BUSINESS-01
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 - Part 1>
Anderson, Maggie Lake>
Bell, Bob Shanks, Arianna Huffington>
market without any new stimulus. Shares in Facebook have just closed at a
record high. $116. NBC Universal has announced a deal to buy the film giant
Dreamworks Animation. The Chief Executive of Qatar Airways 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. WPP says it's bullish about
Brazil despite country's turmoil. WPP says China is big business and their
third largest market after the U.S. and the U.K. Priceline chief exec
resigns before he was pushed out because of an improper relationship with
an employee. After an independent board investigation, the board concluded
that Mr. Houston violated company policy. Ford had record profits of over
$400 million in the first quarter and the best in Europe sin 2008. Ford's
SUVs were a big seller with smaller and more fuel efficient models.
Arianna Huffington has joined Uber's board of directors. Huffington loves
the whole vision of Uber because she is fascinated by the disruption and
especially in terms of transforming cities.>
Brazil; Entertainment; Music Industry; Aviation; Television & Radio; Stock
Markets; Facebook; Technology; Internet; Brazil; Banking; Finance>
[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.
