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QUEST MEANS BUSINESS
Pearson Sells "Financial Times"; Pearson Shares Up After FT Group Sale; European Stocks Mixed; Key US Government Officials Defend Iran Deal; Iran Deal Under Scrutiny in Congress; Trump Visits US-Mexico Border in Texas; Trump Considering Third-Party Run; "El Chapo's" Folk Hero Status in Mexico; Amazon Releases Q2 Earnings; US Restaurant Giants Report Earnings; Dunkin' Brands Sales Rise; Minimum Wage Rise
Aired July 23, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
POPPY HARLOW, HOST: It is another ugly day for US stocks. It is Thursday, the 23rd of July.
Tonight, the sign of the "Times." The FT sold to a Japanese media giant.
Donald Trump's political campaign heads to the US-Mexico border.
And very fast money. Ferrari says it is going public on the New York Stock Exchange.
I'm Poppy Harlow and this is QUEST MEANS BUSINESS.
Good evening and welcome to the program. Tonight, $2.50 will buy you exactly this. This is today's copy of the "Financial Times," but $1.3
billion gets you the entire company. That is how much Japan's Nikkei Media Group paid for the venerable pink newspaper and a stable of other business
The sale marks an end to Pearson's 58-year ownership of the FT Group. Pearson said it made the deal to focus on its educational publishing
Here is what Pearson is giving up. Let's take a look. Obviously, they're giving up the "Financial Times," perhaps the best-known of all of
these publications. It was first published back in 1888. It was only four pages at the time.
It took on its distinctive pink hue five years later and in an effort to help it stand out from the competition. Well, today, it is still
certainly pink and the staff includes more than 500 journalists from around the globe.
FT.com is also being sold in this deal. The total circulation there in paper and online is up 30 percent over the last five years. Digital
makes up the bulk of the total at 70 percent of subscriptions. Although the sale also includes a number of other titles, what it doesn't include is
Pearson's 50 percent stake in the Economist Group.
The buyer, Nikkei, is Asia's largest independent business media group. Its flagship newspaper, "The Nikkei," has a circulation of just under 3
million. The group's holdings also include television stations, book and magazine publishers, and data services.
Pearson's CEO issuing a statement today saying the FT will be better off as part of a global --
HARLOW: -- writing, quote, "We've reached an inflection point in the media, driven by the explosive growth of social."
Earlier today, I spoke with Ben Fenton. He is the former chief media correspondent from the FT. Now he is the director of creative industries
at Edelman public relations firm, of which Nikkei is a client. And he told me Pearson's move was not surprising, and other newspapers would do well to
heed Pearson's words.
BEN FENTON, DIRECTOR OF CREATIVE INDUSTRIES, EDELMAN: I think it's a sign that those who are looking to really grow in a shrinking market in
many ways have got to take on the challenge of mobile, particularly in smartphones. And the FT has been getting an increasing amount of its
coverage, of its audience from mobile devices of one kind or another. And that's what everybody's got to face up to.
HARLOW: Seventy percent of FT readers are digital subscribers. That is a desirable number by any measure. Do you think that Nikkei would
potentially take the FT digital only? Or is that sort of not aligned with their strategy?
FENTON: Well, Nikkei is a very heavily -- heavy investor in print. Its own sort of flagship publication sells more than 3 million copies a day
in Japan. So, I don't think they've given up on print by an stretch of the imagination.
And really, I don't think you would if you're looking at the FT's business model. It's a combination. It's a kind of gradually managed
decline in print, which is sort of supported by the fact that its weekend edition has got terrific traction with luxury advertisers and really makes
quite a lot of money for them.
HARLOW: It should be noted here, you now work at Edelman, a public relations firm. Nikkei is one of Edelman's clients, so I want to disclose
HARLOW: Talk to me about how you think the FT will change, evolve, under new ownership.
FENTON: Well, obviously, the proof of the pudding, as we say, is in the eating. We'll have to wait and see. But I think that in the short
term, there will not be very much change.
I've worked with Nikkei myself on the Nikkei Asian Review product last year, and I was struck by how cautious they are. I think they're very,
very deep-thinking people when it comes to this kind of change or new ownership. But they're conservative and cautious.
I think they know that everybody will be watching them to see what changes are made to the FT, whether its editorial independence, which was
key to the idea of selling it as far as Pearson was concerned, is going to be protected.
HARLOW: What's the end game here, in your opinion?
FENTON: For Nikkei, I think it's to put itself on a global stage and to show that it can publish and be credible in English, the world's global
business language, as well as in its native markets. It knows, like a lot of Japanese corporations of all scales and all industries that it's got to
grow internationally if it's going to keep itself strong.
[16:05:07] HARLOW: The FT has been lauded by so many for being really at the forefront of putting up that pay wall and being very
successful in doing so. What do you think that other publications can, A, learn from that, even though now some say it may be too late for others?
What do you think they can learn from it, and also do you expect to see the same staffing, or do you expect that we'll see job cuts?
FENTON: Well, again, early days. I think -- I hope very much, for my former colleagues, that there aren't staff cuts. And actually, if you look
at the way in which the Nikkei is staffed in Japan, I think its staff is probably larger than, say, "The Wall Street Journal's."
You asked me what I think the lessons are for others. I think, you know, most people already know, if you don't have something very special to
sell, it's very difficult to operate behind a pay wall. The FT has got niche business information that people are prepared to pay for because they
know they can make money from it.
If you're "The New York Times," which I should say is also a client of Edelman's, then you also have something unique, which is this sort of
incredible trust that people have in that product. So, you've got to have something to sell. Otherwise, you really are in that game of playing mass
HARLOW: Sage words there from Ben Fenton.
Well, ahead of this announcement, the European media company Axel Springer had been touted as a potential buyer of the FT. Axel Springer
shares ended the day slightly lower in Frankfurt. Pearson stock rose more than 2 percent in London. And shares in "The Daily Mail" and General Trust
fell nearly 9 percent on the day. A rise in digital ad revenue not enough there to offset losses from the company's print publications.
European stocks had a mixed session with investors keeping their eye on those earnings that continue to roll in. The big winner for the day was
Credit Suisse. Shares rose 6 percent in Zurich after the bank announced it swung to a profit in the second quarter.
And Donald Trump in the headlines yet again, taking his presidential campaign to Texas to the US-Mexico border. The Republican front-runner
talking about immigration. We'll bring you that next.
HARLOW: Three key members of the Obama administration have been defending a controversial nuclear deal with Iran on Capitol Hill today.
Secretary of State John Kerry, Treasury Secretary Jack Lew, and Energy Secretary Ernest Moniz, each addressing Congress refuting opponents claims
that the US has been, quote, "fleeced." That is what Bob Corker said of Tennessee.
Treasury Secretary Jack Lew insisted that the use of additional sanctions to curb Iran's nuclear program were, quote, "unrealistic," adding
that Tehran is not getting an easy ride in this deal.
(BEGIN VIDEO CLIP)
JACK LEW, US TREASURY SECRETARY: There is no signing bonus. To be clear, there will be no immediate changes to UN, EU, or US sanctions. Only
if Iran fulfills the necessary nuclear conditions will the US begin suspending nuclear-related secondary sanctions on a phased-in basis.
(END VIDEO CLIP)
HARLOW: On the Iran deal, it is, as you know, coming under increasingly intense scrutiny from US lawmakers, who will vote on whether
to lift those economic sanctions on Tehran in September. CNN Global Affairs correspondent Elise Labott joins me now from Washington.
So, Elise, listening to some of the words that John Kerry used today on the Hill, he said there is no "unicorn," there is fantasy alternative
here. This is the beginning of that 60-day review that Congress has to make up its mind on how it's going to vote, and he really sparred head-to-
head with Senator Marco Rubio, a contender for the White House.
[16:10:05] ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: That's right, Poppy. Really a vociferous, a fierce counter attack by Secretary
Kerry to some of these Republican critics.
Now, let's be fair: Marco Rubio is running for president, so he wanted to get in there and show that he would be a stronger commander in
chief, and he warned Secretary Kerry that this deal is only as good as the Obama administration, and that the next president, i.e. him, hopefully,
could undo that.
And the secretary said, listen, any new president would be coming to the same conclusions, because Iran is not going to negotiate again with
another US president after America would renege on the deal.
So, I think this is the beginning of this 60-day period that's likely to be very contentions. But Secretary Kerry really up for the fight, aides
say, to defend this deal, which the administration thinks is the best deal they could get.
HARLOW: And when you listen to the words Kerry used today or the president has been using, they've been very vocal, talking about some of
these pro-Israel groups, AIPAC, for example, the lobbying that's going on. I want to play this sound from John Kerry today. Let's roll it.
(BEGIN VIDEO CLIP)
JOHN KERRY, US SECRETARY OF STATE: The alternative to the deal that we have reached is not what I've seen some ads on TV suggesting
disingenuously. It isn't a, quote, "better deal," some sort of unicorn arrangement involving Iran's complete capitulation. That is a fantasy,
plain and simple, and our own intelligence community will tell you that.
(END VIDEO CLIP)
HARLOW: Elise, take us behind the scene on some of the lobbying that's even going on behind closed doors.
LABOTT: Well, we know that Israel is lobbying, and it's not even behind the scenes. I mean, Prime Minister Netanyahu has been very clear
that he is going to use all the influence he can, and it was starting even before the deal with that big speech to Congress. The Israeli ambassador
here has met upwards of 40 congressmen trying to lobby them on behalf of rejecting the deal.
And you've seen these ads on television, the Iran Project, the Israel Project ads warning about dire consequences if this deal goes ahead. And
certainly AIPAC, the pro -- main pro-Israel lobby, has its scientists who are arguing against that. They have a whole list of former nuclear
officials and nuclear scientists that are backing up their point of view that this is a bad deal, that it could be a better deal.
And so, the secretary and his counterparts are not just lobbying against Republican critics, but also against Israel and their influential
backers as well.
HARLOW: All right, Elise Labott, live in Washington. Elise, thank you very much.
Now, to the race for the White House. Republican presidential candidate Donald Trump says he is a favorite among Hispanic voters. He
spoke today in Laredo, Texas, where he was on a visit to the US-Mexico border.
He launched his campaign last month with very controversial comments about illegal immigration and illegal immigrants from Mexico, and he
promised to build a wall and strengthen border security. Speaking moments ago, he says he has strong support among Hispanic voters.
(BEGIN VIDEO CLIP)
DONALD TRUMP, REPUBLICAN PRESIDENTIAL CANDIDATE: Yes, I think I'll win the Hispanic vote. I have thousands of Mexican and Hispanics, and I
think when it comes right down, I don't know if you saw the poll, but they just did a big poll in Nevada, the state of Nevada, and I'm way ahead.
And more importantly, as far as I'm concerned, I'm way, way ahead with the Hispanics, well into the 30s, which -- and I think second is like 11.
So, I have a great relationship.
(END VIDEO CLIP)
HARLOW: Trump, who has contributed to Republican campaigns and to Democrats says the party has not supported him in the past, saying he
doesn't have the backing, the support he wants from the RNC for the nomination.
Speculation is growing about whether he will leave the party, whether he will run as a third-party candidate, a la 1992. Dana Bash is in Laredo,
Texas with more.
DANA BASH, CNN CORRESPONDENT: Donald Trump came down here to Texas to get a firsthand look at the border he talks about so often on the campaign
trail, the border between the US and Mexico. He says he wants to build a "giant wall" across.
He also wants to change the subject back to illegal immigration, because he knows his tough stance on that really has propelled him with
Republican voters. But before he came, he issued a warning to his party.
BASH (voice-over): Donald Trump's refusal to rule out a presidential run as a third-party candidate now comes with a direct threat to the GOP
not to push him too far, telling "The Hill" newspaper, "I'll have to see how I'm being treated by the Republicans. If they're not fair, that would
be a factor."
The Republican National Committee this week criticized Trump for his comments about John McCain's military service, saying, "There is no place
in our party or our country for those comments that disparage those who have served honorably." An unusual move for a national party, supposed to
be neutral in a primary process.
[16:15:00] That clearly got under Trump's skin, telling "The Hill," "The RNC has been, I think, very foolish."
Trump has never closed the door on keeping his campaign going even if he loses the GOP primary. He said this to Anderson Cooper earlier this
ANDERSON COOPER, CNN ANCHOR, "ANDERSON COOPER 360": Do you rule out the idea of running as in independent party candidate or third-party
candidate if for some reason you don't get the GOP nomination?
TRUMP: Everybody asks me to do it. I have had so many people saying, would you run as an independent, would you run as a third-party candidate?
And I think they see the kind of votes, I'd get a lot of votes. The best way of defeating the Democrats, and probably Hillary, I think it's going to
be Hillary, is to run as a Republican.
BASH: On that, the data back him up. An independent Trump would hurt the Republicans. For example, this week's ABC News/Washington Post poll
shows Clinton at 50 percent and Jeb Bush at 44 percent in a two-way match- up. With Trump on the ballot, Clinton takes a small hit, down to 46 percent, but Bush's support plummets, down to 30, 14 points.
History could repeat itself. In 1992, Bill Clinton won the White House thanks in part to wealthy businessman Ross Perot's third-party run,
which siphoned votes from George H.W. Bush.
Privately, Republican party officials have been saying for weeks there's a dangerous line between distancing themselves from Trump and
pushing him to go it alone.
BASH (on camera): Trump's trip here, not surprisingly, kicked up controversy even before he came, and that's because he was initially
invited by the local Border Patrol union. But they this morning rescinded that invitation, saying they didn't want to look like they were endorsing
Trump. And in response, he said, quote, "They were being silenced by leaders in Washington."
HARLOW: Dana Bash reporting for us.
On the other side of the border, Mexican drug lord Joaquin "El Chapo" Guzman is still on the lam after escaping from a Mexican prison nearly two
weeks ago. He's reportedly worth a billion dollars, and Mexico is offering $3.5 million for his -- any information, really, leading to his capture.
But as Polo Sandoval reports, El Chapo has admirers who really complicate the efforts to track him down.
POLO SANDOVAL, CNN CORRESPONDENT (voice-over): On the streets of Mexico City, everybody knows the name of Joaquin Guzman. At this bustling
market in the heart of the city, we found that ruthless cartel boss known as "El Chapo."
About $8 will get you a t-shirt that bears the face of Mexico's most- wanted man. Jesus Jimenez, the shopkeeper here, says his Chapo Ts became his hottest item after the bold escape.
(MAN SPEAKING SPANISH)
SANDOVAL (on camera): He says people of all walks of life, all economic backgrounds, come here to buy this shirt.
SANDOVAL (voice-over): For Jimenez, it's not about the face on the shirt. He tells me he simply the lead demand.
SANDOVAL (on camera): You have money and even drugs.
And then what's interesting, they also have the custom-made t-shirts, like this one here. It's a plain white t-shirt, but they have the machine
here on the premises to be able to print Chapo's face on there. It even has the FBI on top. This is the actual Wanted poster that's been
circulating here in Mexico.
(MAN SINGING IN SPANISH)
SANDOVAL (voice-over): Then there are the musical tributes to El Chapo. Narcocorridos, or Narco ballads, are flooding the internet. The
lyrics of these tunes tell the story of a so-called great escape.
(MAN SINGING IN SPANISH)
ANNABEL HERNANDEZ, JOURNALIST: People say it was "epic," the escape was "epic." "He's amazing, he's incredible." Like El Chapo is a hero or a
very smart man. And it's not true. This guy is a terrible criminal.
SANDOVAL: Mexican journalist Annabel Hernandez says El Chapo is often admired and seen as a Robin Hood-like figure.
HERNANDEZ: "OK, let's be like El Chapo!"
SANDOVAL: She says it's this glorification of the Narco culture that allows Guzman to remain camouflaged amongst a people that revere him.
(MEN SINGING IN SPANISH)
SANDOVAL: Polo Sandoval, CNN, Mexico City.
HARLOW: All right, coming up, it is a battle of the brands as two of America's biggest coffee chains post their quarterly earnings. We will be
speaking to the chief executive of Dunkin' Brands next.
[16:19:31] (COMMERCIAL BREAK)
HARLOW: I can tell you one thing: Jeff Bezos is having a really good afternoon. Amazon just released its second quarter earnings, and shares
are soaring in after-hours trading. CNN Money digital correspondent Paul La Monica here to talk about Amazon, McDonald's, Starbucks, Dunkin' Donuts.
We will start with Amazon. Wow.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Yes.
HARLOW: A surprising profit here.
LA MONICA: Yes, it is amazing that Amazon did actually report a profit. A lot of people were predicting a loss, and Amazon usually does
lose money every quarter except the holiday one. So, Bezos, that trademark cackle, I'm sure --
LA MONICA: -- we're hearing that in Seattle right now. I mean, the numbers were really strong. Sales beat forecasts as well. So, this is
going to be a stock, I think, much like Google last week, it's just going to surge, and another record high is probably in the cards.
HARLOW: It's interesting, Gene Munster, one of the analysts, was saying look at profitability of margins of 1.6 percent or better. Look at
September guidance of 1 percent or better. Look at unit growth of 18 percent or better. It sounds like they're just winning it.
LA MONICA: Yes. For all the flack they took for Prime Day and the deals maybe not being the best, I think they did bring in a lot of new
customers, sales were, apparently, very strong. And don't forget their Cloud business, too. That's also very big for them.
HARLOW: Yes, absolutely. And America's biggest restaurant chains are serving up fresh earnings on Thursday. Here's a look at what's on the
menu. Today's main course, undoubtedly McDonald's. The struggling fast- food giant updated investors on its turn-around strategy on the call today.
Two coffee powerhouses head-to-head, Starbucks and Dunkin' Brands both releasing their quarterly numbers, and for a roundup of those restaurant
earnings, Paul tells us what he liked the most. I mean, Starbucks numbers are down, 10 percent decline, right, in quarterly sales? But the new CEO
spoke, said he was disappointed, and talked a little bit more about the plan.
LA MONICA: Yes, talking about McDonald's here. McDonald's, Steve Easterbrook is promising that the food is going to get better, and he said
during the conference call that hey, we're toasting the hamburger buns longer and we're going to sear the meat better.
But it's really not showing up in the results yet. The US sales, same store sales, which are very important for restaurants, down 2 percent.
You've got so much competition from the likes of Chipotle and Shake Shack. And then, obviously, the breakfast crowd, too, Dunkin' and Starbucks, are
HARLOW: So much more food now.
LA MONICA: Yes.
HARLOW: It's interesting. He called -- the CEO of McDonald's calling it a "modern progressive burger company" --
LA MONICA: He's used that phrase a lot --
HARLOW: That's what they're aspiring to.
LA MONICA: -- and it's just -- it just reeks of kind of weird marketing 101 --
HARLOW: Corporate speak.
LA MONICA: -- corporate speak. What is a modern progressive burger company?
HARLOW: Starbucks' numbers are out, and Dunkin' Donuts.
LA MONICA: Starbucks, again, like Amazon, another Seattle success story. Their earnings and sales topped forecasts. I think it's another
company that, like Amazon, many people occasionally will criticize Howard Schultz, there was all the flack about the "race together" being written on
the cups by baristas, but people that are addicted to caffeine are still going to Starbucks obviously.
LA MONICA: Numbers were great. Dunkin's numbers were really strong as well.
HARLOW: Right. I think what's interesting, when you look at companies like this, whether it's an Amazon or a Starbucks, you can
increasingly go to them for more things. You can get your coffee, you can get your lunch at Starbucks, you can get dinner if you want. And at
Amazon, you get pretty much everything.
LA MONICA: Pretty much everything, exactly.
HARLOW: Pretty much everything. Paul La Monica, thank you very much.
The final course on that menu, Dunkin' Brands, topping Wall Street's expectations thanks to higher sales and a strong showing from its K-Cups
being sold outside of the stores. The results not exactly enough to keep investors happy. Looks like they were taking a little bit of that profit.
I think they've been up about 30 percent so far over the year, so, they're taking a little bit of that off the table.
For more on the results, we're joined by the CEO of Dunkin' Brands, Nigel Travis. He joins me from Newton, Massachusetts. Thank you for being
with me, sir.
NIGEL TRAVIS, CEO, DUNKIN' BRANDS: Poppy, good to see you.
HARLOW: Good to see you as well. All right, you beat the Street. K- Cups business outside of the store is doing a lot better. You opened up 154 stores in the quarter. I'm interested in where the most, most strength
is. Because you've talked about some tough spots still in Detroit, in some of the more depressed parts of this country, but where's the most optimism?
[16:25:08] TRAVIS: We got a lot of optimism around the country. We're still opening up a lot of stores in what we call our established
area, which is Philadelphia, New York. We're even opening stores in our core markets of Massachusetts, where I'm sitting right now, despite the
fact that we have over 1,000 stores in downtown Boston. People love Dunkin' Donuts and want even more stores.
The Southeast, Florida is absolutely on fire. California, we're really excited with our initial stores that have opened there. Denver's
another strong market in Colorado. Phoenix is a market that's growing. I was in Washington two weeks ago.
We've got strong places just about everywhere, and probably the biggest success story of all has been in the Midwest, places like Chicago
and Indianapolis, have done extremely well in the last couple of years.
HARLOW: Have to get your take on China, though, because Dunkin' is planning on opening up some 1400 stores in China and internationally.
Where's your concern level on China?
TRAVIS: Well, obviously there's a lot of discussion about China. We think China has a huge opportunity going forward. You can't get away from
the demographics that they're moving into the urban areas. You've got to recognize that income is growing in China.
We've opened -- we opened and we established ourselves in Shanghai, that's going very nicely. The deal we did with the joint venture, RJR and
Jollibee for the rest of China effectively doesn't open up until later this year. We're excited about that.
Jollibee, one of the world's leading fast-food businesses, and we think they're going to do a great job in China. So, China we have a fair
degree of optimism.
HARLOW: OK, all right. So, you're still bullish on China. Back here in the United States, the wage debate is raging. Where I'm sitting in New
York City, New York State's labor commission yesterday passing and recommending a $15 minimum wage for all fast-food workers in the state.
Now, it still has to get through the state legislature, but if it passes and it's implemented, that is huge for your industry. Are you a
supporter of that?
TRAVIS: Well, we've always been a supporter of reasonable increases in the minimum wage. We think the minimum wage actually stimulates the
economy, we think it's good for low, middle income employees and people in those categories.
We think that a debate needs to take place about how to tackle income inequality. But this is absolutely outrageous. The increase is 71 percent
that's proposed over three years. Yes, 71 percent. And we tried to enter into the debate, the industry wasn't allowed to have a voice in it.
This is going to affect small business, it's going to affect franchisees. This is the -- basically the fuel of growth in our economy.
I think it's actually going to hurt young people. The unemployment rate among 16-to-19-year-olds in New York state is 20.8 percent.
Obviously, we're going to do everything we can to mitigate. And part of the mitigation maybe employing less people.
HARLOW: That's what I was going to ask. You've got to have contingency plans here, right? You guys run the numbers. If this is
implemented, what does it mean in terms of layoffs?
TRAVIS: Well, I don't think it's going to mean layoffs, Poppy.
HARLOW: OK. Less hiring?
TRAVIS: But I think what's going to happen, we're in an industry where, yes, probably less hiring, probably less growth. I don't want to
sound at all threatening about that. We wanted to have a debate, the industry wanted to have a debate. I think the industry is actually taking
a very progressive stance.
And what people forget, our industry is the industry that trains America's workforce. Most people have their first job in our industry.
HARLOW: But -- here -- I just want to say, also, though, what we have seen is that it's not really anymore just the youngest workers, high school
students right out of high school, that are working in the fast-food industry. Increasingly, we're seeing older workers in the fast-food
industry that are staying there.
TRAVIS: The preponderance of our workers are younger workers. When people move into our industry, once they demonstrate success in working the
restaurants, they get progression very quickly. And if they're effective, they can make management grades or shift leader grades very quickly indeed,
and they will be earning far in excess of minimum wage.
And I would also suggest they are earning far in excess of what people call the living wage. So, we've got a track record of developing people
who are good. We give people the opportunity.
But I think you're missing the point in that we are the people who start off and give the young people the opportunity to start work. They
can progress in our industry or elsewhere. As I said, we educate and help train America's workforce.
HARLOW: You bring up a living wage, and I wanted to ask you that. In your opinion, Nigel, what is a living wage in an American city right now?
And I know it differs from city to city, so let's take a New York City or a Chicago, or a Los Angeles. What is a living wage?
[16:30:10] TRAVIS: Well, as you say, Poppy, it's all over the map, and I did look up before I came on air what we think it is in New York
state, it's over $12 an hour, but it's not $15 an hour.
TRAVIS: So, I think that's for a family. That is for a family who, obviously, are going to look after their kids and hosing, et cetera. But
most of the people that we employ are minimum wage, and it's not many in our company, and our franchisees are very select about how many are minimum
HARLOW: All right.
TRAVIS: Most of those are the younger workers, 16 to 19.
HARLOW: Nigel Travis, I appreciate you joining me. Thank you.
TRAVIS: Thank you.
HARLOW: Well, investors, start your engines. Ferrari preparing to roar onto Wall Street. We'll talk about that next.
[16:00:00] POPPY HARLOW, JOURNALIST FOR CNN FILLING IN FOR RICHARD QUEST ON "QUEST MEANS BUSINESS" SHOW: -- an American city right now and I
know it differs from city to city, so let's take a New York City or a Chicago or a Los Angeles. What is a living wage?
NIGEL TRAVIS, CEO, DUNKIN BRANDS: Well, as you say, Poppy it's all over the map and I did look up before I came on air and what we think it is
in New York State it's over $12 an hour, but it's not $15 an hour.
TRAVIS: So, I think that's for - that's for a family - that is for a family who obviously are going to look after their kids and housing, etc.
But most of the people that we employ are minimum wage and it's not many in our company. Franchisees are very select about how many are on minimum
HARLOW: All right.
TRAVIS: Most of those are the younger workers, 16 to 19.
HARLOW: Nigel Travis, I appreciate you joining me. Thank you.
TRAVIS: Thank you.
HARLOW: Well investors, start your engines - Ferrari's preparing to roar onto Wall Street. We'll talk about that next.
HARLOW: Hello, I'm Poppy Harlow. There is more "Quest Means Business" in just a moment when Italian carmaker Ferrari sets its sights on
a New York listing.
And overworked in Seoul -- South Korean workers on the dangers of taking too little time off. First though the news headlines.
Top officials from the Obama administration spent four hours in Congress today defending Iran nuclear deal. They face very tough questions
from Republican critics of the deal. But U.S. Secretary of State John Kerry told lawmakers there is no better alternative to prevent Iran from
obtaining a nuclear weapon.
U.S. President Barack Obama scheduled to arrive in Kenya - his first trip to his father's homeland since becoming president. Kenyan's are
gearing up for the visit. Security is a concern of course throughout his stay in light of past terror attacks by Shabab militants.
The Italian Coast Guard has staged more rescues for migrants stranded near the coast of Italy. Eight rescues in total took place on Wednesday
alone 88 kilometers off the coast of Libya. Some 2,000 migrants were rescued over that 24-hour period.
The Chinese artist All Weiwei says that he is - Ai Weiwei, rather -- says that he is looking forward to a foreign trip after his passport was
returned to him by the Chinese government. A four-year international travel ban against him was lifted on Wednesday. In an exclusive interview
with our Ivan Watson, he says he feels relieved.
AI WEIWEI, ARTIST: I feel my heart is at peace, I feel quite released (ph) because has been quite a long time resolve passport.
[16:35:01] IVAN WATSON, SENIOR INTERNATIONAL CORRESPONDENT BASED IN HONG KONG: What is the first thing you plan to do now that you can travel?
WEIWEI: First thing I may apply for visa and travel some engagement outside of China so I can start to travel.
WATSON: Why do you think you got your passport back?
WEIWEI: I think every human or citizens need - if it's a travel they need a passport and mine being taken away with no clear reason and now this
is back. So I think that's very normal condition.
HARLOW: And some very cool news for you from outer space. NASA says it has spotted earth's bigger, older cousin. Scientists say the planet
named Kepler-452b is the closest match yet to our own planet.
It is around 1,400 light years though from earth, about 60 percent bigger and it is far enough away from the nearest star that water could in
theory be present on the surface.
Have you ever dreamed of having a Ferrari in your garage? You probably have. Well now perhaps you can at least have one in your
portfolio - the Italian automaker set to list on the New York Stock Exchange, aiming to be valued at more than $11 billion.
The firm is being spun off of by its current company Fiat-Chrysler which debuted on the New York Stock Exchange last year. Despite the
shakeup, the son of Ferrari's founder, Piera Ferrari, is expected to hold on to his 10 percent stake in the firm. Ferrari's IPO is expected in early
2016. Let's talk more about it with Erik Gordon. He is a professor at the University of Michigan Ross School of Business. He joins me from Ann
So, sir, you have said it's one thing to own a Ferrari - love it, drive it, maybe make some money off of it - it's another thing to own a
Ferrari stock. Is this a risky bet?
ERIK GORDON, PROFESSOR, UNIVERSITY OF MICHIGAN: I think it's pretty risky at the price that they're talking about. They're talking about
valuing Ferrari at three or four times as much as you would value BMW using any of the standards we use to value companies.
So they're asking - you know - that's really big price for Ferrari and they're asking a really big price for a piece of Ferrari's - the company.
HARLOW: Right, it's sort of the question of how long does that sheen last with investors, right?
GORDON: Yes, you know you have to wonder - I, I mean, I actually think this is going to work for Fiat. I think people are going to buy the
stock. I mean, today you could float a dog food company and be oversubscribed.
GORDON: So I think it's going to work. I think the question for investors is if you buy in at the price they're asking for or, you know,
the price that you can actually buy it for after it goes public, what are the economic prospects?
Because a year from now, it isn't going to be so much fun to have - you don't even get a piece of paper now. You just get a little entry on
your monthly statements. It's not as much fun as wearing a Ferrari tee shirt.
HARLOW: That may be still (inaudible) choice. Suppose you could post on Facebook that you're a Ferrari share owner.
But, look, this is part of Sergio Marchionne's sort of plan. He said before that he didn't think when they were IPOing last year Chrysler Fiat
that he thought that people weren't correctly valuing Ferrari, that it was sort of undervalued and this is part of the bigger plan to raise money to
fund the expansion of Jeep and Alfa Romeo and Maserati.
So from his perspective, is this a good strategic move?
GORDON: Great from his perspective. You know, Poppy, I've never heard a CEO say my stock is undervalued. We're always undervalued. In
fact, I tell my dean that I'm undervalued.
GORDON: That's what we always say. Fiat has - Fiat-Chrysler, FCA, has a real problem. They're not big enough to compete in the global car
business. They have to do a merger. As you know, he - you know - tried to get GM to come to the table with him. That didn't happen.
So he needs to raise money and he knows he needs to raise money. So from Sergio's point of view, you have to come up with a good story that
leads to money in the coffers and FCA so that they can go about their business.
HARLOW: Yes, well he has certainly done quite a - quite a job turning Fiat-Chrysler around so we'll see how this plays out. Thank you very much.
Good to have you on the program, sir.
GORDON: Thank you.
HARLOW: Meanwhile, Ferrari's parent company Fiat-Chrysler offering a software upgrade. You've heard about this, right - the Jeeps being hacked?
Two hackers revealing they were actually able to take control of a Jeep vehicle. CNN's Dan Simon shows us just what the hackers are capable of.
DAN SIMON, CNN CORRESPONDENT: It could be a driver's worst nightmare --
Male: Guys I'm stuck on the highway.
SIMON: The engine in your Jeep Cherokee suddenly dies --
Male 2: Do it, kill the engine.
SIMON: -- after hackers take control of your car.
Male 2: So we're killing the engine right now.
[16:40:00] SIMON: It could happen without any warning. The stereo system, air conditioning, windshield wipers all out of control.
Male: The air conditioning is blasting, the music is blasting and I can't see anything because of the (BLEEP) windshield wiper fluids.
SIMON: In this case the guinea pig is Andy Greenberg, a reporter for "WIRED" magazine.
ANDY GREENBERG, REPORTER, "WIRED" MAGAZINE: I didn't expect them to cut the transmission which actually was incredibly unnerving. And you know
I was stuck on the highway (AUDIO GAP) thanks to these guys who were, you know, wirelessly connected to the car over the internet from ten miles
SIMON: The hackers got in the Jeep through its entertainment and information system called Uconnect. It's basically a computer inside the
car that's connected to the internet. Once they found the weak spot, they discovered they were able to control pretty much everything inside the car.
Charlie Miller is one of the hackers who took control of this Jeep Cherokee.
So once you're in, you can access other functions of the car?
CHARLIE MILLER, HACKER: Right, so as I mentioned, inside your car really there's like 30 computers and they all talk to each other. And once
you're on one of those computers, you can start to send messages to the other computers and tell them to do things.
SIMON: Do things like control the brakes and send the car down a ditch.
GREENBERG: Hold on tight, hold on. Ah, (BLEEP).
SIMON: The experiment was only tested on a Jeep but the hackers say it could impact hundreds of thousands of other Fiat-Chrysler vehicles with
the same system. In a statement, the automotive giant says, "The security and confidence of our customers is important" and that it issued a software
update that either customers can download or take to their dealer.
Miller says other carmakers have similar computer systems and could also potentially be hacked, exposing drivers to a whole new danger on the
MILLER: Someone steals your bank account information - I mean, that's a bummer, but no one's hurt. But here if a hacker would get into your car,
they can crash it, you know, you and your children could get hurt, so it's really important that we deal with this issue now instead of waiting until,
you know, this is reality that there's cars crashing all the time.
GREENBERG: Guys, I need the accelerator to work again.
SIMON: Dan Simon, CNN San Francisco.
HARLOW: Well he may not be quite as fast as a car but Usain Bolt has been virtually unbeatable since he shot to stardom at the 2008 Olympics.
Now after six gold medals and a string of world records, he is being challenged for his title as American Justin Gatlin is the fastest man in
the world this year and the two are set to meet at the world championships.
Before that, Bolt will run in the anniversary games here in London and there's where CNN's Amanda Davies caught up with him. She began by asking
him how he is preparing after an injury-plagued 2015.
USAIN BOLT, OLYMPIC CHAMPION: No, definitely I will go. I never back down from a challenge. I just say I need to get to (96), I think that's
my - that's my aim every season - try to get back into the best shape I that I can get into.
So right now that's the focus and the work that I need to put in to get there, I am doing it. So everything - I know everything will be fine.
AMANDA DAVIES, SPORTS CORRESPONDENT AND ANCHOR FOR CNN INTERNATIONAL: The fact that everybody's talking so much about Gatlin and his great form
(ph), it's a different position for you to be in. Has there been any moments of doubt in recent months?
BOLT: No, you can't - you can never doubt yourself. I think I've been in this situation a couple of times where, you know, the championships
I haven't been competing at my best, but I know when it comes to the championship, I don't know what about championships, but I have a different
mindset going into a championship. When I get there my whole vibe just change.
So for me, I'm never worried. I know Gatlin is running fast, he's doing great, but I know when I get to the championships, I'll be ready.
DAVIES: What if Justin Gatlin breaks your world record?
BOLT: I don't think he is going break my record.
DAVIES: But what if somebody who has been found guilty twice of doping - is he worthy of your world record?
BOLT: Tough question. If he did it clean, sure. If he didn't no. Hard to tell, right? So I don't think he's going to break it. And if he
does, I'll break it back. (LAUGHTER).
HARLOW: The competitive edge there. You can see that full interview on World Sport in around an hour from now. And we should note Justin
Gatlin has denied ever using any banned substances in the past.
According to the U.S. Anti-doping website, he has been tested 59 times since his second suspension ended in 2010 including nine times so far this
Well we are in the midst of earning season and we have heard time and time again about companies around the world that are worried about China.
We will now hear from a CEO who says he is walling his company off from the volatility. That's next.
[16:46:40] HARLOW: Well U.S. markets fell. This session of the Dow fell more than 100 points on weak earnings reports from
industrial heavyweights. Gold slumped yet again, extending its losing streak and Dow Chemical shares closed more than 4 percent lower despite
better-than expected second-quarter earnings.
The company's profits rose even as falling oil prices and exchange rates pushed their sales lower. Maggie Lake spoke with
the CEO Andrew Liveris and asked how the company is adapting to the slowing Chinese economy.
ANDREW LIVERIS, CEO, DOW CHEMICAL: I go to China four or five times a year. I've spent a lot of my life out there based -
as a younger man running the Dow operations at that part of the world. This transformation in China which started in 2012, the pivot from an
export-led economy to a domestic economy, from high volume to high value, that's the pivot we're all seeing and this - if you're exposed to the
export sector of China, you're not going to like your numbers for some time. It's been true for a couple of years and it's going to actually get
- probably get - worse from here.
Our exposure to China we pivoted a few years ago to these domestic drivers. And these domestic drivers in the main, they
really are trying to build up a high value economy and improve their quality of live. So if you have technology for pure water or for food
safety or for emissions management and environment or for lightweight automobiles or for efficient building construction - that's our exposure to
China. It's a high value exposure. Our volumes grew 8 percent year on year in China despite all the noise around the China market.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: That's interesting, and you have been retooling
this company. In fact I saw that you said that you're not a chemical company, you're a science company. What do you mean by that?
LIVERIS: A lot of our R&D dollars these last seven or eight years is actually moving to the intersection of those
sciences -- putting money into biology, putting money into materials science whether it be coatings or water purification technology or
installation materials for building, adhesives.
These are still sciences based on chemistry but they express themselves not as chemicals and plastics, but as materials.
And that type of company still - if you like - a chemistry company, but it's now looking at all the sciences.
You know, we hire analytics experts, mathematical modelers, we hire big data people, we hire robotics experts, we hire
automation experts and we hire chemical engineers like me.
LAKE: If you're trying to woo someone - a young person - as you continue to try to make the company nimble, what do you say
to them? What's your pitch when they can say I could go to a Silicon Valley startup or I could go work for Dow? What do you say to them?
LIVERIS: The last five years we've hired 22,000 people and the last five years our average age has gone down by over 10
years. And 12,000 of our people that we have hired are under the age of 30 and 35 percent of my workforce has not been with us longer than five years.
So what I say to the Silicon Valley crowd is we're 118 years young. We're a 118-year young startup.
And, no, we're not quite Silicon Valley but we're catching you. We launched our 2025 sustainability goals. Millennials care
about the social issues and the environmental issues.
[16:50:00] And if you work for a company that solves those problems rather than creates them, our sustainability goals
speak to that - valuing nature - and that's another major recruiting line.
We can get pretty much who we want today - very low turnover rate and we're recruiting globally and certainly here in the
United States and I will tell you we're an employer of choice.
LAKE: Andrew, we're talking a lot about the positives and I could see how enthusiastic you are about Dow's future. But
I know a job as CEO is to worry as well. What is it out there on the horizon that concerns you for Dow?
LIVERIS: Well I would say over and over risk - geopolitical risk, geopolitical volatility, Maggie, is here to stay. And
you read about it, you report on it, we read about it. Managing country- based risk, managing new exposures. You talked about currency earlier. Managing your - you know - your physical locations, being safe. We run 900
assets around the world. You can imagine that's a 24-hour operation. You can no longer do a five-year plan and just think you're going to execute
that plan. You plan in the moment. As long as you know your north star and go in that direction, you're planning the moment against those risks.
HARLOW: Andrew Liveris there. Well, all work and no play makes for an overstressed population. Now there are signs that
South Korea's culture may be changing.
HARLOW: All right to the earnings news we brought you earlier this hour. We told you about Amazon shares surging
after hours when it posted a surprise profit. Well, according to those after-hours, that makes Amazon officially the world's largest retailer,
And in South Korea, the Bank of Korea reports that the economy expanded at the slowest rate in more than two years. The
central bank's governor warned economic effect of the MERS outbreak could linger through August.
South Korea is the world's second largest working country according to the OECD. Only Mexican workers work longer hours
each. As Kathy Novak reports, some Korean bosses worry their employers are just work - employees, rather - are just working too hard.
KATHY NOVAK, CNN FREELANCE REPORTER OUT OF SEOUL, KOREA: Deuk-Soo Lee always dreamed of his own business. He ditched a
commodities trading company to open this bar. It's still hard work, but with much more freedom. At his old job it was normal to only take five
days off per year.
LEE DEUK-SOO, BARTENDER: If the new guy, like asked for the holiday more than like five days, like it's like - they - I
mean - the other people think like he is crazy or --. Yes, he doesn't care about like their bosses.
NOVAK: Lee and his colleagues also pulled many late nights and not always because they were busy.
DEUK-SOO: Even if there is nothing to do, like they have to wait until their team leader or the vice presidents leave the
NOVAK: That could go some way to explaining why this country's productivity rate remains relatively low even though South
Koreans work some of the longest hours in the developed world. Excessive overtime is the most common complaint on the employment forum Jobplanet.
YOON SIN-KUN, CEO, JOBPLANET: We pulled out the most-mentioned word icons (ph). It was late-hour work.
HEE SEUNG DANIEL HWANG, CEO, JOBPLANET: Yes.
NOVAK: Workers are airing their grievances online say the startup CEOs because they would never complain directly to
[16:55:04] HWANG: Some Korean company tend to have this military environment - military type of culture where you don't -
you have to always say yes to the boss.
NOVAK: And that goes for whatever the boss is requesting. The work day may not necessarily end after the long hours in
the office. Bosses may ask their employees to join them for dinner and drinks. Saying no isn't really an option.
Even the bartender thinks it's too much.
DEUK-SOO: Like most of team leaders they have to drink (inaudible) away. Three or four times a week?
NOVAK: It's such a common practice that it was depicted in a popular TV drama, sort of like a South Korean version of the
"The Office" with fewer laughs. Some say the culture is slowly changing and lawmakers have been discussing what the government can do to curb the
long hours. Because after all, the odd night out with colleagues can be fun, but the morning after is never the most productive. Kathy Novak, CNN
HARLOW: Coming up, this -
(CLIP FROM "JURASSIC WORLD" MOVIE)
HARLOW: It is still roaring at the box office but Universal is already planning a return to "Jurassic World."
HARLOW: Well, "Jurassic World" hasn't even left movie theaters yet, but audiences can already start a return - start
planning for a return trip. Universal confirmed a sequel to "Jurassic World" is indeed in the works. The new movie is due out June 18th and will
feature a lot of the same cast members.
Meanwhile, it continues to break records at the box office. "Jurassic World" is now the third highest-grossing film of all
time, bringing in over 1 and 1/2 billion dollars. And by the way, it hasn't even come out in Japan yet.
All right, that is "Quest Means Business" for today. I'm Poppy Harlow. I'll see you back here tomorrow. Stay with us
here at CNN.