
decision was. QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Uber has scored a rare victory in one of its largest European markets. The high court in England has ruled that the service is lawful.
London's black cab drivers, the co-called cabbies, they're not happy with the decision.
Laurie Segall has been speaking to Uber's UK general manager. She joins me now, live from London. Laurie, the fundamental point of the case
was what? The black cabs said that Uber was not legal.
LAURIE SEGALL, CNN MONEY TECH CORRESPONDENT: They did. And how they said this was very interesting. They said that Uber was almost operating
as a meter. Now, a meter essentially calculates fares and takes into account traffic so that the black cabs can actually make money when there's
a slowdown.
This is a privilege, and this is reserved for the black cabs here in London. Now, the high court ruling said that actually, in fact, Uber was
not operating as a meter, that the smartphone that these drivers are using does not equal a taxi meter.
I spoke to Jo Bertram. She's Uber's general manager for the UK. And she talked about how this was a great ruling, but she also spoke about the
challenges ahead. Listen to what she said, Richard.
(BEGIN VIDEOTAPE)
[16:10:09] JO BERTRAM, UK GENERAL MANAGER, UBER: Have recently launched a consultation with some proposals for changes to the private hire
regulation. We are concerned that some of the proposals would actually go against improving the customer and driver experience.
SEGALL: Talk a little bit about some of these regulations that they're proposing.
BERTRAM: So, one of them is a five-minute wait, for example, so you couldn't get into a car within five minutes of booking it. As a woman,
often traveling alone, one of the things I love about Uber is that I can get a car very quickly, and I don't want to be hanging around on the street
late at night for five minutes.
SEGALL: It's particularly sensitive in London because you have these black cab drivers who spend years and years trying to be able to drive
these cars. So, what do you say to those black cab drivers who are upset and say this is unfair?
BERTRAM: We absolutely agree that the requirements on black taxis today are probably too onerous. They have invested four years in the
knowledge, they've got certain vehicle requirements and things like that.
But we would argue that the best way to improve the situation is to reduce the requirements on black taxis, particularly given modern
technology, rather than to add restrictions on other services that just make things worse for consumers and for drivers.
SEGALL: Why do you think there's been so much controversy when it comes to Uber expanding in Europe?
BERTRAM: Essentially, we've disrupted an industry that in many cities and countries hadn't been disrupted for decades, and those kind of changes
can be uncomfortable for incumbents.
Particularly here in the UK, we operate a fully licensed and regulated model, and I think sometimes we're associated with the rise of technology.
We're some of the first to use technology to improve our business model. And sometimes, those two get confused.
(END VIDEOTAPE)
QUEST: Laurie Segall is still with me. The -- listening to what she was saying, the general manager was saying, it is a rare victory. But we
do still have this unusual situation where entrenched protectionism is attacking Uber whilst everybody else is busy using it and loving it.
SEGALL: Yes, that seems to be how oftentimes disruptive technology works. You have people protesting in Paris, you have problems with Uber in
Amsterdam. And I will say, the Licensed Taxi Drivers' Association, they're not giving up. They're appealing this decision to the Supreme Court.
And I actually want to read you a tweet. They tweeted a reaction that's a little bit colorful, so I will warn you. They said that that,
"The really is an ass. The app uses time and distance to calculate fare, and it's not a meter?"
So, as you can see, there's real anger. There are a lot of people with their jobs, and they're entrenched jobs, and the jobs that they spent
a lot of time trying to get, especially here in the UK, because you have to go through quite a bit to become a black cab driver here, and they're
really, really unhappy about this. So, they are facing a lot of resistance, Richard.
QUEST: Laurie Segall, joining us from London. The license Hackney Cab, or something that it's called, the test, of course, they take is the
knowledge. It takes absolutely years and you have to learn an extraordinary number of routes and be able to regurgitate them, and it
takes about four years.
The markets in Europe and the region, it was closed to the end of the week, and this is how it looked. Small -- well, made moderate gains.
London's FTSE and Zurich SMI were the best performers on the day. The Frankfurt DAX was higher. Those shares in Hugo Boss sank more than 11
percent. The luxury brand is the latest to report the slowdown in China and how it has hit its sales.
And we will look at -- we'll look at Hugo Boss, and we'll look at luxury goods to food staples and how Western companies are relying on
Chinese workers to manufacture their goods, the consumers to buy them, and the government to regulate them. QUEST MEANS BUSINESS on a Friday, now.
[16:14:02] (COMMERCIAL BREAK)
QUEST: Tonight, China's economic troubles hit home on the Western balance sheets. Now, whether it's a slowdown in sales, volatile trading,
or stifling regulation, companies who've gambled on Chinese growth are now very much feeling the pressure, and we are seeing it in their returns.
For instance, particularly when it comes to things like gambling. So, let's start and spin the Macau roulette wheel --
(ROULETTE WHEEL SOUND EFFECT)
QUEST: -- and you'll see exactly the companies that we are talking about. The first comes Nestle, which has announced -- thank you -- Chinese
sales are slowing down, and it says that won't change this year. And that is something as basic as chocolate and basic consumer products. But it's
not only the basics that are in trouble. The high rollers, too --
(ROULETTE WHEEL SOUND EFFECT)
QUEST -- are also having a difficult time. Hugo Boss and Burberry, both saw their shares falling sharply, and they blame sales on the slowdown
in China. Roll the dice.
(ROULETTE WHEEL SOUND EFFECT)
QUEST: C'est vos jeux, mesdames et messieurs. Yum has got trouble placing its bet. The online volatility, in their words, it's finding it
hard to -- difficult to forecast Chinese sales. And if you want to know why we are obsessed by the roulette wheel, once again, turn the wheel.
(ROULETTE WHEEL SOUND EFFECT)
QUEST: We're talking about Macau, where the house is in trouble. Wynn is reporting complaints about government regulation.
Steve Wynn said on the conference call that in terms of regulation in Macau, he calls it "preposterous" and said he's never seen anything like it
before, referring to rules showing how many tables he can actually put into one of his casinos. It's not just the economic slowdown that is taking its
toll.
(ROULETTE WHEEL SOUND EFFECT)
QUEST: Retailers are bracing and bearing the brunt of the corruption crackdown. CNN's Matt Rivers has more from Hong Kong.
(BEGIN VIDEOTAPE)
MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Welcome to Russell Street, Hong Kong, the most expensive street in the world to rent a retail
storefront -- that is, until last year, when that title was retaken by New York City's Fifth Avenue.
A big reason for that change, declining revenue at luxury stores as Chinese shoppers rein in their spending on things like designer watches and
high-end handbags.
RIVERS (voice-over): Retail sales in Hong Kong have been suffering for months. Profits at Prada are down nearly a quarter this year, and
brands like Coach and the world's largest jewelry chain, Chow Tai Fook, are closing some stores here.
It's being blamed on China's slowing economy, and also its anti- corruption crusade, which is cracking down on extravagance to stop the culture of sweetening business deals with expensive gifts, often seen as
bribes. And it's causing a dramatic shift in shopping habits for the world's biggest buyers of luxury products.
JING ULRICH, VICE CHAIR FOR ASIA PACIFIC, JPMORGAN: The luxury industry in Hong Kong and in greater China has undergone a major change.
So, in the past, gifting was a big part of the luxury industry. But these days, people are buying predominantly for self use.
RIVERS (on camera): Beyond just luxury goods, though, other status symbols are taking a hit as well. Take, for example, gold. Just last
year, Chinese consumer demand fell nearly 40 percent. And this year, it's expected to experience a similar decline. That's in part because Chinese
buyers just aren't purchasing things like gold jewelry or even solid gold bars as much as they used to.
[16:20:05] RIVERS (voice-over): The number of Chinese tourists splashing the cash in Macau's casinos has also plummeted. GDP there is
down 26 percent. But experts say that even as revenues in Asia fall, there's an opportunity elsewhere, as the growing Chinese middle class
travels further afield, spending more money in other parts of the world.
Matt Rivers, CNN, Hong Kong.
(END VIDEOTAPE)
QUEST: There's been an unprecedented move in the battle against climate change. The leaders of ten of the largest energy companies in the
world are coming together to help stop global temperatures from rising, and the campaign is known as Two Degrees.
Eight of the executives were in Paris for a show of unity at the conference. You can see them there and their various companies that they
represent in the Two Degrees organization.
Together, these ten companies produced 20 percent of the world's oil and gas, everything from Repsol, Total, BP -- I won't go through them all -
- Pemex -- and you can see them right the way through to the Saudi Aramco. They said they want to play a larger role in renewable energy, as well as
investing in natural gas over coal production.
(BEGIN VIDEO CLIP)
BOB DUDLEY, CEO, BP: The companies have come together and said the 2 degrees C target is what we should shoot for and aim for. We're very open
right now that the path and trajectory of that is not on that path, which is why we have this renewed sense of urgency.
PATRICK POUYANNE, CEO, TOTAL: And I'm fully convinced, but for this climate change, if we are all serious, all energy companies, we have a
strong human capacity, strong technology capacity, strong financial capacities, are clearly part of the solution.
If we don't step in this issue, nothing will move, or very little will move. So, it's better to see that as positive rather than to fight against
us.
(END VIDEO CLIP)
QUEST: It's better to do a deal rather than fight against it. But you might quite rightly say, when you look at all these companies -- the
Americans have a lovely, quaint phrase: isn't it a bit like turkeys voting for Thanksgiving when you think about things like Shell and BP and all of
that? Is that not going to seriously affect their profits in the long term?
Clare Sebastian is with me to talk more about this. Good to see you, Clare. So, does it ring true for the world's great oil companies to be
talking about the Two Degrees campaign? Are we right to be cynical or skeptical?
CLARE SEBASTIAN, CNN PRODUCER: Absolutely, Richard. I think there is definitely a reason for skepticism here. We've seen -- well, this is the
first time they've come out all together to do this, so there is positivity there.
But there's definitely reason to be skeptical because of the pressure that this industry is under at the moment. They're facing lower oil
prices, they're facing cuts to emissions around the world. The slowdown in China, their biggest consumer of fossil fuels.
And we've seen some extreme skepticism after this. Greenpeace came out with some very choice words. They said these are -- these companies
produce what amounts to a dangerous level of global warming, and they said, "The world should thank them for their offer of advice and politely turn it
down." They said, "Arsonists don't make good firefighters." Is that exactly what you said?
QUEST: Except -- except, with all due respect -- I'm going to argue against myself now -- there's no -- you -- and I think it was Henry
Kissinger, famously -- or somebody famous who said, you make peace with people with whom you are at war. Therefore, you've got to have the oil
companies involved no matter how distasteful it may be, because they're the ones that have got to do the deed.
SEBASTIAN: Well, absolutely. They -- this is the sector of business that is responsible for the vast majority of emissions, and if you're going
to get the deal which reduces emissions enough to meet this two degree target, they absolutely have to be involved.
But they are not just involved for the sake of the global altruism surrounding the COP21 meeting in December. This is for their own sake as
well. They need to get out in front of this debate. They're facing a growing amount of skepticism, of activism, even, from shareholders.
The divestment movement worldwide is growing at a very rapid rate. According to one report, it hit $2.6 trillion in pledges in the space of a
year. It went up from $50 billion to $2.6 trillion. And this is a worrying trend for them.
QUEST: Right. And then you get things like Shell pulling out of the Arctic and you get BP making -- so, where does all this leave the oil
companies going into COP21?
SEBASTIAN: Well, the problem we have here, this is not yet an industry-wide initiative. This is just those -- I mean, yes, this is --
(CROSSTALK)
QUEST: Well, hang on, hang on. You've got ten of them.
SEBASTIAN: We don't have Exxon, we don't have Chevron. The US -- none of the US oil companies were --
QUEST: Why not?
SEBASTIAN: -- involved in this. I spoke to a representative from Exxon. Chevron did not respond to my request for comment yet. Exxon told
me that the reason they didn't join this meeting was because they have already set out their story on climate change.
They said that they want -- they have supported a revenue-neutral carbon tax since 2009. That's their position. They felt that the European
and the other oil companies involved in this initiative were behind them. And so, in order to get -- so, getting getting involved in this would --
basically amount to taking a step back for them.
QUEST: Clare, thank you very much. Do you think you'll be following this very closely? I -- you're going to have still to convince me how to
get excited by COP21 as we get towards it closer.
[16:25:02] SEBASTIAN: We'll work on that.
QUEST: Lot of hot air.
Hillary Clinton says she doesn't know what congressional Republicans are hoping to get out of their investigation into the Benghazi attacks.
Democratic presidential front-runner and the former secretary of state is due to testify in just a few days. On Friday, she sat down with CNN's Jake
Tapper.
(BEGIN VIDEOTAPE)
JAKE TAPPER, CNN ANCHOR, "THE LEAD": You're scheduled to testify before the Benghazi committee in the House of Representatives in a few
days. What are you expecting, and how are you preparing?
HILLARY CLINTON, FORMER US SECRETARY OF STATE: I really don't know what to expect. I think it's pretty clear that whatever they might have
thought they were doing, they ended up becoming a partisan arm of the Republican National Committee with an overwhelming focus on trying to -- as
they admitted -- drive down my poll numbers.
I've already testified about Benghazi. I testified to the best of my ability before the Senate and the House. I don't know that I have very
much to add. This is, after all, the eighth investigation.
Other committees of the Congress, standing committees with very experienced members and staff, have all looked into this and basically just
rejected the conspiracy theories that are still floating out there in some circles.
So, I really don't know. I will do my best to answer their questions. But I don't really know what their objective is right now.
(END VIDEOTAPE)
QUEST: You can see the full interview with Hillary Clinton this weekend. It's on CNN's "State of the Union," which she'll be at on Sunday.
It's 2:00 in the UK, that's 3:00 across, of course, central European time.
Turkey is telling the EU not so fast. Its foreign minister is downplaying reports of an action plan agreement on refugees and migrants.
And afterwards, the interview with the prime minister of Georgia about the humanitarian crisis and more.
[16:27:06] (COMMERCIAL BREAK)
[16:30:22] QUEST: Hello, I'm Richard Quest. There is of course more "Quest Means Business" in just a moment when the prime minister of Georgia
tells me how his country will weather the migrant crisis being faced by its neighbors.
And Netflix movie debut hits the theaters on the same day it hits your Smartphone. How is that possible and who loses out?
Before all of that, this is CNN and on this network the news always comes first.
Five Palestinian protesters were killed in clashes with Israeli forces in the West Bank in Gaza according to the Palestinian Health Ministry.
Before dawn on Friday, Palestinians threw fire bombs at Joseph's Tomb in Nablus. The site is holy to Jews and other religions.
Israel has called the act a despicable violation of the freedom of worship.
President Barack Obama has called on all sides in the Middle East conflict to tone down their rhetoric in order to stop the violence.
He was speaking at a news conference with the South Korean President Park Geun-hye. And Mr. Obama said all parties had a responsibility to stop
the conflict.
(BEGIN VIDEOCLIP)
BARACK OBAMA, U.S. PRESIDENT: It's important for both Prime Minister Netanyahu and Israeli elected officials and President Abbas and other
people in positions of power to try to tamp down rhetoric that may feed violence or anger or misunderstanding and try to get all people in Israel
and in the West Bank to recognize that this kind of random violence isn't going to result in anything other than more hardship and more insecurity.
(END VIDEOCLIP)
QUEST: Turkey says its air force shot down an aircraft that crossed into its airspace from Syria. Two U.S. officials say initial reports
indicate it was Russian drone.
The Russian Defense Ministry says all Russian aircraft on combat missions in Syria had returned to their bases and that all drones during
reconnaissance are, in their words, "functioning as planned."
Meanwhile, three people wounded in last Saturday's attack on a Kurdish peace rally in Ankara have died. It now brings the number of people who
were killed to 102 according to the chief prosecutor's office.
Thirteen people have been detained in connection with the suicide bombings in the Turkish capital.
Malaysian authorities have arrested a man who is accused of stealing the personal information of more than 1,000 American military members and
then giving it to ISIS.
The alleged hacker is a citizen of Kosovo and police say he was studying computer science in Kuala Lumpur. The U.S. is now trying to
extradite him.
Turkey says Europe's offer of $3 billion to stem the flow of refugees and migrants into Europe says it doesn't go far enough.
Late on Thursday E.U. leaders said they'd struck a deal with Turkey. Well today, the country's foreign minister poured cold water on that.
He says the migrant action plan was not final in the working draft. And he labeled the financial offer as "unacceptable."
Georgia's prime minister says so far his country hasn't been negatively affected by the crisis. I spoke to Irakli Garibashvili as his
country hosts the Tbilisi Silk Road Forum. It's a regional summit , and he told me his government's watching Europe's handling of the crisis very
closely.
(BEGIN VIDEOCLIP)
IRAKLI GARIBASHVILI, GEORGIA PRIME MINISTER: It is a big problem, it is a major problem. And of course I believe that no one party can solve
this problem.
And I strongly believe that the international community should sit down together and find a solution to this - to this problem.
Because of course this will have spillover effects on and negative impacts on many countries - all European countries and all the countries in
the region, in the Middle East.
And you know that Turkey received over 2.5 million migrants from Syria. And of course Turkey is our neighbor country. We have a very
strong relationship with these countries.
And of course we're watching very careful.
[16:35:05] QUEST: When I look at Georgia, and I now see the interesting position you are in, between China on the one side and
traditional partner Russia on the other which has had such a difficult relationship with your country recently.
Where do you want to position Georgia between these two world powers?
GARIBASHVILI: Well, as I said, our position here is that we are a perfect bridge to connect Asia and Europe. And this has been our
historical role.
I want to again repeat that Georgia can play a very important role in connecting these two continents and in getting closer Europe and Asia.
And Tblisi and our country is a great location. It's a great place for this. And because, again, we're at the crossroad between Asia and
Europe and this can provide the shortest route -
QUEST: All right.
GARIBASHVILI: -- for the Chinese goods for example for the Central Asian countries, for other goods to be traveled to the Central Europe
through this corridor.
(END VIDEOCLIP)
QUEST: (AUDIO GAP) position of Georgia. While the country hasn't been adversely hit by the refugee crisis, others in the region most
definitely have been.
They're fleeing Syria and Yemen but also war-torn Afghanistan where people-smuggling is a lucrative business.
CNN's Nic Robertson now introduces us to one smuggler in this exclusive report.
(BEGIN VIDEOCLIP)
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: I'm meeting a people smuggler. How many people have you taken to Europe?
SMUGGLER, INTERPRETED BY ROBERTSON: "Fifteen hundred to Germany in the past six months," he tells me, "the most popular destination."
ROBERTSON: We can't show his face because he was is illegal.
SMUGGLER, INTERPRETED BY ROBERTSON: We take people to Germany on three different routes. By the sea for $7,000, we take people by road and
foot for $9,000 and we take people by air for $20,000.
ROBERTSON: Top dollar he tells me buys a black market visa and direct flights. Anything less could cost your life.
SMUGGLER, INTERPRETED BY ROBERTSON: We have had our clients injured and even killed along this journey.
Just 15 days ago, 70 people were caught by Iranians and deported from the Turkish border which included 15 of my clients.
ROBERTSON: But there plenty here who are ready to take the risk. Before dawn, the line outside Kabul's passport office stretches several
blocks -- people worried about the faltering economy, worried about war.
Getting a passport has never been so popular people here say, these lines never so line. Precisely how many plan to flee is hard to nail down.
But early estimates this year already say the number of Afghans arriving in Europe is second only to the number of Syrians, and how they
get there starts right here.
Omar Saboor runs the passport office. How many people are applying for passports every day?
OMAR SABOOR, PASSPORT OFFICE DIRECTOR: Every day more than 7,000 or 6,000 people.
ROBERTSON: None here are ready to admit their plans, but Saboor knows many will leave. He tells me since Europe opened its doors to refugees,
we've seen a direct increase in the number of people applying for passports. F
For the smuggler, each passport holder is a business opportunity.
SMUGGLER, INTERPRETED BY ROBERTSON: They leave their money with a trusted person. For instance, a money dealer. "As soon as the person
reaches his destination, then he calls the money dealer to give us the money."
ROBERTSON: As he explains, if the person doesn't get through, he still gets paid.
SMUGGLER, INTERPRETED BY ROBERTSON: "Our rule is that we try three times. If the person can reach his destination after three attempts, he
has to pay us."
ROBERTSON: The surest certainty it seems - smugglers always win. Nic Robertson, CNN Kabul, Afghanistan.
(END VIDEOCLIP)
QUEST: An extraordinary story of the business, if you like, of trafficking in migrant lives. "Quest Means Business."
(COMMERCIAL BREAK)
{16:42:05] QUEST: Oh, I do enjoy a good movie. The only problem is, are you better off watching it on the big screen or the little screen?
Well now there's a revolution about to take place. Twentieth Century Fox, MGM, Warner Brothers and now Netflix. The company's first feature
film or theatrical release is being - is releasing on Friday.
Now "Beast of No Nation" is getting high marks at the Oscar buzzards around the star Idris Elba. And yet - hang on - am I watching it on the
big screen or the little screen?
The big screen, -- the point about this is the release is almost simultaneous in theaters and movie houses whilst at the same time it's
being streamed to your iPad or other tablet or other device.
And not surprisingly, many theaters have said, "Oh, whoa, whoa, whoa." We're not having any of this nonsense - I mean, it's going to be on the big
screen, little screen.
Look, Brian Stelter is with me, our senior media correspondent. It's good to see you, Brian.
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: You too.
QUEST: Why - there's two things here.
STELTER: Yes.
QUEST: Obviously for Netflix it's a massive deal - it's their first full-length feature film. So we give them (RINGS BELL) for spending money
and making good television or good movies.
But putting it on the big screen and the little screen - why?
STELTER: Because they are trying to get to that point where movies premiere online instead of in theaters. But this is sort of a step toward
that direction. They're not going all the way right in the beginning.
One of the reasons why it's got to be on theater screens is so it can be nominated for Oscars. That's the only way to get it into awards - it's
got to be physically seen.
But most people are going to watch this online - they're going to watch it in the comforts of their own home. That's how I'm probably going
to watch it thanks to my Netflix account.
QUEST: Which I need to steal.
(LAUGHTER)
QUEST: The question - I didn't really say that - joking, joking. Look, the question of course if why are they here to show it though -
STELTER: Yes.
QUEST: -- because it's going to cost more in the theater -
STELTER: Yes.
QUEST: What's the difference in price for the two, do you know?
STELTER: Well, you know, here in New York, you know, $15 for a ticket down at Landmark to watch this movie. Of course it's a different kind of
experience. No one at home has quite that big a screen that you have in here that we have at movie theaters.
So, it is a different experience to see it in the theater. But Netflix says 70 million members nation - worldwide - 70 million. Obviously
most people are going to see this movie that way.
What Netflix is doing is is it's spending so much money for feature films including Adam Sandler's next movie - those come out in the winter
time.
Because it's getting harder and harder for them to get deals for other people's movies. It's getting harder and harder to get the film studios to
give them the rights.
So for them, the idea is to have exclusive material.
QUEST: So, I mean, I think you're right about the big screen here is part of being sure it's an Oscar contender?
STELTER: Yes.
QUEST: In that respect.
STELTER: That way it qualifies.
QUEST: But longer term, can companies like Netflix afford the tens of millions -- not up to the100 millions - even the tens of millions of
production costs that the movie studies have?
[16:45:06] STELTER: It's going to very difficult for them to have as much of a pipeline as they'd like although they are spending already
billions of dollars for television rights.
Amazon is doing this as well a little bit differently. Amazon is going to have movies come out of the theaters for about a month and them
put them on Amazon Prime.
Netflix is trying to go further. They believe that you shouldn't have to wait at all to watch a movie online. But at least for now, because of
the Oscars and for other reasons, they are going to at least have limited theatrical showings.
It's a brave new world though when Netflix is creating the same kinds of Oscar contenders that Warner Brothers and Walt Disney are making.
QUEST: Warner Brothers which - I'm going to do the statement - part of Time Warner, parent company of this network.
STELTER: And as we know, they're all competing as well as working together in this brave new world. Good to see you.
QUEST: Brave new world. Graffiti artists hired to make the set of the U.S. spy series more authentic ended up sabotaging the TV show.
They spray painted subversive messages in Arabic, including one calling the show racist, and the graffiti made it on to an episode of
"Homeland."
CNN's Ian Lee talked to one of the artists.
(BEGIN VIDEOCLIP)
IAN LEE, CNN CORRESPONDENT: "Homeland" has been hijacked by graffiti. The Showtime series hired street artists to give their set of a Syrian
refugee camp a more authentic feel. But they flipped the script.
Tagging things like "Homeland is racist" and "Homeland is a joke but we aren't laughing." Here it says "Homeland is a watermelon."
HEBA AMIN, EGYPTIAN STREET ARTIST: When you say something is buck teeth or something is watermelon, you're basically saying it's a sham, it's
a joke, it's not to be taken seriously.
LEE: Egyptian Heba Amin was one of the artists involved. When they realized nobody from the show was double checking, they took creative
license.
AMIN: Well in previous, you know, seasons they had many, many mistakes in regards to cultural references in regards to language. So
seeing that they don't have a thorough research team.
LEE: The series which follows CIA agent Carrie Mathison played by Claire Danes has been criticized for distorting the Middle East.
Countries even threatened to sue. Here the series depicts Beirut's Hamra Street as dangerous, full of violent militia men.
In reality, the strip in the Lebanese capital is famous for its cafes, restaurants and night life.
AMIN: To really open this dialogue of the lack of awareness that people have of how these images are incredibly dangerous, and they really
have a real-world impact, even if it's a fictional story and even if these are fictional characters.
LEE: "Homeland"'s co-creator Alex Gansa told CNN, "We wish we'd caught these images before they made it to air.
However, as Homeland always strives to be subversive in its own right and a stimulus for conversation, we can't help but admire this act of
artistic sabotage."
AMIN: I'm an artist and so there is this huge tradition of subversive art and activist art and that's the scene that I'm very much involved in.
LEE: A key part of street art - provoking conversation. Ian Lee, CNN Cairo.
(END VIDEOCLIP)
QUEST: And you have to admire the way in which the "Homeland" producer basically recognizing they've been caught decides to put the
bravest face on it and actually says good idea.
With the Olympics less than a year away, Brazil throws open the door to international travelers. We're going to talk to the tourism board
president about the challenges of getting those tourists to come.
First, you will need to make sure you always "Make, Create, Innovate."
(COMMERCIAL BREAK)
[16:51:28] QUEST: You've got to admit there's few scenes - pieces of scenery -- as beautiful as that. Now Brazil is hoping to spur tourism
around next year's Olympics by allowing foreigners to spend up to 90 days in the country without a visa.
The country attracts some six million foreign tourist a year. Now that's a small number for a country so large and with such potential. It
is of course currently in recession, it has a tremendous corruption scandal and it has a political crisis on the agenda as well.
I spoke to the president of the Brazilian Tourism Board and he admitted Brazil's got a lot of work to do to lure in the visitors (RINGS
BELL).
(BEGIN VIDEOCLIP)
VINICIUS LUMMERTZ, PRESIDENT, BRAZILIAN TOURISM BOARDS: The challenges are to make Brasilia known - there is a distance -- and
improving infrastructure.
I think that large events - these large events - since 2007 with the Pan-American Games in the sequence - the World Cup and Olympics have helped
to build an image. And also infrastructure has been built. Airports are larger, I think in general venues are more important.
And I think Brazil has awakened to tourism as an industry. It's a late awakening but it's an awakening that's happening and tourism is
growing twice or a three times more than the national economy for the last ten years.
QUEST: Is there - and this is always something that I find when I talk to tourism officials - is there a recognition within government that
tourism has a role to play in the economy or is it the typical government that says, 'Yes, yes, yes, those tourism people'?
LUMMERTZ: Well, there's two things - government have social priorities and pressure groups that are more important than tourism.
In tourism, the organization and the pressure of tourism is not as strong as it should be, you know. That's - it's -
QUEST: Reality.
LUMMERTZ: Democracy's like this, you know. It's about pressure. And I think we should increase the pressure. But I think there is government
recognition when the government decide on these large, big events.
QUEST: Largescale events - everybody is now basically saying 'The Olympics.' Are you going to be ready and just how much of a last -minute
dash will it be?
LUMMERTZ: There won't be a last-minute dash for the disappointment of the world - or part of the world - because it's almost ready.
You know, the mayor was, the weather (ph) minister and us with the president and the vice president and seven ministers on a meeting last week
in Brasilia and it's around 85 to 95 percent ready.
So I think Brazil has learned some lessons on not delaying because that cost us during the World Cup - cost us in terms of image, the delay.
The World Cup was a huge success in the end, but it paid a cost of delay.
QUEST: The Petrobras corruption scandal is on a scale that few of us have ever seen anything like in terms of the depths in which it seems to be
going into the economy.
Will the president survive this scandal?
LUMMERTZ: Well I think Petrobras the scandal affected the economy because Petrobras used to be ten percent of Brazil's investment and a lot
of hope on the production of oil to the world.
This scandal is costing a lot to the government and it's costing a lot to the country. And I hope we are ending it by the due investigations and
the due process of law.
I think Brazil, we have to see the other side of the story. The other side of the story that this democracy and institutions are so far surviving
and well.
QUEST: Does the president survive the scandal?
LUMMERTZ: I think so - I should think so. The party that I belong to is the Center Party called Paime Debay (ph) and I think it's aligned and in
support what Bendedit (ph) thinks, it's fair to say that there are no connections with the president herself.
(END VIDEOCLIP)
[16:55:13] QUEST: The - that is the tourism president of Brazil.
News just in to CNN - Lamar Odom is conscious and is able to speak according to a source of knowledge of the situation.
The former NBA star was found unconscious at a Nevada brothel on Tuesday. His estranged wife Chloe Kardashian was making medical decisions
for Odom.
And now, according to a source, Lamar is conscious and was able to say 'hi' to Chloe but his condition remains guarded.
"Profitable Moment."
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." The chickens are coming home to roost for many luxury companies. At first it was Burberry reporting
profits that are down, earnings down because of China. Now Boss earnings down as a result of China.
And in fact across the board, more and more companies are basically saying that China's slowdown is impacting their profits, and for good
reason.
Some companies make 30/40 percent of their money in China.
Next week we get the GDP number. Will it be 5, 6, 7? And even when we get that number, will anybody believe that's what's really happening?
Until then, the corporations that sell luxury goods are keeping everything crossed. And that's "Quest Means Business" for this week. I'm
Richard Quest in New York.
Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. And let's get together next week.
END
