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CNN IN THE MONEY

Wholesale Inflation Rises By 1 Percent; Syrian Impact on U.S. Discussed

Aired February 19, 2005 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANDREA KOPPEL, CNN CORRESPONDENT: One U.S. soldier is now reported dead in a bloody day across Iraq. In Baghdad alone, at least 23 people have died in five attacks. Insurgents targeted this bus. Mourners at a funeral and a procession of pilgrims marking the Shiite holy day of Ashura.
Amid the violence, a five-member bipartisan delegation of U.S. senators met with Iraqi and U.S. military leaders within Baghdad's heavily fortified green zone. The delegation is also scheduled to visit several U.S. military bases. Arizona Republican John McCain and New York Democrat Hillary Rodham Clinton have expressed cautious optimism about Iraq's emerging government.

In Washington today, Japan joins the U.S. in calls on North Korea to return to the negotiating table and talk about its nuclear program. North Korea insists it wants nothing to do with the six-party talks and in a new development, Pyongyang now says it's also no longer interested in direct talks with Washington. I'm Andrea Koppel at the CNN center in Atlanta. We'll have more news for you at the bottom of the hour. IN THE MONEY begins right now.

ANNOUNCER: From New York City America's financial capital, this is IN THE MONEY.

JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY, why Syria matters on Main Street USA. Damascus is a long way away, but what happens there could affect things that happen here, our goals and our lives. We're going to do a little Syria 101.

Plus, watching the watchdog. The FDA has a new panel on drug safety. But wasn't that the agency's job all along? I believe it was. See if they're serious about checking our medication.

And the mogul and the mouse. We'll learn about Michael Eisner's battle for a company in the happiness business. We'll hear from the author of a widely anticipated new book called "Disney Wars." Joining me today, a couple of the IN THE MONEY veterans, CNN correspondent Susan Lisovicz and "Fortune" magazine editor at large Andy Serwer. Wholesale inflation numbers came out on Friday and they were very strange. Usually, when you take out food and energy, the component goes down. This time, overall wholesale inflation without food and energy went up and up a lot, from 0.3 percent overall to 0.8 percent ex food and energy. What's going on?

ANDREW SERWER, "FORTUNE" MAGAZINE: Well, that means the price of automobiles went up more and the price of cigarettes. Cigarettes is a part of the inflation number. And I just think that's just a joke.

CAFFERTY: Just bothers you, doesn't it?

SERWER: Why don't they put in the price of Milky Ways or cocaine? That's a drug, it's not a necessity. I just think it's unconscionable.

SUSAN LISOVICZ, CNN CORRESPONDENT: OK, but to your point, auto costs were something that I think most of us can relate to.

CAFFERTY: Sure.

LISOVICZ: It's not a drug for most of us, unless you own 25 cars like maybe Elvis did. And they rose, you know, about 1 percent. The point is, is that when you have a recovery, prices will rise. And there's where you have that delicate little tap dance and what the market worries about and a lot of companies and people like you and I, is how much interest rates will rise and that's where the fear comes in and Alan Greenspan said in Washington this week, watch productivity and watch prices.

CAFFERTY: Well and interest rates actually did climb immediately on those inflation numbers. The bond market selling off in anticipation of more hikes from the Fed. But the conventional wisdom was, there's no inflation, it's all under control, we've got a nice, slow-paced recovery. Is this like a one-time --

SERWER: Well, I think it's a bit of a blip, Jack, but I think that Susan's right. I mean I think this is the beginning of the sea change that actually began in the summer. And Alan Greenspan if you don't want to listen to him -- he has been telling you loud and clear, month after month after month, rates are going up. If you don't believe it, you know, get out of the way because it's coming. It's for real.

LISOVICZ: Or buy your house now and I think housing starts were a 21-year high in January.

SERWER: I think you saw people doing that. That's right.

CAFFERTY: We've been talking about the housing, quote, bubble, unquote, for a year and a half on this program and prices just keep going up.

SERWER: It's going to get big, see the bubble...

CAFFERTY: Oh, I see, OK. More on this later. In the language of diplomacy, sometimes you can say a lot without saying anything at all. That's sort of the message the U.S. was sending this week when it pulled its ambassador out of Syria. The U.S. did that right after the former Lebanese Prime Minister Mr. Hariri was killed in a massive car bomb explosion this week. And some say Syria was behind the explosion and the assassination. Theodore Khattouf is going to help us understand what's going on in Syria.

By way of background, Syria has had 13,000 troops in Lebanon for a number of years. And while the troop presence is OK with some of the people in Lebanon, it was definitely not OK with the people who supported Mr. Hariri, the diplomat and former prime minister who was assassinated this week. Our Secretary of State, Condoleezza Rice, all but blamed Syria for the killing. What's your take on what happened there and on Miss Rice's comments?

THEODORE KHATTOUF, FMR US AMB. TO SYRIA: Well, I believe that we have to be careful not to rush to judgment. It's certainly understandable why the administration is going to use this tragic murder of a very, very fine man, to push their agenda to get Syria out of Lebanon. Indeed, they have a lot of support on that point with the French and as you have noted, with a number of opposition elements in Lebanon who were starting to rally around the former Prime Minister Rafik Hariri.

But the fact remains, we don't know who killed Hariri and we accused Syria back in the late '80s of having brought down Pan Am 103 over Lockerbie, Scotland, only to find out many many months later that it was Libya that was responsible.

LISOVICZ: But it's understandable why Syria, Mr. Ambassador, would be certainly a prime target of suspicion. It has 13,000 troops there. It is not welcome there. The former prime minister was outspoken in that he did not want to see his country under Syrian control. So this is -- this has been a thorn in the side of the Lebanese people for a long time. And not only that, it's just -- the latest prominent person who's been assassinated in Lebanon.

KHATTOUF: There is no doubt that Syria tops the list of suspects because it had both motive and capability. Although some people believe that because this is going to so harm Syria's position, that maybe for that reason alone, we ought to be looking elsewhere for suspects. But yes, Syria has been suspected of assassinations before and Lebanon, the Bashir Jamil (ph), who was elected by a rump parliament immediately after the Israeli invasion was assassinated, so were many other prominent Lebanese personalities, such as Druze leader Kamal Zumblat (ph) years ago and he's the son of Kamal Zumblat has just gone public with his accusations that the Syrians killed his father, after these many years. And obviously, a lot of people want Syria out of Lebanon. But we have to recall, too, that Syria has a strong card to play in Hezbollah and the Shia community, which make up almost 40 percent of the Lebanese population.

SERWER: Mr. Ambassador, I was in Lebanon before 9/11. It's a very confusing place. You know, you see people in nonmilitary uniforms with guns at the airport. People look for linear explanations here in the United States when you look at a place like Lebanon and Syria and often there aren't any. How do we engage a country like Syria? I thought we were doing a pretty good job with young Mr. Assad, but are we?

KHATTOUF: Well, we've had a mixed record with the Syrians. Frankly, it's a difficult regime for an administration, an American administration to talk to, particularly an administration that has the focus of President Bush's government, in which basically we're talking about democratization in the Middle East and we're dealing with a regime, hardly the only one in the Middle East, whose three rules is power, power, power, don't give it up. So it's a very difficult dialogue. Essentially, the administration approach to Syria has been, here are 10 or 15 things we'd like you to do. Once you've done them, come back and maybe we'll talk to you. The Syrians haven't been very responsive to that approach. Recently, in fairness to the Bush administration, they have tried to engage them on the highest priority issues, particularly Iraq. That is, cross border infiltration into Iraq, and the possible -- the possibility that Syria is safe havening a number of Iraqi insurgent leaders.

CAFFERTY: What's likely to be the outcome of the increased harsh rhetoric toward this country? One of the byproducts of last week's events was that Syria and Iran announced that they'd formed a partnership to fend off enemies of both countries. While the United States wasn't mentioned specifically, it's sort of implied that we were the subject of that conversation. The administration is threatening sanctions now against Syria, talking about taking a much more aggressive tone with the country. Where are we going to get with that? I mean, we've got Iraq. We've got Iran. We've got North Korea. There's a few other little things going on. And now it seems like we're almost going out of our way to get tough with Syria, not that the assassination of Mr. Hariri isn't cause for some sort of outrageous response. But is this the right response by this country at this time?

KHATTOUF: Well, I think the Bush administration would be well advised to proceed carefully. We all recall, at least those of us of a certain age that we sent Marines into Lebanon in 1982 to try -- after the massacres at a Palestinian refugee camps, Soverin (ph) and Chichila (ph) by right wing Christian militia backed by Israel. And all of a sudden, we found ourselves enveloped in a very complex, messy sectarian dispute within Lebanon and we lost 241 Marines. Hezbollah was just then becoming a factor in Lebanon.

Now Hezbollah is a very well trained military and terrorist organization that also happens to sit in the Lebanese parliament. And Iran and Syria have a close alliance. Both are feeling threatened by the United States. And, therefore, we have to take seriously the possibility that if we go too aggressively after Syria, i.e., by non- diplomatic means, we may find ourselves with Hezbollah rocketing Israel and Hezbollah targeting U.S. installations around the world. And the former deputy secretary of State called Hezbollah the "A" team of terrorism so they're no one to be messed with lightly.

CAFFERTY: Well, not a comforting thought. Mr. Khattouf, thank you. Theodore Khattouf is the former ambassador to Syria. I appreciate your insights. Thanks for being with us.

KHATTOUF: Thanks for having me Jack.

CAFFERTY: When we come back, just what the doctor ordered. It's the FDA's job to make sure your prescription drugs are safe. We'll look at whether they're doing that job or not.

Plus, bulls, bears and hams. Find out how managers are learning some business tips from Shakespeare. Plus, inventions you don't need -- or you didn't know you needed or maybe you don't need them at all. It's all about Wastler's fun site of the week and he'll translate what I just said in about a half an hour.

(COMMERCIAL BREAK)

CAFFERTY: Do you feel like every time you turn on the TV there's a new ad for a new drug? That's because every time you turn on the TV, there's a new ad for a new drug. According to our next guest, that's because the FDA approval process takes just six months now as opposed to considerably longer, not so long ago. An FDA panel met on this very subject this week in Washington, D.C., part of the discussion triggered by the Vioxx mess. For more on all of this, we're joined now by Harvard medical school's John Abramson, who's the author of "Overdosed America," the broken promise of American medicine and we are delighted to welcome you back to our humble little program here. Nice to have you with us.

DR. JOHN ABRAMSON, AUTHOR, "OVERDOSED America": Thank you. It's a pleasure to be back with you.

CAFFERTY: Help me out with something. Earlier this week, the FDA announced that it's going to form an independent board to look into the safety of the medicine we take.

ABRAMSON: Right.

CAFFERTY: Isn't that what the FDA is supposed to have been doing all along?

ABRAMSON: That's a great question. It is. But it is, in fact, not what the FDA has been doing. Since 1992, there's been increasing drug company funding of the FDA so that now the division of the FDA that oversees drug safety is actually more than half paid for by the drug companies themselves. So this is a ridiculous situation where the fox is guarding the chicken coop. This new division of drug safety could be a meaningful step in the right direction. It depends on how much independence it's given.

SERWER: You know, John, you just said the fox guarding the chicken coop. I might call it the inmates running the asylum.

ABRAMSON: OK. That's better.

SERWER: Either one. Jack was just talking about turning on the TV and seeing all those drug ads by the pharmaceutical companies. Another thing you see on TV all the time ad nauseam, ads by plaintiffs lawyers trying to get you into their class action lawsuits against the drug companies. So on the one hand, we have the drug companies spending all this money on marketing. On the other hand, we have the class action plaintiffs lawyers going after these companies, boosting their costs that way. You know, what happens in the middle here? Isn't the whole system kind of rotten?

ABRAMSON: Absolutely. I mean Andy, you're absolutely right. The goal of our health care ought to be to have doctors and patients have the best information available to take that information into the exam room where decisions are made so that people can get the full benefit of the wonderful medical science that we have. That is not happening. What's happening is most of the information that docs and patients have is produced by the drug companies and other medical industries. The medical journal articles are primarily sponsored by the drug companies. The guidelines are dominated by the drug companies. Doctors' continuing education is dominated by the drug companies. So the information and the advertisements that we get on TV just incessantly bombard people with the idea that their lives will be better if they take more expensive drugs.

LISOVICZ: I think it makes you just want to go and -- go off by yourself and just raise organic vegetables and never touch a drug again because there's no belief in anything, John. So my question to you, is there -- is the creation of this independent board the answer, or should the FDA just simply be overhauled?

ABRAMSON: Or a third alternative would be to develop a Federal Reserve Board-type body that was in charge of the integrity of our medical knowledge with maximal insulation from commercial and political influence. Susan, I think part of the message -- you're absolutely right. It makes you want to grow organic vegetables. Seventy percent of our health care is in our own hands. It depends on the lifestyle choices we make for those of us who are fortunate enough to be able to make those choices and not live in a toxic environment. Seventy percent of our health is in our own hands. We don't want to miss the other 30 percent. I don't think we want to take a light-eyed approach and say, look, let's just forget all medical science. It's just a shame that medical science is now really controlled for commercial interests instead of the people's interest. And that's what we need to gain back. Hopefully, the FDA can play some role in doing that. I think we're going to need an independent government body to oversee the whole thing so that Americans get the full benefit of medical science.

CAFFERTY: With all due respect, I'm not sure we ever need another independent government anything. The government is big enough. I mentioned that the approval time for some of these drugs has shrunk to only six months, much shorter than it used to be. Low and behold, now we're finding out some of these thing aren't safe. They don't work. They kill people. There are terrible side effects. Why is this stuff being allowed to go on in this country?

ABRAMSON: It's being allowed to go on because the drug companies now have so much influence at the FDA. This started in 1992 and it really started with a very good reason. The AIDS -- people with AIDS were dying and there were AIDS drug in the pipeline at the FDA that couldn't get out into use. So the solution to that was to bring more of the FDA's agents into the new drug approval process. Well what happened is those agents were paid for by the drug company themselves.

CAFFERTY: Sure.

ABRAMSON: So 1,000 agents were added. The average approval time for an important new drug went from 14 months to six months. But what's happened is there's been sort of importance creep so that a drug like Vioxx got approved on the fast track, when it isn't really a significant improvement over other drugs. If fact, it look like it's more harmful than other drugs.

SERWER: John, I'm going to pass on those organic vegetables that you and Susan seem to be in love with if you don't mind. I kind of wonder though if the FDA doesn't get a bad knock here though. They get beaten up for approving drugs too slowly as you're describing. Now they're getting beaten up for approving drugs too quickly. I mean, it's a can't win though.

ABRAMSON: There is a win. There is a win. The FDA analysts did a magnificent job in February of 2001 of looking at the studies that the manufacturers of Vioxx and Celebrex did. They did a wonderful job. So in that sense, the people within the FDA are public servants of the highest order and they need all our thanks. What we need to do is just get the information that they're generating out to the public so that it can form our medical decisions. So there is a can win situation. Science really can help us to live better lives. What's happening right now is that there's too much commercial distortion in the application of our best medical science. And this is - the American people ought to have the full benefit of our medical science. That's the real bottom line here.

SERWER: All right, John Abramson from the Harvard University, also the author of "Overdosed America, the Broken Promise of American Medicine." Thanks very much for coming on the program.

ABRAMSON: Well, thanks for having me. A pleasure to be with you.

SERWER: Coming up after the break, power play, Circuit City is facing a takeover bid in the billions and cutting back on jobs. See how the stock is holding up.

Plus, the family business. Roy Disney went up against a mogul in the fight over the company's future. We'll talk with the author of "Disney Wars."

And lessons in managerial power ball from guys in tights. Find out how a little Shakespeare can change a manager's style.

(COMMERCIAL BREAK)

LISOVICZ: Now let's take a look at the week's top stories in our money minute. Attorneys for former WorldCom CEO Bernie Ebbers laced into star prosecution witness Scott Sullivan in Ebbers' fraud trial. The former WorldCom finance chief admitted he lied to investors, Wall Street analysts and the company's board. But Sullivan would not back down from accusing former CEO Ebbers of knowingly orchestrating the company's $11 billion accounting fraud.

Still no solid sign of a cool down in the real estate market. Housing starts unexpectedly rose to a 21-year high in January. The biggest gains were in construction of single family homes.

And we're closer to seeing a huge increase in fines the FCC can slap on broadcasters for indecency. The house passed a bill boosting the possible fine to broadcasters to $500,000 from $32,000 for each violation. The number of indecency complaints filed with the FCC has jumped from about 100 in 2000 to more than 1 million last year. It should be said, half of those complaints were tied to the Janet Jackson wardrobe malfunction. You might have heard of it.

SERWER: Many of you probably know Wal-Mart has been challenging Best Buy for the top spot in American electronics retailing. But where does that leave smaller players like Circuit City? Apparently, it makes them a takeover target. A Boston hedge fund put up a $3.75 billion offer for Circuit City just a day before the company announced it's closing 19 superstores and a distribution center.

Circuit city shares have been on a bit of a rise over the last two years, but they've been basically treading water since falling sharply in 2000. That makes Circuit City our stock of the week. You know, this business could be a dinosaur of a business. You got Best Buy versus Circuit City. Those two stocks have been all over the place. But Best Buy's been beating up Circuit City. Wal-Mart as we said, is in the business, Target's in the business. Dell sells consumer electronics to a certain extent online. Amazon is a huge seller of electronics online. So you have to wonder what kind of future does this business have?

LISOVICZ: Right.

CAFFERTY: And why did this hedge fund want to go and take it over and perhaps take it private if they get it?

SERWER: Well, I think the answer to that with the hedge fund thing is that there's so much money flowing into hedge funds right now that they can't be satisfied just buying little bits of pieces of companies. They have to go after the whole thing.

LISOVICZ: And being private, of course, you're not under the microscope every quarter like public companies. So it could give it a little breathing room. But having said that, there's just such tremendous pressure either from the big box stores like the Wal-Marts or the Best Buys, which are creaming them -- I see here, athe chain posted losses in each of the last three quarters. Just a terrible performance and very very vulnerable right now.

SERWER: The hedge fund thing is interesting, just to continue on that a little bit because we saw Eddie Lampert (ph) -- he was the guy behind the Sears/Kmart deal. He got involved in Auto Zone, Auto Nation. So these guys have so much money, they literally don't know what to do with it. And the consumer electronics, on the other hand, remember all these regional chains like Crazy Eddie. He got into a little trouble that guy. Remember him?

CAFFERTY: A little. He went to prison.

SERWER: AND PC Richards is around. Everyone's got them all over the country. But I think you know, they call them rollups where you are going to see these things consolidate massively. I really think that's what's going to happen and probably the future is online in this business because it's such a commodity business. If you know you're going to buy a boom box, why not buy a cheap online?

LISOVICZ: A lot cheaper to operate.

CAFFERTY: So you're probably not going to go out and buy a couple of thousand shares of Circuit City here this afternoon.

SERWER: No. I would recommend buying Circuit City a week ago.

LISOVICZ: He'll be a flat screen TV but he'll buy it from another location.

SERWER: That's got to be it. All right. We'll follow that one. Coming up on IN THE MONEY, cat fight in the mouse house. Find out about Michael Eisner's turbulent time at the magic kingdom. We'll speak with the author of "Disney Wars."

Also ahead, methinks the lady doth invest too much. Shakespeare goes business in a new management training trend. Find out how it works.

And just dumb enough to be smart. We'll show you some weird inventions from Japan on our fun site of the week.

(COMMERCIAL BREAK)

ANDREA KOPPEL, CNN CORRESPONDENT: Hello. I'm Andrea Koppel in Atlanta. IN THE MONEY returns in just a moment after a check of these stories now in the news.

President Bush leaves tomorrow on a five-day trip to Europe. In his regular radio address today, the president said he'll reaffirm the importance of U.S. relations with Europe, but he admits even best friends don't agree on everything. U.S. ties with many European allies were strained over the war in Iraq.

A half dozen attacks in Iraq today left at least 26 people dead, among them, a U.S. soldier. Many were suicide bombers. One rode a bicycle into a funeral tent. Another set off his explosives on a crowded bus. The violence comes on the Shiite holy day of Ashura (ph).

Former Presidents Bush and Clinton are visiting tsunami-ravaged areas of Thailand today. They're urging Americans not to forget those still suffering. President Bush appointed his father and Clinton to lead private fund-raising efforts for tsunami victims.

More rain for southern California. Forecasters say there will be several more inches before it lets up Wednesday. Flooding is reported on a two-mile stretch of I-5 in suburban Los Angeles. Mudslides pose a threat to several homes in Culver City, Mission Vieho (ph) and Anaheim.

And even though the National Hockey League canceled the season Wednesday, the league and the players union are meeting today in an effort to reach a last ditch effort to salvage the season. Go figure. I'll have all the day's news at the top of the hour. Now back to IN THE MONEY at CNN.

SUSAN LISOVICZ, CNN CORRESPONDENT: The name Disney may conjure up thoughts of furry woodland creatures, fairy godmothers and prince charming. But our next guest says you won't meet any of those characters at the company's corporate headquarters. The trials and tribulations of Michael Eisner's reign as CEO is scripted in the new book "Disney War." Author James Stewart join us now. Welcome and congratulations.

JAMES STEWART, AUTHOR, DISNEY WAR: Thank you.

LISOVICZ: Of course, there's a lot about Michael Eisner in there. But it comes at an especially pivotal time, because it's the time everyone's talking about Michael Eisner's successor and your book, for the first time, details some of Eisner's own doubts about his handpicked successor.

STEWART: Well, that's certainly true and he's had, by the way, doubts about everyone who I think...

LISOVICZ: other than himself.

STEWART: ... challenged his power, other than himself. But it is an historic moment for Disney. I mean Eisner is completing a nearly 20-year tenure, the last 10 years of it pretty much in absolute control there. He has announced that he's stepping down. The board is seeking a new CEO. The big question, will it be his handpicked belatedly handpicked successor Bob Eiger or not? And the story shows that at repeated times over the years Eisner was extremely critical of Eiger and so much so that at one point, Tom Murphy, the highly respected former chairman of Cap Cities ABC and a member of the Disney board, called Eiger on his vacation and said, Bob, you have got to quit, you cannot stay here, Michael does not have any confidence in you.

JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: You were given almost unprecedented access to the Disney company and perhaps under the heading of it's better to be lucky than good, this is not the book you started out to write, is it?

STEWART: Well, no, it's not and while I was in the midst of writing this a pretty familiar presence around Disney's Burbank headquarters, Roy Disney, the nephew of Walt Disney, a Disney board member and the head of the animation department there, abruptly resigned after being pushed -- he was going to be pushed out by Eisner and the board, and declared war essentially on Eisner and led an amazing sort of national shareholders campaign to get rid of Eisner.

ANDREW SERWER, "FORTUNE" MAGAZINE: Jim, it's interesting, you talk about Eiger and of course Eisner did the same thing to Katzenberg and the same thing to Ovitz, so he had a history of doing this to his successors. He does not have a lot of friends in Hollywood, maybe no friends at all. But I want to ask you this, aren't all Hollywood CEOs and moguls megalomaniacs? Aren't they all like this?

STEWART: I haven't done an investigative book on all of them, but I have to say I do feel that Eisner is in a class of his own, if for no other reason, he has lasted for so long. In this Machiavellian treacherous environment, that is no small achievement. Now is there lying in Hollywood? Yes, but I have to say, in my career, reporting on Wall Street, on Washington, other fields, I've never encountered it as blatantly and with as many harmful consequences, as I did at the top of the Disney company.

LISOVICZ: But the irony is, is that now Disney is on it seems, more sturdy footing. For instance, ABC is coming back by a team by the way with lost and "Desperate Housewives" that was sacked --

STEWART: that was fired for that show, yes.

LISOVICZ: Also the weak dollar is sending a lot of overseas visitors to the theme parks. So Disney ironically is financially a little bit more secure.

STEWART: It is doing better and some of that is cyclical. Some of the things that hurt Disney were beyond their control. But there nonetheless, has been some huge blunders, more than $1 billion mistakes. The disaster of building euro Disney, the foray into the Internet, the acquisition of the ABC family channel. Not to mention turning down hit shows like the "CSI" franchise, turning down "The Lord of the Rings." I mean (INAUDIBLE) hiring -- pushing out Jeffrey Katzenberg. I mean the catalogue of errors, however well Disney is doing -- and it is doing better, as you say -- it is staggering to think how great it would be doing if even a few of those decisions had been better.

CAFFERTY: Maybe it would be better at looking at how the board survived at the Disney Company. Because they allowed Eisner to sit there and do all this and they kept signing off on him. No CEO serves without the board saying it's OK.

STEWART: I think perhaps the most important theme in the story is the role of the board. And the Disney board was really a textbook case of how boards let down shareholders and let down constituencies of the company because they were so easily manipulated and lulled into complacency by a CEO like Michael Eisner.

LISOVICZ: ... so close to him, right?

STEWART: There were many conflicts of interest. The most glaring was the fact that his personal lawyer was on the board, was head of the compensation committee --

LISOVICZ: What's wrong with that?

STEWART: And negotiated Eisner's own employment contract for Eisner with Disney.

CAFFERTY: Unbelievable.

SERWER: What about, what about your crystal ball here? Is Bob Eiger going to run this company or what's going to happen? Will they merge with Dreamworks? Will Jeffrey Katzenberg return? I mean, what do you think is going to happen?

STEWART: As I said, this is an historical juncture. The board is going to have to make a critical decision about the successor. Bob Eiger is a very nice guy. He's the only leading internal candidate. But I think he carries tremendous baggage from his years and among other things, they'll still be at war with Roy Disney and his ally Stanley Gold (ph) and I think one of the first tasks of a new CEO is to bury that hatchet so the kind of civil war in the kingdom can come to an end and they can build on their legacy and move forward. But then anything could happen. I mean the real issue, is the model of the entertainment industry going to be the fully vertically integrated, massive conglomerate like a News Corporation or is it going to be the creative boutiques like Pixar and Dreamworks? And right now the market is putting a higher multiple on those creative boutiques.

LISOVICZ: We talk about how many things that Disney has done wrong, retention of talent, succession plan, bad decision making. The fact that there are no external candidates being interviewed publicly - I mean there's nobody out there on the horizon, would you consider that yet another blunder?

STEWART: Well, if they never interview an external candidate, I'd say it would be a blunder.

LISOVICZ: But the timetable is coming up.

STEWART: It is, but I think there's time. There's plenty of time. I think the board at its worst, after that historic shareholder vote last year repudiating Eisner's leadership and by the way, withholding many votes from the directors including George Mitchell, I think that did send a powerful message and I think they have woken up. It's a new era of shareholder democracy. They owe to the shareholders. They owe it to the company to do a very thorough search and get, as they promised, the best single individual to run this great institution.

LISOVICZ: One can only hope. James Stewart, author of "Disney War, the Battle for the Magic Kingdom." Thanks so much for joining us.

STEWART: Thank you.

LISOVICZ: There's lots more to come here on IN THE MONEY. Up next, wherefore art thou CFO? Find out how a shot of Shakespeare can put a classic twist on a manager's style.

Plus de-inventing the wheel. On our fun site of the week, check out some inventions that look better than they actually work.

(COMMERCIAL BREAK)

SERWER: If the biggest role Shakespeare has played in your life was keeping you off the honor role in high school, it might be time for a second read. My next guest says "Hamlet," "Henry V," "Julius Caesar," "The Tempest," can all teach you a lot about your life and career. Carol Adelman is director of Movers and Shakespeares, a business that is teaching leadership to corporations and the military through Shakespeare play. Welcome, Carol. CAROL ADELMAN, MOVERS AND SHAKESPEARES: Thank you.

SERWER: Listen, a lot of people are going to be skeptical about this I guess. I frankly am a little skeptical. Can you please just lay out how this works, how Shakespeare can teach business and military people anything about anything?

ADELMAN: Well, Shakespeare is phenomenal. And most people were probably like me. They slept through King Lear their senior year. And it wasn't until I married my husband who was a Shakespeare nut that I began to learn the fantastic wit and wisdom of Shakespeare. And we then began to apply this to leadership. And I think there's three reasons. First of all, Shakespeare had the greatest insights into people. And every great leader has to know what makes people tick. Second, he told the greatest stories. And we think you learn best through stories. And third, he had the most beautiful language. And it really takes beautiful language to inspire and motivate people and get the job done.

LISOVICZ: But, you know, Carol, let's face it, when you're in the trenches and you're under fire, you're not saying ah, the slings and arrows of outrageous misfortune --

SERWER: Ah, very good, Susan.

LISOVICZ: I remember that from high school. We all had to memorize -- my inner Shakespeare. But seriously, how does it facilitate our men and women in uniform who are in very harsh circumstances?

ADELMAN: Well, Susan it sounds like you didn't sleep through King Lear your senior year. I'm very impressed.

LISOVICZ: Thank you.

ADELMAN: A-plus. Well, I'll tell you and the St. Crispin's (ph) Day speech from "Henry V," is probably the most famous, was played on the boats going over to Normandy. It was read to men in the Persian Gulf war by General Tom Drowdy (ph) in February and when he was taking a small platoon in to clear minefields before the invasion of Kuwait and he read it to his men before they went in. So it was also -- there were copies of it going around the Internet before the Iraq war. So that's the famous phrase "we few, we happy few, we band of brothers." So it's a great speech and it's definitely been used as has the speeches in Julius Caesar, "friends, Romans countrymen." And this speech by Mark Anthony is used as an example of how to make a speech, whereas Brutus' speech is used on how not to make a speech.

CAFFERTY: There's obviously a little lighter side to this. I'm reading some of these notes. It says here, you say I've seen more men in tights than anyone. We dress the top executives up in full Elizabethan garb and then have them read quotes out of context. It is great fun. Do these guys like this? Some of the CEOs I've met might be, how shall we say, resistant to making a bit of a fool of themselves, at least on purpose? ADELMAN: One of the things I've learned that there's really a little bit of Elvis in everyone, the ones that you would least suspect. So it doesn't take long before they get fully into the roles. In fact we always have two roles that we like. We usually put the CEO as the king --

CAFFERTY: Excuse me, I don't know if you can see the monitor -- we've got a guy, it looks like he's got a bowl of fruit on his head. I mean there is no way, I don't care what he's saying. All you've got to do is look at this. I'm not going to take it seriously.

ADELMAN: You will, we just don't put mirrors in the dressing room.

CAFFERTY: I'm sorry, I didn't mean to interrupt. Go ahead.

ADELMAN: No, no problem.

CAFFERTY: These guys get into it and actually enjoy this, I guess.

ADELMAN: They do get into it. And really, theater is transformational. Everybody loves theater. Everybody loves the fourth grade play they were in, whether they were just the plant waterer or whatever it was.

CAFFERTY: Spear carrier (INAUDIBLE).

SERWER: Carol, I actually was a tree in my third grade. I did a pretty good job.

LISOVICZ: That explains a lot.

SERWER: There's a little bit of theater actually here on IN THE MONEY maybe you've noticed. Let me ask you, do you see any of these plots, like "King Lear" and "Hamlet" and "Macbeth," do you see them any time writ large in society, I mean when you see power plays like let's say at Disney, does that remind you of Lear or things like that. Do these things come to your mind?

ADELMAN: Well, King Lear, to our mind, when we teach it, is the best example of succession planning. You know, he really didn't know how to do it. He needed an estate planner with him. He should have thought it through better. He should have known when to quit. He stayed too long when he was into his dementia. So we teach that for succession planning lessons.

LISOVICZ: OK so Carol we're going to continue on the Shakespearian theme. Who would be your corporate "Hamlet," to be or not to be?

ADELMAN: Corporate "Hamlet," boy. I would say kind of -- probably a conglomerate, conglomeration. And that would be the CEOs who really have not bitten the bullet on the fiscal accountability and they're trying --

LISOVICZ: Oh, there's so many of them, Carol.

ADELMAN: Well, that's why I'm having trouble singling out one. And I think that's just a key, key issue today. And it -- you know, people -- I think corporate boards and CEOs were sitting around and not grabbing this bull by the horn. And they were doing the "to be or not to be" thing and they needed to just handle it.

CAFFERTY: What Shakespearian character does Donald Trump bring to mind?

ADELMAN: Donald Trump. I think Donald Trump clearly a "Henry V," OK? I mean he is - Donald Trump is once more unto the breach, dear friend, once more, if I've ever seen it, wouldn't you say?

SERWER: Sure, the bard knew it.

LISOVICZ: Carol Adelman, she knows her Shakespeare. She is the director of Movers and Shakespeares. Thanks so much for joining us. Coming up, he's IN THE MONEY. Find out how a cameo on our fun site of the week took a kid from obscurity - there he is -- to celebrity. And here's a chance to grab your own piece of the limelight. We just might read your comments on air. Write to us at this address, inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: Usually, when we report about a painting selling for big bucks at a ritzy auction, we're talking about something by Picasso or Pollack. But two paintings of dogs playing poker fetched almost $600,000 this week. Allen Wastler us here to explain that. Absolute lunacy, I say and to fetch us a good fun site of the week.

ALLEN WASTLER, MONEY.COM: It's great art, great art.

CAFFERTY: It's just silly.

WASTLER: By Casius Coolidge (ph), this is part of Americana, but three reasons why this auction -- they're expecting these two paintings. The first one is the "Big Bluff," and the second one is "Waterloo 2" and showing those darling dogs just playing poker. It's great. But three reasons why this probably went higher -- they thought it would get like 50 grand. Instead, more than $500,000. One, the Internet. That's what it makes me here, you know, the Internet. You get wider awareness of it, more ability to get in on the bidding. It was done by Doyle, but people could submit bids over the net. Two, we had the dog show in town so there was a little bit of excitement. Three, poker is big business these days. I mean poker is all over the place.

LISOVICZ: Somebody called it bona Lisa.

SERWER: You've got dogs, poker and the Internet, that's just an unbeatable combination.

WASTLER: It's a slam dunk. And I am surprised and shocked, Jack, that you don't appreciate -- SERWER: Come on Jack. Get with the program, it's great stuff.

CAFFERTY: My tastes in art run at a much higher level than dogs playing poker (INAUDIBLE).

WASTLER: Elvis on velvet, here we come.

CAFFERTY: That, too. What about the fun site of the week?

WASTLER: Well, first of all, I want to give ourselves a pat on the back. Remember that...

CAFFERTY: This is funny, I saw this on the paper, Dutch boy.

WASTLER: We put him on and it just took off. It turns out he's from New Jersey.

LISOVICZ: Of course.

SERWER: Like Hagan Daz (ph). He's like Hagan Daz.

WASTLER: We love this guy but we threw him on IN THE MONEY as one of our fun sites a couple weeks ago. His fame has taken off. He did a little posting saying, "I was on CNN on this show about money and finance and stuff."

SERWER: That's the good part right there Allen, see when he does that, when he starts getting down.

WASTLER: You go, boy. You go.

LISOVICZ: He's demonstrating on all the morning talk shows like GMA. He's proud of himself.

WASTLER: He's all over the place and somebody in our CNN household tried to take credit for putting this -- us. It was us.

CAFFERTY: It was right here.

WASTLER: We make the cyber stars.

CAFFERTY: Wait a second. Who tried to take credit?

WASTLER: Somebody on primetime.

CAFFERTY: Who, we want names here.

WASTLER: Your buddy, Anderson.

CAFFERTY: Anderson Cooper, I'm looking for you. He did?

WASTLER: Yes, sir.

CAFFERTY: I'm told he rescinded it.

WASTLER: Oh, he rescinded it? CAFFERTY: Yeah, yeah.

WASTLER: Wise move. Don't mess with the Jack man.

CAFFERTY: So what do you got for this week? What do you have for this week?

WASTLER: We revisited, in Japan, there's a little thing called shindugu (ph), which is an appreciation of inventions that maybe you don't really need. All right. Now this one might work. How about a little -- to put butter on your toast. Wouldn't it be nice if it was a stick? Look at this. Now there's a good invention.

SERWER: How have I been living all these years without it?

CAFFERTY: That's a good idea, you know.

WASTLER: You get a runny nose when you got a cold. You keep reaching for the tissue and stuff?

SERWER: Yes, I do!

WASTLER: What if you could just have it on your head, available anytime you need it?

CAFFERTY: There's a name for that person there, but we can't say it on TV.

SERWER: Ding-dong.

CAFFERTY: That ain't it.

WASTLER: Get the eye drops in your eyes, oh, that is hard. Oh that is hard. But if you had one of these gadgets right now, it could really help you get the eye drops in. Plunk, plunk.

CAFFERTY: Where's the eye drops thing?

WASTLER: There we go. See, that makes it work, doesn't it?

CAFFERTY: You have to put the thing in your eye so you can drop the drops in your eye?

WASTLER: That will work.

CAFFERTY: I like the one with the roll of toilet paper on your head. Thank you, Allen.

Coming up next on IN THE MONEY and you do want to stay tuned, it's time to hear from you and read some of your e-mails from the past week. You can send us an e-mail right now if you're so inclined. We're inthemoney@cnn.com. Check it out.

(COMMERCIAL BREAK)

CAFFERTY: All right, it's time now to read your answers to our question of the week about how you won the heart of your significant other. One viewer wrote in the early '70s I simply told my then boyfriend to either marry me or get his shirts out of my closet. We've been happily married for 30 years.

John wrote, I have no illusions as to how I won my wife's heart. She fell for me because I have Washington Redskins season tickets.

SERWER: Yes.

CAFFERTY: I proposed during a game, 1995. We've been happy ever since.

And Evelyn wrote this. I won my husband's heart when I came to bail him out of jail. He had some time there to think about what was important. Now for next week's e-mail question of the week, are the drug companies more concerned with profit than healing? Duh. Send your answers to inthemoney@cnn.com and you should also visit our show page at money.com/inthemoney which is where you'll find the address of our fun site of the week. Thank you for joining us for this edition of IN THE MONEY.

Thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine editor at large Andy Serwer and money.com managing editor Allen Wastler. Join us tomorrow 3:00 Eastern time when we'll look at the power of the bloggers. Some say they're on track to overtake the influence of the established news media. Media expert Howard Kurtz will be our guest then. Hope to see you tomorrow at 3:00. Enjoy your weekend.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


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