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Quest Means Business
FIFA Under Pressure; Another Record for Wall Street; Tesla Drives into Britain; Elon Musk's Next Move; Console Wars; Move to Scrap Mobile Roaming Charges; Global Markets Rally
Aired June 09, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: If this is a new week, it must be another record on the markets. The Dow and the NASDAQ -- and the S&P, beg your pardon --
both hitting record highs as the closing bell rings on Wall Street. The gentleman with the hammer, do the business. Oh, dear, not terribly
enthusiastic. Let's see what happens before the week is over. Today is Monday, it is the 9th of June.
It's a beautiful game, and allegedly a dirty business. Sponsors are putting the boot into FIFA. Will it have any difference?
Super-charging the British market. Elon Musk tells me about his grand plans for the electric car.
And in an exclusive interview, the NBA commissioner tells us how it feels forcing Donald Sterling to sell up.
I'm Richard Quest. It's a new week, live from London, and I mean business.
Good evening. FIFA is facing serious pressure, now, to investigate corruption allegations only days before the World Cup gets underway. A
British newspaper, "The Sunday Times," has alleged a Qatar official lubricated the bidding process in his country's favor.
He is Mohamed bin Hammam. He's accused of paying bribes, setting up trade deals, and arranging secret meetings. It's all to secure the 2022
World Cup for Qatar. He was successful.
Several of FIFA's key sponsors are voicing concerns. Sony has demanded FIFA investigate the bidding process and says, "We expect these
allegations to be investigated appropriately and continue to expect FIFA to adhere to its principles of integrity, ethics, and fair play."
FIFA's key sponsors, like Sony, hold serious power at the organization. Now, look at the numbers. FIFA made about $1.3 billion in
revenue last year. Around a third of it -- a sizable sum of money -- comes from the sale of marketing rights. And those rights, specifically for the
World Cup, account for the lion's share, $400 million. The vast majority all related to the World Cup.
"World Sport's" Amanda Davies is in -- live in Rio de Janeiro getting ready for the start of the festivities. Look, it's an awful thing, Amanda.
Barely -- you haven't even begun, and we're not talking about football, we're talking about unsavory activities. The question is, are people
talking about these things there?
AMANDA DAVIES, CNN SPORTS CORRESPONDENT: Hi, Richard. It's certainly not what FIFA were hoping for. As you said, just three days to go until
the start of football's flagship event here in Brazil, and it is still what the main sports journalists, what the newspapers are talking about. It's
overshadowed by Qatar 2022.
The point, really, is when are FIFA going to take action? Or, indeed, will they take any action? They at the moment are toeing the party line,
which is that they will await on the results of the independent investigation being carried out by their ethics committee and an American
lawyer called Michael Garcia.
He has been traveling the globe speaking to all the key people who were involved in the bidding process for the 2022 World Cup. He was
understood to be finishing those investigations today, Monday. We haven't heard anything from him. The report isn't due until July. But FIFA are
saying that they won't take action unless it is recommended by Garcia himself.
The thing is that we have now got the money men involved. The sponsors who are so crucial to the international football game, who
normally remain so quiet, have really started putting some pressure on FIFA to take some action.
Sony were the first of the sponsors to say something, as you said. We've now had five of the main six coming out, Adidas are the latest. And
their statement's really quite strong, Richard. They say, "The negative tenor of the public debates around FIFA is neither good for football nor
FIFA nor its partners."
And you wonder that for everything that the journalists say, for everything that the supporters say, it might just take the sponsors, those
who invest so heavily in football, to start pulling out. That might make FIFA stand up and take notice.
QUEST: When I read this week's "Economist" and I saw the -- the absolute coruscating article, the leader article this week, the "Economist"
basically railing into Blatter, railing into FIFA, railing into the corruption that it says is in the organization, I do wonder, is it -- and
you've been talking to some companies -- is it really only when the weight of money pushes hard that that change takes place?
DAVIES: Football is a money business, and despite the controversy, it is still the sport that these brands want to be involved with, Richard.
Perhaps Nike, the global sportswear brand is the epitome of that.
They aren't a World Cup sponsor, but it is still the event on their calendar that they invest millions in with their flagship television and
online adverts. They, of course, go head-to-head at this tournament with Adidas, Adidas, who are the ball sponsors and one of the main World Cup
sponsors.
And I sat down with their president, Trevor Edwards, a little bit earlier on on Monday, and he actually echoed the view of his Adidas rival,
saying that yes, football is a fantastic sport, but FIFA really need to take action to limit the damage, to stop the damage to brands football.
(BEGIN VIDEOTAPE)
TREVOR EDWARDS, PRESIDENT, NIKE BRAND: As football fans, I think we all feel that the allegations are concerning, and they're something that
really should be addressed by the governing body. And at the same time, if they do that, I think it will enable all of us to really get really focused
on the football during the World Cup.
So, I think we're all hoping that they can address it so we can really just get a chance to sort of celebrate great football.
DAVIES: If Nike were a sponsor, would it have a message to FIFA?
EDWARDS: As you know, we're not a sponsor, but we do sponsor a lot of the teams that participate, so for us, it's really about hoping that the
governing body will address it so we can, again, focus on football.
DAVIES: How much power or how much responsibility do you think sponsors have around the events that they're involved with to see the event
do the right thing?
EDWARDS: I can certainly speak for us, and for us, the World Cup is an incredible -- just an incredible time of energy, right? And we really
use the World Cup to win with our consumers, to ultimately drive our business, and then reinforce our position as the leading football brand in
the world.
And so, for us, it's about making what we believe is already a big moment that much bigger, right? It's our job to bring more people -- have
more people who actually love the sport, engage in the sport, see beautiful football being played. And that's what we spend our time doing, which
makes it so we can celebrate the sport that everybody loves so much.
DAVIES: How important is this market for you over the next few years?
EDWARDS: Yes.
DAVIES: It's not just the World Cup. There's also the Olympics coming up as well.
EDWARDS: Yes. We've been in Brazil for many, many years. I personally have been coming here for over 20 years, and when you -- for us,
the World Cup, the Olympics, are amplifying moments. We'll be here. We were here before the World Cup, we'll be here after it. And so, for us,
it's really about making sure that we can serve the market.
We believe that Brazil has the potential to be our third-largest market in the future. And so -- and that goes behind the United States,
and then China, and then Brazil. So, obviously for us, being here every single day, serving the consumers here, understanding their specific needs
in Brazil and making sure we serve that.
This is a market that loves -- they love sports. They love football, everybody knows they love football, but they love -- just look on the beach
and you'll see people running, people doing skateboard, people doing everything. That makes this market very appealing to us.
(END VIDEOTAPE)
DAVIES: Richard, aside from Qatar, Brazil, of course, has had its own problems gearing up for this World Cup. There's protests and strikes
happening as we speak in Sao Paulo. But with three days to go, organizers are very much hoping that it will be the football that we're talking about
when it all kicks off on Thursday.
QUEST: In a word, very quickly, in a word, do you think, yes or no, that there is any likelihood that FIFA will ever either take the vote
again?
DAVIES: I would say no, as things stand at the moment, because it's also tied into 2018, both the votes were taken -- done at the same time.
Can you imagine that phone call to President Putin? "Mr. Putin, I'm afraid we're going to have to take away your 2018 World Cup, and that needs to be
re-voted for as well."
(LAUGHTER)
QUEST: Enjoy the tournament while it lasts. Who knows what sewage you'll be wading through afterwards with FIFA. Many thanks, Amanda. Enjoy
the World Cup. Our first broadcast from CNN in Rio, the first time you've heard from our team there, and you'll hear a lot more in the weeks ahead.
US investors were feeling optimistic today as markets continue to rise. Alison is at the New York Stock Exchange today. A small gain, but a
gain nonetheless and a record on the way.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. I think it was caution, though, that ruled the roost today. And then, of course, some
comments from Boston Fed president Eric Rosengren. He sent the market actually in reverse. We did see stocks go into the red.
He raised questions about how the Fed's massive portfolio will shrink after the stimulus ends, and he's worried about it bringing volatility to
what's been a very complacent market for quite a while.
But then, cooler heads prevailed. Everybody counted to ten and then continued to go back to the drawing table and buy. And even with modest
gains, as you said, we are seeing some record highs. Richard?
QUEST: Alison Kosik in New York. And hopefully, Alison will be with me tomorrow. We'll be back in New York, and we'll be on the floor of the
New York Stock Exchange. That's tomorrow with QUEST MEANS BUSINESS. We'll be back.
(COMMERCIAL BREAK)
QUEST: Tesla's model is driving into Britain. The company has sold its first right-hand vehicles and installed its first charging station in
the United Kingdom. The company's chief executive, Elon Musk, says the UK could become Tesla's biggest market behind the United States and China.
And Tesla can't just drop the cars off the ferry. The company must also build out a charging network to make the whole electric car concept
viable. There are charging stations, but of course, none of the super- charging that really makes these high-performance vehicles worthwhile. You don't want to have to wait and get married and divorced in the time it
takes to charge your vehicle.
It perhaps is no challenge for Elon Musk. He's disrupted the auto industry, the space industry, the solar industry, and he's even the
inspiration for Tony Stark, the billionaire inventor and superhero in the Iron Man films. So, this weekend, I was privileged to sit down with Elon
Musk and find out where Tesla's expanding next.
(BEGIN VIDEOTAPE)
ELON MUSK, CEO, TESLA, SPACEX: Right now, the priority is the UK, and it's building out a network of super-chargers so that people can travel
with freedom anywhere in the British isles, the UK and Ireland, and make sure we have service centers everywhere. So, we have a massive
infrastructure expansion happening right now in the UK, with multiple sites being constructed simultaneously.
QUEST: When we look at the development, now, of Tesla and the range of projects that you have, you have a lot on your plate.
MUSK: We've a lot of initiatives happening simultaneously on multiple dimensions, so, obviously market expansion to establish charging
infrastructure and service infrastructure throughout the world. We're scaling up our production of the model S, we're developing the model X,
we're in the early stages of the giga factory, which will break ground in the next -- probably this month, actually.
And then, longterm, there's the affordable mass-marketed car, which that development has to happen in parallel with the giga factory. In fact,
it's very important that the giga factory and our mass market model come to fruition at the same time, otherwise one will be -- we'll have a tremendous
amount of capital, but no way to make it useful.
QUEST: Do you think the market -- and I'm not going to ask you what you think your share price should be, because you wouldn't tell me anyway -
- if you look at this volatility, that often suggests speculation and a lack of understanding of longterm strategy.
MUSK: Yes. There's a lot of speculation. Necessarily, if you look at, say, our trailing revenues, our market cap makes no sense, because our
market cap is like ten times what our revenue was last year.
So clearly, the market cap is driven by future expectations. And as soon as anything happens to either enhance or diminish the faith in our
future, of those future expectations, the stock price takes a massive movement one way or the other. Because it's just so leveraged based on
where people think we'll end up.
QUEST: When I look at those ventures with which you are involved --
MUSK: Right.
QUEST: -- they all signify a strong element of risk and reward.
MUSK: It's not really the size of it or anything, it's just that I think there are some important things that need to be addressed and
important problems the world faces, and when there doesn't seem to be much happening in that arena, then I've sort of tried to be helpful.
So, with Tesla, it's about trying to accelerate the advent of sustainable transport. With Solar City, it's sustainable production of
energy, because you need both sides of the coin, obviously. With SpaceX, the goal is to accelerate rocket technology improvements to allow,
ultimately, to hopefully to allow humanity to become a multi-planet species and establish a base on Mars.
QUEST: And at the same time, all of them have to have an element of commercial reality about them.
MUSK: Well, yes. It's not really a profit optimization except that if we run out of money, then we're dead. So --
(LAUGHTER)
MUSK: -- so therefore we better make more than we spend.
QUEST: But you do enjoy risk?
MUSK: I enjoy a modest amount of risk. But I -- large amounts of risk make me unhappy.
(LAUGHTER)
MUSK: Right. So, I was unhappy for quite a few years there. I sort of like where things are now. I think we're sort in a good sort of space.
Things are sort of in the more good than bad, which is great. But it's only been, really, in the last, maybe, year and a half that we've been in
that situation.
QUEST: Do you understand -- can you understand the Tesla phenomenon?
MUSK: We are -- yes, we're punching --
QUEST: Interesting.
MUSK: -- way above our weight, yes. But our weight is small.
(LAUGHTER)
MUSK: And we actually have to make a car that's not a little bit better than the competitors, because it's only a little bit better, than
why would customers bother buying it? It has to be a lot better than any of the existing cars.
QUEST: Will you still be chief executive of Tesla when the giga factory opens?
MUSK: Yes.
QUEST: When the X comes online?
MUSK: Definitely. No, I'm absolutely committed through volume production of the affordable third-generation car. At that point, I'll
have to consider whether it's -- me being CEO is still the right thing, and whether it's -- I can sort of stay sane, which is, I think, important,
because I think insane CEOs probably don't do the best job.
No matter what, I would stay involved in Tesla. Even in four or five years, if I was not the CEO, I would still probably be the chairman and
help drive the product and make sure we make great cars.
(END VIDEOTAPE)
QUEST: Elon Musk talking to me. And this weekend on "Best of Quest," you will be reading for leading. Hear what book he is enjoying at the
moment -- it's an interesting one -- and why.
Now, a sign of how dramatically trends can change in the technology world, for the first time in almost a decade, Sony has overtaken Nintendo.
Sony has overtaken Nintendo in terms of console sales. Bear with me and watch exactly how this battle has been fought.
(PUNCHING SOUND EFFECT)
(GRUNTING)
QUEST: Sales of the newly-released PlayStation 4 propped up Sony's numbers. Overall sales fell to 20 percent in the last fiscal year, but
they were still 18.7 million. So, if Sony's numbers fell, well --
(PUNCHING SOUND EFFECT)
(GRUNTING)
QUEST: -- Nintendo's fell even faster. They were down 31 percent to 16.3 million. So, Sony won this round. Can we have that "ugh" again?
(PUNCHING SOUND EFFECT)
(GRUNTING)
QUEST: Sony's victory -- thank you. Sony's victory may be short- lived because gamers are increasingly ditching their consoles to play by something else --
(PUNCHING SOUND EFFECT)
(GRUNTING)
QUEST: They are playing by smartphones instead. So, the real battle ultimately may not be who wins the console, but who wins the smartphone and
manages to pull the whole thing together.
Roaming charges: the words that strike fear and dread into the heart of all of us who travel. Now there are moves to scrap them, and they have
an unusual ally. The boss of a mobile network, who's Dave Dyson of Britain's Three, now he wants to end so-called "bill shocks."
The trend's already there. T-Mobile in the United States has unlimited data roaming, and the EU wants to ditch European charges, but
Dyson wants to go further.
(BEGIN VIDEOTAPE)
DAVE DYSON, CEO, THREE: The European Union is targeting the end of next year, so we are significantly ahead of their timetable. The execution
of that, there's still some details to flush out, but I expect that across the European Union there will be elimination of roaming charges.
But this isn't just about the European Union. To me, what's fair for customers is to move beyond the European Union. It doesn't make sense that
you pay ridiculous amounts of money to roam in the US or in Canada or in other jurisdictions. So, it's important that we try and make this global.
But certainly any help that we can get from the European Commission is welcomed.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: But you're -- you feel that you will now get more customers, and that's the way you will make up
some of this revenue, but locking other people into longer-term contracts even if they don't -- and especially since they're not going to be paying
for roaming.
DYSON: Well, the Feel at Home proposition is available to pay-as-you- go customers as well as customers on very short contracts, so we haven't just restricted it to people that are tied in. Yes, we do expect to get
more customers from this.
The first thing we need to do is just help people understand what the proposition is. It's amazing. Actually, our biggest challenge is to get
people to believe, actually, that they can come back to the UK after a holiday and not have a hundred-pound bill.
BOULDEN: And I can understand that, because when I get to the hotel, I do the same thing, I go on the wireless. And I say in my mind, OK, I'm
in Greece. Is that one of the countries? Oh, no, I'm not sure. I think I'll turn it off.
DYSON: Yes, exactly. That's one of the things that we want to do, we want to reinvent the rules. We want to look at the things that are broken
in the mobile industry and try and fix them and make the customer experience better.
(END VIDEOTAPE)
QUEST: The experience of roaming. When we come back in just a moment, to the floor of the New York Stock Exchange, Mark Newton will be
with us to talk more about why the market is rising so sharply.
(COMMERCIAL BREAK)
QUEST: It is a phenomenon, something that Gillian Tett of "The Financial Times" says is really quite -- it's very difficult to understand
at the moment. Some markets around the globe are hitting major milestones as investors start to relax about the health of the world's biggest
economies.
Now, just look at the way the markets are. The US stocks have hit an all-time high, nearly 17,000 on the Dow. And it's been a constant and
solid -- if you look at the graph overall, it's been a constant and solid rise for the Dow in recent weeks.
The DAX is also at an -- there's the Dow. And the DAX, we're going to do the same thing for the DAX and you'll see again just how these markets
have moved over the -- there we are. A very solid maneuvering all the time. The DAX finished above 10,000 for the first time.
Bond yields in the eurozone are at all-time lows, with the prospect of that continuing for the foreseeable future. Asian markets are up as Japan
raises growth numbers.
So, Mark Newton on the floor of the New York Stock Exchange joins me now. Mark, you and I can talk economic fundamentals, interest rate
differentials, we can make an argument one way or the other, but fundamentally, what's driving this growth in markets?
MARK NEWTON, CHIEF TECHNICAL ANALYST, GREYWOLF EXECUTION PARTNERS, INC.: I think it's a combination of a lot of things, and some of it just
has to do with market cycles, which clearly don't really seem to have peaked just yet. You have a market where the economic data has come in
recently a bit better than expected.
The market seems to be comfortable with what the Fed has said recently, along with the ECB in Europe. You have the macro situation, it
seems to be OK. You have interest rates are hitting record lows. You have just a number of things that are combining --
QUEST: Right.
NEWTON: -- that really have taken away a lot of that fear and angst that we saw over the last couple of months, and now we're hitting all these
milestones globally, with the DAX, as you mention, now above 10,000 for the first time. The Dow closing in on 17,000.
And people are scratching their heads. At this time last year, the market was up 14 percent and people could afford to take the year off. And
now we have a number of people that had anticipated we'd have a 10 to 15 percent in correction, the sell in May and go away, and it just simply
hasn't happened.
So, now people are being forced to play catch-up and to really chase a market that already has been quite stretched. And the market's up about
4.5 percent --
(CROSSTALK)
QUEST: OK, but --
NEWTON: -- just in the last 15 days --
QUEST: -- let me --
NEWTON: -- alone.
QUEST: Let me jump in there because the core question is whether there is concrete underneath this rise in the market, or whether it is sort
of on shifting sands. What do you think?
NEWTON: Well, having looked at the markets over the last 20, 25 years, I tend to be more of a glass half empty type personality. I hope
for the best, but I'm always anticipating the worst. So, I always want to look and see exactly what's wrong with the market or why things could
potentially go wrong, despite this resiliency, indices continuing to hit new highs.
I certainly don't look at earnings or macro data as really driving stocks. It almost seems to be this shifting sentiment over time where you
have these pockets of really complacency that later turn into enthusiasm, where people almost always are on the wrong side and the wrong time --
QUEST: Right.
NEWTON: And everybody right now seems to be betting that the markets can go higher. We've seen a lot of that anxiety go away in recent past.
The sentiment indicators that I look at are now at nearly the highest levels we've seen not only since last December, when markets peaked, but
also in the spring of 2011 and October of 2007.
So, that's certainly a concern. And the fact that people feel more at ease, they feel like --
QUEST: Right.
NEWTON: -- nothing is in the way of this market right now, that we can continue to move higher. And that's definitely reason for concern at
this stage of the rally. We've been up almost 180 percent over the last five-plus years with really no 10 percent correction in over two years'
time.
QUEST: Mark, thank you for that --
(CROSSTALK)
NEWTON: So, you have to --
QUEST: -- interesting -- yes?
NEWTON: Yes.
QUEST: Yes, interesting. I was writing down while you were talking to me. I love your quote tonight: "complacency turns into enthusiasm." I
think one might finish that saying off, "which eventually turns into a fall" or at least turns into a slip. Thank you very much, Mark. Mark
Newton at the --
NEWTON: My pleasure.
QUEST: -- New York Stock Exchange for us this evening. I'll be seeing, hopefully, Mark. At least I'll have a chance to stop and say
hello. Tomorrow's a very special occasion --
(RINGS BELL)
QUEST: -- on Wall Street. The CNN money team will be ringing the closing bell, and we will be live from the floor of the stock exchange.
All being well, I will be with them as they ring the closing bell. That's assuming the plane takes off on time, the engines keep going, and the pilot
knows the way from London. That's tomorrow at this time, QUEST MEANS BUSINESS.
You know the old saying, it's not over until the fat lady sings. For New York's Metropolitan Opera, she's on the stage and the volume's getting
louder. We'll tell you why the curtain might be about to fall for good, and the person giving the warning is the artistic director of the Met.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more Quest Means Business in just a moment. This is CNN, and on this network, the news always comes
first. The death toll has risen from Sunday's attack on Karachi's airport. Pakistan's interior minister said 29 people were killed in total, at least
ten of them were Taliban militants.
Meanwhile (ph) Pakistani authorities say they're trying to rescue seven employees from a private cargo company who are trapped inside a cold
storage facility within the airport. The Syrian news agency SANA's reporting President Bashar Assad has issued a general amnesty for crimes
committed before today, June 9th. The deal commutes death sentences to life with hard labor and reduces life prison sentences to 20 years.
Foreigners involved in so-called terrorist activities were also released (ph) to seek amnesty if they turned themselves in.
Police in Las Vegas in Nevada are grieving for two officers who were shot and killed while eating at a pizza restaurant on Sunday. A shopper at
the entrance to a nearby Walmart store was also killed. Authorities say the suspects died in a murder-suicide pact as police closed in. A source
says they held extreme views towards law enforcements.
There are only three days to go before the World Cup begins. The strike by subway workers has paralyzed the city of Sao Paulo. Police fired
teargas in an effort to disperse protestors who were supporting the strike.
The head of one of the most famous operas in the world - The Metropolitan in New York - says the company could go bankrupt in a matter
of years. Now for opera fans, it would mean an end to scenes like this.
(BEGIN VIDEOCLIP)
(OPERA MUSIC AND SINGING)
(END VIDEOCLIP)
QUEST: Careful dear, don't take heart. The Met found it (ph) faces challenges on multiple fronts. Attendance and box office receipts are both
down while production costs are severely up. So, you've got attendance down, costs are up. This is not a recipe for economic success as we've
talked about on this program. You've also got new technology to broadcast performances to cinemas. Now, there are two views on this. Some suggests
it's failed to attract new audiences, others suggest of course that the cinema audiences are merely now precluded or stop going to see the real
thing.
Unions are threatening to strike over proposed pay cut. Here in London, the English National Opera says the opera scene is in fine voice.
Its artistic director John Berry joins me now. Good to see you sir, thank you.
JOHN BERRY, ARTISTIC DIRECTOR, ENGLISH NATIONAL OPERA: Good evening.
QUEST: So, are you - before we talk about problems there may be, are you seeing any of those same symbols, any same trends at ENO? Attendance
down, costs up?
BERRY: Two years ago the opera audience was roughly down about 10 percent in the U.K. overall, and ballet audiences were actually up. In the
last two years we've definitely seen opera audiences rise. Last season we were per performance about 13 percent. And I think it feels reasonably
buoyant at the moment, although the economy is still hard and it's still tough.
QUEST: So what are you doing right that the Met maybe could learn a lesson or two from you?
BERRY: They are different planets. In North America there is hardly any subsidy whatsoever. So the American institutions have to raise every
penny themselves. And in Europe, it ranges from - in Central Europe - 100 percent subsidy to the U.K. where it conflict (ph) (inaudible).
QUEST: But that's a funding mechanism. That doesn't affect necessarily the cost - the rising cost of productions and certainly
attendance levels.
BERRY: Well I can comment on rising costs. I mean, the Met and ENO share a lot of productions. We do about ten productions together, we share
the costs, we set - share - the artistic risk. So actually the Met and the ENO in terms of a business model, they're doing things to really help opera
as a whole. ENO - we do get a subsidy, but that's going to be going down. In the U.K., subsidy is also going to fall very, very soon. And we will
get closer towards a North American model in terms of the amount of subsidy arts organizations get.
QUEST: That's a risk and a worry for you, but is there something in the way you produce your opera - the sort of operas you produce, the
mechanisms of attracting both the first time and the pensioner to come back into the opera - the opera that's been successful.
BERRY: I think we all have our challenges. I mean, Terry Gilliam from the Pythons is doing an opera with us at the moment, therefore the
audience - Benvenuto Cellini had a huge success -- half that audience were probably have never been to an opera before. So we're all doing - we're
all doing many different ways of attracting new audiences, but also still engaging with our loyal supporters.
QUEST: Do you think that perhaps the Met is just crying wolf in the face of some very steep and severe union negotiations. After all, what
better way than to say, 'We're going bust and we'll all be out of a job if you don't buckle under.'
BERRY: Well, you'll have to ask Peter Gelb that. I wish Peter well -
QUEST: Right.
BERRY: -- because we have great relationships, our work travels around the world and we are able to show work in London we wouldn't
otherwise be able to show through our co-productions and our work with the Metropolitan Opera. And vice versa, he's able to do work that he wouldn't
otherwise be able to do without the ENO collaborating with him. Now it's going to be about collaborations, it's going to be about sharing costs and
it'll be about new commercial models to bring in commercial money -
QUEST: Are you ready for that? Are you ready?
BERRY: We are ready -
QUEST: You're going to lose your subsidy, are you ready?
BERRY: I think we are very much on the forefront about creating a model for an opera house for the future with commercial investment as well
as public investment. And in the future, it's going to be a balance between those because without it, we will not succeed.
QUEST: Good to see you, sir. Thank you very much.
BERRY: Thank you.
QUEST: Now, one company is bringing the best of online shopping experiences to its bricks and mortar store. Learn how your mobile can
serve as a personal shopping assistant. (RINGS BELL). Next.
(COMMERCIAL BREAK)
QUEST: Now I'm going to introduce you to Pepper. Who is Pepper you may ask? The robot which can understand your emotions. I could say he or
maybe you'd say she or we could all agree on it - whatever. Well, Pepper was created by Japan's SoftBank and goes on sale next year for around
$1,900. If you can't afford Pepper to help with your shopping, there are cheaper alternatives. Home Depot's designed and app which can be your
virtual assistant whether you're shopping online or in store or in both. Home Depot is this week's "Executive Innovator."
(BEGIN VIDEOCLIP)
Male Announcer: The year was 1979. Home interest rates in the United States were hitting a peak of around 15 percent when two men had a vision,
a vision to create a one-stop shop do-it-yourself store. And The Home Depot was born.
Male: Their cavernous warehouse structures in Georgia took off, and by 1981 The Home Depot became a publically-traded company and just three
years later moved to the New York Stock Exchange. What began as one brick and mortar concept grew to more than 2,200 stores spanning North America
and beyond. But as with all successful companies, the trick is to continue to evolve and innovate as the world changes.
CRAIG MENEAR, PRESIDENT OF THE U.S. RETAIL, THE HOME DEPOT: I'm Craig Menear, president of the U.S. retail at The Home Depot. Innovation to me
is all about bringing product or a process to the marketplace that gives you a differentiation point and hopefully a competitive advantage in the
market.
Male: From the beginning, rigorous training of their floor associates was a game-changing innovation for the company. In 1991, The Home Depot
was one of the first on the environmental bandwagon with a commitment to sustainability. But how they maintained the momentum towards domination in
the home improvement market as competitors enter the retail landscape.
MENEAR: So the customer is definitely changing and in today's environment the customer wants to shop when, where and how they would like,
and a retailer needs to be able to adapt and adjust to that to remain relevant to the customers.
Male: For Menear, the company's 'ah-hah' moment might lie in bridging the gap between the physical store and the online world.
MENEAR: Well we're innovating around the customer themselves in terms of the experience. So we brought together apps that make it easier for
them to shop our stores, navigate our stores, utilization technology we've put in place that help actually our operations and supply chain team around
what we call bay sequencing which tells us what's - what - product is on it every inch of the shelf. We can actually bring that to life for our
customers in the app and help them navigate the store through their smartphone. I'd say we've also had learnings as well. So, you know, some
of the things that we put out into the - into the - app, some of them measuring tools for example - not a lot of engagement from the customers.
You find a lot of shiny bolts and there's a lot of things out there that people want to try, and you have to really try to narrow down and stay
focused on what's most important and what you think will have the biggest positive impact to your business.
QUEST: That's really interesting. The "Executive Innovator" Home Depot. And where Home Depot go, others will follow, which is why we wanted
to hear from them today. The weather forecast - Tom Sater is at the World Weather Center.
TOM SATER, METEOROLOGIST FOR CNN INTERNATIONAL: Hello, Richard. After a little bit of rain in London, you head a little further to the
south central areas of Europe, the low countries. We've got some pretty strong thunderstorms and it all starts with the heat. Currently at this
hour, it's 25 in Berlin. Warsaw's at 22, Paris is at 22. They're seeing temperatures warmer than average as well, but the high temperatures' been
into the low and even mid-30s. Frankfurt, 35 degrees, your average is 22, Vienna 34. Look at Berlin - 32 degrees. You didn't quite make it to 34
but on Friday you were 24 degrees. By Sunday, 34, and where you have the heat bubble - and you got this little area of low pressure that's well off
a little bit here you see to the west. It's just pumping moisture in and it's actually funneling up from Northern Africa and it is feeding the
storms that are riding on this Jetstream. And this where we have found damage. In fact, not just small golf ball-size hail. We've got hail that
is the size of melons right now. Not just a level one, level two but we have a level three that continues into Tuesday morning.
Any flights you have whatsoever from Paris to Brussels to Frankfurt - all of these areas could easily see thunderstorms and are - that could
produce damaging winds. We've seen wind damage, we've seen some pretty large hail, you can see the thunderstorms. Get ready, Paris, it's going to
rumble all night long for you as we're going to start to see what we call training - one thunderstorm after another. Large hail, 7.5 centimeter
diameter hail. That's melon-size hail. And the wind damage not good for this vineyard. They will not be able to recoup from this damage. So we're
going to continue to watch this. As the storms continue to move , this is going to break down most likely in about two days.
So, let's get past Tuesday into late Wednesday, and I think we're going to start to see a breakdown in the pattern and the temperatures will
cool as well. Notice in the next 48 hours most of the precipitation falls apart which is fabulous news. We can do without the severe weather. And
of course the temperatures will soon follow suit - 35 expected for Tuesday in Berlin, Warsaw 27, Kiev 25. Moscow which is seeing some warm
temperatures will start to see temperatures increase just slightly, but we're looking for a big drop, Richard, in Berlin - from 35 back to 24.
Budapest stays warm and then we'll see the cooler temperatures slowly slide eastward. But it's going to be a rough couple of days in parts of Europe
with the strong storms.
QUEST: All right. Luckily I'm leaving Europe tomorrow heading back to the States. Many thank. Now, these days some people seem to think a
romance isn't official until it's been declared on social media. You'll be aware Kim Kardashian's wedding pictures with Kanye West is now the most
liked picture of all time on Instagram. Aw, bless.
Everyone loves a nice wedding photo. What if the romance doesn't last? Couples are now setting up social media prenups. It means if you
post embarrassing pictures of your ex - you pay. The state attorney Ann- Margaret Carroza joins me now live from New York. I'm not surprised that they're doing these prenups. But fundamentally, what are they asking from
each other in the prenup?
ANNE-MARGARET CARROZZA, ESTATE ATTORNEY: Well, we can't prevent a divorce. We know in this country there's a divorce rate of 50 percent. For
couples who are living together, the break up rate is even higher. So while we can't prevent the breakup, what we can prevent with the social
media clause is public humiliation. You know, we all have our finger on the button now to traumatically -
QUEST: Right, but -
CARROZZA: -- inflict damage.
QUEST: But what does the clause say? I agree that - I agree that I will not post embarrassing of you doing the can-can on New Years' Eve?
CARROZZA: Or - it depends on the couple - so you could have a couple and each of them loves to post, tweet and Instagram every aspect of their
relationship. And that's all well and good if they're both exhibitionists, but if they're different we need to set up rules. You can't post a picture
maybe without my OK.
QUEST: Where is the sanction? Because once the divorce has happened and once the agreement is there, yes, if there are children, you can go
back and revisit it, you can reopen it in the future. But three years down the road, assuming, you know, hell hath no fury like a spouse vengeance,
what's to stop you breaking that prenup?
CARROZZA: Well this is a contract, so it's designed to last after the marriage, after the co-habitation, whatever the relationship was. Twenty-
seven states now in the United States have enacted or are considering revenge porn legislation. So this is a crime in some states to tweet or
post sexually explicit images. But this would create civil monetary penalties that would stand apart from any divorce agreement.
QUEST: Fascinating. Thank you for coming in and talking to us about this. I very much appreciate it.
CARROZZA: Thank you.
QUEST: Thank you so much. Now, the NBA commissioner Adam Silver wasn't in the job more than a few weeks before he was tested beyond
controversy. On the other side of Donald Sterling's scandal, Silver sits down with CNN to discuss what he's learned. That's next. (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: The NBA commissioner Adam Silver is speaking up for the first time after wading through one of the biggest sporting controversies in
years. Since Donald Sterling was heard on tape making racist remarks, Silver has banned him from the National Basketball Association, he's
pressured a sale of the L.A. Clippers and established a new standard for executive behavior. CNN's Rachel Nichols sat down with the commissioner in
an exclusive interview.
RACHEL NICHOLS, CNN ANCHOR AND HOST OF "UNGUARDED WITH RACHEL NICHOLS" SHOW: Well, the board of governors still has to approve the sale of the
Clippers to Steve Ballmer, but, basically, what does it feel like to be at the other side of all of this?
ADAM SILVER, NBA COMMISSIONER: You know, I don't have any feeling about it yet because it's not done. Donald Sterling still has a $1 billion
lawsuit filed against the League. When it comes to me personally I'm not so worried about that because I can't afford it. But, hey, there's still a
last issue to resolve and that is Donald dropping his lawsuit and resolving his former issues with his wife.
NICHOLS: Now his lawyer has said they plan to do that but are you in the 'I believe it when I see it' mode?
SILVER: Absolutely. I've been there with him before. He's almost sold his club several times over the years, there's well-known incidents in
the League when he was right there to closing and at the last minute decided not to sell, and until he signs that document, we still have a
pending litigation with him.
NICHOLS: We all saw you come out for that press conference which will now be a historic press conference. Give me behind the scenes - the five
minutes before you walked out to that podium. What was going through your head? What was going on?
SILVER: I generally tend to get a little bit nervous in those situations, and I haven't walked out on such a large stage really ever in
my career with that many cameras, that many members of the media. And up until the last second, I was literally writing what I was going to say.
(BEGIN VIDEOCLIP)
SILVER: Effective immediately, I am banning Mr. Sterling for life from any association with the Clippers organization or the NBA.
(END VIDEOCLIP)
NICHOLS: All right, so then what about the five minutes after you walked off that podium and had delivered this shell-shock bomb to
everybody?
SILVER: I didn't have a sense of what a big moment it was I think until I walked back to the office. I was beginning to have sense of people
coming up to me, and the reaction to -
NICHOLS: You were walking down the street and people just started talking to you about it and -
SILVER: Absolutely, yes. I began to have a sense of the magnitude of the decision, that how many had been watching it.
NICHOLS: You got tremendous positive support from the public, but there was some criticism. The most pervasive question as stories of Donald
Sterling's past were more widely circulated is, 'Hey, why didn't you guys do anything about this guy before?'
SILVER: Well first I'll say if you read my e-mails, it's not all positive. There are a large segment of people out there who are saying
similar to what Donald Sterling's lawyer said - this is America. You know, he should be able to say whatever he wants. I mean, in terms of Donald's
past behavior, only say what I said at the press conference - had we ever seen evidence of anything remotely like this, we would've acted on it.
There were lawsuits that were - by the federal government, by the Department of Housing and the Department of Justice that were settled
without any findings. But you're right, in retrospect in today's day and age of social media - should we have approached it differently? Maybe.
NICHOLS: I know that you don't think that just because someone has money mean to make their problems go away, that that's the - makes their
behavior OK. Yes, he settled, but he was sued over and over again for discrimination. There were depositions - videotaped depositions - in those
cases of people testifying to abhorrent behavior. Sexual harassment claims and credible misogyny, and just because he had the money to settle and have
those never get adjudicated, why didn't you guys launch your own investigation the way you did in this case?
SILVER: I don't have a good answer for that. Only to say that I was the League during that time so I don't want to run from it but maybe
there's just a different standard in today's society. I can't say we were ever even having that discussion. It didn't come to our attention in the
same way, and it was - and it seemed maybe even beyond our authority. But I don't want to make excuses. Clearly there's a different standard now, in
part because of social media and because there's a much greater awareness now of how that behavior can affect people and impact our league.
(END VIDEOCLIP)
QUEST: The wonderfully honest views from the commissioner. We'll have a "Profitable Moment" after the break. (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Our program this evening was bookended with two very different tales of sporting ethics. At the
beginning we started with FIFA and the disgrace that now seems to be the bidding process of the 2022 World Cup. And then right at the end of
tonight's program, Rachel Nichols' illuminating interview with Adam Silver, the NBA commissioner who took such a strong stand against Donald Sterling's
comments. How different the approach we see there. From an NBA commissioner that was brooking no nonsense stepped in - yes, to be sure,
sponsors were evaporating and deserting the L.A. Clippers. So quote, "Something must be done."
But the FIFA debacle has gone on for years. "The Economist" describes it as 'a dirty business.' And now of course it's only the sponsors - like
Sony - that are starting to say something must be done. It's time for that to be changed. Put it all together and you do end up with something that
you and I have known for a very long time - money speaks. And it really is only when the money men and women - those who write the big checks for the
sponsorship, those who get involved and say enough is enough - finally withdraw, then ethics becomes part of reality. It may be sad but it's
true. And that's "Quest Means Business" for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's
profitable. Join me at the Stock Exchange tomorrow.
END
