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Quest Means Business
Asian Central Banks Shock Market With No New Stimulus; Facebook Shares at Record High; Dreamworks Take Over by NBC; WPP Bullish on Brazil Despite Political Crisis; NBCUniversal Buying DreamWorks; Priceline Boss Resigns Over Workplace Affair; Ford Profits More than Double in Quarter One; Arianna Huffington Joins Uber's Board. Aired 4-5p ET
Aired April 28, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
RICHARD QUES, CNN HOSTT: Closing bell's ringing. The market turned turtle late in the afternoon. It's pulled back a bit from the lows but it's still
off more than 200 points as the bell is ringing. Time to hit the gavel. A nice, firm gavel. Bringing trading to a close with the Dow off more than
200 points on Thursday, it's April the 28th.
(BEGIN VIDEO CLIP)
QUEST: Tonight as the Dow tumbles, U.S. growth stalls. Lord Mervin King on this program tells me it's time to get worried.
Shrek has a new boss. Dreamworks is being taken over by NBC. And the office scandal that went all the way to the top. Priceline's chief exec quits over
a relationship at work.
(END VIDEO CLIP)
QUEST: I'm Richard Quest. We have an hour together. And, yes, I mean business.
Good evening. The numbers are in and it shows that the world's biggest economy is going nowhere fast. The Dow has taken a tumble late in the
afternoon. And it all seems to be on the back of growth number that is showed the U.S. is stalling at a critical time. Join me at the super screen
and you'll see what I mean.
(BEGIN VIDEO CLIP)
QUEST: Look. We got that number in the morning over here and the Dow went down, it sort of recovers as the Dow -- as the day goes on. And then just
after 2:00 o'clock, the losses got worse and worse towards the end of the session. With this very sharp selling that takes place after 3:00 o'clock.
It all follows the U.S. posting the lowest quarter of growth in some two years. The Dow finishing down 208 points, off over 1%. The GDP number that
we got showed that the GDP increased only half of one percentage point - Q1 growth on an annualized basis half of one percent.
Spending from consumers and businesses was the reason that's anemic and it comes at a time when other major economies are seemingly at a crossroads.
If you look at the way the world looks at the moment. You've got the U.S. which had been the fastest growing major economy, the engine of growth for
everybody, but now, it seems to be struggling unless that Q1 is an aberration.
Over in Japan, in Asia, you've got the Central Bank shocks the market without any new stimulus. Abenomics still resting primarily on two of the
three quivers of the - hours of the quiver. So Japan in there.
You've got the pro-brexit economists wading into the debate over Britain's future in the E.U. And, of course, in Europe itself, you have the ECB still
heavily engaged in monetary stimulus with the prospect of more to come. Whichever you look at, there is worry on the horizon.
(END VIDEO CLIP)
QUEST: So let's put this GDP number into perspective. Joining me, CNN money's senior writer, Heather Long. Good to see you.
HEATHER LONG, CNN MONEY'S SENIOR WRITER: You, too.
QUEST: What explains this GDP number and should we be worried by it?
LONG: That is the key question, Richard, should we be worried? Most experts are starting to say, wait a minute the United States always has weak growth
in the first quarter. Think about it as a winter slump, that's followed by a nice spring and summer bump.
(BEGIN VIDEO CLIP)
LONG: However, when you dig into the numbers in this report, you realize what drives the U.S. Economy? It's consumer spending. Americans love to go
out and shop, shop, shop. But they're not doing that like they used to. As you noted. Consumer spending a bit of a drag this time on the economy.
QUEST: If history follows through, there will be a corresponding bump in second and third quarter.
(END VIDEO CLIP)
QUEST: And they may even be - and it will be revised upwards. Would that be an expectation?
LONG: Well that's what the history has shown the last few years but here's why it could be different this time.
(BEGIN VIDEO CLIP)
LONG: What we're seeing is in this recent quarter when you look at the numbers, Americans actually had more money to spend this quarter but what
did they do with it? The savings rate went up. If you look --
QUEST: Well, you can't have it both ways because we've always said the problem was the Americans they don't save anything.
(END VIDEO CLIP)
LONG: Exactly. I know.
QUEST: Now they're saving.
LONG: And now we're saying they save too much. You're right. You're right. You do sort of feel like they talk out of both sides of their mouth. But
again, the key to U.S. growth continues to be people going out and spending and we're seeing a slowdown in spending and the other thing we're seeing is
consumer confidence is falling so --
QUEST: Let's just look at the market quickly. This sharp fall after 2:00, 3:00 o'clock this afternoon.
(BEGIN VIDEO CLIP)
QUEST: It's very pronounced. It's very dramatic. I'm wondering, is that on the back of Carl Eichorn announcing he is selling out of Apple or do you
think there's something else that happened late afternoon?
[16:05:05]
LONG: I think that was a huge factor. He didn't just get on CNBC and talk about selling Apple stock. Which was itself a pretty dramatic news. He got
on and said the day of reckoning is coming. That is a pronouncement on the entire market. Not just on Apple stock.
(END VIDEO CLIP)
QUEST: So --
LONG: So --
QUEST: At least we know what the reason. Good to see you.
LONG: You, too.
QUEST: Thank you. Heather joining me.
Now meanwhile Japanese stocks plummeted more than 3% it all shows the seriousness of the situation.
(BEGIN VIDEO CLIP)
QUEST: The Central Bank is pulling a major surprise on investors. There was no new policies and the economy still mired in basically going nowhere
growth.
CNN's Will Ripley is in Tokyo.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Richard, we're just beginning a holiday weekend here in Japan but many investors may not be in a very
festive mood. Thursday was a rough ride for the Japanese markets. Really a double west whammy. The Nikkei plunging more than 3.5% as the Japanese yen
surged at times up to 3.2% versus the U.S. Dollar, the biggest single day increase in almost six years. And as you know, a stronger yen means that
Japanese exports are more expensive, making them less competitive.
So who do investors have to thank for the gloomy news on a rainy Thursday here in Tokyo? Bank of Japan.
(BEGIN VIDEO CLIP)
RIPLEY: Many were expecting more stimulus from the Central Bank this week, especially on the news that Japan has fallen back into deflation for the
first time since 2013 but instead a shocking move from the Bank of Japan saying they're just going to wait and see what happens, claiming they need
more time to assess the impact of negative interest rates. A recent policy which essentially allows people to borrow money for free while charging
them to hold money in an account.
(END VIDEO CLIP)
RIPLEY: Now, this has many wondering if the Central Bank has perhaps run out of economic fire power to jump start Japan's stagnant economy. We'll
have to wait and see what happens here in Tokyo when trading resumes on Monday. Richard?
QUEST: Will Ripley in Japan.
Lord Mervyn King says it's almost time for Central Banks to throw in the towel. The former governor of the Bank of England says he has serious
concerns about the state of the global recovery. This is his new book, it's called "The End Of Alchemy." Lord King joined me a short while ago and I
asked him if he was worried now taking in mind what we had seen today with U.S. growth barely stalled and the rest of the world going nowhere if he's
worried about the level of global growth.
(BEGIN VIDEO CLIP)
LORD MERVYN KING, FORMER GOVERNOR OF BANK OF ENGLAND: I am. And it's not a factor that any one country can easily get out of. So most countries in the
world today could say if only the rest of the world was growing normally, we'd be fine. But it isn't so we aren't, so what should we do and they're
trying to push down their exchange rates. The real problem is that until we deal with the fundamental disequilibrium in the world economy where people
realize that they were spending more than they would have done had they fully understood how much they were borrowing and how much their future
incomes would be, then until we correct that problem, central banks are going to be struggling to generate a recovery.
QUEST: At what point do central banks throw in the towel and say to governments, we've done our bit? This is now yours.
KING: Well I think we're there pretty much. I don't think -- I'd put it quite so dramatically. Though what they would say is don't expect us to be
the answer to the problem. We can buy time. We have bought you eight years since the crisis, now it's your turn to do something.
QUEST: Are we in trouble?
KING: Yes. I mean, I think that the -- until we put in place very different policy measures to ensure a recovery, we're heading towards the risk of
another crisis. And the question is does that come before governments respond or later? So, in my book the last chapter is called "The Audacity
of Pessimism." Only if things are bad enough will governments summon up the courage a) to work together and b) to put in place the measures that will
make it possible for central banks to start raising rates and get back to normal.
QUEST: One of the biggest issues at the moment and it's short termism to some extent in the sense of it's going to happen in the next two months is
the U.K. referendum on EU membership. You have been -- you have been punctilious in saying you're not saying which way you're going to vote
publicly. But the mere fact you haven't decided yet speaks volumes.
KING: Well, I'm not going to say which way I will vote.
QUEST: But have you decided?
KING: I haven't made up my mind and I think when's very important is that people start giving us real arguments, not just assertions. The current
referendum campaign is long on assertions and short on arguments.
What I would say is that is very important for the United Kingdom but it's not an existential question for the rest of the world. And therefore, many
of the claims about, you know, what would happen if the U.K. were to leave, I think, are probably somewhat exaggerated.
[16:10:00]
KING: That doesn't mean to say we shouldn't think deeply in Britain about which way to go and ought to be based on a positive assessment of what we
believe our role in Europe is. Not a negative statement about what we think the costs of leaving would be.
QUEST: But when I read your views, the mere fact that the former governor of the Bank of England still hasn't decided which way to vote, I would have
thought -- I mean, I am clearly not the only one and I'm not being presumptuous in this sense sir, but you know clearly he's going to vote to
stay in, it's an obvious, it's a slam dunk, City of London benefits, he's going to stay (inaudible). So the mere fact that the governor, the former
governor is still deciding speaks volumes.
KING: But few issues of this kind are ever slam dunk. There are always arguments on both sides and people before they make up their mind should be
given an opportunity to hear all the arguments. What is the vision of the two sides of the campaign about Britain's role in Europe in the future? And
we're still waiting I think to hear that set out coherently. There's no need to make up one's mind until the day before the referendum so why rush
to make up one's mind now when there's plenty of time still to encourage people to give arguments?
(END VIDEO CLIP)
QUEST: That's Lord Mervyn King, the governor of - the former governor of the Bank of England.
Shares in Facebook have just closed at a record high. $116. If you haven't bought them by now, you may be wondering why not? Up 7.23%. They were
slightly higher, that gained during the course of the session. Profits were up nearly 200% at one point, 6 billion. It's the monthly active users that
is extraordinary. Mobile using is also surging. And what's fascinating about the Facebook results if you look at it compared to twitter and yahoo!
and everybody else, it is absolutely bucking the trend for companies. Cristina Alesci is going to makes sense of it all for us now.
Good to see you as always.
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Thank you for having me.
QUEST: So what - I mean what are they doing right that others are not doing?
ALESCI: They are doing phenomenally well when it comes to mobile as you said which is really exciting for investors and video. People are sharing
three times more video on Facebook than they did a year ago.
(BEGIN VIDEO CLIP)
ALESCI: That is money for advertisers. Right? You can get a lot of money for digital video if people are using it on your platform.
QUEST: But its matrix for revenue is still ad-based, isn't it?
ALESCI: Oh yes, and this has got to have the dominant player in online advertising shaking in its boots; Google. Right?
For years it has been the dominant player when it comes to online advertising. Facebook is growing at a rate that's just phenomenal when you
talk about on desktop and on mobile. Users on mobile are up 20%, Richard. Everybody wants to get on your phone. All advertisers want to be on your
phone.
(END VIDEO CLIP)
QUEST: Should we be worried about this new class of share that is been issued so that founder control is how it's been for Mark Zuckerberg. He can
still sell shares, and I notice from his statement he's going to give it all to charity but he keeps control. Isn't this a bit weird?
ALESCI: You know what, people have been talking about Mark Zuckerberg's control of the company since it went public.
(BEGIN VIDEO CLIP)
ALESCI: I covered the initial public offering and you know what? They were saying that the structure of the stock and the equity was going to be an
issue an it has not been an issue at all for investors. Because they're getting the returns that they want.
(END VIDEO CLIP)
ALESCI: In fact, I remember covering Facebook's IPO and people were laughing at the company because if you remember the stock dropped 50%
months after IPO. Now Mark Zuckerberg is laughing all the way to the bank. And let's not forget people are very optimistic about its ability to
monetize on Instagram, which I know you're on - you have to be on Instagram?
QUEST: I'm not - I'm not.
ALESCI: What?
QUEST: (inaudible) I'm the only people in the world who is not on Instagram. Amazon?
ALESCI: And -- oh, Amazon had an incredible quarter.
QUEST: Results just in.
ALESCI: Another quarter of profit growth that's four straight in a row which is pretty incredible. All driven primarily by its web services
business. And here --
QUEST: Now, this has got nothing to do - the web services business, is this to do with selling people's stuff or this is to do with companies, isn't
it?
ALESCI: Yes.
QUEST: This is to do with being the back end of other people's companies.
ALESCI: Right. And I remember covering when Amazon came in to this specific market and everybody was, like, this is a race to the bottom because it's
all about price. Offering the lowest price for companies to host their sites on Amazon services. And now they've scaled up to a point that they're
actually making it very profitable. Other companies are paying attention and they want to get into this business too.
QUEST: OK listen, I've got something I can fool you with. I bet you.
ALESCI: Oh really? OK. try me.
QUEST: I bet you haven't got a favorite Dreamworks character. Could you even name a few Dreamworks?
ALESCI: I can, as a matter of fact. Shrek.
QUEST: Oh!
ALESCI: But he's not my favorite.
QUEST: Shrek, when an easy give. Shrek. She went for Shrek. But these are the Dreamworks experts an they're going to be with us because Dreamworks in
an epic deal NBC Universal is buying the animation powerhouse. We are going to be - guys and girls we're going to be at the movies.
(END VIDEO CLIP)
[16:15:10]
(COMMERCIAL BREAK)
QUEST: Millions meet Kung Fu Panda. Comcast hopes that they'll be an unstoppable force as the Comcast subsidiary, NBC Universal has announced a
deal to buy the film giant Dreamworks Animation. It is an epic deal that promises to reshape the entire family entertainment industry.
(BEGIN VIDEO CLIP)
QUEST: Coming to the big screen near you. NBC Universal, Dreamworks Animation, joining forces.
[Video Playing]
QUEST: It is a merger of epic proportions. $3.8 billion.
A bold move. Taking on the king of family entertainment. For Dreamworks, the end of a story of adventure and intrigue and a search for a suitor.
[Video Playing]
QUEST: Now, as this merger comes together, one final hurdle before it reaches the screen. The regulators.
[Video Playing]
QUEST: Now, will the regulators supper this deal? Or will it be a fairytale ending with a marriage at the end of the year?
(END VIDEO CLIP)
QUEST: Dreamworks and NBC Universal. Today is take your child to work today here in the United States. When we heard about this deal we knew we had to
ask the experts which usually means me getting down to say hello. Who are you?
(NINA) My name is (Nina).
QUEST: And who are you?
(MADDOX): My name is (Maddox.)
QUEST: And you are --
(M.J.): Hello my name is M.J.
QUEST: (M.J.), (Nina), and (Maddox). OK. Dreamworks, who is your favorite Dreamworks character and what movie do they come from?
(MADDOX): My favorite Dreamworks character is Mr. Peabody from Mr. Peabody & Sherman.
QUEST: Why?
(MADDOX): Because he's a talking dog that really has all the knowledge in the world.
QUEST: Right. And yours is?
(NINA): My character is Gloria from "Madagascar." And I love her personality because she's hilarious and she loves to do these funny dances.
QUEST: And who's your favorite character?
(M.J.): I like O from "Home" because he has like basically the same personality as me.
QUEST: Excellent. Well, thank you. Have you enjoyed your day here at CNN?
[TOGETHER]: Yes.
[16:20:00]
QUEST: What's been the best bit of your day at CNN? Coming to see Richard Quest. What's been your best bit of the day?
(NINA) : Coming to see Richard quest.
QUEST: Oh, well done. You'll all go far. Thank you.
Now Matt Belloni is with us and joins me now from the Hollywood reporter. This deal that Dreamworks, kids obviously adore the characters. NBC, or
Comcast is paying a full price for it. But there's an element of disappointment. Dreamworks was supposed to be the anti-corporate company.
MATT BELLONI, EXECUTIVE EDITOR, THE HOLLYWOOD REPORTER: Well, sure. I mean, it was started by Jeffrey Katzenberger a former Disney executive who went
out on his own with Steven Spielberg and David Geffen, you know three big moguls starting a full service studio in the mid-90s. Ultimately Dreamworks
Animation was spun off as a public company in the mid-2000s.
(BEGIN VIDEO CLIP)
BELLONI: It was an independent studio but the problem with that is it was subject to the fluctuations of the stock market. If they were to have a
hit, the stock would go up. If they had a disappointment, the stock would go way down, and it was a roller coaster ride. So he's been looking for a
sale for the last couple of years.
(END VIDEO CLIP)
QUEST: OK. Will this change Dreamworks? Because to some extent, NBC once they get hold of it, they don't want to kill it, I mean you know but
classically very often the best intentions fall apart when it's folded in to a bigger organization.
BELLONI: Oh, Dreamworks Animation is over as we know it. Jeffrey Katzenberger is leaving the company. He will be put in charge as a
consultant and have some other digital assets. But all of the Dreamworks Animation assets are going to be put under the control of another
executive, Chris Meladandri, who's another animation executive. He created films like "The Minions," "Despicable Me." Those types of films.
QUEST: So the issue becomes, are they buying a back catalog? Are they buying a franchise? Or, are they buying a future pipeline?
BELLONI: I think they're buying both. What's going on here is NBC Universal has Disney envy. They very much want to be the Walt Disney company in the
sense that Disney has two separate animation companies, Pixar and Walt Disney Animation Studios that produce a separate pipeline of animated films
each year. They want to do the same with Illumination and with Dreamworks Animation. And characters from those films, both past, present and future,
can populate the theme parks of the NBC Universal family, Universal Studios in Florida, in Hollywood, overseas. They have a big plan to rival Disney in
the theme park industry and this all fuels that.
QUEST: Now Matt, which your answer beautifully leads me to say, though, taking the Disney -- all right. Disney bought Pixar and managed to succeed
- or to more than succeed, thrive with it. Do you believe that you can -- that NBC can buy this -- this powerhouse and maintain it and thrive it?
BELLONI: I think it's an open question. I think what happened to Disney was very unusual. They bought Pixar and they put the top executives of Pixar,
John Lasseter, and Ed Catmull in charge of Disney Animation Studios and Pixar. And a lot of people at the time said this is a, you know, this is
not going to work, they're going to be spread too thin. Pixar is going to suffer and they're not going to be able change the culture at Disney
Animation Studios. You look eight years later, they have "Frozen" and "Zootopia" at Disney Animation Studios, both gigantic hits. They've
completely changed the culture there and Pixar is also doing very well. They're about to release "Finding Dory" a sequel to "Finding Nemo" which is
probably going to be amongst their biggest movies ever.
So the Disney model has worked but can NBC Universal replicate that with an executive Chris Meladandri who is untested at managing two giant companies?
That's a big question.
QUEST: Final question. Briefly. Favorite Dreamworks character, if the kids can answer it, you can, too.
BELLONI: I'd probably go with "Puss in Boots," the Antonio Banderas cat character. He had kind of - he has a swagger to him.
QUEST: At least you didn't go for Shrek like Cristina Alesci, which I think was an obvious one. Good to see you sir, thank you.
BELLONI: Thank you.
QUEST: Back to the markets, we're in Europe which managed to eek out some very small gains.
(BEGIN VIDEO CLIP)
QUEST: The CAC 40 was pulled down by Airbus which was down more than 4%. Its profits fell 50% in the first quarter after delays delivering planes,
particularly the A-350 which is giving us - which is giving the company some trouble.
(END VIDEO CLIP)
QUEST: The Chief Executive of Qatar is so tired of delays on the 350 he says his company could walk away from its long relationship with Airbus and
jump to Boeing. Akbar Al Baker told Becky Anderson that his company, his airline, the patience is running out.
(BEGIN VIDEO CLIP)
[16:25:00]
AKBAR AL BAKER, CHIEF EXECUTIVE, QATAR AIRWAYS: Everything in Qatar Airways we do we always have a plan "b" because as an airline we cannot just be
reliant on one business proposition that we have.
We have a very strong relationship with Airbus. But, unfortunately, they're falling behind their commitments to us. We were the launch customer for the
Airbus Neo with a very large order and they failed us. We know that there is a major issue with the engine manufacture. But also, there are issues
which up to now have been very quiet about is with Airbus themselves.
There is software problem. There is APU issue. There is hydraulics issue. So, we cannot really take an airplane that we pay very handsomely for and
then we cannot use it to its maximum. And we are fully prepared to walk away. We are already going to exercise our rights walking away from
airplanes that are already substantially late. Our first aircraft was supposed to be delivered to us last October. And we are already four
aircraft short. So we cannot run our business this way. And Airbus has to understand that there is an alternate to them. That we are not in anybody's
basket.
BECKY ANDERSON, CNN CORRESPONDENT: So this is not an idle threat.
BAKER: I don't give any idle threats to anybody. I mean what I say. And I have the full backing of my board and of my government because we have to
grow. We are in a competitive world and if I am six, seven airplanes short of my business plan, this is unsustainable to me as an airline.
ANDERSON: What's your message to the Americans about the skies?
BAKER: Well, two things. First, the American people must stand with the trigger of carriers because we are providing them connectivity and a
product which is equal to none. Secondly, they should also understand that, "a," we have not violated any clauses of the Air Services Agreement, Open
Skies Air Services agreement with the United States and my country. Nor we have done any harm to American carriers. They couldn't prove it. We have
done our filing. And we are waiting for the wise decision of the government of the United States.
But I should tell you one thing very clearly. Things that they're accusing us of, that there is no traffic between the American destinations and my
country, or Abu Dhabi and Dubai, that we are carrying beyond traffic from United States. Which is also a fact to the carriers in Europe who have
instigated all this. Also, are carrying majority of the passengers in the airplane out of America at fifth and sixth freedom traffic and I can prove
it with figures, and I have done so in my filing to the United States government.
ANDERSON: That government currently run by President Obama, that won't last long. There is a potential that going forward could be run by Donald Trump.
How would that go down in your book?
BAKER: It's all smoke and mirror with Donald. Donald is a businessman at the end of the day. He will see what is the best interest of his country
and in the best interest of his country is to create more competition. Whatever he's saying which is anti-immigration, anti-Muslims, this is all
just to appease the right of the voting population.
(END VIDEO CLIP)
QUEST: Akbar Al Baker or Qatar Airways talking to Becky Anderson.
Brazil is in the midst of a political and economic crisis and the Olympics are only 99 days away. The U.S. Election is several months away. The
advertising industry is booming. The advertising firm WPP is optimistic. Sir Martin Sorrel.
MARIN SORREL: Hello Richard.
QUEST: Good to see you. Come and join me in the C-Suite and afterwards give us your views. Have a seat.
(COMMERCIAL BREAK)
[16:30:00] QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When Ford's chief financial officer tells us
about his company's record quarterly earnings. And the head of one of the world's biggest online travel companies quits after a workplace
relationship that went wrong. Before that, this is CNN. And on this network, the news always comes first.
The U.N. says rebel and government fighting in the Syrian city of Aleppo reached catastrophic proportions. 50 people died when an air strike hit a
children's hospital late on Wednesday. According to Doctors Without Borders. Which supported the hospital. Russia says it was not responsible
for the air strike.
A South Korean defense official says North Korea test fired two mid-range missiles in the last hours. The South said both missile testing proved
failed. This is the latest in the recent tests of South Korea says it sees the investigating.
The former Speaker of the House of Representatives has slammed his old colleague Ted Cruz. John Boehner says the Republican presidential
candidate in his words is Lucifer in the flesh. And that he'd never worked with a more miserable person. Senator Cruz dismissed the criticism at a
news conference earlier.
(BEGIN VIDEO CLIP)
TED CRUZ, US REPUBLICAN PRESIDENTIAL CANDIDATE: John Boehner calls me Lucifer. He is not directing that at me. He is directing that at you.
What Boehner is angry with me for is not everything I've ever said to him. I haven't said much of anything. What Boehner is angry with me for is
standing with the American people.
(END VIDEO CLIP)
QUEST: The music legend Prince was carrying a powerful prescription painkiller when he was found dead last week according to law enforcement
sources and an official also said the singer may have been treated for an overdose of pain medication one week prior to the death. The toxicology
test results from the autopsy are still awaited.
The Brazilian President Dilma Rousseff said she will be sad if she's impeached and removed from office during this summer's Olympic Games. In
an exclusive interview with with Christine Amanpour, President Rousseff said the games in Rio would leave a valuable legacy.
(BEGIN VIDEO CLIP)
DILMA ROUSSEFF, BRAZILIAN PRESIDENT (via translator): You know, there's one thing I wish to tell you. If that happens, I will be very sad, indeed,
because we have I think it is fair to say, we have undertaken a very good effort, number one, in a spirit of partnership with the Rio de Janeiro
government. And we have also engaged in an effort where we have learned many lessons from the recent World Cup. So we'll certainly be in a
position to leave a legacy behind.
(END VIDEO CLIP)
QUEST: WPP says it's bullish about Brazil despite the country's political turmoil. The company is expecting a boost of the year's Olympics in Rio.
Chief executive, Martin Sorrell, joins me now here in studio.
MARTIN SORRELL, CEO WPP: In the longer term, Richard.
QUEST: In the longer term.
[16:35:00] SORRELL: They're obviously going to have problems in the next two, three, four years. Economy has -- not another election if Temer takes
over and not subject of an election until 2018. So they have the few problems to sort out.
QUEST: 2016 is one of those great years.
SORRELL: Quadrennial years.
QUEST: Quadrennial.
SORRELL: Maxi quadrennial. Just to confuse you. You have the Olympics --
QUEST: (CROSSTALK)
SORRELL: -- well, a little bit, about 100 basis points of extra growth we think. The Olympics, the Euro Football Champions and last but not least,
the presidential elections.
QUEST: How significant is the presidential election in terms of --
SORRELL: Well, it doesn't generate -- I mean one of our companies, Gerald Benson is running Hillary Clinton's polling advisory strategy, but beyond
that, there's little if any greater flow through of billings. But what it does do is tighten up the media markets. So it makes selection of media,
planning of media and buying of media that much more important both online and off-line.
QUEST: You mentioned our lead of today. Of course, NBC is buying DreamWorks.
SORRELL: Right.
QUEST: And the whole sort of media consolidation continues ever greater.
SORRELL: Yes, good move I think, because obviously animation, in fact, one of our board directors, Ruigang Li the CEO of DreamWorks China. In fact, I
would claim some responsibility for putting Jeffrey Katzenberg and Ruigang Li together to form DreamWorks China. And the Chinese government backed
the animation studio in China in Shanghai and Kung Fu Panda 2, I think it is, is actually the first Chinese animation film. There's an English
language version and Chinese language version, separate films.
QUEST: but then you get to this, as you've seen today, Carl Icahn, who you mentioned, sold out of Apple, he announced today.
SORRELL: Yes. It could be staged a bit. I was watching it on the competitive network.
QUEST: That serves you right for watching a competitor network.
SORRELL: But I mean, there's going to quite sort of stage of, I was surprised.
QUEST: He says that Apple could have probable's ahead because of China.
SORRELL: In China.
QUEST: Now you have bigger issues, not issues. You have big business in China.
SORRELL: It's our third largest market after the U.S. and the U.K.
QUEST: Do you worry about regulation? Do you worry --
SORRELL: We are not that important an industry. So I don't think -- you know I have this view that in some Chinese bureaucrat's drawer there's a
list of industries, which is strategically important to China. I don't think the advertising a marketing servicing industry is in it. Media
ownership is certainly in it. We've seen pressure there. But the new regime, the Xi regime, they are cracking down, there is no doubt on media
and particularly foreign media. So that's part of what's been happening and it is a worry. And I think Carl Icahn is right to raise it as a
concern. But the other part of this is that the Chinese technology companies like Shami or Lico are building technology and creating
technology. They don't steal or copy quite as much as we tend to think that they do. They're initiating the technology.
QUEST: One hand, obviously is a large media -- not media, a --
SORRELL: Humble agent. Yes.
QUEST: You have to be in China.
SORRELL: Yes. No choice.
QUEST: You see the developments, which you described just now as worrying.
SORRELL: Yes.
QUEST: You have to balance that out.
SORRELL: Yes. I don't think it's a market you can ignore. You know, it's 1.3 billion, 1.4 billion. It won't be the most populous nation on earth,
India will be in a few years' time, but there on an absolute GDP basis, the biggest, it's already, what 11 trillion.
QUEST: Brexit.
SORRELL: Brexit, yes. I'm in. I'm in.
QUEST: You're in all the way?
SORRELL: I'm an inny. Yes, for three reasons. There are three buckets here. One is the economy bucket, and I think even the outies or the outers
agree that there is an economic negative if we come out. At least in the short to medium-term's. Sovereignty, I can understand the argument about
it, I prefer to argue about sovereignty and come out for that reason. I prefer to argue about sovereignty within inside the tent. The last issue
is this grandson of an immigrant, a Russian Ukrainian immigrants, and Polish and Romanian immigrants, I tune out when I hear the anti-immigration
issue, because I think immigration on balance as to the strength of an economy. It doesn't detract.
QUEST: Finally, we had another King sitting just a little bit earlier, said he's worried. He's worried about the state of the global economy.
SORRELL: Global economy or Brexit?
QUEST: Yes.
SORRELL: Well it's slow growth, Richard. So if you look at our results, what we said. Slow GDP growth three, 3.5 percent, real and nominal, little
inflation, little pricing power, and therefore focus on cost. Disruption, zero-based cost budgets, activist investors like Carl Icahn buying and
selling stocks, although he does claim to be -- average holding. I think he said was seven years, if I heard him right. But basically, average life
of a CEO is about six or seven years.
QUEST: How long have you been CEO?
SORRELL: A long time, 31 years I admit to.
QUEST: Is it time you gave it up?
SORRELL: No, I love it. I'll carry on, Richard, as long as I have, or until they shoot me or take me out to the woodshed and shoot me.
QUEST: With your large pay packet.
QUEST: It's not a pay packet. As I said, Richard, and you went along with me for 31 years I've been building an equity stake in the company. That's
building long-term brands. That's the business we're in.
[16:40:00] QUEST: And we're glad you're here to talk about it. Thank you.
Now, one CEO divided -- didn't decide, he had -- it was decided for him. The resignation of Priceline CEO is not in any way to do with the financial
performance of the company. Oh no, it's about performance of his personal relationships with a colleague that broke the company's code of conduct.
We'll discuss that somewhat after the break.
(COMMERCIAL BREAK)
QUEST: The online travel agent Priceline is looking for a new chief exec after his former boss in the words of the company, engage in activities
inconsistent with an executive. He's Erin Houston. He resigned. Well he resigned before he was pushed following improper relationship with an
employee. Priceline says the person involved was not under Houston's direct supervision. The online travel provider includes Priceline, Kayak,
Bookings.com, and OpenTable. Joining me from Chicago is Rick Bell, the managing editor of Workforce. Rick, look, we don't know the facts. We
don't know who was involved in all of this. CEOs having affairs with members of the staff tends not to end well.
RICK BELL, MANAGING EDITOR, WORKFORCE: No. Exactly. Any time that you have a manager or a supervisor having a relationship with any subordinate,
it's not going to end well. So yes, I think Priceline did its due diligence. They had an independent board investigation. I think they did
a fine job and came to the conclusion that Mr. Houston violated company policy.
QUEST: Do we know why he violated company policy? Because let's face it, I mean, are you saying that -- because obviously, the HR mantra is direct
supervisor, same department, you have responsibility, conflict of interest, but if you're the chief executive, effectively every single employee is
your subordinate.
[16:45:00] BELL: That's correct, yes. And so, I think that maybe, yes, we have to hold CEOs to a higher standard. I mean, I think we see it in the
military with the fraternization rules. As an officer, you cannot have any kind a relationship with a subordinate. And so I see that to be a parallel
with what you're seeing in this situation.
QUEST: Now, I looked into all of this during the course of the day. You have famous cases like the Boeing chief exec, Harry Stonecipher, who seem
to have committed a similar sort of thing, but there was also expenses that were involved in that one. There's the Starwood former CEO who was let go
and there an allegation of impropriety or harassment. Most of the other cases do seem to have another element other than just a romantic or sexual
relationship. Do you need that other element? Do you think?
BELL: Well, I mean, when you're crafting a policy -- all right, Let me step back a little bit. Do you even really need a policy in place? I mean
the courts say it's okay to have a dating policy. But any number of companies don't have any policy whatsoever. Well, they have to be prepared
for the slings and arrows that come with that and this is what you're seeing from it. So this kind of situation is going to happen. And but
you're right. We have seen it with a number of CEOs. Mark Hurd, when he was with Hewlett-Packard and he's now with Oracle. So yes, you can't stop
love and it's going to happen. It's going to happen in the workplace whether it's between employees. And we've seen it time and time again with
subordinates and supervisors.
QUEST: There's just a price to be paid if you're the chief exec but can't stop love. I think there's a song by the name of that. Thank you Rick.
Good to see you from Chicago.
Ford posted the best first quarter results in the 113-year history. We're going to hear from the company's chief financial officer after you've had a
chance to pause, "MAKE, CREATE, INNOVATE."
(COMMERCIAL BREAK)
QUEST: Right at the start I promised you it was going to be a busy hour together of business news in our nightly conversation on business and
economics. More business news. This time business on the move! Lego is saying sorry to Ai Weiwei. The sorry is because Lego refused to sell its
bricks to the artist for an exhibition. It sparked an outcry. The vice chairman told the Wall Street Chairman, the decision was an internal
mistake. Sorry.
Now to Ford. Ford profits more than doubled in the first quarter. The low gas prices it boosted SUV sales and trucks. The executives are celebrating
and needless to say, it's the best quarter in the history for 113 years.
[16:50:00] Ford will drink to that. It's three strikes and you're out for Nintendo. The company's selling most of its ownership in the Seattle
Mariners. Now, the price is unknown. And the deal still needs approval from major league baseball. That's Business on the Move.
It might have been the best results in 113 years and Ford's financial chief, the chief financial officer, says lots of positive factors are just
working right now for the company. CNN's Maggie Lake asked him what's driving that strong performance.
(BEGIN VIDEOTAPE)
BOB SHANKS, CHIEF FINANCIAL OFFICER, FORD: Well, it's pretty broad strength across the business. We had record results in North America,
around product and good cost performance. We had record results -- not record results -- but the best results since 2008 in Europe, are strong
profit there of over $400 million. Again, it was products, it was cost. And it was also a bit of -- a good news around the revenue, as well. And
then in Asia Pacific, it was very, very similar. So, you know, we are just really seeing the strength of the products, good cost performance. And the
products being well received by the consumers around the world. It is just working for us.
MAGGIE LAKE, CNN CORRESPONDENT: That is something that investors love hearing. In terms of keeping up those sales at these levels, are we going
to see discounting coming to effect? It is always a concern when we talk about the car industry. Are we all going to get addicted to all those
incentives again? How do you feel about what? Do you feel that you have pricing power?
SHANKS: Yes, we hear that often and it's a legitimate concern because if you go back a number of years ago, certainly, there was a lack of
discipline, I would say, in the overall industry, particularly among the domestics on that part of the business, but that's not been the case for
quite a long time. We see very good discipline around pricing, good management of production relative to demand and certainly a focus on
margins, not only by us by I think on all the players in the market. And there's no sign that that's going to change, and I think that's good for
all of us going forward.
LAKE: We've really seen sales of trucks and SUVs pick up. We know that's good for the bottom line. Do you think that's completely dependent on
these low energy prices or is there a more permanent shift going on, especially when you've changed the makeup of some of these trucks and made
them more fuel efficient?
SHANKS: Yes, I actually think it's a secular change. This is happening not just here where we have the low oil prices, but happening in Europe
where, you know, petrol prices are very high. It's happening in China and other parts of Asia Pacific. So this is consumers just appreciating and
valuing the better utility, the better seating position, a feeling of being more safe and secure. So I think this is something that's here to stay.
And I think the other thing, Maggie, to remember is that if you go back ten years and think about SUVs then. They tended to be larger, more truck
based and certainly the fuel economy isn't what it is today. Today these products are off the same platforms in many cases that the cars are, and
offer a fantastic fuel economy. So I think this is a change that's here to stay.
(END VIDEOTAPE)
QUEST: That's the chief financial officer of Ford. Staying with transportation, Travis Kalanick has disrupted transportation in a big way
as the head of Uber. Arianna Huffington has disrupted the news business with the creation of the Huffington Post. The two are coming together.
The founder of the Huffpo has now joined Uber's board. Arianna Huffington spoke to me on Wednesday and she told me why she was so appealing and
attracted when she was invited to the board of Uber.
(BEGIN VIDEOTAPE)
ARIANNA HUFFINGTON, EDITOR IN CHIEF, HUFFINGTON POST: So it came about through a growing friendship between Travis and me. We met at the DAD
conference in Munich in 2012. And I have personally loved the whole vision of Uber. And as somebody who's fascinated by the disruption and the way we
consume media, the way we live, the way we work, I saw Uber, of course, central to the disruption, especially in terms of transforming cities.
Which for me is the key to how we're going to transform the world and I was working on cities at the Huffington post. We have a dedicated section of
what's working with city. I'm been working with Mike Bloomberg and Bloomberg Philanthropies and the amazing work they're doing spotlighting
cities and I feel Uber is at the center of that, too.
QUEST: Were you still surprised, even though you were friends with Travis, were you still surprised when he said would you consider joining the board?
HUFFINGTON: Yes, I was. In fact, it was funny. Because we were having dinner in San Francisco and in the middle of dinner with his girlfriend and
Michael from Uber and his girlfriend, he said to me, can we get together tomorrow to talk about something? I thought to myself, we're having
dinner. Why can't we talk about something here?
[16:55:00] And that's when we met and he asked me and we spent a lot of time going through everything, including last Saturday my home in L.A.
when he spent four and a half hours, you know Travis walks when he works and talks and he literally walked around my dining room for four and a half
hours telling me about the vision, the challenges, the cultural and values.
QUEST: And that's what he wants you for. Doesn't he? He was specific in the announcement today about the role that you're going to play.
HUFFINGTON: Yes. And that's what excites me, because I believe that data is key but storytelling is king.
QUEST: Do you think that you're going to become to some extent the face of Uber?
HUFFINGTON: Oh, absolutely not. No. I'm the face of the Huffington Post and I have incidentally, recused myself from the coverage of Uber at the
Huffington Post.
QUEST: That's really important, isn't it?
HUFFINGTON: Very important.
QUEST: Because Uber does have some very controversial issues, and not least the union relationship with drivers. The regulation of them. There
are sort of incidents such as in India. Huffington Post has to cover all those incidents.
HUFFINGTON: Absolutely, and there are editors are going to be in charge of our Uber coverage going forward.
QUEST: Did you think twice before joining? Because you're a name in your own right. You have a huge journalistic enterprise in your own right.
Uber is a controversial company. Whichever way we look at it, Arianna, it's controversial. Did you have to think twice maybe?
HUFFINGTON: No. It was a completely instant yes.
(COMMERCIAL BREAK)
QUEST: And when Arianna means yes, she means it. Profitable Moment next.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment, we told you about dreadful GDP numbers in the United States. You also saw problems in Japan where the markets off
3 percent. The Brexit arguments get ever worse and on this program former Lord Morgan King, former governor of the Bank of England, said he is
perhaps rightly worried. And yet on the same show you hear Facebook roaring ahead. Which all of which shows how difficult the economic and
financial environment is right at the moment. Which is why we need to be together each evening for our conversation on business and economics. And
that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable.
END
