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QUEST MEANS BUSINESS

Obama: Will Send "Clear Message" To Russia; Dow Falls After Reports China Stole U.S. Drone; "Rogue One" has Biggest Thursday Box Office of the Year; Lufthansa and Etihad Sign Codeshare Deal. Aired 4:30-5p ET

Aired December 16, 2016 - 16:00:00   ET

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


(SIMULCAST OF OBAMA REMARKS AND CNN ANLYSIS)

[16:32:54] RICHARD QUEST, CNN ANCHOR: I'm Richard Quest. You've been watching President Obama's end of year news conference. And the President

has been sending a clear message to Russia. That cyber-attacks against the United States will be met with a response of some kind. Now he's been

warning Russia, our intelligence suggests Russian interference in elections. According to the president, the United States can do stuff to

you too, in his words. He also slammed the Republican's praise of Vladimir Putin, saying, Ronald Reagan would be rolling in grave.

On Syria, the world must not be fooled by the Assad regime and its allies, Russia and Iran, who are trying to obfuscate the truth. But it was on the

question of Russian cyber-attacks that the president spoke first about those forcefully.

(BEGIN VIDEO CLIP)

BARACK OBAMA, U.S. PRESIDENT: Our goal continues to be to send a clear message to Russia or others, not to do this to us, because we can do stuff

to you. But it is also important for us to do that in a thoughtful, methodical way. Some of it we do publicly. Some of it we will do in a way

that they know, but not everybody will. And I know that there have been folks out there who suggest somehow if we went out there and made big

announcements and thumped our chests about a bunch of stuff, that somehow that would potentially spook the Russians.

But keep in mind that we already have enormous numbers of sanctions against the Russians. The relationship between us and Russia has deteriorated

sadly, significantly over the last several years. And so, how we approach an appropriate response that increases cost for them for behavior like this

in the future, but does not create problems for us, is something that's worth taking the time to think through and figure out.

(END VIDEO CLIP)

QUEST: Michael Weiss, CNN contributor and senior fellow at the Atlantic Council. Michael, let's start with the hacking. It's turning into an

absolute mess, because you've got Republicans saying that the Democrats are sore losers. Democrats saying that the Republicans are ignoring it.

You've got the President and the President-elect both saying something else. And President Putin himself saying, if you've got evidence show it.

Otherwise, shut up.

MICHAEL WEISS, SENIOR FELLOW, ATLANTIC COUNCIL: Right, and of course, the difficulty with showing the evidence is that you compromise the sources

that you have. For instance, if the CIA has human intelligence, somebody working on the inside of the Russian government who has told them this is

what we did. They can't jeopardize that source. Losing that would be the loss of years' worth of work and recruitment and cultivation.

QUEST: But even if Republicans don't believe, or at least are not same publicly that Russia did intervene in the election, the incoming president

certainly doesn't want it happening on his watch against him.

WEISS: Well this is the thing that I most curious about with Donald Trump. He has been auditioning to be Vladimir Putin's prom date for ages. Donald

Trump was anti-NATO before even Putin was anti-NATO. Read the book he put out in 1999. He thought NATO was a waste of time, a waste of money. Putin

is a great leader. Greater than President Obama. He likes me. He said nice things about me, blah, blah, blah.

The Russian government is going to do something in the next four years to provoke Donald Trump. It's going to do something to weaken American power

and vitiate American interests abroad, in the Middle East, in Europe, everywhere. When and if it does that, Donald Trump being as thin-skinned

and narcissistic as he is, is going to lash out. That I think is an inevitability. I don't believe this relationship with Russia is going to

last. It's also worth bearing in mind, every president comes into power wanting to reestablish or reset, as we call it term, that relationship with

Moscow. And then it becomes a cropper. For exactly reasons like this. They do something to pieces off. They interfere with our sovereignty, or

they engage in some active foreign adventurism like annexing Crimea or invading Syria.

QUEST: So, you're basically saying that whatever lovefest may be underway, it will be short --

WEISS: I think the chances of that are very good, and there's another component to that as well. Russia and Iran are strategically wedded now.

Look at Syria. This was not a "liberation" by Assad regime. You want to come to that I know.

QUEST: I want to stop you. I want to say quite simply, I need you to somehow avoid giving me the Geo political politics of it. But at what

point does anybody get ashamed by what's happening. What point does any leader get ashamed by what's happening?

WEISS: Look Richard, I've been covering Syria for as long as there has been an uprising and revolution an armed rebellion. I said very early on,

based on the trajectory of where this was headed, listening to people who were secular, who said, please the United States come to our rescue. You

gave a no-fly zone Libya, do it here. Watch their Islamization, their radicalization. Including sources, by the way, who ended up joining ISIS

and left, who I've known for five years.

I said from the beginning you can have a no-fly zone now, or you'll have drones in the sky tomorrow. And that's exactly what we have. Now

President Obama comes out and says, well, the choice was doing what we did, or a full scale a rock style occupation, 150,000 troops on the ground.

Nonsense.

[16:35:00] QUEST: Listen to what the president said today.

(BEGIN VIDEO CLIP)

OBAMA: There are places around the world that horrible things are happening and because of my office, because I'm president of the United

States, I feel responsible. I asked myself every single day, is there something I could do that would save lives and make a difference, and spare

some child who doesn't deserve to suffer. So, that's a starting point. There's not a moment during the course of this presidency where I haven't

felt some responsibility.

(END VIDEO CLIP)

WEISS: There are things that he did do, but he did them in a halfcocked fashion. He told Assad in 2011, you have to step aside. When the

president of the United States calls for -- that's not regime change, but regime decapitation. That is an announcement heard around the world. He

imposed his so-called red line on the use of chemical weapons. Assad is a first dictator in modern history to gas people in his own capital city.

Not even Saddam had the balls to do that.

And then there is a misconception that we didn't do anything to help the rebels. No, Richard, this is the problem, we did. We just didn't do

enough. There about 80+ vetted free Syrian army groups that have been given weapons, antitank missiles and money from the CIA, under an operation

known as "Sycamore Timber". The problem is -- and I've talked to some of these rebels -- what they have are like slingshots compared to what the

Assad regime has, or Lebanese Hezbollah has, and indeed what ISIS and al- Qaeda franchise has.

I would have been better -- looking back on this conflict now -- had Obama in 2011 said, you know what? I just don't care. I want to get out of the

Middle East. This is terrible, but terrible things happen all over the world, we cannot help you. Had he shut down the debate then, people

wouldn't have risen up. They wouldn't have taken up arms expecting Americans to come to the rescue.

QUEST: We need your help next week or at least online.

WEISS: Any time.

QUEST: Thank you very much, sir.

WEISS: Cheers.

QUEST: QUEST MEANS BUSINESS, will have more of that, including how the markets closed. Don't get too excited it was off just a few points.

(COMMERCIAL BREAK)

QUEST: They hope that the street could finish the week with a new record. They were daft by the report from the U.S. Department of Defense. The Dow

gave up its gains after Reuters flashed a story about China seizing an American underwater drone. We'll have to wait at least next week

potentially for 20,000. Down 8.8. It could've been a lot worse, but it wasn't. You see there the way the market starts up and finishes down.

It's proving once again the difficulty of the psychologically important barriers.

The president heralded the reality in the markets at the very start of his news conference.

(BEGIN VIDEO CLIP)

OBAMA: The stock market has nearly tripled since I signed Obamacare into law. Our businesses have added more than 15 million new jobs. And the

economy is undoubtedly more durable then it was in the days when we relied on oil from unstable nations and banks took risky bets with your money.

(END VIDEO CLIP)

QUEST: And if you just want to see how the Dow has performed since the president, the current president took office, 8,000 up to 19,833.

[16:40:00] I suppose I can make an argument to say that a few of those thousands, although they happened on Obama's watch, actually should be more

properly credited to Donald Trump since it's part of the Trump rally. But that might be a sophisticated argument that's best left in the closet.

Shares in Disney fell around a half a percent on the day the new Star Wars film was released. Thursday night preview showing of "Rogue One" in the

U.S. brought in $29 million. The biggest Thursday opening night of the year. And "Rogue One" is the first spin off for the Star Wars franchise.

The series is as popular today as it was 40 years ago.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Star Wars is more than just a hobby. It's people you hang out with. It's the movies you watch. It's the cloths you buy. It's

so much more than just a film franchise.

UNIDENTIFIED MALE: This is just going to be absolutely amazing. It's going to be something that really brings back my childhood as well as just

having fun. Being something new and exciting. So, I'm really excited.

(END VIDEO CLIP)

QUEST: Now they're not rebels anymore. Disney is the Empire. "Star Wars, The Force Awakens", brought in $2 billion at the box office last year.

Disney has the top four grossing films of this year. Three have brought in more than 1 billion. So, Disney came out victorious. It had "Captain

America", "Civil War", it found profits with "Finding Dory", the sequel to "Finding Nemo", And fake animals delivered real money in "Zootopia". So,

put all those together. CNNMoney's Frank Pallotta, joins me now. Good to see you, sir.

FRANK PALLOTTA, CNNMONEY MEDIA REPORTER: Good to see you, sir.

QUEST: First of all, "Rogue", good bad or indifferent.

PALLOTTA: "Rogue One" was great. It's a great action film. It's a good Star Wars film. It follows the same type of tropes. But this is a really

good movie and has one of the best finale third acts of any of the movies I saw a couple days ago. It's just a really fun time.

QUEST: For Disney, who paid a lot of money for the franchise, they will be grateful after the "Force Awaken" and now they stand to make a fortune on

this one too.

PALLOTTA: Yes, this is a franchise they spent $4 billion on in 2012. And this stretch is way more than just films. You're talking theme parks,

which is going to be their biggest expansion ever. You have toys, you have even things like this, like look at my keychain. There's Darth Vader right

there. You have merchandising, you have a bunch of different things. This is a multi-multi-tiered franchise.

QUEST: But when it's not just the "Rogue". When it put with all their other movies, why are they doing so well?

PALLOTTA: They're doing so well because what Disney does well is it tells a story probably better than any other media or film company on the planet.

And it takes something like this, it takes Star Wars that we've known for 30 years, 40 years, and tells a brand-new story that is not just familiar,

but incredibly brand-new.

QUEST: Right, but do we put aside all the ESPN and all the cable ways and all those other worries that perennially come around when we talk about

Disney in the future, and the cable pipeline.

PALLOTTA: Yes, we don't put them away. ESPN is the "Death Star" to Disney. But it's film studio is the rebel alliance. It is the one that is

pushing this company forward. Yes, I got really nerdy on the show, and you're just going to have to deal with it. But I'm just saying that ESPN

is a huge thing to Disney and the media company, but Star Wars matters.

QUEST: You probably enjoy Star Wars questions in Trivial Pursuit and things like that, don't you?

PALLOTTA: I'm going to go home and talk to Star Wars to anyone who will listen me, anybody. We could keep talking about this after the show ends.

Anything you want.

QUEST: Oh, lord, it's Friday. Thank you. Good to see you, sir.

PALLOTTA: You too.

QUEST: We'll have more in a moment. First around the world actor Jim Sturgis takes us on his tour of his North London neighborhood.

(BEGIN VIDEOTAPE)

JIM STURGIS, ACTOR: Welcome to Camden town. We're outside Camden, the stable market. Which is really the kind of heart of the cultural, you

know, London scene. Very much the place of British guitar music. Right behind us use can see a place called Dingwall, which is in the heart of the

market there. And Dingwall was really the focal point for a lot of British punk music, and are bands like the Sex Pistols played there and the Clash.

It's embedded in a lot of musical history.

You know, while I'm fortunate enough, I get to travel around the world a lot for the work that I do. But the one thing that I always look forward

to coming back to is having a pint in a North London pub and enjoying one of these amazing London Scotch Eggs. Cheers.

[16:45:00] Yes, there really is no better place to finish my tour of London and at the top of Primrose Hill we can see the whole skyline of London.

And just to have a moment and just taken this beautiful scene.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

QUEST: If you can't beat them, join them. Lufthansa signed a codeshare deal with Etihad after years of complaining about Gulf carriers. Now the

flights are due to start in January and Lufthansa's code will go on Etihad's flights from Frankfurt and Munich to Abu Dhabi. And Etihad's code

will go on Lufthansa's flight to Rio and Bogota. Now the Lufthansa chief executive says they're going to consider extending cooperation into other

areas.

It's fascinating this, because Lufthansa is playing catch-up. Qantas and Emirates already have a major partnership, a global alliance. British

Airways and Qatar Airways co-share flights, in fact, have a joint venture and Qatar actually owns of BAs parent which is IAG. So now, Lufthansa,

deciding it has to do a deal. Choosing the preferred partner, which is Etihad. Ben Schlappig joins me now, the travel expert and blogger, "One

Mile at a Time". He joins me from Los Angeles.

This is even more unusual though than the other ones, because Etihad actually has a large stake in Air Berlin, which is Lufthansa's domestic

rival. This is downright promiscuous.

BEN SCHLAPPIG, TRAVEL BLOGGER, ONE MILE AT A TIME: Yes, aviation in Germany right now is getting really bizarre. Basically, Air Berlin has

been performing very poorly for the past few years. And kind of the solution at this point is that they're cutting many of their routes.

Lufthansa's concern was that other European low-cost carriers, like EasyJet and Ryanair, that they would start flying to Germany if Air Berlin did go

out of business. So, they sort of cut them a deal. And what's happening here is that Lufthansa is taking over many of Air Berlin's planes and

they're going to start operating them.

QUEST: Ok, so, Lufthansa is basically bailing out Air Berlin, at the same time as Etihad has also bailed out with cash, Air Berlin. One questions

the future of Air Berlin. Do you see Lufthansa wanting a closer, longer, deeper relationship with Etihad?

SCHLAPPIG: Like you said at the beginning, I think it comes down to if you can't beat them, join them. And that's kind of been the name of the game

with the Gulf carriers for so long.

[16:50:00] When you look at the U.S. aviation industry, American, Delta and United have been complaining nonstop about the Gulf carriers, at the same

time both Etihad and Qatar Airways have relationships with American and they codeshare on many routes. So, it's a bit puzzling that they on one

hand cry foul, but at the same time gladly participate in partnerships with them.

QUEST: Except the Lufthansa, the Germany situation -- and the reason we've got you this evening, the Germany situation is just bizarre. Etihad has a

foot in both camps. It is owning part of Air Berlin. It's doing a deal with Lufthansa. It's having his cake and it's eating it.

SCHLAPPIG: It is. And I know it's a very unique situation, and I think kind of the situation of an airline bailing out their biggest competitor

isn't something you see every day. But in this case the big fear in Europe is that EasyJet and Ryanair, these ultra-low-cost carriers, and that they

continue to expand. Because that could be very costly for Lufthansa if they come in and start offering $10 fares to everywhere, which is what they

have done in so many other European markets.

QUEST: My enemy's enemy is my friend. Ben Schlappig, joining us from Los Angeles. Have a good weekend, sir. Will have a Profitable Moment after

you've had a chance to "MAKE, CREATE, INNOVATE".

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment. All right, I'm going to go and see the movie "Rogue One". And I will try and make sense of it. A prequel to

a sequel, to originally before the episode for the original Star Wars, with a different set of cast, but following up from the same first-line that all

will fit together and have to make sense of characters I've never heard of in a movie that I don't fully understand.

[16:55:00] But does that matter. The best Thursday opening this year and only beaten by last year's best Thursday opening, which was the other Star

Wars, Force Awakens, movie. I'm not even going to try and pretend to understand who anybody is in it. Because from what I've read about it

that's just about impossible to follow. All I need to do is sit there, eat popcorn, and enjoy it. Well, that's fair enough.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard quest in New York. Whatever you're up to in the hours ahead, may the force be with you.

I hope it's profitable. I'll see you next week.

END