CNN TALKBACK LIVE
Do Recent Business Debacles Signal Need for Accounting Reform?; Does the Recording Industry Discriminate?
Aired July 8, 2002 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ARTHEL NEVILLE, HOST: Wow, lively crowd today. I got to love that. OK. Hello everybody. Welcome to TALKBACK LIVE. I'm Arthel Neville. Today fireworks on Capitol Hill, the big players in the WorldCom scandal went to Washington and face tough questions from Congress. Tomorrow the president expected to call for serious penalties for corporate offenders, and I want to know what you think as always. So go ahead, give me a call at 1-800-310-4CNN or, of course, you can e-mail me at firstname.lastname@example.org.
Here's what we're doing today.
Thousands of employees are out on the street, but what's life like for the top executives? Is it too good for the CEOs embroiled in Wall Street's latest scandal? Should corporate greed be a criminal offense?
The Gloved One points a finger at music execs.
MICHAEL JACKSON: Record companies really, really do conspire against the artists. They steal. They cheat. They do whatever they can, especially the black artists.
NEVILLE: In the music world does it matter if you're black or white or is Michael Jackson off key?
And listen up ladies. Could his "I do" mean really mean I might? New research on what living together does to that walk down the aisle.
All right, I know you want to stick around for that one. We're going to start now with the WorldCom hearing where the company's former CEO and the former chief financial officer both refused to testify.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I must respectfully decline to answer the questions of this committee on the basis of my Fifth Amendment privilege.
UNIDENTIFIED MALE: I respectfully will not answer questions based upon my Fifth Amendment right to the United States Constitution.
NEVILLE: All right, so basically they're not saying anything. For the latest let's go to Louise Schiavone on Capitol Hill -- Louise.
LOUISE SCHIAVONE, CNN CORRESPONDENT: Hi, Arthel. Well, we expected the former CEO and the former chief financial officer to both invoke their Fifth Amendment privilege against self-incrimination and not answer any questions. That is within their rights. We also heard so far today from Melvin Dick, who is the Arthur Andersen auditor and we also heard from Jack Grubman, who is an analyst for Salomon Smith Barney, an analyst who is accused of being way too bullish on WorldCom stock.
You know in 1999, in June of 1999, Arthel, WorldCom sold at $63. Last Friday it closed at 25 cents a share. So you can imagine how many investors, how many people who have their money tied up in pensions, people who have been saving for college funds, for retirement are just insane about what has happened to the WorldCom stock, and they are going to Congress and Congress is going to WorldCom executives. It's not just Congress also, Arthel. Tomorrow on Wall Street, President Bush is going to outline his plan to deal with corporate skullduggery.
NEVILLE: It's punishment such as jail. But regarding this whole Fifth Amendment idea here, I mean, if we don't hear from Ebbers and Sullivan, I mean will we ever get to the bottom of this?
SCHIAVONE: Well it seems like in all of these cases there's going to be a whistle blower. In this case there is a, an executive at WorldCom, somebody very high up in the auditing department who is actually the person who discovered the irregularities. Her name is Cynthia Cooper. She was to testify today, but because she is cooperating with the SEC and the Justice Department, Congress deferred to those investigations and kept the witness list at its current dimensions.
Also expected today the current CEO of WorldCom, a man by the name of John Sidgmore and also the chairman Bert Roberts. Now what's interesting is that Bert Roberts who is the chairman of WorldCom right now, he is accusing the Arthur Andersen auditors of being asleep at the switch, that of course they should have known what was going on and the reason that WorldCom is in the position that it's in is because of Arthur Andersen.
Now, we know that Arthur Andersen has been under fire because of its role in the Enron case, but the auditor for Arthur Andersen said, Listen, it's not my fault, I didn't have any idea what these WorldCom guys were doing. The chief financial officer never clued me in that he was going to take roughly $4 billion in expenses and call them capitol investments, creating a problem where they had a $4 billion shortfall.
NEVILLE: Yes, you know this story really does baffle me. Louise, thank you very much for that update.
SCHIAVONE: Thank you. NEVILLE: OK, we're going to bring in now Rick MacArthur. He's the publisher of "Harper's" Magazine and Dennis Kneale. He's the managing editor of "Forbes" Magazine. I want to welcome both of you gentlemen.
UNIDENTIFIED MALE: Hi Arthel.
UNIDENTIFIED MALE: Hi.
NEVILLE: All right, Dennis, I'm going to start with you. It's their right, of course, but is it fair for Ebbers and Sullivan to plead the Fifth?
DENNIS KNEALE, MANAGING EDITOR, "FORBES" MAGAZINE: Well, I mean of course it's fair. This is a well-protected right that all Americans have. It certainly makes for disappointing television though, doesn't it? I mean Bernie Ebbers is an awfully interesting figure. Let's think about something.
Did he really know all this bad stuff was going on? Here's a guy who, as his stock was falling, he borrowed over $300 million from his company to keep buying the stock and to avoid having to sell off his own stock. Now I think that means he thought the stock was going to be going up. How could he have thought the stock would come back if he knew this kind of thing was going on?
NEVILLE: I don't know. Rick, how do you see it?
JOHN R. MACARTHUR, PUBLISHER, "HARPER'S" MAGAZINE: Well I see it as a massive breakdown in the regulatory system in the United States. You know, everyone's blaming the auditors, everyone's blaming Ebbers, but you really have to look at the politicians who created the environment of permissiveness and reckless -- recklessness that we're experiencing now.
When people go out on the street, lose their jobs because somebody cheated at WorldCom, you can go back to the '80s really and look at the bipartisan effort in Congress. It doesn't matter if they were Democrats or Republicans, that essentially has eradicated, not eradicated, but greatly crippled the regulatory apparatus in this country that suppose to protect working people.
Now there's been a tremendous sales job made on the American people that the stock market is as safe as Social Security or better than Social Security. I hope people are going to learn their lesson now that the market is not fair, that the rules are rigged, that this is about as, you've got about as much chance of beating the ...
NEVILLE: OK now wait ...
MACARTHUR: ... system here as you do of beating the house in Las Vegas.
NEVILLE: ... let me jump in there.
MACARTHUR: The house always wins.
NEVILLE: If you're saying that the rules are rigged, then where do stockbrokers fall into all of this?
MACARTHUR: The stockbrokers take advantage of the lax regulation. The Glass-Steagall Act was -- which used to separate the investment banking function from the stock brokerage function in investment firms, was repealed last year, and as a result, the securities analysts, like this guy Grubs -- or Grubman, excuse me, are booming stocks, recommending stocks that their companies are also underwriting.
NEVILLE: OK, Rick, I'm going to jump in again here because what I'm hearing you say is it's as if we can't trust the stock market at all.
MACARTHUR: I don't think you can trust the stock market under the current -- in the current environment, and you certainly can't trust the Securities and Exchange Commission to clean up the mess or the president.
KNEALE: Arthel ...
MACARTHUR: The president of the United States -- the president of the United States lecturing ...
NEVILLE: Hang ...
MACARTHUR: ... corporate America on ...
NEVILLE: ... on for me.
MACARTHUR: ... ethics is like Martha Stewart lecturing Howard Stern on the evils of self-promotion ...
NEVILLE: All right, I let you finish that little analogy ...
NEVILLE: ... because I was interested to see where you were going with that, but now I'm going to let Dennis go ahead ...
KNEALE: All right ...
NEVILLE: ... and jump in.
KNEALE: ... look, there is a tendency here, and Rick MacArthur is guilty of this, even though I've heard wonderful things about Rick MacArthur, and I love his magazine. We're painting with too broad a brush here -- Enron, Arthur Andersen, WorldCom, but there are thousands ...
KNEALE: ... of companies traded on the stock market, OK, that aren't fudging the numbers. By the way, it was not a lack of regulation and a lack of rules that hurt this. These are a couple of companies that decided to engage in a criminal conspiracy and no amount of regulation is going to stop that from happening. It's the regulation now that is allowing us to go after these guys and hang them.
NEVILLE: OK, so ...
MACARTHUR: What about Glass-Steagall?
NEVILLE: ... are the smaller investors at all, I mean because we keep referring to the smaller investors as victims. Are they at all responsible in any way?
KNEALE: Look, I'm sorry to say this and I know it's going to make a lot of people mad, but I'm a journalist. That's my job. A lot of us, investors, got greedy and three years ago we did not care if a company pushed the envelope, if a company was like hiding earnings so that taxes didn't have to get paid as much. The stock price kept going up and we were really happy about it. Now all stocks are down. Our retirement funds are hurting, and we are angry and we want to see someone pay.
NEVILLE: That's right.
KNEALE: But really, aren't we a little bit guilty of greed ourselves?
MACARTHUR: Yes, you're quite right. You can't regulate greed, but you can regulate the people who are in a position to do the most damage, who are the wealthiest people in the country and the politicians who benefit. Let's also get into -- complete the circle. The WorldCom executives, the Enron executives, all these top executives contribute to the Republican and Democratic Parties. It's protection money ...
KNEALE: That's ...
MACARTHUR: ... and they pay these people to some extent to lay off.
KNEALE: That's the idea ...
NEVILLE: Dennis, jump in and then I'm going to get Jason (ph).
KNEALE: The idea that campaign contributions honestly are responsible for what's going on now is a little silly. For example, look at the congressman in WorldCom's district in Mississippi. He's received all of $89,000 over the last 12 years. That's not why he's in there protecting WorldCom.
NEVILLE: Hang on ...
(CROSSTALK) NEVILLE: ... hang on guys. Jason (ph) is ...
NEVILLE: ... going to speak out right now. Hang on for me guys.
JASON (ph): The insinuation that the stock market was ever safe was foolish. It's a risk. It's an investment. The best you can do is assess your risk and try and capitalizes on your opportunities. To say that -- to say that stock brokerages take advantage of that is to say like Coke takes advantage of marketing. I mean they're trying to sell a product. Whether or not you buy it, you have free will. You can make your own ...
NEVILLE: But shouldn't you -- you should be able to trust your stockbroker.
JASON (ph): You should be able to trust information provided by your stockbroker, but not necessarily his opinion.
UNIDENTIFIED MALE: Yes what ...
NEVILLE: I have to take a break, which is why I said stock breaker. In my ear, my producer Jody (ph) just said take a break, so I said stock breaker. Anyway on that note, here's a question for you.
Well, scandal or not, these executives were bringing home the bacon. We're going to talk about their salaries when we come back and later, the king of pop sounds off on racism and the recording industry.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Tommy Mottola. Tommy Mottola.
(END VIDEO CLIP)
NEVILLE: The "King of Pop" accuses the head of Sony's music division of racism. Are other artists singing the same tune, or will Michael Jackson have to go solo on this one?
NEVILLE: ... I mean I understand your point and I understand -- welcome back everybody. Here at TALKBACK LIVE we continue our discussions during the break. We're talking about top execs at WorldCom and before we get to their salaries and to find out how large these guys are living, I want to continue this conversation here. Eric (ph), what did you say?
ERIC (ph): What I was saying is there are a lot of people, blue- collar workers or people who are factory workers, who have some money to put aside, maybe for the kid's college or for whatever reason. But they have that money to put aside for something, investment. You know because you know when you get what ...
NEVILLE: Yes, but what about the stockbrokers you said?
ERIC (ph): Well you need to find someone who is more knowledgeable than you to put that money away for you.
NEVILLE: And you said what?
JASON (ph): I said essentially that if you don't have time to do the research there are lower risk investments. You wouldn't trust a used car salesman to tell you which car to pick.
NEVILLE: OK, but hold up --used car salesman, stockbroker -- two different things, OK. Come on now -- what?
JASON (ph): No.
NEVILLE: No? What is Marvin (ph) up here talking about? Are you going to tell me that stockbrokers are like used car salesmen?
MARVIN (ph): Yes, I pretty much think they're like football touts. You know, I mean, they sell what they have to sell, and they're not sure what they're doing themselves.
NEVILLE: Oh come on, Dennis, what do you say to this?
KNEALE: I mean I think that the parallel is a little smarter than one would think, especially now in terms of how America is regarding stockbrokers. Look, they were always there to sell something. They make money when we buy. They make money when we sell. But good business means that they have to do a good job of advising us, otherwise they won't get any more of our business, and so it's a self-policing system usually.
MACARTHUR: Yes, but there's a lot more money at stake -- there's a lot more money at stake in the stock market than at the racetrack. When you go to the racetrack and you bet at the $2 or the $5 or the $10 window, you're not going to lose that much money because you got a bad tip from a race track tout. Here you're talking about tens of thousands of dollars or hundreds of thousands of dollars, peoples lives being absolutely ruined or having ...
KNEALE: But ...
MACARTHUR: ... to go back to work when they were ...
KNEALE: ... these are people ...
MACARTHUR: ... planning on retiring.
KNEALE: ... who took -- they took the risk and they took them knowingly.
MACARTHUR: No they didn't take ...
MACARTHUR: ... they took them in ignorance. (CROSSTALK)
NEVILLE: Yes, but come on ...
MACARTHUR: They took them in ignorance.
NEVILLE: ... Dennis, do you really think that people -- now Rick what you just said -- now most people feel like they should be able to trust their stockbroker as somebody who is able to research various stocks and give you good advice.
MACARTHUR: Yes, but the average investor, the new investor particularly who's the one who gets clipped the worst because they buy at the top of the market when they think it's safe are the ones least likely to know about the deregulated financial economy, financial situation. They don't know that Glass-Steagall has been ...
NEVILLE: So who's ...
MACARTHUR: ... repealed.
NEVILLE: ... looking out for those people?
MACARTHUR: They don't know that the investment banking and ...
NEVILLE: Who's looking out for them Rick?
MACARTHUR: The politicians and the Democratic Party were supposed to. The Democratic Party used to be called the "party of labor", the working man's party. It's now equivalent to the Republican Party in greed and corruption. They raise money from the same corporate tax, the same rich individuals that the Republicans raise money from, so there is no competition any more in the political arena.
KNEALE: Arthel ...
MACARTHUR: You need new ...
NEVILLE: Go ahead.
MACARTHUR: ... politicians and new voices ...
NEVILLE: ... go ahead Dennis.
KNEALE: Yes, Arthel if I may ...
MACARTHUR: ... to come to the fore. In fact, the right wing Republicans ...
NEVILLE: Go ahead Dennis.
MACARTHUR: ... and the Democrats.
KNEALE: The problem with -- the problem with your question, who's going to protect the individual investor, I think that we all have to take responsibility for our own money, and we've got to protect ourselves. We never should have been leaving it to everyone else and certainly we should not be leaving it to politicians because the same politicians that today are doing great hearings on WorldCom, the biggest accounting fraud of all time, are also furiously investigating a teeny tiny transaction by Martha Stewart because it makes for great publicity.
Politicians were never the answer. You've got to protect yourself. You've got to be smarter and tougher.
MACARTHUR: Who's going to pass the laws to protect these people?
MACARTHUR: You need new politicians.
KNEALE: You know, there are already plenty of laws on the books. There are laws all over the place. The reason ...
MACARTHUR: No, there aren't.
MACARTHUR: No, there aren't. There are conflicts of interest all over the place now ...
NEVILLE: Rick do we need new laws?
MACARTHUR: ... that are now legal.
NEVILLE: Do we need new laws, Rick?
MACARTHUR: We need old laws restored, which were instituted after the great crash of '29, like the Glass-Steagall Act, which separated the investment banking from the stock brokerage functions in these banks because it's an obvious a ...
KNEALE: Actually ...
MACARTHUR: ... terrible conflict of interest.
NEVILLE: And then Rick, if you're ...
KNEALE: ... separate commercial banking, customer banking from stock market, but if you put that barrier back in place, you're going to hurt American companies against the rest of the world, which doesn't have those kinds. That's not what caused this problem.
MACARTHUR: What caused it then?
KNEALE: ... got too greedy.
MACARTHUR: What caused it? Oh just greed, well, so you're going to legislate greed?
KNEALE: ... nothing to do about greed.
MACARTHUR: You're going to legislate against greed.
KNEALE: In other words ...
MACARTHUR: Of course you can't.
KNEALE: ... customers and investors put our money with companies that we trust. You know four years ago you would rather invest in a WorldCom than an AT&T. Today for all of AT&T's problems it's a safer investment and its balance sheet is true and honest.
NEVILLE: OK. I promised take we would take a look at these guys, Rick -- Ebbers and Scott Sullivan salary. Let's pop that on the screen right now. Bernie Ebbers, president and chief executive, in 2000 and 2001, his salary was $1 million a year. His 2000 retention bonus, $10 million. Moving on to Scott Sullivan, CFO, 2000 and 2001 salary, 700,000 a year, 2000 bonus $10 million again. I mean this kind of money makes me nervous. Hello. Where is the incentive ...
NEVILLE: ... to keep these guys ...
KNEALE: .. Arthel this kind of money says that they were superstars and when the stock was going up, shareholders felt they were worth it, and now that they're under a cloud of criminality and alleged criminality, now we feel like shoot, we were paying them too much. But a lot of these guys, they earn their keep. OK. They create wealth for thousands and thousands of American investigators and thousands of employees.
MACARTHUR: What you seem to be saying -- what you seem to be saying is that the suckers are as culpable as the big wigs. Is that what you're saying?
KNEALE: You know ...
MACARTHUR: The people who got conned ...
MACARTHUR: ... are just as responsible for what happened to them as the con artist -- as the con artist.
KNEALE: Look I think all of us were in there and all of us were making a lot of money and ...
MACARTHUR: Not all of ...
MACARTHUR: ... us were in there.
KNEALE: ... crying about it for a long time.
MACARTHUR: Not all of us were in there. Half the country is not in the stock market.
KNEALE: Yes and half is. OK.
NEVILLE: Hang on guys for me one second. I've got Sanjay (ph) here.
SANJAY (ph): I just -- you know I think about all those that are cheating the system for you know social assistance or welfare, something. That is a drop in a bucket compared to all these corporate people up there that are -- I mean what's an income statement or a budget when you you're -- when you don't have proof? You need receipts. You need this and a budget is nothing. I mean income statements are useless. So, and they just pleaded the Fifth so they didn't restore my faith in any of the process.
KNEALE: Yes we're -- I think we're facing a real crisis if we're not careful in American confidence in the stock market. To hear the people say the things that they're saying about it today is very disturbing, and it's going to stop the stock from coming back and I want to see a comeback in the market ...
KNEALE: ... once we can ...
NEVILLE: I think that would be ...
KNEALE: ... restore faith.
NEVILLE: ... great for everybody.
MACARTHUR: Based on what? Based on what do you want to see the stocks come back?
KNEALE: Based on ...
NEVILLE: OK ...
KNEALE: ... the assurance of punishment, and we're going to see these guys get strung up by their thumbs and it's going to make us feel better.
MACARTHUR: No, we're not going to see David Komansky of Merrill Lynch go to jail. We're not going to see politicians thrown out of office as a result of this. That's what got to happen. You're going to have to have some bigger fish go than a few accountants or the financial or the CFO of WorldCom. There's got to be a seismic shift in the political landscape if you're going to expect a safer somewhat more regulated market where people don't get screwed.
NEVILLE: I need to take a call right now from Neberto (ph). Go ahead sir. You're on the air.
CALLER: Yes, hi. I was wondering after 9/11 civilians are being asked to give up all kinds of liberties and conveniences that we used to enjoy. So now after all of these scandals have broken out, are companies and corporate America going to be asked by the government to give up oh, let's say, deregulation laws and those wonderful golden passions that we see also bankrupt the companies get away with?
NEVILLE: So basically any accountability here, Rick?
MACARTHUR: Well I don't -- I don't -- so far we haven't seen any major, any examples of accountability. Nobody has gone to jail who's of any importance. I suppose that at some point we're going to see some new legislation and maybe the president will say something interesting tomorrow. I doubt it because, again, his the Party lives off of the inflated earnings of these corporations. That's what they -- that's where they raise their money from.
NEVILLE: Well that's the last word on this segment because I have to go to break right now. Rick MacArthur, John Rick MacArthur and Dennis Kneale, thank you very much for being with us here ...
UNIDENTIFIED MALE: Thank you.
NEVILLE: ... today. And up next, a sour note for the music industry. Is it guilty of racism? We'll find out why the "King of Pop" is saying it is.
JOYA DASS, CNN CORRESPONDENT: I'm Joya Dass at the New York Stock Exchange. Here's a quick check of your financial markets. The Dow is lower by 114 points making its way to session lows. The Nasdaq, by the way, is at a session low, lower by 38 points.
Now the stock of the day is Merck and at issue is the way that they reported some $14 billion in co-payments from patients between the period of 1999 and 2002. They booked them as revenue, but never actually received the payments. Now Merck contends that they did everything by the book and this did not impact their bottom line.
By the way, the Merck-Medco spin-off, according to people familiar with the situation, is still set for Wednesday. Additionally we got some earnings from Alcoa. They came in a penny light. That's a quick check of your markets here. TALKBACK LIVE continues after this break.
(COMMERCIAL BREAK) NEVILLE: All right, welcome back everybody. I'm Arthel Neville. Pop legend Michael Jackson is lashing out at the head of Sony Entertainment and accusing the record industry of racism.
(BEGIN VIDEO CLIP)
MICHAEL JACKSON: Racism is bad. Tommy Mottola made some very racist remarks. But what he said was, one of these artists who worked at Sony, he has a contract with the company, and he called him a fat black (EXPLETIVE DELETED).
(END VIDEO CLIP)
NEVILLE: Well I think you can figure out what Michael said. Sony issued a statement saying the company is deeply offended by Michael's comments. The pop star has joined a coalition, by the way, investigating the exploitation of artists in the music business.
Reverend Al Sharpton is also part of that coalition and he joins us now from New York, and in Los Angeles Karel Bouley. He's a music journalist and contributor to "Billboard" Magazine and I want to welcome both of you gentlemen.
KAREL BOULEY, SYNDICATED MUSIC JOURNALIST: Hi, Arthel.
NEVILLE: OK, Reverend Sharpton I'm going to begin with you. Why is Michael Jackson upset with Sony and why did he call Tommy Mottola a racist and do you support Michael?
REV. AL SHARPTON, PRESIDENT, NATIONAL ACTION NETWORK: Well, I think that Michael has said very clearly that he's concerned about how artists are treated in general and about the fact that there seems to be a particular problem in the music industry when it comes to race. I mean when you look at the fact that out of the four major record companies today you've never had a black president of either company, you can't find black businesses that have real long-term contracts. Artists are charged with million of dollars in promotions, yet they can't guide where they go.
So in this national summit tomorrow that Michael will be a part of, you have people like the child of Otis Blackwell, who wrote all of Elvis Presley's hits and never got the credit on or the money. Kenny Gamble, I mean there are a lot -- this is a historic problem that needs to be dealt with, and I think that Michael Jackson being the largest record seller of all times, I think adds a lot of weight to the concern. People can argue about when he came, how he -- what difference does it make if the issue is there.
Address the issue. Name the blacks that have been presidents of these companies. Name those that have gotten the contract. They want to do everything but answer the charge and try to get into some personality discussion that is irrelevant to the issue.
NEVILLE: Go ahead Karel. How do you see this?
BOULEY: Well you know, Arthel, it's really interesting. This is not a race issue. Record companies treat everyone the same -- poorly. It's an industry. It's their job to make money for their labels. If you're an artist on their label, you're often asked to give away rights. The lawsuits that they're referring to, by the way, were brought about by white people. Courtney Love brought it about. "The Dixie Chicks" just settled a lawsuit.
To go back to the race issue, for Michael Jackson of all people, he hadn't been white since the "Off The Wall" album -- I mean been black since the "Off The Wall" album. So I found that very amusing.
SHARPTON: Well, first of all, what lawsuit is he talking about?
BOULEY: There are many lawsuits ...
SHARPTON: You ...
SHARPTON: ... argue with us something we're not -- I don't even know what you're talking about.
BOULEY: Reverend Sharpton there ...
BOULEY: Reverend -- Reverend -- one reverend to another, there are many lawsuits pending right now movements against ...
SHARPTON: It has nothing to do with what we're talking about.
BOULEY: ... a recording industry -- yes it does, unfair treatment of the artists ...
She asked you about Michael Jackson.
BOULEY: If Michael Jackson's "Invincible" album had gone triple platinum in the United States, I sincerely doubt he would be making comments about Tommy Mottola right now.
SHARPTON: I don't agree with that. That's just speculation. You can't assign other lawsuits to us, sir. You deal with what we're talking about. I don't know what you are talking about. What lawsuits?
NEVILLE: Let me just say this, Karel. Now, in the U.S. alone, Michael Jackson sold some 58 million CDs or albums. BOULEY: Yes. I own them all.
NEVILLE: So, really, maybe he's using this particular time to go ahead and speak out. But Michael Jackson has sold a lot of records. And I suspect Michael Jackson will continue to sell a lot of records. And he has also made a lot of money for Sony as well, right?
BOULEY: OK. So, then, is this a new policy of racism at Sony? You just said that Michael sold millions of records before this point. Were they racist then? They seem to have promoted Michael in the past. He's the king of pop. You don't get there without help.
SHARPTON: But that's like saying we should stay in the back of the bus because we were there 100 years. Why not 100 more?
BOULEY: Reverend Sharpton, why do you always go there? I'm a member of a minority, myself, OK?
SHARPTON: You are raising a question, sir.
BOULEY: And I hate people to jump on the minority tip every time they think they are being treated unfairly. There is a valid...
SHARPTON: All right, let me ask you a question. Name to me a black that was the president of one of the major record companies. Name one.
BOULEY: This coalition is about artists. As far as I'm concerned...
SHARPTON: How are you going to tell me what out coalition is about?
BOULEY: Michael Jackson's statements were about racism for
BOULEY: You just stated about publishers, about Gamble, about Huff. You weren't talking about CEOs. You were talking about people making the music getting bad deals.
SHARPTON: Arthel, I think I opened about talking about CEOs, about business -- if you are going to argue with yourself, you'll win. Why don't you address the points I opened with? That's what the summit is about.
NEVILLE: I am going to jump in here and get Reed from Louisiana.
Go ahead, Reed.
SHARPTON: You can't name one.
REED: I think all the race comments, all of them are just trying go back to money. What happens when the artist want to bring his music to the people? That's what the record industries are for, just for the artist to bring his passion to music to the people. And all this is going back to money, because the race, whatever.
BOULEY: The recording industry does have a problem. Record labels are not treating artists fairly nowadays. They are locking them into long-term contracts. Oftentimes, they are asking for a lot of their publishing, which is if they write a song, which is where the real money in the music industry is, is in publishing.
NEVILLE: Karel, I have tell you, though, too, this is not a new problem. This has been going on for a long time.
BOULEY: Arthel, you're in the industry. Well, your relatives are in the industry. So, you know.
SHARPTON: Arthel, they want to be in denial. They want to say -- again, he won't address any point. He can't name -- you can't even name me a leading black at Billboard, where you write. And now you are going to tell us what we're arguing about.
BOULEY: He left. He went off to write books.
NEVILLE: All right, listen, you know what? I'm going take a break.
I have Vanessa, who is standing by on the phone. I have Trish in the audience, Calvin, a bunch of people who want to speak out on this. I want to hear from you as well. E-mail me, TALKBACK LIVE, CNN@TALKBACKLIVE, 800-310-4CNN.
I'll talk to you in a moment.
NEVILLE: And welcome back, everybody.
We are talking about the accusations of racism in the music industry -- a lot of passion here.
Patricia, you want to say what?
PATRICIA: Probably too passionate.
But I don't think it has anything to do with fame or money. He already has the money. He has the fame in Europe. We have to look at the whole picture, the whole picture. Racism was here. Racism is here. And I pray to God it won't be, but it will probably continue to be here. It's so embedded in our society that sometimes even we don't see it, meaning my own people. But it's here. It isn't a Michael Jackson thing.
NEVILLE: Thank you, ma'am. I'm going to take a phone call now from Vanessa in New Mexico -- Vanessa.
CALLER: Yes, hi.
Basically, I agree with what the lady just said, because racism, it was here in the beginning. And it will be here. And I think what Michael Jackson is doing is very good, because, a lot of times, it's just like he says. People will overlook racism. They want to say it's not here. But it is here.
And I think that, because some people that are in that business, they make all this money. They are willing to make the money and not say anything. So, I'm just glad that Michael Jackson is bringing it to the front, because I deal with racism every day. And it is still sad. Even sometimes my son says, "I'm racist," and when I to try tell him, "You know, you need to be careful, because it's out there."
And that's really all I have to say.
NEVILLE: Thank you very much, Vanessa, for your call.
And I'm going to go to Danielle, who's on the line from Georgia.
CALLER: Hello, Arthel.
First, I want to say hi to my brother Chris.
CHRIS: Shout out.
CALLER: But I wanted to say that Michael Jackson I believe is wrong for saying that they are racists, because, like Karel said -- I agree with him -- it comes down to him making money. And if the artist is not making money for the record company, then how is it going to be racist even if he's black?
And there was an AOL instant messenger on there saying, where was he when the other black artists were being targeted as well? And I disagree with Pastor Sharpton, because he said that there were some record companies that didn't have black -- major black companies that didn't have black leaders. But what about Arista Records with L.A. Reid and what about Murder Inc. with Irv Gotti?
SHARPTON: But neither one of them are major record companies. They are not major record companies. And they are not the distributors.
And, clearly, if you go from the history of the music business to now, there's been a problem. And, really, what people are saying is that Michael ought to shut up, sing and dance, and get money. And the fact that he would stand up and say, "No, I am making money, but I'm going to stand up because I have seen people ahead of me"
BOULEY: I don't think anyone in America thinks -- I don't think anyone thinks Michael Jackson should shut up, sing and dance and make money. How dare you claim that we are all about racism?
SHARPTON: Then why are you disputing that...
BOULEY: This is a broader problem. It's not a race problem, Reverend Sharpton. I have been in the recording industry for 20 years. I don't think you have.
SHARPTON: I don't think that you can tell us that are the victims what the problem is.
BOULEY: I don't think that you have been in the recording industry as long as I have, Reverend Sharpton. And you can yell over me all you like to, but it's not going to get the point across. And the point is the entire industry...
SHARPTON: The fact of that matter is, where the Black Musical Association started, I was there some 25 years ago. The father of that, Kenny Gamble, will be at the summit tomorrow. I've been there much longer than you.
BOULEY: I love them. And I have met them. And they have written for me. And that is great. But you are making vast assumptions about the majority of the people in the industry being racist. And I'm saying...
SHARPTON: I haven't said anything about the majority of people in this.
BOULEY: Oh, that we all want Michael to shut up, sing and dance?
SHARPTON: Name it. Name it. Name a president of a major record company. Name a major contract.
BOULEY: Will you agree that this goes to a larger issue in the recording industry, which is that all artists are given raw deals in their contracts, that record labels are a business? They want nothing more than to make the most for their label. So many artists have had to sue to get out of contracts, to get back royalties, to get a video done. It's very difficult in the recording industry right now.
SHARPTON: May I respond?
BOULEY: Will you agree that it is difficult for all artists in the industry?
SHARPTON: If you let me respond, you will find out what I agree or don't agree with.
SHARPTON: I agree that there is a broad problem with artists. And, as Michael Jackson says, I agree there is a particular problem with black artists and black entrepreneurs and business people.
BOULEY: Is there a particular problem with Hispanic artists? Is there a particular problem with Asian artists? Is there a particular problem with Hawaiian artists?
NEVILLE: OK, gentlemen, gentlemen, I'm going to go ahead and step in here right now and get some audience reaction.
Claire from Connecticut.
CLAIRE: My husband and I used to book the oldies groups, the groups in the '50s. We booked them in the '70s. We got to know a lot of the groups, black groups and white groups both.
We found out that a lot of them were cheated out of money. They did not have the right kind of advice. They were cheated by their managers. They were cheated by record companies. A lot of them were going around trying to make some money in the '70s because they didn't have money from the '50s. I don't know Michael Jackson's exact situation, so I can't comment on him. But I know that both black and white did suffer.
BOULEY: Yes, all artists at that time have been cheated. Artists have been historically cheated.
SHARPTON: I don't think that you played any tape where Michael Jackson raised his particular point. He said James Brown. He said the artist that he was concerned about, Otis Blackwell, and that this stops.
And I think he ought to be saluted for that. I don't question why someone will come with something that needs to be dealt with. I deal with what they're dealing with. And I think the industry should deal with it.
BOULEY: I think the industry should deal with it across the board.
NEVILLE: Let me hear from Shane and then Stacy. Go ahead, Shane.
SHANE: There's a coalition that wants to investigate whether or not these artists are being financially exploited. What are the ultimate goals of this coalition? Where does Michael Jackson fit in? And what do you ultimately want for the artists?
SHARPTON: Ultimately, to have contracts that are fair and that they can direct.
If Michael Jackson or Luther Vandross or anyone wants to say that, one: "If you are going to charge promotion money to me, I should have say-so that some people in my community ought to make some of that money."
BOULEY: Reverend Sharpton, will that go...
SHARPTON: I do not feel that we should be charged with things we have no control over.
SHARPTON: And I agree it should be across the board for all artists, but I think it's a particular problem for black artists.
NEVILLE: I'm going to jump in now, gentlemen.
And I want to go ahead and read a statement from Sony. Excuse me.
It says: "We were deeply offended by the outrageous comments Mr. Jackson made during his publicity stunt this past Saturday. The executive he attacked is widely supported and respected in every part of the music industry and has championed both Mr. Jackson's career and the careers of many other superstars. In launching an unfounded and unwarranted attack on this man's reputation, Mr. Jackson has committed a serious abuse of the power that comes with celebrity."
BOULEY: Mr. Sharpton, do you believe that the changes that your coalition wants to make should apply to white as well as black artists?
NEVILLE: Can't answer the question, because I've got to take a break. I'm sorry.
SHARPTON: Absolutely. Absolutely. Do you?
NEVILLE: Reverend Al Sharpton, Karel Bouley, you know what? I'm going to pass on the phone numbers to each of you and you all can continue the conversation.
Thank you very much for that lively discussion. I do appreciate it.
OK, listen, when we come back, we are going to switch gears here. And mom always said he won't buy the cow if he can get the milk for free. You heard that, right? Well, now at least one study agrees. You got to hear about this when we come back.
NEVILLE: Suddenly the temperature just got hotter in here. Boy.
All right, this subject, maybe your mother was right. A new study shows men are less likely to marry if they live with a woman first. And men who do marry after living together are less likely to be committed to the marriage.
The author of the study joins us now. Scott Stanley is the co- director of the Center for Marital and Family Studies at the University of Denver. Also with us: Dorian Solot, the co-founder of the Alternatives to Marriage Project. And Dr. Pat Allen, she's a marriage and family therapist in Los Angeles and author of several books on marriage.
I want to welcome all of you to the show.
SCOTT STANLEY, AUTHOR, "FIGHTING FOR YOU MARRIAGE: Thank you.
DORIAN SOLOT, ALTERNATIVES TO MARRIAGE PROJECT: Thank you.
PAT ALLEN, MARRIAGE/FAMILY THERAPIST: Thank you.
NEVILLE: OK, Scott, bottom line, what does your study say?
STANLEY: Well, the most interesting part of our research is this: that, when couples live together prior to marriage, what our data shows, that once those couples are married, those men actually tend to be, on average, less committed to their wives than men who didn't live with their wives prior to marriage.
NEVILLE: OK. You know what? In between each guest, I'm going to go ahead and let my audience here speak out -- Calvin.
CALVIN: I don't know if that's necessarily true.
But I've been married 16 years. I did not live with my wife beforehand. But you are having a relationship with the family that's there, her parents, her father, and then my parents and my father. You don't necessarily have to live together. You should be able to build a relationship as friends and then build a relationship past that. That's what going to last. Everybody -- things don't last living together. Five years is a long time nowadays. Well, I'm proud to have a 16-year marriage and still going.
CALVIN: So, I think living together is a problem sometimes.
NEVILLE: That's very nice.
Wait. Wait. What was the last thing you said? You think living together is what?
CALVIN: Living together can sometimes create problems. You live together, but she has her account and he has his account. And nobody is building anything together. If you all separate, everything is separate already and you can leave.
STANLEY: That's consistent with a number of studies, that one of the things that happens when people live together for some time, is they develop this ongoing independent mind-set that makes it harder to develop this sense of us being a team if they do decide to marry. So, that can be some residual from that.
And the other thing that he picks up on in a way that I would comment on, is, one of the problems with living together for some couples is that some of them end up marrying people they wouldn't have married if they weren't living together with them.
NEVILLE: Why, because they just settle, they just get complacent?
STANLEY: Exactly. They get settled. The inertia builds up for the relationship continuing. A fairly significant percentage of these couples are having children now, which, of course, is going to create a lot of inertia.
So, some people who maybe are not so sure about a marriage before -- or not so sure about a relationship before living together may actually be more likely to end up marrying that person because they started living together.
NEVILLE: I want to hear what Dr. Dorian Solot has to say.
SOLOT: Well, I think it's really important to understand the role of cohabitation in this country today. Most people today live together before they get married. It's very mainstream practice, so that the people who don't live together, they are becoming actually more of a minority group. They have their own distinct tendencies.
And what we see in those groups, that group of people, is, they tend to be a little bit more religious on average. They tend to be more conservative. They tend to answer some of these questions about commitment differently. So, what happens, when you compare these groups, is, you are really looking at different groups, apples and oranges. It's not to say that there's one right answer for everybody.
Certainly, not living together, it's the right answer for some people. On the other hand, cohabitation is what most people do. And it works out fine.
NEVILLE: That's what you do, right? SOLOT: I'm in a very happy long-term unmarried relationship. And I think this is really the key. The two people in the relationship have to be in agreement. My partner and I are in agreement that we are very happy not being married.
If, on the other hand, you really want to be married, it's really important that your partner also agree with you. You don't want to move in with someone who isn't quite sure about marriage. That's going to hurt you in the long run. So I think the key here is talking about it, having open communication, before you make these long-term decisions about things like moving in together. That does have risks.
NEVILLE: Hang on one second. I want to get Dr. Allen in.
But I also want to get Kristin in first -- Kristin.
KRISTIN: Well, I can agree with the fact that, in today's society, we view commitment differently. There are people out there who think that they don't want a commitment. They want to live together. They don't want to get married.
But I think that -- I'm a little conservative myself. I believe that we would all -- you are going to need to make that commitment. You need the commitment in your life to have a full life. And I think that you should all need to be -- you need to be looking out there for that person that you want to live with for your whole life, and that you need to get married, and it has that fulfillment that I think that we lack in society today.
NEVILLE: So, bottom line, you should not live together first, right?
KRISTIN: Unless you have a ring on your finger and you're engaged, I think that's...
NEVILLE: But that's still before marriage.
NEVILLE: I'm just saying.
KRISTIN: It's a commitment.
NEVILLE: OK, let me let -- I haven't heard from Dr. Allen.
I want to hear from you, Dr. Pat Allen. Is living together before marriage a good idea or not?
ALLEN: No, it's not a good idea. But my message is based more on science than anything.
The word oxytocin should create shudders in the bodies of every woman on the planet. Oxytocin is a bonding nueropeptide that causes young women and old men to bond to the people they are living with, having sex with. Women marry physically, while men marry intellectually. And whether we like it or not, if a man gets a free wife, she's not going to be as valuable as one that he has to commit to with an engagement ring, with a wedding date, with a social status. So you don't mess with Mother Nature.
NEVILLE: You have some people here, including Susan in the audience, applauding.
ALLEN: I will pay them directly after the show.
NEVILLE: And I will take the commission gladly. No, no, I'm just kidding.
Listen, we have to take a break right now.
Hey, you are over there.
We will continue this conversation after the break. TALKBACK LIVE continues in a moment.
NEVILLE: Welcome back, everybody. I'm Arthel Neville.
We are talking about living together and how it might impact your marriage. And, of course, as I always tell you, we talk during the commercial break on TALKBACK.
And Justin here had this to say.
JUSTIN: I think that, even if you're in a relationship with your best friend, you don't know the person until you live with them. Even if you are thinking about bringing a child involved, that's even more important. You need to know each other first, because you don't want to be fighting and arguing with a child involved.
NEVILLE: So, Justin, you're saying it's OK to live together first.
NEVILLE: Hang on one second, because, Justin -- I know you can't see Justin, Dr. Solot. Justin is all of about 12.
How old are you, Justin?
NEVILLE: OK, Justin is 17, probably just went to the prom last week. What are you talking about living together first for? JUSTIN: No, I'm not saying that I would do it. I'm just saying that you need to know the person before you get married. So, if you live together, if you find that you hate each other, you can get out of it.
STANLEY: See, this is a very good example of what is probably a myth right now in our culture, is that you can easily get out of it.
And while cohabiting relationships are easier to get out of than marriage, they are not as easy to get out of as a dating relationship without living together. So, what if you are learning more about this person and you find it's not who you want to marry? But you have been buying things together. You have a child coming on the way. You are starting to lock yourself into a path when maybe that wasn't at all the original idea on the plan.
SOLOT: And I think we're all in agreement on that. And, to me, the conclusion there is, people need to be on the same page. They need to know ahead of time: What are we committing to? What have we not committed to?
It makes me very nervous to hear that relationships are one-size- fits-all, that there's one answer and that's going to do it for everybody. Obviously, that's not the way relationships work. And, for some people, living together is really a great thing. And, for other people, it doesn't feel right. And that's fine. What I'm saying is, people need to make really good, well-informed decisions.
ALLEN: The problem here is, 20 percent of the young women, career-women-aged, are not getting to have their babies. They are getting their clock ticking. And what is happening is, they are giving the best years of their fertility and pulchritude to men that are intellectually deciding when to give a ring, when to give honor, when to give the wedding. And he can go on later and marry someone, while she then can't have those children.
NEVILLE: That's right. Absolutely.
Dr. Allen, you get the last word. I am out of time here. I want to thank Scott Stanley very much for being here. Dr. Dorian Solot, Dr. Pat Allen, thank you for joining us.
Thanks for you at home for watching, or wherever you might be watching.
And just take a shot of my little black-and-gold people here, Xavier University Peace Camp in the house from New Orleans. All right.
NEVILLE: Join me tomorrow at the 3:00 p.m. Eastern for more of TALKBACK LIVE. I'm Arthel Neville.
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Reform?; Does the Recording Industry Discriminate?>