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Quest Means Business
Italy Declares State of Emergency After Genoa Bridge Collapse; The Vatican Says it has No Official Comment After a New Report Details How Priests in Pennsylvania Sexually Abused More Than a 1,000 Children; U.K. Bid to Curb CEO Pay Fails to Yield Dividends; Hollywood Gambles with Crazy Rich Asians; Losses Mounting, Cash Running Short at MoviePass; Nokia 8110 Gets An Update; T-Mobile Abandons Automated Phone Menus. Aired 4-5p ET
Aired August 15, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Closing bell ringing on Wall Street, it's been a down day for the market. They're off the lows of the
session. Well, as you can see, or you'll see when we show you the final number, it's not been an encouraging day for the financial system. And
that's three good gavels, bringing trading to a close today, Wednesday, August 15th.
Tonight, stock markets are sinking. It is a cocktail of risk and we'll tell you what's actually within it. We'll be live at the New York Stock
Exchange. Qatar rides to the rescue with a $15 billion rescue for Turkey; and they're crazy, they're rich and they're Asians, and that's the name of
the film. I'll speak to the author of Hollywood's newest diverse blockbuster.
I'm Richard Quest live in London where of course, I mean business.
Good evening. We begin tonight with the global markets and the sell-off. It seems to be almost a perfect storm of Turkey, trade and tech, and how
they all interrelate is sending the market sharply lower. Let me show you exactly what I mean. Now, the Dow is off 137. It's still ticking over the
last few points after the close, off half a percentage point. We had been down around 320 or so at 11:00 in the morning and there was an afternoon
rally and then as you can see, the market has well come off its lows towards the end of the session.
But the big components of what dragged the Dow down. For example, Boeing was off 3.1%. Boeing is 9% of the Dow. Caterpillar down 3% and the reason
there, well, we talked about it many times, you and I, exposure to China and the trade war and exactly how much -- how the Chinese will retaliate
with nontariff barriers against say for example, Boeing or Caterpillar.
Look at the global markets, and you'll see exactly what a down day it was, wherever we look in the world, tech stocks were no longer immune from what
we saw. We'll talk about exactly how they were affected in a moment. There is the US markets. We've got the European bosses, the worst losses
were there where you have Paris down 1.8% but the FTSE was also up 1.5% and the previous session, so really the day goes like that.
Look down over at Asia, and Asia, very sharply off in China, the Shanghai Composite, and also in Hong Kong. Those two were very sharply down. Less
so for Tokyo. Now, the three market risks, sending investors running over all of this, Turkey contagion from the current crisis, not only -- not only
the crisis with the United States and tariffs, but also with the actual -- the new tariffs from the US, but also from actually the economy itself,
which, today, received a lifeline from Qatar.
Then you've got the stronger dollar. Now, the stronger dollar is a result of shift to safety. People are going back in the havens, and that's
hitting commodities, resources and all of those sorts of stocks.
Anything that is priced in dollars is starting to feel the push and pressure if you like of that higher currency. And finally, the tech
concerns, now, we had Tencent out of China with a very bad earnings miss and worries over exactly new regulations on gaming -- gaming restrictions
by the Chinese authorities.
Clare Sebastian is at the New York Stock Exchange, John Defterios is in Istanbul. We will start with you, Clare, with an overview of how important
you think the Turkish contagion was in what we saw in the markets today.
CLARE SEBASTIAN, CORRESPONDENT, CNN: Well, Richard, it's interesting because Turkey, yes, it is a very small economy, yes, less than a trillion
dollars. Yes, the US isn't that exposed to it, and certainly not nearly as much as Europe. But I think investors are wary of underestimating this.
Don't forget, memories are quite long down here on Wall Street. People will remember that it was the collapse of the Thai baht that led to the
Asian financial crisis back in the late 1990s. Maybe, you'll remember that yourself.
So, I think people are wary of underestimating it, plus this adds to the broader kind of geopolitical landscape, the turmoil out there, plus, don't
forget with the extra tariffs, the doubling of tariffs now from Turkey, this is yet another tit for tat trading relationship that the US has to add
to its list.
But, I think Turkey, to one side, that was the trigger today. You said, a perfect storm there, there are more fears about China that have resurfaced.
QUEST: John Defterios in Istanbul, $15 billion from the Qataris. It was always going to be the Qataris, the Russians or the Chinese, but $15
billion won't go very far unless there is a change in economic policies.
JOHN DEFTERIOS, EMERGING MARKETS EDITOR, CNN: A change of economic policy and a more aggressive trade stance yet again, Richard. I think that the
friendship with Qatar came at the right time to help both the currency and give a lift here to sediment.
[16:05:07]
DEFTERIOS: First and foremost, again, President Erdogan very aggressive on the trade front, targeting five core sectors. It included even coal, which
is near and dear to President Trump in trying to revive that sector. He leaned at the East showing he has partners bringing in Qatar, yesterday it
was Russia, and then good old-fashioned intervention, the bank board stepped in today to limit short selling of the lira. It gave it a near 6%
boost, bringing to the key six level against the dollar here.
It was intervention that made it happen, but it is up about 10% the last few days of trading. So very important, but, Richard, to the point here,
it doesn't solve the long-term problems for Turkey. The current account deficit and inflation at the same time.
QUEST: Clare, the element of technology in today's route, all the major tech stocks, at least earlier in the day, were down 2%, 3%, 4%. Again, the
reason of Tencent, look at how they closed. Netflix off 3%. Google down 2%, you can see the numbers for yourself, they make sad reading if you're
long on tech.
SEBASTIAN: Yes, absolutely, Richard, I think Tencent was pretty much the only trigger for this that we can find out there. This was an unwelcomed
surprise for Wall Street, and this has been a company that has consistently beat expectations, plus the fact that this was largely down to the
regulatory environment in China, it speaks to the role that the Chinese government can play in the fortunes of a single individual company. But I
think the tech stocks are the growth stocks out there in a broad based decline that we saw today, they are also going to get hit.
QUEST: John Defterios, finally, to you, the question of emerging markets, not just Turkey, per se, but whether it is the rupee in India, whether it's
Southeast Asia, whether it's Latin America, I was reading one note that said the emerging market ETF is down some 40 odd percent this year. They
are going to -- it could get extremely bad if and when the Fed raised rates further.
DEFTERIOS: Yes, indeed. You make a key point here with the rising rates and the rising dollar, putting pressure on these markets. Turkey is on the
list, of course, you have Brazil, Indonesia, Russia, they're all quite vulnerable at this stage, Richard, and you have to bring back this
narrative of contagion here, pushed along by Donald Trump.
Look, he's been aggressive from Canada to China on trade. You have to expect at some point this is going to bubble up. I made the point earlier
today, this is the quiet period in August. I think investors are going to wake up and say, "Look, this is too much to handle with vulnerable
currencies, while the Fed is tightening now. This is the new reality.
QUEST: Clare and John, thank you, to Anthony Chan who joins me now from New York. Chief economist at Chase, to put all of this into the wider --
good to have you as always, Anthony. Thank you.
ANTHONY CHAN, CHIEF ECONOMIST, CHASE: Good to see you.
QUEST: Thanks for taking the time to join us. Now, look, this contagion that we keep talking about, where is it going? I mean, give me the
examples of contagion and the sort of reasons that investors are using behind it.
CHAN: Well, Richard, right now the real concern is not so much directly the United States. You've seen the retail sales numbers were very strong,
the Q2 GDP was very strong. But the concern is that somehow what is happening in Turkey can spill over into other emerging markets. We know
that the European banks have some exposure to Turkey, but close to 25% of their revenues go into emerging markets.
So that if emerging market contagion occurs, and then all of a sudden, it hurts the European banks, which in turn suggests that somehow Europe will
have some difficulty navigating through the economic waters if their banks are impaired, and eventually that could spread over the United States. We
do not think that's going to happen. We think that the base case is that cooler heads will prevail and a lot of the difficulties and tensions
between Turkey and the US will be resolved, but that was not on the minds of investors today.
QUEST: Okay, but that contagion that you talked about, obviously made worse if US interest rates continue to go up, thus making US assets more
profitable and more valuable, but even if the current tensions between Turkey and the US abate, that doesn't deal with Turkey's underlying
economic difficulties.
CHAN: But those difficulties, Richard, have been there for quite some time. We know that Turkey, for example, has about $180 billion worth of
external debt that it has to basically roll over within the next 12 months, and we know that their foreign currency reserves are less than half
of that. So there are real challenges there, and the currency, of course has taken a hit and when the currency drops by 50%, guess what? Servicing
that debt basically becomes more challenging.
[16:10:10]
CHAN: It doubles the cost of servicing that debt, so these are all challenges, but, again, given that Turkey makes up just about 1% or a
little bit over 1% of global GDP, that's not a major number. It's important, it's the 17th largest economy in the world, but, again, the
concern is whether it spills over and the concern is that with a strong growing economy in the US, the Federal Reserve may even be unable or
unwilling to slow down its gradual policy hikes which in turn exacerbate the situation in emerging markets. That's the concern of investors.
QUEST: Right, and taking the United States and taking the way forward for the United States, the economy is strong and robust, but the potential for
that to weaken as a result of the trade disputes, whether with China, or with Turkey, or when -- perhaps not with Turkey, or with -- certainly with
the European Union, at what point does this trade spat or war have real economic suffering consequences?
CHAN: I think we have some time, Richard, for that to happen. And I say that because coming off of 4.1% growth rate in the second quarter, the
third quarter is probably going to give you something in the 3% range, maybe even more. So even if all of a sudden, the trade tariffs that we
have seen so far end up subtracting a quarter or half a percent off economic growth, we still have enough of a cushion that right now it is not
an issue. The problem becomes when it starts to spread into other parts of the world, which in turn can come back to the US.
But the first order effects on the US economy, we're still doing well, which is the reason why it has been much more challenging to read some sort
of a compromise when you're bargaining from a position of strength.
QUEST: Anthony Chan, very good of you to give us your time. Thank you. So very much appreciated. Thank you.
CHAN: Pleasure.
QUEST: As we continue tonight, we'll turn our attention to Genoa in Italy where the government has very quickly got into the blame game as to who is
responsible for the bridge collapsing and the government not wasting any time pointing fingers, in a moment.
Thirty nine people are confirmed dead following the collapse of the bridge in Italy in Genoa. In a moment, we'll deal with what they are saying as to
who could be to blame and the reasons why. The European Union is coming in for some of that blame.
[16:15:16]
QUEST: But Ian Lee is there, watching the rescue operation in Genoa, and that's where we must start our coverage tonight as we ask, do they still
expect to find more bodies in the wreckage or do they say now 39 is the number?
IAN LEE, CORRESPONDENT, CNN: Richard, we just spoke to the Chief of the Fire Rescue Service, they're still going through that mountain of twisted
metal and concrete looking for people who could still be alive. He said they approach this as if it were like an earthquake where people can
survive up to a week.
Right now, they're cutting the concrete, they're lifting it out of the way and they're going a little bit deeper trying to see if they can hear anyone
trapped inside.
(BEGIN VIDEO TAPE)
LEE: Fifty years ago, the Morandi Bridge was celebrated as revolutionary, state of the art, meant to solve Italy's traffic problems. Now, a mangled
mess, this bridge will be remembered for one of the deadliest accidents in the country's modern history. Rescuers still scour the carnage for
survivors, hope fades by the hour.
Davide Capello, a firefighter and former soccer player is a survivor. He was on the road when it disappeared.
(BEGIN VIDEO CLIP)
DAVIDE CAPELLO, SURVIVOR (Through a translator): I found myself going down in my car. I thought that it would be the end, that I was going to die.
Then my car stopped. The car hit concrete and it got stuck. I touched myself to see whether I was still in one piece as it was a massive shock.
I then called the firemen straightaway and they were the ones who helped me first and then I managed to get out of my car. I was helped out of my car
by the rescue teams.
(END VIDEO CLIP)
LEE: Davde's car is still in that mound of twisted steel and concrete. Alongside the wreckage is the neighborhood of San Petarina (ph). We spoke
with a family who lives literally underneath that bridge, in the shadow of danger.
They are part of hundreds of residents evacuated to a nearby shelter. They're relieved, but angry.
(BEGIN VIDEO CLIP)
GAVINO DELOGU, RESIDENT (Through a translatorr): For years and years, we spoke of our disappointment about the bridge and the structure. As time
went by, chunks of the bridge fell down. It was a tragedy we anticipated.
(END VIDEO CLIP)
LEE: Genoa's mayor confirmed to CNN the bridge needed repairs and said the national government had contracted the work out to a Autostrade d'Italia, a
privately owned company. They say maintenance work was under way. But it is too late. The tragedy residents predicted happened for the whole world
to see.
(END VIDEO TAPE)
LEE: Richard, I asked the Chief of the Fire Service how many people could possibly still be trapped inside. He said frankly they don't know. They
don't know what cars could still be under there, they have a ballpark figure, but they say until they scrape the bottom of that pile, it really
is a moment by moment operation.
QUEST: Ian Lee, thank you in Genoa. If you get more news on more numbers, please come back to us immediately.
As you heard in that report, many say this tragedy was not hard to see coming. The Morandi motorway was known to need substantial improvements.
The "Il Tempo" newspaper summed it up with this headline, "Vergogna Italia," "Shame Italy." The Deputy Prime Minister, Matteo Salvini says the
blame for this disaster should fall on the EU.
EU membership rules makes it hard to spend on infrastructure. The Transport Minister is blaming the company that maintains many roads and
bridges in Italy.
(BEGIN VIDEO CLIP)
DANILO TONINELLI, ITALIAN MINISTER OF INFRASTRUCTURE AND TRANSPORT (Through a translator): In a modern and civilized country like Italy, we cannot
afford to see tragic events like this. It is not acceptable and those who made a mistake will have to pay until the end.
(END VIDEO CLIP)
QUEST: Pierre Carlo Paduan is Italy's former Finance Minister. He joins me now on the line. Minister, you can hear me, I hope. Clearly something
obviously went very badly wrong. and blame there needs to be. Do you think it is right to say that the EU's budgetary reasoning and infrastructure
policies bear part of the blame here?
PIERRE CARLO PADUAN, ITALY'S FORMER FINANCE MINISTER: No, I don't share that view. The EU has been very generous with Italy over the recent past
by allowing a lot of additional fiscal space that should be used in terms of investment, public investment and infrastructure spending.
So the resources is not a problem. The problem with this tremendous tragedy is assessing the territory responsibilities of who was supposed to
be looking after the safety of the bridge.
[16:20:00]
QUEST: The new government has only been in office a relatively short period of time, so it is highly likely that -- and it's speculation, but it
is highly likely that many of the causes of this, probably the seeds were sown in previous years when your government or the government of which you
were a part was in office. With that in mind, again, was enough being spent on Italy's infrastructure at a time when austerity required cutbacks,
pension reforms and the like. Will we find that that played a cause or part of the cause?
PADUAN: As I said, I don't think the cause is lack of funds. The real problem with lacking infrastructure in Italy as a general problem is often
the administrative procedures that are much too slow and too cumbersome, but in this specific case, this was not up to the government to provide
spending for security upgrade.
It was up to the private company that was given the task of running the highways and therefore all the complete measures. So ...
QUEST: I guess what -- well -- if ...
PADUAN: ... you being blamed (inaudible) for this.
QUEST: If I can jump in, I guess what this always end up, and having seen similar situations in the United Kingdom, I guess what it always ends up as
being whether this private-public partnerships, whether contracting to the private sector for something so crucial, without full proper safeguards, is
indeed inherently dangerous. The UK has learned that through its past, for example with the Grand Fall fire and others, and I am wondering whether
Italy is about to discover that private-public partnerships need to be better supervised.
PADUAN: They certainly need to be better supervised, but, of course, whenever there is a tragedy like this, all the attention is pointing at the
specific events and forgetting about the huge amount of work of supervision that has been done in what is an already existing infrastructure capital.
Having said that, certainly, this is unacceptable and responsibilities must be defined clearly.
QUEST: Pierre Carlo Paduan, Minister, thank you for joining us. Joining me now is Lorenzo Codogno, the former director general of the Italian
Treasury. You just heard then the former Minister saying there must be responsibility. Somebody has to carry the can, but you've got the current
government saying on the one hand, now, Europe is part of the blame, for its austerity measures and the Minister is saying, no, actually, it is the
company who did it.
I mean, this is unseemly. They barely pulled the bodies from the rubble and the government is on the blame game.
LORENZO CODOGNO, FORMER DIRECTOR GENERAL OF THE ITALIAN TREASURY: Yes, it is. It is already on the blame game. I mean, politicians are very quick
to shift the responsibility away from -- to someone else and that's typical, I would say. But in this case, I think that there is a point
because the maintenance of the motorway was actually contracted away to a private company, which is listed and the prosecutor has already filed an
investigation. So it is far too early to say who we have to blame for the disaster.
QUEST: Do you see any element -- not European blame, that's so pejorative, but any element whereby you can say the European budgetary rules, the
deficit procedures, the six pack, the four pack, and all of these, they play into an environment that makes it more difficult to spend on
infrastructure at a time of austerity.
CODOGNO: Well, you know, I mean, keep in mind that Italy is coming from a very deep recession, prolonged recession, with GDP growth not yet -- that
has not yet recovered to the level before the crisis. So inevitably, investment and spending has been reduced over the years.
Having said that, there is no reason why the government cannot shift spending away from current expenditure into investment in infrastructure.
And I think the current attempt by Salvini to shift the blame into Europe is probably part of an ongoing debate because the government is preparing
the budget for the autumn and there is a big debate on the kind of moving away from the rules.
QUEST: Is it your r feeling, looking at this, and knowing the, if you like, the tone and the mood, is this going to be a sea change? Will this
reinforce the populist government? Or will it create an anger against them because they are only just in office, they bear very little responsibility,
other than having the titles for what is currently happening.
[16:25:02]
CODOGNO: Yes, it very much depends how they will react. So far, I think they have reacted quite quickly and quite forcefully, so my guess is that
in public opinion the -- they won't be penalized by the situation. But, again, it is a big debate that is just at the beginning now, and will come
up in the autumn.
QUEST: Good to see you, sir.
CODOGNO: Thank you.
QUEST: Thank you very much indeed for joining us. Have you worked for a FTSE 100 company and you don't like your boss? Remember one thing, it
could take you an entire century and more to make their annual salary. A new report exposes the world of CEO pay and the author is with me after the
break.
Hello, I'm Richard Quest, there's more "Quest Means Business" in just moment when I'll be talking to the man behind "Crazy Rich Asians," a new
rom-com hoping to break the Hollywood casting mold, and the President of T- Mobile tells me about his plan to fix customer service for good.
As you and I continue tonight, this is CNN, and on this network, the facts always come first.
US President Donald Trump announced he is stripping the security clearance of one of his most vocal critics, former CIA Director, John Brennan. The
White House said it was to protect the nation's classified information. One of Brenna's criticisms, calling Mr. Trump's performance at the Helsinki
Summit with Vladimir Putin nothing short of treasonous.
Authorities in Afghanistan says, a suicide attack on an educational center in Kabul has killed at least 50 people and wounded dozens. So far, there
have been no claims of responsibility. The Taliban are saying they were not involved.
At least 22 students and one woman are dead after a boating accident in Northern Sudan. The state news agency says the boat sank in strong
currents on the Nile River while it was taking students to school. The search crews are at work trying to recover the bodies.
Italy's Prime Minister has declared a year-long state of emergency in the wake of the bridge collapse in Genoa. Giuseppe Conte says the government
will contribute more than $5 million to help offset search and rescue efforts.
The Vatican says it has no official comment after a new report details how priests in Pennsylvania sexually abused more than a thousand children. The
report says the abuse took place over a period of some decades, and it says church officials systematically protected the priests but not the children.
How much do you get paid -- all right, well, never mind, the actual number. I think you would probably accept that you earned considerably less than
your chief executive or your chairman of the board or is the big boss who gets paid the big bucks to make the big decisions.
Now the British government trying to close the pay gap between chief execs and their employees after new numbers from the high-paying center research
-- sure center, show it's not been working. Look at these numbers. In the board room, British chief executives for the top FTSE 100 countries got
only 11 percent pay rise last year.
Now, that's bad enough when inflation is only 2 percent or less. But these CEOs make up around $5 million a year. In the post room, full time workers
got a 2 percent rise in line with inflation, and after have nothing (INAUDIBLE) today's inflation is 2.5 percent, which means they got even a
pay cut.
The High-Pay Center is the think tank behind the report and Luke Hildyard is its executive director -- good to see you, sir.
LUKE HILDYARD, DIRECTOR, HIGH PAY CENTER: Mostly --
QUEST: Thank you to have you chief. The numbers are startling, but you're not surprised. You -- I suspect expected this. But it seems to be getting
worse.
HILDYARD: Yes, CEO pay has been increasing at a much faster rate than pay for the average worker for quite a long time now.
The government and investors, there's been a lot of rhetoric from them about closing the gap, about making top pay fairer and more proportionate,
and there have been some tentative moves from Theresa May; the Prime Minister making these big companies publish pay ratios between what their
top earners, their top quarter of earners make in relation to the media earner and the company and the lower earners.
But there's also growth back a little from promises to introduce worker representational boards in the face of lobbying from big business --
QUEST: But arguably, there are two different issues, I mean, in the sense of, you know, worker representational board and the CEO pay. I mean,
shareholders with the exception maybe of BT Royal Mail and WPP.
Shareholders have seemingly extremely reluctant to go into battle and if you like wash the dirty linen in public.
HILDYARD: Yes, exactly. I mean, there's the extraordinary case, the precedent where the guy had a long-term incentive plan that paid out, I
think, close to a 100 million pounds over a period of years. And the -- you know, that was due to the increase in the company's share price that
related largely to --
QUEST: Right --
HILDYARD: Changes in the U.K. housing market, you know, you could have had one of the bricks they used to build the house, sitting there as the CEO
and the company's value would have -- would have increased. And even in that one, the most blatant cases of inappropriate pay package, the company
did still get it through the AGM with the majority of shareholders have proven.
QUEST: But I remember years ago, I covered the AGM, Cedric was the first name of the --
HILDYARD: Yes --
QUEST: And from British Cast --
HILDYARD: British Cast --
QUEST: Remember it?
HILDYARD: No, I've read about it.
QUEST: Thank you. Cedric, I've got -- and Cedric Brown and Cedric Brown, they ended reeling up a pig into the shareholder meeting because he was
supposed to have his nose in the trough, and I guess this was years ago by the way.
But it shows that this is a story, an issue, a challenge that doesn't go away. And arguably since the board is with the CEO and the CEO helps
appoint the board --
HILDYARD: Yes --
QUEST: But he looks after themselves --
HILDYARD: Well, exactly, the whole process is ridden with bias and conflicts of interest that you know, the CEO pay set by remuneration
committee of either executives and of course they all benefit from the going rate for an executive going higher and higher and higher.
QUEST: Do you -- how much credence do you give though to the other argument which is -- and we've got to pay these people, these sort of sums
of money. They are exception though, they are unique, they are there because they have the ability to deal with large corporations and billions
and billions of pounds or dollars.
HILDYARD: Well, I think we should take a skeptical challenging approach to those assumptions.
[16:35:00] If you look at the CEOs of the world's biggest companies, we did analysis of their fortune global 500 are found, but fewer than 1 percent
approached their chief executive from an international rival.
So this idea of those, you know, huge international marketplace for their talent is actually pretty questionable. I'd always say that if your
company so overly rely on a single individual of the top of it, then it's not been run in a very long term, sustainable --
QUEST: Right --
HILDYARD: Fashion.
QUEST: Women in the boardroom. The CEO of Pepsi is about to retire and the number of CE -- women of CEOs in Fortune 500 companies has dropped by
something like 23 percent --
HILDYARD: Right --
QUEST: Because of the statistics. What's gone wrong and how can it be put right?
HILDYARD: Well, I think that it's a real challenge. I think it's something that will take kind of a number of years to get right as we
change the working culture of big corporations. I think the source -- the research shows that women, you know, do as well as --
QUEST: Right --
HILDYARD: Men at quite, you know, quite a young age. But then it's when - - around -- you know, when they have kids, they fall behind. Which is pretty eccentric when you think about it. You know, people starting work
now are going to have to work until they're -- you know, into their 70s.
Perhaps, it's going to be, you know, a --
QUEST: Right --
HILDYARD: A career about half a century. And the idea that, you know, you should suffer or suffer some, you know, great setback because it will take
a few years to have to have children. Now, that is, you know, it's been a bizarre.
QUEST: Good to see you sir, thank you very much indeed.
HILDYARD: Cheers, thanks for having me.
QUEST: Makes it -- make sure that we all now find out what our CEOs earn - -
HILDYARD: Yes --
QUEST: And the ratio between them and --
HILDYARD: By the workforce, yes.
QUEST: Thank you, good to see you. As we continue tonight, Hollywood takes a chance with crazy rich Asians, what's pretty much their premise of
a new romantic comedy with an Asian cast. The movies executive producers with us after the break.
(COMMERCIAL BREAK)
QUEST: And so, tonight's QUEST MEANS "SHOW" BUSINESS, a movie with an all Asian cast that releases today, it's "Crazy Rich Asians"; a romantic
comedy, Rom-Com, and it is here to expect a lot of copy cats to follow one.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: He's been dating for over a year now, and I think it's about time before I met my beautiful girlfriend. What about us taking an
adventure week?
[16:40:00] UNIDENTIFIED FEMALE: Like Queens(ph)?
(END VIDEO CLIP)
QUEST: The film could bring in $25 million over its five-day opening and it's become a point of pride for the Asian-American community. One Asian-
American comedian is offering to buy tickets for those who can't afford to see it themselves. The book upon which the film is based is now number
three on Amazon charts.
And Kevin Kwan is the book's author and the executive producer of the movie. He joins me from New York. Good to see you, thank you for taking
the time. I saw the trailer --
KEVIN KWAN, AUTHOR: Great to be here --
QUEST: When I was -- when I was at the movies last week in New York, I saw the trailer and remember thinking absolutely, it is one to see. It is
different and arguably even the title is somewhat controversial in these politically correct days, isn't it?
KWAN: Well, you know, the title has been controversial since the book came on in 2013, but I think it's become so popular now that even real crazy
rich Asians in Asia are calling themselves crazy rich Asians.
QUEST: That of course is the touchstone of that which you want. The significance of this movie with an all Asia cast -- I mean, in the rest of
the world people may say, well, that's not nothing particularly new, but for a Hollywood big movie and a Rom-Com at that, it's exceptional.
KWAN: It really is, and for the first time in 25 years. And really, the first Rom-Com ever to have Asian male and female leads, and it's been a
long-time coming and way overdue.
QUEST: Is it being celebrated by the various Asian communities and there were many of course, sub-sects in different areas of Asia that we talk
about. Is it being celebrated?
KWAN: It really is, I mean, the outpouring of emotion and joy that we've seen and the support from Asian communities and not even from Asian
communities, from American communities. You know, I've been doing promo tours all over the nation now for the past week.
And everywhere I go from Philadelphia to Boston, you know, people of every culture and color, they love the --
QUEST: Right --
KWAN: It's just a great Rom-Com for them.
QUEST: OK, now, you could have taken the type of yourself of a "Crazy Rich Asian" perhaps --
KWAN: Not really, not really --
QUEST: Well, you know -- well, you know where I'm going with this, so you will soon enough. If you had taken the other offer and had Netflix make it
with the figures -- look, I'm not for a moment suggesting you're going to be crying your way to the bank with what you've got from Warner Brothers
which is part of Warner Media; a parent company of ourselves.
But you had -- it's fascinating, there's a folklore in this, you have a choice, Netflix or Hollywood, Hollywood or Netflix. One was offering a
fortune, the other was offering the big screen. Why did -- what was your reason for choosing?
KWAN: Well, first of all, you know, I love Netflix and I feel like it would have been interesting in that model. But we really needed something
where we could show and prove Box Office numbers. Because we wanted this movie to be an example of how movies of this sort tell diverse stories,
interesting original characters can work, can succeed.
And the only way to really show that is to see what happens at the Box Office on opening weekend.
QUEST: And to that extent, if this is successful, then the Rom-Com duplicates will inevitably start of some -- one description or another,
correct?
KWAN: Probably, but we're also hoping that this really offers opportunity for more voices, more diverse vices, telling stories that aren't just
necessarily crazy rich that can, you know, be told by Hollywood that Hollywood will take advantage of this opportunity and tell new stories from
new writers, new actors and really showcase the sure diversity of this world.
QUEST: And on that point of Hollywood, do you think Hollywood has the guts to do that? I mean, a few if you like -- sorry?
KWAN: I really hope so, I think they've got to make this movie. So I think that's a great stuff at the right direction.
QUEST: Finally, what do you think of the Academy's decision to go for a new popular movie award. I mean, I suppose that will put you nicely for
your category. I mean, do you think it's a sort to populism to have an Academy Award for a popular movie when actually the best movie should be of
course the one that everybody knows well.
KWAN: You know, I don't really know how I feel about that at the moment. I just learned about it a few hours ago, and I think it's an interesting
premise. But you know, I really do believe, you know, it should be a merit-based award and the best movie should win.
QUEST: Kevin, wonderful to see you, thank you for coming on, I'm looking forward --
KWAN: Thank you --
QUEST: To seeing the movie --
KWAN: Such a huge fan --
QUEST: As soon as -- thank you, and I'm going to be seeing the movie when I get back tomorrow, thank you.
KWAN: Hoping for it.
QUEST: Now, Frank Pallotta -- Frank Pallotta is our entertainment reporter in New York and joins me now. The movie is opened and was starting to get
the first numbers, how are they looking?
[16:45:00] FRANK PALLOTTA, CNN ENTERTAINMENT REPORTER: Well, the numbers are still a little bit early, it just opened today, we'll have more of an
idea starting tomorrow and into the weekend. But I spoke to Kevin Kwan actually last week, and he made a really good point that no matter what
this does at the Box Office, it's already kind of the success that this film even exists.
Just think of the Rom-Com genre itself and how far we've come. We have a predominantly all Asian cast here. If you think other caricatures of
Asians in the past and other romantic comedies like "Love Tong-Dong" and "Sixteen Candles" where Mr. Yoshi(ph) played by Mickey Rooney(ph) and
(INAUDIBLE).
There are obscene caricatures, now we get to see a full cast of Asians in this film, it's going to be a big hit, I think for Warner Brothers.
QUEST: Let's turn our attention to movie pass, and the whole question of the way -- of whether or not it's going to -- well, going to say succeed,
survive as it makes its various changes. You've been looking into this, not only MoviePass, but also the various alternatives.
You said that you didn't think they would survive, have you changed your view?
PALLOTTA: Yes, I go back and forth on this literally every day. I mean, if you talked to me two weeks ago when you did, they were trading at 5
cents a share, they're trading at 5 cents a share still, but they're still here.
I actually sat down with the CEO of MoviePass Mitch Lowe, and asked him about this new model and if it could actually be a good business plan for
them going forward.
(BEGIN VIDEO CLIP)
MITCH LOWE, CHIEF EXECUTIVE OFFICER, MOVIEPASS: What we announced is absolutely a solid business model that will be profitable. It actually
accelerates our point of time of being profitable dramatically versus the - - go do a movie every day.
(END VIDEO CLIP)
PALLOTTA: So now speaking about that, you also have other competition now. So just a year ago, subscription services for movies was a thing that
people really didn't know about. Now, you have AMC and I spoke to that CEO about their subscription service going forward as well, and here's what
Adam Aron has to say.
(BEGIN VIDEO CLIP)
ADAM ARON, CHIEF EXECUTIVE OFFICER, AMC ENTERTAINMENT HOLDINGS: Well, it's almost obvious what makes AMC stops a list of sustainable program. Number
one, our price is higher and admittedly higher, we don't shy from that, we're not only getting the profit that comes in on the admissions to the
theater, but also we get the revenue on the concession stand and that's something that only a theater operator has the benefit of.
(END VIDEO CLIP)
PALLOTTA: So here's the thing, Richard. I really don't know if MoviePass is going to survive. I don't know if AMC is going to be this huge win for
them as well with a list. But what I do know is that audiences --
QUEST: Right --
PALLOTTA: Really do want this and that the idea in concept should survive.
QUEST: Finally, Frank, your thoughts -- Netflix or Hollywood, Hollywood or Netflix. It was a fascinating choice that Kevin had to make -- Kevin Kwan
had to make and on that conference call, and they only had about 15 minutes with which to make it. Well, which would you have gone for?
PALLOTTA: I'm still going to go with Hollywood because at the end of the day, you know what the numbers are. Netflix is obviously huge and it has a
audience of subscribers, but at the end of the day, if you're trying to make an impact, saying that it's the biggest Rom-Com in the last three
years?
And having that be an Asian, a predominantly Asian cast means more than just saying it was a buzzy thing on Netflix, I think right now, but just
call me old fashion, I guess.
QUEST: If you're old fashioned, the Lord knows what that makes me. Frank Pallotta, thank you. As we continue tonight, from "Crazy Rich Asians" to
another great movie, "The Matrix" spot the project placement in this clip.
(BEGIN VIDEO CLIP)
(PHONE RINGING)
(END VIDEO CLIP)
QUEST: Now, that phone, the Nokia 8110 went on to become an icon. And today, an update version has gone sale here in Britain of the 8110. It's
not a Smartphone, but it has got 4G and will see if retro-appeal makes this a big success. Stay with the mobile, after the break, the president of T-
Mobile scraps automated answering systems.
We didn't get to push one, we didn't have to push two, we didn't have to wait on the line, after he break he tells us why?
[16:50:00] (COMMERCIAL BREAK)
QUEST: We've all been there, you're calling a company, but it happens to be today, and not only have you pushed one for this and then two because
it's international and three because it's something else. And by that stage, you're about four levels down in the telephone tree.
And then all of a sudden, you get hit with the automated menu and the questions, the questions, the questions, the questions.
(BEGIN AUDIO CLIP)
AUTOMATED VOICE RESPONSE SYSTEM: Please enter your Social Security Number, date of birth and pin code.
(END AUDIO CLIP)
QUEST: And that of course got to be ended in exactly the correct format or you'll get no further. Well, that's T-Mobile's customer service is
abandoning its automated systems in favor of real human beings instead. The company's president explained why and updated me on T-Mobile's plans to
merge with Sprint.
(BEGIN VIDEO CLIP)
MIKE SIEVERT, PRESIDENT, T-MOBILE: Now, we didn't do this as a cost savings, but at the end, we are right now at the launch of a team of
experts simultaneously experiencing the best rates of satisfaction in this industry's history, and the lowest cost to serve customers in our history.
And it's really simple, if you solved customers problems, they don't have to call --
QUEST: Right --
SIEVERT: As often, and ultimately, that actually saves us money.
QUEST: Mike, my issue has always been with these sort of we're going to improve the service and we're going to answer your phone and there won't be
any telephone trees and you'll get straight through to somebody. Is that they can't solve the problem, they've been -- there's a lot more people
that's on the box, but they can't solve the problem.
They just -- because either they're not the right quality or the issue is too complicated. What can you do about that?
SIEVERT: Well, here's why that's the case. In the past, what companies have done is specialize reps. You can route it randomly to the next
available rep who's highly specialized in one thing. But it turns out that might not be the reason why you're calling.
It shouldn't be a specialized rep. What you need is an inter-disciplinary team seated together, 30 to 40 people who are dedicated to just you and
people in your areas. And if they need help, they can just reach in from a friend sitting right in the pod with them with a different skill-set.
It's a totally different mindset on how to --
QUEST: Right --
SIEVERT: Solve customer problems. And these teams are --
QUEST: Well --
SIEVERT: Incented to actually get it right the first time.
QUEST: When this is up and running, how long will a customer usually have to wait before somebody answers?
SIEVERT: Well, the vast majority of time, it's either instantaneous or just a few seconds. But what's different about our model is that on those
rare occasions when there might be a wait, instead of making you wait and listen to that smooth jazz music, what you'll be able to do is simply
schedule a callback at the moment --
QUEST: Right --
SIEVERT: That's convenient for you. You just pick up the phone at a time when we call you when you're free --
QUEST: Finally -- thank you. Finally, we need to just obviously talk about Sprint and how that is going. You are the president of the company,
so you're in a good position, sir, to give us an update and a briefing.
SIEVERT: Well, you know, it's going really well. It's just been a little over three months since we announced this deal. And you know, our job is
really simple, it's to tell our story to the regulators and the officials in government and make sure that they understand the pro-consumer and pro-
competition benefits of this deal.
[16:55:00] And so far they've been listening and we've been really encouraged and it's going well. But it's early in the process and our job
is to keep our heads down and make sure to keep explaining why this deal is pro-consumer and pro-competition.
QUEST: So no -- so too early to give a feeling of how the regulators are going to go or what restrictions they may want to put on.
SIEVERT: Well, I can say this. When we launched the deal, we were highly optimistic that we would get approval, and we would get approval with the
deal as we crafted it. And it's been three-and a half months, we've done a lot of work since then and we're still as optimistic as we were then.
We filed our public interest statement, our -- asked for registration, we've met with every major part of government and we've had the chance to
tell our story to an audience that's willing to listen. And after all that quality work, we're still as confident as we were the day we announced that
the government will ultimately see the benefits that are pro-consumer and pro-competition.
(END VIDEO CLIP)
QUEST: The president of T-Mobile, and as a T-Mobile customer, as I've promised you, I will report back and let you know exactly how. We'll have
our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, the Italian government has wasted little time in passing the blame game and started to pass the buck over who
is responsible for Morandi bridge collapse. Already Matteo Salvini has blamed Europe, the EU budgetary process and another cabinet member has
blamed obviously the company responsible, the private company that was responsible.
All right, look, I have no doubt at all that there's plenty of blame to go around. But to so quickly be launching these accusations by government
marks to me of amateurishness. Yes, this is a new -- this is a new government with a new cabinet that is not as experienced in national
politics.
But they have a tragedy on their hands with dozens of dead bodies. And it behooves them to act with a certain amount of decorum. Find out the facts
first and then worry about who is to blame.
In Italy at the moment, the government seems to have gotten the other way around, so keen to make a populace message that they're prepared to go out
and forward when restraint really should be the order of the day.
And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. I'm back
in New York with you tomorrow.
END
