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CNN Live At Daybreak
U2 Teams With iPod; Falluja Firefight; Movie Rental Rivals; At The Movies
Aired December 03, 2004 - 06:26 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.
CAROL COSTELLO, CNN ANCHOR: Let's hear it for U2, the classic, mature rocking group. It scored on "Billboard." The new album, "How to Dismantle an Atomic Bomb," is No. 1, beating out acts like Eminem and Destiny's Child. Could it be because of a savvy partnership between U2 and Apple? Well, that is the big buzz this morning.
And joining us to talk about it all is "Billboard" magazine's senior writer Brian Garrity.
Good morning, Brian.
BRIAN GARRITY, "BILLBOARD" SENIOR WRITER: Good morning.
COSTELLO: So, who made out more? The iPod and Apple? Or U2?
GARRITY: Well, Apple, how big they win still is coming in the Christmas season. But clearly, U2 is a huge winner from this ad campaign.
COSTELLO: Oh, it's insane! I want to show people a bit of the ad, because it's so cool. I think this is their video on MTV. There it is.
GARRITY: And the thing, you know, about this is basically this is riffing on the Apple commercials that have been running already, the same color scheme, the same kind of silhouette, imagery that you're seeing there. So, it's kind of an effective -- it's a video, but it basically meshes with, you know, the promotion that Apple was already doing.
COSTELLO: Well, let's talk about this issue of selling out, because years ago you have a group, like the Rolling Stones let's say, did a commercial for a product, that would be selling out, ad their fans would be turned off. But this hasn't happened to U2. Why?
GARRITY: Well, once upon a time it was sacrilege to be featured in a commercial. But the way the media has evolved over the years, exploiting TV commercials is actually an important way for bands to get their message out now, because radio is so consolidated, because MTV doesn't play as many videos as they used to.
And so, you know, the marketing infusion into the music industry has really kind of made that less of a heresy. And therefore, you know, fans now are not nearly as turned off by that.
COSTELLO: Well, that's because they're exposed to great music. I mean, on the radio you just hear constant, you know, bubble-gum pop music. I mean, a radio station probably wouldn't play U2. So, this is a way to get the music out there, to get fans involved, to get them to buy CDs and the like.
GARRITY: Absolutely. I mean, yes, you listen to commercials now, and they're almost a better radio station than radio can be in certain times.
COSTELLO: But isn't that pathetic?
GARRITY: Well, it does speak to the conservative nature of mainstream radio now. And it does tell you that, you know, if you're a younger or even an older band, if you don't hit into the target demographic of radio, then you're not going to get on there.
Now, U2 has really been able to rise above the fray. And, you know, what we've seen here is really an unprecedented level of marketing on television for a new record coming out. You know, you see this with movies day in and day out, but the record industry doesn't normally (UNINTELLIGIBLE) its records this way.
So, this is what was just so huge for U2 and really helped -- I mean, they essentially doubled -- when their last album came out in 2000 they sold about 400,000 copies. This is -- they've doubled their first-week sales this time out. Clearly...
COSTELLO: Yes, it more than 800,000. But, you know, just a thought struck me. If U2 was singing for a product like, you know, hand lotion, maybe that would be different than singing for something like the iPod.
GARRITY: Matching brands and bands is a huge -- you know, is a huge part of this. It has to be right fit for the artist and for the marketer as well.
COSTELLO: Fascinating stuff. Brian Garrity from "Billboard" magazine, thank you for joining us this morning.
GARRITY: Thanks very much.
COSTELLO: We're going to take a short break. We'll be right back with much more on DAYBREAK.
(COMMERCIAL BREAK)
COSTELLO: And good morning to you. Thank you for waking up with us. I'm Carol Costello. Let's check the headlines right now, shall we?
A multimillion-dollar settlement in the Catholic Church abuse scandal in Orange, County, California. Sources tell CNN the settlement will far exceed the $85 million paid by the Archdiocese of Boston last year.
The "San Francisco Chronicle" quotes Barry Bonds as saying he used a cream and a clear substance given to him by a trainer. But Bonds, the Giants slugger who won his seventh MVP award this year, says he wasn't told those substances were steroids.
It's the final day of deliberations by Ukraine's Supreme Court over the disputed presidential election. Freezing temperatures have not deterred a week of demonstrations by thousands of opposition protesters.
A powerful typhoon is hampering rescue efforts in the Philippines. Thousands are stranded by the typhoon on the heels of a torrential rainstorm. Mudslides and flash floods have left provinces littered with bodies and collapsed homes.
It has been a bloody morning in Iraq this morning. U.S. and Iraqi troops have been in a close-quarter gun battle with insurgents in Falluja.
Jane Arraf joins us live by phone from Falluja with more details now.
Jane -- bring us up-to-date.
JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: Carol, this has been going on for four hours now. And if there's an extremely loud explosion while we're talking it's because the Marines are going to launch an anti-tank missile at a house, where they believe insurgents are holed up.
This started when Iraqi forces fired at and believed to have wounded two gunmen in a neighborhood very close to the Iraqi Red Crescent, the main humanitarian organization here. Instead of going in to attack, the gunmen fired back, though. They have had to act with extreme restraint.
There was a family next door. There are very few families left in the city, but next door to the gunmen there were three civilians. After going in to get them, there was a firefight that ensued.
There is believed to be three casualties, one Marine and two Iraqi forces wounded, no deaths reported.
And after the wounded were evacuated, then the Marines moved in with heavy weapons, firing tank rounds into the house. It was burning for hours; still is, in fact.
And the fight is not over yet, Carol. There are believed to be still insurgents in the adjoining house, and they are about to launch missiles at them, an indication that even though the city has been essentially secured, there still are cells here -- Carol.
COSTELLO: You know, I am surprised by that, because Falluja has been flattened, literally. How many -- I guess there is no way to know how many insurgents are left in the city.
ARRAF: Well, they do know how many they've killed. And they believe that they have killed more than 1,500 of them. That doesn't mean that they are still left. And the ones who are left, Carol, are the hardcore fighters. These are people who are fighting until the end. These ones, in fact, were given the choice of surrendering. The Marines went out with loudspeakers, saying that they could give themselves up. They didn't. They kept shooting.
And that's what they are finding throughout parts of this city. Some of them are foreign fighters, some of them Iraqis, but these are the diehards, the hardcore fighters who are continuing to attack Marines here, Iraqi forces and in some cases some of the civilians still left -- Carol.
COSTELLO: Well, you stay safe. Jane Arraf reporting from inside Falluja this morning.
Who's in and who's out of the Bush administration? The president has nominated Bernard Kerik to be the new Homeland Security secretary, succeeding Tom Ridge. Kerik was police commissioner in New York City at the time of the 9/11 attacks. He went to Baghdad last year to help train Iraqi police.
Democratic Senator Charles Schumer of New York is endorsing Mr. Bush's choice.
(BEGIN VIDEO CLIP)
SEN. CHARLES SCHUMER (D), NEW YORK: Running Homeland Security is one of the toughest jobs, not only in the U.S. government, but in America. But having run the New York City Police Department, which has 35,000 police officers and 10,000 more civilians, is a pretty big and tough job, too.
(END VIDEO CLIP)
COSTELLO: An administration official says former New York Mayor Rudy Giuliani personally recommended Kerik for the Homeland Security job.
Sources tell CNN Asa Hutchinson will soon leave his post as undersecretary of Homeland Security, but sources say Hutchinson is interested in running for governor of Arkansas, which is his home state. Hutchinson says, I'll have to wait and see. There are a number of options open to me now.
Another cabinet change to tell you about. President Bush has nominated Nebraska Governor Mike Johanns to be agriculture secretary, succeeding Ann Veneman. Johanns grew up on an Iowa dairy farm, but has never been a farmer himself. As governor, he has led trade missions to Mexico and to several Asian countries.
Also this: John Danforth will leave his post next month as U.S. ambassador to the United Nations. Danforth has been on the job four only seven months. He says he wants to return home to St. Louis to spend more time with his wife, Sally, who has had health problems recently.
African delegates at the United Nations today are expected to issue a statement of support for Secretary-General Kofi Annan. Major European countries have already expressed their support. But U.S. Senator Norm Coleman has called for Annan's resignation, citing alleged corruption in the U.N.'s oil-for-food program.
Coming up on DAYBREAK, trying to avoid bah humbug holiday revenues. Wal-Mart unleashes a new ad blitz to move more merchandise.
And, the boy who could fly could put a grownup on stage at the Oscars.
But first, here's a look at what else is making news this Friday morning.
(COMMERCIAL BREAK)
COSTELLO: It's time now for a little business buzz. Wal-Mart feels like a loser this holiday season. Wal-Mart a loser? Yes. The company is going to great lengths to make you want to be a Wal-Mart shopper.
Carrie Lee has details live from the Nasdaq Marketsite.
This is hard to believe, Carrie.
CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: You know, it is, Carol. But remember last Friday, Black Friday, Wal-Mart said sales for that big holiday shopping day were actually disappointing, causing the world's largest retailer to lower sales estimates for November.
What they did is basically abandon their low price, the lowest price strategy. So, now they're fighting back with a huge ad blitz that's starting today -- newspapers, radio, television ads, all touting Wal-Mart's low prices.
Not only that, but they're going to feature about 24 items, mainly toys and electronics, and list the prices that they are selling these items for. So, prices for things like portable DVD players, LeapPads, Elmo toys, even a Black and Decker jar opener.
And also, they're going to be posting the December newspaper circular on their Web site, so they can keep track of prices and change them as the competition changes. This could potentially cause Wal-Mart's competitors to lower their prices.
The bottom line, Carol: Wal-Mart is fighting back with a big ad campaign, trying to grab those customers in these last few weeks before the holidays.
COSTELLO: Interesting.
LEE: Yes.
COSTELLO: I wanted to ask you, too, how the futures are looking, and I heard of some breaking news out of Dow Chemical. What's that about?
LEE: Dow Chemical has some things going on. Basically, the company is accepting full responsibility for a disaster in India. They put together a $12 billion compensation plan. So that's something we're watching.
Also, a pretty positive report out of Intel last night. They're raising their sales guidance for this quarter. Intel has had a rough year. So, that stock is moving higher early this morning. That's the reason futures, especially tech futures, are looking very strong this morning.
The big thing, Carol, the big November jobs report is coming out at 8:30 Eastern, and that's going to be the key one. The unemployment rate is expected to come down to 5.4 percent. We're expecting to have added about 200,000 jobs for November.
COSTELLO: Well, that's pretty good.
LEE: Yes.
COSTELLO: Thank you, Carrie. Carrie Lee live from the Nasdaq Marketsite.
How do you watch your favorite flicks, as in movies? If you still rent your movies from the corner store, get ready. The world is about to pass you by.
Ali Velshi is here to talk about some changes in the movie rental business.
You know, in the commercial break, you were talking about a Brooke Shields movie, and I was concerned.
ALI VELSHI, CNN DAYBREAK CONTRIBUTOR: You're going to laugh at me. You've going to laugh.
COSTELLO: I already have.
VELSHI: The first movie I ever rented was "Endless Love."
COSTELLO: Oh.
VELSHI: A misunderstood movie. Let me tell you, it's a misunderstood movie. It was a misunderstood movie about the misunderstood love between Jade and David. Jade was Brooke Shields. David was Martin Hewitt. And then Martin Hewitt sets fire to Jade's house.
COSTELLO: Oh!
VELSHI: Now, there are only two scenes that I remember from that movie, one of which I can't speak of on TV. The other one is right after the fire, just like the firemen came in and put water on the house so it didn't burn down, the online movie rental industry is putting fire on the bricks and mortar participants.
COSTELLO: Oh, I was wondering where you were going with this!
VELSHI: Right. My endless love affair with technology and movies continues. Let me tell you a little about how this worked out. First of all, just remember that in 1977, 1978, those VHS machines came out. I remember I had one of those JVCs. You press play, the lights kind of dimmed in the house. We fast-forward to '77, believe it or not, '77 or '78 laser disks came out. Remember that? The big 12-inch disks? It didn't last very long. In 1982, CDs came out. In 1997, the first DVD movies became available. And then you got DVRs, the TiVo kind of devices and video-on-demand.
Now, let's talk about what's happening right now. Blockbuster, which is the nation's largest video rental movie chain, about 9,000 stores, is in what has strangely become a bidding war for Hollywood Entertainment, which runs Hollywood Video.
Now, in October, an organization called Leonard Green & Partners, a private equity firm, decided to bid about $600 million to buy Hollywood Video. All of a sudden, Blockbuster steps in with a $700 million bid. And then Movie Gallery pumps in with bid that's different from that but undisclosed. Blockbuster chimes in again. They all want to buy Hollywood. Hollywood has got about 1,900 stores. Billionaire investor Carl Icahn disclosed that he owns more than 5 percent of Hollywood.
What are these guys doing? Because the business is shifting toward online rentals. Netflix. Netflix has 25,000 or more movies. You pay a monthly fee. I think it's 18 bucks, and you get three at a time. And then you send them in, and they send you more, unlimited rentals with these things.
COSTELLO: Yes, and there are no late fees.
VELSHI: Yes. No late fees, which is the big deal for me. The postage to return it is free. Wal-Mart is in that game now. Wal-Mart has about 14,000 titles, but that's growing. Blockbuster deciding to compete. All of them are in the same price point, $17 to $18 a month to rent your movies.
Now, I thought the whole world was going in that direction. But we took a little poll of the DAYBREAK staff.
COSTELLO: Oh, no.
VELSHI: Very surprising.
COSTELLO: Yes, the squarest people in the world.
VELSHI: Look at this: 85 percent of the staff go to video stores.
COSTELLO: Go figure.
VELSHI: Blockbuster, Hollywood or the local video store. And there are still lots of those. Five percent use Netflix or Wal-Mart or Blockbuster online, one of the online ones. Five percent use video-on-demand or pay-per-view. And 5 percent sit around and wait for it to be released on TV. Remember the day when it was the world television premier at 8:00 on Sunday of such and such of "Endless Love?" You don't even have to do that anymore. It's on TV all the time.
But I don't know. That's an interesting sample. I think that if you're paying the same money and, you know, you're doing the same stuff, why wouldn't the business shift completely to online?
COSTELLO: Oh, it's going to. It's just the DAYBREAK staff is a little square.
VELSHI: Like I am the guy whose first rental was "Endless Love."
COSTELLO: Yes.
VELSHI: The second one was "American Gigolo." I picked it up a notch.
COSTELLO: Oh, gee, Ali!
VELSHI: My movie habits haven't changed much over the years.
COSTELLO: He's telling the truth on that one. Thank you, Ali. We appreciate you're being here.
VELSHI: Good to see you, Carol.
COSTELLO: Let's head to the weather center in Atlanta to check in with Rob Marciano.
(WEATHER REPORT)
COSTELLO: Just moments ago, Carrie Lee said that Dow Chemical had reached a settlement. We understand now that that story is a hoax. We wanted to pass that along to you. Again, that story that you heard just moments ago on CNN about Dow Chemical settling with that company in India, it's a hoax.
Let's check in now with -- are we going to a break now? All right, we're going to go to a break. We'll be right back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
JULIA ROBERTS, ACTRESS: How did you end up writing obituaries?
JUDE LAW, ACTOR: Well, I had dreams of being a writer, but I had no voice, one would say. I have the talent. But I ended up obituaries, which is the Siberia of journalism.
(END VIDEO CLIP)
COSTELLO: A clip from the movie, "Closer." It's supposed to be a big movie. In fact, "TIME" magazine, this review, they're always touting this review, saying why can't there be a dozen, a 100 films like this? It's just so darned great.
Tom O'Neil from "In-Touch Weekly" has a different view, though.
What a surprise. Well, you don't like this movie.
TOM O'NEIL, EDITOR, "IN-TOUCH WEEKLY": It is supposed to be a great movie. Back in the 1990s, this was the cool play to see on Broadway. It's about four despicable people doing despicable things to each other, literally screwing each other over every which way they can. We brought this to the film with Jude Law, Julia Roberts, directed by Mike Nichols. It's supposed to be a masterpiece.
COSTELLO: Why isn't it, though? Is it just pretentious and the script didn't translate from Broadway? What?
O'NEIL: I think what you learn looking at this movie is the script was never there in the first place. It's very preachy and pretentious.
Now, some people like "TIME" magazine disagree passionately and think this is the masterpiece we had hoped. But in general you'll find a sense of disappointment about the movie, because we expected more of a consensus. We expected a great film.
COSTELLO: But no. OK, well, let's move on to the next one then, shall we? "House of the Flying Daggers," which, really, I haven't heard much about.
O'NEIL: This has been doing very well in the art house circuit. Remember, "Hero" from earlier this year, which surprised everyone by doing better than $50 million at the box office? These are those martial art ballet films that are like "Crouching Tiger, Hidden Dragon."
COSTELLO: Oh.
O'NEIL: And they're, you know, leaping through fields of whispering bamboo, and there is clashing, you know, kickboxing scenes, et cetera. It's very, very atmospheric and good. The story of a rebel being pursued by two government officials who fall in love with her, but it's not about that. It's about battles. It's about...
COSTELLO: It's about just looking at the pictures, right?
O'NEIL: Yes.
COSTELLO: OK, that sounds cool. "Aviator" is the big film, thought, that everybody is talking about, Oscar-worthy.
O'NEIL: Oscar frontrunner. This is the movie we had hoped finally from Martin Scorsese, the director. And Leo proves he's a great actor, not just a good one, because he portrays that high-flying Hollywood hero, Howard Hughes, who, of course, launched TWA Airlines on one hand, launched RKO Studies as a moviemaker, seduced the great beauties of Hollywood from Ava Gardner to Katharine Hepburn. And his relationship with Hepburn is one of the story lines of this movie. It's best picture frontrunner, and Leo could finally win.
COSTELLO: Wow! What about Cate Blanchett? Because I heard her portrayal of Katharine Hepburn is just primo.
O'NEIL: Just primo. And not because she tries to imitate Hepburn so much and there are moments when you really think it's her, but she really gives a performance. It's sensational.
COSTELLO: You know, the funny thing I heard the other day, the actress who portrays Ava Gardner -- I can't remember her name right now.
O'NEIL: Right. And I knew you were going to ask me this.
COSTELLO: Kate Beckinsale.
O'NEIL: Yes, yes, yes.
COSTELLO: Yes. She was interviewed, and she said she had to gain 20 pounds to play Ava Gardner.
O'NEIL: Oh, my!
COSTELLO: Twenty pounds to play this sex siren, and she said that when she went home she was just fat Kate. It just illustrates how much times have changed when it comes to the sexiness of women on screen.
O'NEIL: Absolutely, yes. And in this movie, it becomes an issue with Jane Russell, because remember Howard Hughes had designed this aerodynamic bra for her. They told that story. And you see how the beauty of women changed from...
COSTELLO: Yes. I want to go back (UNINTELLIGIBLE) myself.
O'NEIL: Or maybe it's not changed so much.
COSTELLO: "Finding Neverland," I wanted to talk about this movie, because it just won a big award, and that could push it ahead of "Aviator" in the Oscar race. Couldn't it?
O'NEIL: It certainly pushes it very close. I think "Aviator" is that big Hollywood epic biography film with an A-list cast. It's hard to beat. But "Finding Neverland" was just named best picture of the year by the National Board of Review. And it stars Johnny Depp as J.M. Barrie, who was inspired by his friendship with four fatherless boys to write "Peter Pan."
This is such a good movie, Carol! It just makes you feel good, and it's funny, and it's warm, and it's well-acted.
COSTELLO: I know. It's just kind of creepy, too, to me, just that this grown man is playing with these children all of the time. I mean, I don't know. It's just a little creepy, but I'm sure it's fabulous. And I should go see it before I say anything else.
Tom O'Neil from "In-Touch Weekly," thank you for joining DAYBREAK this morning.
O'NEIL: Thanks, Carol.
COSTELLO: This is DAYBREAK for a Friday morning. We'll be right back.
(COMMERCIAL BREAK)
COSTELLO: We leave you this morning on a happy note. Say hello to these little bundles of joy. In a Salt Lake City hospital, four new babies, all related. Their mothers are an aunt and her two nieces. The infants were delivered by the very same doctor. Now that is keeping it in all in the family.
Also in Utah, a sad story with a happy ending. See these puppies? They were delivered by C-section after their mom died in the arms of her owner, a paramedic in Cedar City, Utah. Carolyn Shaw (ph) and another paramedic went to work to deliver three puppies. Shaw (ph) says she won't keep the pups, but there are a lot of people interested in adopting them.
And using those knives that we just saw.
ROB MARCIANO, CNN METEOROLOGIST: What were those knives for?
COSTELLO: I don't even want to say it. That does it for DAYBREAK today. "AMERICAN MORNING" starts right now.
MARCIANO: See you, Carol.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired December 3, 2004 - 06:26 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Let's hear it for U2, the classic, mature rocking group. It scored on "Billboard." The new album, "How to Dismantle an Atomic Bomb," is No. 1, beating out acts like Eminem and Destiny's Child. Could it be because of a savvy partnership between U2 and Apple? Well, that is the big buzz this morning.
And joining us to talk about it all is "Billboard" magazine's senior writer Brian Garrity.
Good morning, Brian.
BRIAN GARRITY, "BILLBOARD" SENIOR WRITER: Good morning.
COSTELLO: So, who made out more? The iPod and Apple? Or U2?
GARRITY: Well, Apple, how big they win still is coming in the Christmas season. But clearly, U2 is a huge winner from this ad campaign.
COSTELLO: Oh, it's insane! I want to show people a bit of the ad, because it's so cool. I think this is their video on MTV. There it is.
GARRITY: And the thing, you know, about this is basically this is riffing on the Apple commercials that have been running already, the same color scheme, the same kind of silhouette, imagery that you're seeing there. So, it's kind of an effective -- it's a video, but it basically meshes with, you know, the promotion that Apple was already doing.
COSTELLO: Well, let's talk about this issue of selling out, because years ago you have a group, like the Rolling Stones let's say, did a commercial for a product, that would be selling out, ad their fans would be turned off. But this hasn't happened to U2. Why?
GARRITY: Well, once upon a time it was sacrilege to be featured in a commercial. But the way the media has evolved over the years, exploiting TV commercials is actually an important way for bands to get their message out now, because radio is so consolidated, because MTV doesn't play as many videos as they used to.
And so, you know, the marketing infusion into the music industry has really kind of made that less of a heresy. And therefore, you know, fans now are not nearly as turned off by that.
COSTELLO: Well, that's because they're exposed to great music. I mean, on the radio you just hear constant, you know, bubble-gum pop music. I mean, a radio station probably wouldn't play U2. So, this is a way to get the music out there, to get fans involved, to get them to buy CDs and the like.
GARRITY: Absolutely. I mean, yes, you listen to commercials now, and they're almost a better radio station than radio can be in certain times.
COSTELLO: But isn't that pathetic?
GARRITY: Well, it does speak to the conservative nature of mainstream radio now. And it does tell you that, you know, if you're a younger or even an older band, if you don't hit into the target demographic of radio, then you're not going to get on there.
Now, U2 has really been able to rise above the fray. And, you know, what we've seen here is really an unprecedented level of marketing on television for a new record coming out. You know, you see this with movies day in and day out, but the record industry doesn't normally (UNINTELLIGIBLE) its records this way.
So, this is what was just so huge for U2 and really helped -- I mean, they essentially doubled -- when their last album came out in 2000 they sold about 400,000 copies. This is -- they've doubled their first-week sales this time out. Clearly...
COSTELLO: Yes, it more than 800,000. But, you know, just a thought struck me. If U2 was singing for a product like, you know, hand lotion, maybe that would be different than singing for something like the iPod.
GARRITY: Matching brands and bands is a huge -- you know, is a huge part of this. It has to be right fit for the artist and for the marketer as well.
COSTELLO: Fascinating stuff. Brian Garrity from "Billboard" magazine, thank you for joining us this morning.
GARRITY: Thanks very much.
COSTELLO: We're going to take a short break. We'll be right back with much more on DAYBREAK.
(COMMERCIAL BREAK)
COSTELLO: And good morning to you. Thank you for waking up with us. I'm Carol Costello. Let's check the headlines right now, shall we?
A multimillion-dollar settlement in the Catholic Church abuse scandal in Orange, County, California. Sources tell CNN the settlement will far exceed the $85 million paid by the Archdiocese of Boston last year.
The "San Francisco Chronicle" quotes Barry Bonds as saying he used a cream and a clear substance given to him by a trainer. But Bonds, the Giants slugger who won his seventh MVP award this year, says he wasn't told those substances were steroids.
It's the final day of deliberations by Ukraine's Supreme Court over the disputed presidential election. Freezing temperatures have not deterred a week of demonstrations by thousands of opposition protesters.
A powerful typhoon is hampering rescue efforts in the Philippines. Thousands are stranded by the typhoon on the heels of a torrential rainstorm. Mudslides and flash floods have left provinces littered with bodies and collapsed homes.
It has been a bloody morning in Iraq this morning. U.S. and Iraqi troops have been in a close-quarter gun battle with insurgents in Falluja.
Jane Arraf joins us live by phone from Falluja with more details now.
Jane -- bring us up-to-date.
JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: Carol, this has been going on for four hours now. And if there's an extremely loud explosion while we're talking it's because the Marines are going to launch an anti-tank missile at a house, where they believe insurgents are holed up.
This started when Iraqi forces fired at and believed to have wounded two gunmen in a neighborhood very close to the Iraqi Red Crescent, the main humanitarian organization here. Instead of going in to attack, the gunmen fired back, though. They have had to act with extreme restraint.
There was a family next door. There are very few families left in the city, but next door to the gunmen there were three civilians. After going in to get them, there was a firefight that ensued.
There is believed to be three casualties, one Marine and two Iraqi forces wounded, no deaths reported.
And after the wounded were evacuated, then the Marines moved in with heavy weapons, firing tank rounds into the house. It was burning for hours; still is, in fact.
And the fight is not over yet, Carol. There are believed to be still insurgents in the adjoining house, and they are about to launch missiles at them, an indication that even though the city has been essentially secured, there still are cells here -- Carol.
COSTELLO: You know, I am surprised by that, because Falluja has been flattened, literally. How many -- I guess there is no way to know how many insurgents are left in the city.
ARRAF: Well, they do know how many they've killed. And they believe that they have killed more than 1,500 of them. That doesn't mean that they are still left. And the ones who are left, Carol, are the hardcore fighters. These are people who are fighting until the end. These ones, in fact, were given the choice of surrendering. The Marines went out with loudspeakers, saying that they could give themselves up. They didn't. They kept shooting.
And that's what they are finding throughout parts of this city. Some of them are foreign fighters, some of them Iraqis, but these are the diehards, the hardcore fighters who are continuing to attack Marines here, Iraqi forces and in some cases some of the civilians still left -- Carol.
COSTELLO: Well, you stay safe. Jane Arraf reporting from inside Falluja this morning.
Who's in and who's out of the Bush administration? The president has nominated Bernard Kerik to be the new Homeland Security secretary, succeeding Tom Ridge. Kerik was police commissioner in New York City at the time of the 9/11 attacks. He went to Baghdad last year to help train Iraqi police.
Democratic Senator Charles Schumer of New York is endorsing Mr. Bush's choice.
(BEGIN VIDEO CLIP)
SEN. CHARLES SCHUMER (D), NEW YORK: Running Homeland Security is one of the toughest jobs, not only in the U.S. government, but in America. But having run the New York City Police Department, which has 35,000 police officers and 10,000 more civilians, is a pretty big and tough job, too.
(END VIDEO CLIP)
COSTELLO: An administration official says former New York Mayor Rudy Giuliani personally recommended Kerik for the Homeland Security job.
Sources tell CNN Asa Hutchinson will soon leave his post as undersecretary of Homeland Security, but sources say Hutchinson is interested in running for governor of Arkansas, which is his home state. Hutchinson says, I'll have to wait and see. There are a number of options open to me now.
Another cabinet change to tell you about. President Bush has nominated Nebraska Governor Mike Johanns to be agriculture secretary, succeeding Ann Veneman. Johanns grew up on an Iowa dairy farm, but has never been a farmer himself. As governor, he has led trade missions to Mexico and to several Asian countries.
Also this: John Danforth will leave his post next month as U.S. ambassador to the United Nations. Danforth has been on the job four only seven months. He says he wants to return home to St. Louis to spend more time with his wife, Sally, who has had health problems recently.
African delegates at the United Nations today are expected to issue a statement of support for Secretary-General Kofi Annan. Major European countries have already expressed their support. But U.S. Senator Norm Coleman has called for Annan's resignation, citing alleged corruption in the U.N.'s oil-for-food program.
Coming up on DAYBREAK, trying to avoid bah humbug holiday revenues. Wal-Mart unleashes a new ad blitz to move more merchandise.
And, the boy who could fly could put a grownup on stage at the Oscars.
But first, here's a look at what else is making news this Friday morning.
(COMMERCIAL BREAK)
COSTELLO: It's time now for a little business buzz. Wal-Mart feels like a loser this holiday season. Wal-Mart a loser? Yes. The company is going to great lengths to make you want to be a Wal-Mart shopper.
Carrie Lee has details live from the Nasdaq Marketsite.
This is hard to believe, Carrie.
CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: You know, it is, Carol. But remember last Friday, Black Friday, Wal-Mart said sales for that big holiday shopping day were actually disappointing, causing the world's largest retailer to lower sales estimates for November.
What they did is basically abandon their low price, the lowest price strategy. So, now they're fighting back with a huge ad blitz that's starting today -- newspapers, radio, television ads, all touting Wal-Mart's low prices.
Not only that, but they're going to feature about 24 items, mainly toys and electronics, and list the prices that they are selling these items for. So, prices for things like portable DVD players, LeapPads, Elmo toys, even a Black and Decker jar opener.
And also, they're going to be posting the December newspaper circular on their Web site, so they can keep track of prices and change them as the competition changes. This could potentially cause Wal-Mart's competitors to lower their prices.
The bottom line, Carol: Wal-Mart is fighting back with a big ad campaign, trying to grab those customers in these last few weeks before the holidays.
COSTELLO: Interesting.
LEE: Yes.
COSTELLO: I wanted to ask you, too, how the futures are looking, and I heard of some breaking news out of Dow Chemical. What's that about?
LEE: Dow Chemical has some things going on. Basically, the company is accepting full responsibility for a disaster in India. They put together a $12 billion compensation plan. So that's something we're watching.
Also, a pretty positive report out of Intel last night. They're raising their sales guidance for this quarter. Intel has had a rough year. So, that stock is moving higher early this morning. That's the reason futures, especially tech futures, are looking very strong this morning.
The big thing, Carol, the big November jobs report is coming out at 8:30 Eastern, and that's going to be the key one. The unemployment rate is expected to come down to 5.4 percent. We're expecting to have added about 200,000 jobs for November.
COSTELLO: Well, that's pretty good.
LEE: Yes.
COSTELLO: Thank you, Carrie. Carrie Lee live from the Nasdaq Marketsite.
How do you watch your favorite flicks, as in movies? If you still rent your movies from the corner store, get ready. The world is about to pass you by.
Ali Velshi is here to talk about some changes in the movie rental business.
You know, in the commercial break, you were talking about a Brooke Shields movie, and I was concerned.
ALI VELSHI, CNN DAYBREAK CONTRIBUTOR: You're going to laugh at me. You've going to laugh.
COSTELLO: I already have.
VELSHI: The first movie I ever rented was "Endless Love."
COSTELLO: Oh.
VELSHI: A misunderstood movie. Let me tell you, it's a misunderstood movie. It was a misunderstood movie about the misunderstood love between Jade and David. Jade was Brooke Shields. David was Martin Hewitt. And then Martin Hewitt sets fire to Jade's house.
COSTELLO: Oh!
VELSHI: Now, there are only two scenes that I remember from that movie, one of which I can't speak of on TV. The other one is right after the fire, just like the firemen came in and put water on the house so it didn't burn down, the online movie rental industry is putting fire on the bricks and mortar participants.
COSTELLO: Oh, I was wondering where you were going with this!
VELSHI: Right. My endless love affair with technology and movies continues. Let me tell you a little about how this worked out. First of all, just remember that in 1977, 1978, those VHS machines came out. I remember I had one of those JVCs. You press play, the lights kind of dimmed in the house. We fast-forward to '77, believe it or not, '77 or '78 laser disks came out. Remember that? The big 12-inch disks? It didn't last very long. In 1982, CDs came out. In 1997, the first DVD movies became available. And then you got DVRs, the TiVo kind of devices and video-on-demand.
Now, let's talk about what's happening right now. Blockbuster, which is the nation's largest video rental movie chain, about 9,000 stores, is in what has strangely become a bidding war for Hollywood Entertainment, which runs Hollywood Video.
Now, in October, an organization called Leonard Green & Partners, a private equity firm, decided to bid about $600 million to buy Hollywood Video. All of a sudden, Blockbuster steps in with a $700 million bid. And then Movie Gallery pumps in with bid that's different from that but undisclosed. Blockbuster chimes in again. They all want to buy Hollywood. Hollywood has got about 1,900 stores. Billionaire investor Carl Icahn disclosed that he owns more than 5 percent of Hollywood.
What are these guys doing? Because the business is shifting toward online rentals. Netflix. Netflix has 25,000 or more movies. You pay a monthly fee. I think it's 18 bucks, and you get three at a time. And then you send them in, and they send you more, unlimited rentals with these things.
COSTELLO: Yes, and there are no late fees.
VELSHI: Yes. No late fees, which is the big deal for me. The postage to return it is free. Wal-Mart is in that game now. Wal-Mart has about 14,000 titles, but that's growing. Blockbuster deciding to compete. All of them are in the same price point, $17 to $18 a month to rent your movies.
Now, I thought the whole world was going in that direction. But we took a little poll of the DAYBREAK staff.
COSTELLO: Oh, no.
VELSHI: Very surprising.
COSTELLO: Yes, the squarest people in the world.
VELSHI: Look at this: 85 percent of the staff go to video stores.
COSTELLO: Go figure.
VELSHI: Blockbuster, Hollywood or the local video store. And there are still lots of those. Five percent use Netflix or Wal-Mart or Blockbuster online, one of the online ones. Five percent use video-on-demand or pay-per-view. And 5 percent sit around and wait for it to be released on TV. Remember the day when it was the world television premier at 8:00 on Sunday of such and such of "Endless Love?" You don't even have to do that anymore. It's on TV all the time.
But I don't know. That's an interesting sample. I think that if you're paying the same money and, you know, you're doing the same stuff, why wouldn't the business shift completely to online?
COSTELLO: Oh, it's going to. It's just the DAYBREAK staff is a little square.
VELSHI: Like I am the guy whose first rental was "Endless Love."
COSTELLO: Yes.
VELSHI: The second one was "American Gigolo." I picked it up a notch.
COSTELLO: Oh, gee, Ali!
VELSHI: My movie habits haven't changed much over the years.
COSTELLO: He's telling the truth on that one. Thank you, Ali. We appreciate you're being here.
VELSHI: Good to see you, Carol.
COSTELLO: Let's head to the weather center in Atlanta to check in with Rob Marciano.
(WEATHER REPORT)
COSTELLO: Just moments ago, Carrie Lee said that Dow Chemical had reached a settlement. We understand now that that story is a hoax. We wanted to pass that along to you. Again, that story that you heard just moments ago on CNN about Dow Chemical settling with that company in India, it's a hoax.
Let's check in now with -- are we going to a break now? All right, we're going to go to a break. We'll be right back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
JULIA ROBERTS, ACTRESS: How did you end up writing obituaries?
JUDE LAW, ACTOR: Well, I had dreams of being a writer, but I had no voice, one would say. I have the talent. But I ended up obituaries, which is the Siberia of journalism.
(END VIDEO CLIP)
COSTELLO: A clip from the movie, "Closer." It's supposed to be a big movie. In fact, "TIME" magazine, this review, they're always touting this review, saying why can't there be a dozen, a 100 films like this? It's just so darned great.
Tom O'Neil from "In-Touch Weekly" has a different view, though.
What a surprise. Well, you don't like this movie.
TOM O'NEIL, EDITOR, "IN-TOUCH WEEKLY": It is supposed to be a great movie. Back in the 1990s, this was the cool play to see on Broadway. It's about four despicable people doing despicable things to each other, literally screwing each other over every which way they can. We brought this to the film with Jude Law, Julia Roberts, directed by Mike Nichols. It's supposed to be a masterpiece.
COSTELLO: Why isn't it, though? Is it just pretentious and the script didn't translate from Broadway? What?
O'NEIL: I think what you learn looking at this movie is the script was never there in the first place. It's very preachy and pretentious.
Now, some people like "TIME" magazine disagree passionately and think this is the masterpiece we had hoped. But in general you'll find a sense of disappointment about the movie, because we expected more of a consensus. We expected a great film.
COSTELLO: But no. OK, well, let's move on to the next one then, shall we? "House of the Flying Daggers," which, really, I haven't heard much about.
O'NEIL: This has been doing very well in the art house circuit. Remember, "Hero" from earlier this year, which surprised everyone by doing better than $50 million at the box office? These are those martial art ballet films that are like "Crouching Tiger, Hidden Dragon."
COSTELLO: Oh.
O'NEIL: And they're, you know, leaping through fields of whispering bamboo, and there is clashing, you know, kickboxing scenes, et cetera. It's very, very atmospheric and good. The story of a rebel being pursued by two government officials who fall in love with her, but it's not about that. It's about battles. It's about...
COSTELLO: It's about just looking at the pictures, right?
O'NEIL: Yes.
COSTELLO: OK, that sounds cool. "Aviator" is the big film, thought, that everybody is talking about, Oscar-worthy.
O'NEIL: Oscar frontrunner. This is the movie we had hoped finally from Martin Scorsese, the director. And Leo proves he's a great actor, not just a good one, because he portrays that high-flying Hollywood hero, Howard Hughes, who, of course, launched TWA Airlines on one hand, launched RKO Studies as a moviemaker, seduced the great beauties of Hollywood from Ava Gardner to Katharine Hepburn. And his relationship with Hepburn is one of the story lines of this movie. It's best picture frontrunner, and Leo could finally win.
COSTELLO: Wow! What about Cate Blanchett? Because I heard her portrayal of Katharine Hepburn is just primo.
O'NEIL: Just primo. And not because she tries to imitate Hepburn so much and there are moments when you really think it's her, but she really gives a performance. It's sensational.
COSTELLO: You know, the funny thing I heard the other day, the actress who portrays Ava Gardner -- I can't remember her name right now.
O'NEIL: Right. And I knew you were going to ask me this.
COSTELLO: Kate Beckinsale.
O'NEIL: Yes, yes, yes.
COSTELLO: Yes. She was interviewed, and she said she had to gain 20 pounds to play Ava Gardner.
O'NEIL: Oh, my!
COSTELLO: Twenty pounds to play this sex siren, and she said that when she went home she was just fat Kate. It just illustrates how much times have changed when it comes to the sexiness of women on screen.
O'NEIL: Absolutely, yes. And in this movie, it becomes an issue with Jane Russell, because remember Howard Hughes had designed this aerodynamic bra for her. They told that story. And you see how the beauty of women changed from...
COSTELLO: Yes. I want to go back (UNINTELLIGIBLE) myself.
O'NEIL: Or maybe it's not changed so much.
COSTELLO: "Finding Neverland," I wanted to talk about this movie, because it just won a big award, and that could push it ahead of "Aviator" in the Oscar race. Couldn't it?
O'NEIL: It certainly pushes it very close. I think "Aviator" is that big Hollywood epic biography film with an A-list cast. It's hard to beat. But "Finding Neverland" was just named best picture of the year by the National Board of Review. And it stars Johnny Depp as J.M. Barrie, who was inspired by his friendship with four fatherless boys to write "Peter Pan."
This is such a good movie, Carol! It just makes you feel good, and it's funny, and it's warm, and it's well-acted.
COSTELLO: I know. It's just kind of creepy, too, to me, just that this grown man is playing with these children all of the time. I mean, I don't know. It's just a little creepy, but I'm sure it's fabulous. And I should go see it before I say anything else.
Tom O'Neil from "In-Touch Weekly," thank you for joining DAYBREAK this morning.
O'NEIL: Thanks, Carol.
COSTELLO: This is DAYBREAK for a Friday morning. We'll be right back.
(COMMERCIAL BREAK)
COSTELLO: We leave you this morning on a happy note. Say hello to these little bundles of joy. In a Salt Lake City hospital, four new babies, all related. Their mothers are an aunt and her two nieces. The infants were delivered by the very same doctor. Now that is keeping it in all in the family.
Also in Utah, a sad story with a happy ending. See these puppies? They were delivered by C-section after their mom died in the arms of her owner, a paramedic in Cedar City, Utah. Carolyn Shaw (ph) and another paramedic went to work to deliver three puppies. Shaw (ph) says she won't keep the pups, but there are a lot of people interested in adopting them.
And using those knives that we just saw.
ROB MARCIANO, CNN METEOROLOGIST: What were those knives for?
COSTELLO: I don't even want to say it. That does it for DAYBREAK today. "AMERICAN MORNING" starts right now.
MARCIANO: See you, Carol.
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