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Fiat, Alibaba Make U.S. Jobs Commitment; British Prime Minister Bashes Media as Pound Slips; Happy 10th Birthday, iPhone; Meryl Streep Urges Support for Press Freedoms; Walt Disney Studios Chairman Reflects on Record Success;

Aired January 9, 2017 - 16:00   ET


[16:00:00] RICHARD QUEST, CNN ANCHOR: The Bell is ringing on Wall Street and the start of a new trading week, but the market is down 72 points. And

now under 19,900. So, clearly there a lot of nervousness out there. And that is what you call a robust gavel that's brought trading to a close. It

is Monday, the ninth of January.

Tonight, go west and prosper. Fiat and Alibaba plan thousands of new jobs in the American Midwest.

Theresa May blames the media, as sterling takes a Brexit tumble.

And most important products of a generation. The iPhone is ten years old.

I'm Richard Quest live in the world's financial capital, New York City, where I mean business.

Good evening. Tonight, three of the world's biggest companies have announced plans that will do wonders for Donald Trump's economic manifesto.

As they announce thousands upon thousands of new jobs in North America. First, it was Fiat Chrysler, which announced a $1 billion investment to

expand factories in Ohio and in Michigan. Immediately the President-elect tweeted his thanks. The fiat chief exec said the decision had nothing to

do with Donald Trump.

Then, Donald Trump met with Alibaba's boss Jack Ma at Trump towers to talk small businesses. Mr. Trump says jobs will continue to be created in the

United States.


DONALD TRUMP, U.S. PRESIDENT-ELECT: We had a great meeting. It's jobs, you just saw what happened with Fiat, where they're going to build a

massive plant in the United States, in Michigan. And we're very happy. And Jack and I are going to do some great things. Small business, right?

JACK MA, CEO ALIBABA: We'll focus on small business.


QUEST: In the past few years, Apple's new plans for a new manufacturing facility in Arizona have been announced. It would see finished Apple

products come to its factories in Mesa. CNNMoney's Claire Sebastian joins me now. Look, Donald Trump says thank you, Fiat. The issue is, how much

of Fiat's new jobs were because of Donald Trump? Because I seem to recall much of it was announced last year.

CLAIRE SEBASTIAN, CNNMONEY CORRESPONDENT: Absolutely, Richard. It's very difficult to say that any of that $1 billion announcement is a direct

relation to Donald Trump. In fact, none of it. Because this is all part of a $5.3 billion plan that they announced last year. It's called their

industrialization plan, part of a deal with the United Auto Workers Union to create jobs in the United States.

QUEST: But he's right to claim a certain amount of credit, in that -- as I know your report's going to show -- he has created an environment where

companies are predisposed to stay and grow, rather than leave.

SEBASTIAN: Actually, there was a separate, very significant statement by Sergio Marconi, the CEO of Fiat Chrysler today. He said, if Trump follows

through with a promise to introduce a 35 percent tariff on goods made overseas and imported to the U.S., he might withdraw his manufacturing

facilities in Mexico altogether, Richard. That's seven plants, more than 11,000 jobs. And this is really crucial, because whoever you speak to, be

it big businesses or small ones, it's this tariff that is really, really frightening for them.


J.M. ALLAIN, CEO, TRANS-LUX: We invented the ticker. Our very first customer was the New York Stock Exchange.

SEBASTIAN (voice-over): Trans-Lux, a nearly century-old screen and LED display company, still supplies some of the digital screens at the New York

Stock Exchange. Currently, though, many are made here at its plant in China. Something they say no longer makes sense for the business.

ALLAIN: We made the decision a year ago, that it was time to bring some of our manufacturing back. And those decisions were based on lead times, on

quality, and yes, on financial and economics. But over that year, as we started to implement that plan, we were a viewer of the political rhetoric

that was being thrown about in the U.S. election campaign.

SEBASTIAN: Comments like this --

TRUMP: We're going to charge you a 35 percent taxes that crosses our very strong border.

SEBASTIAN: -- caused Trans-Lux to dramatically speed up its plans.

ALLAIN: When you start talking about 35 to 40 percent tariff on incoming goods from China, that's pretty scary for us.

SEBASTIAN (on camera): What is the goal now?

ALLAIN: Our goal is to get as close to 100 percent over the next few years as we possibly can.

SEBASTIAN (voice-over): in the early the 2000s, Trans-Lux was part of a wave of U.S. companies moving jobs overseas attracted by lower wages and


[16:05:00] The company laid off about 200 manufacturing workers in the U.S. from a total of about 250. Five million American manufacturing jobs have

been lost since the turn of the millennium, driven also by technology and machines replacing humans. In the last few years, though, the jobs numbers

have stabilized.

MARK MURO, BROOKINGS INSTITUTION: A number of things favor it. The United States is a leader in so-called advanced manufacturing. Meanwhile, the

rest of the world has become more expensive. So, some of our cost disadvantages have become, at least, neutral.

SEBASTIAN: Trans-Lux says it hopes to create 200 new jobs in the U.S., the same number it shipped overseas a decade ago. A hundred will be added by

February at an old Ford plant it's renovated in Missouri with the help of local and state incentives.

ALLAIN: One of the things that the Trump election has done for us is truly highlight made in America. It's a good story. And that -- frankly, that

story has put some wind in our sails.


QUEST: Claire, wherever we look now, companies seem to be falling over themselves, either to reinforce previous plans or to change because of the


SEBASTIAN: Yes. But, Richard, the point of that story with Trans-Lux is that it's not that simple. A, because the conversation had started long

before even the Trump campaign, about bringing jobs back, and B, because they may never be able to restore the manufacturing sector in the U.S. to

what it was, because of automation, partly.

QUEST: Except, the CEO of Fiat said he wants clarity. He needs to know what the rules of the road are.

SEBASTIAN: Absolutely, and this is why any move that a company is making right now is a bet on the promises that Trump has made. They don't

actually know was going to be enacted. There may be policies that help them. Like a cut in corporate tax, like deregulation, but there may be

others. If he instigates say a trade conflicts with other companies that they export to. That could really hurt his bottom line, Richard. So,

however you look at it, it's a very risky time for these companies.

QUEST: All right. Thank you, Claire Sebastian. Keep watching it Thank you.

BMW says it's absolutely committed to a new factory in Mexico, despite the warnings of this border tax from Donald Trump. Ian Robertson is the head

of sales and marketing of BMW, who joined me from the Detroit auto show, where I asked if the company will change its tactics to placate Mr. Trump.


IAN RICHARDSON, HEAD OF SALES AND MARKETING, BMW: Let's put it into perspective, Richard. If I look at Spartanburg, our plant here in North

America, it's our largest plant in the BMW world. We make more cars here than in any other manufacturing facility. We're the largest exporter of

automotive products from the United States, around $10 billion worth every single year. And as such, we're continuing to invest in Spartanburg.

Right now, another $1 billion going in that will take our capacity up by another 50,000 or so and bring in a new model called the X-7 online.

In line with our overall strategic direction for production, we need additional capacity. So, we had chosen to build a plant in Mexico, like we

built a plant in Brazil, like we're building new facilities in other parts of the world at the moment. And ultimately, where we supply the cars that

are produced to will be decided in due course. From the point of view of having a new full production facility in Mexico, that plant is underway.

It will be completed and it will come on stream in the early part of 2019.

QUEST: Every carmaker is aware of the way in which President-elect Trump has attacked many. Do you fear that, you know, it is only a matter of time

before it's BMW's turn?

RICHARDSON: You know, at the end of the day, our commitment to the United States is as strong and stronger than ever as we move forward. Let me give

you another example, Richard, I used to be the head of BMW South Africa. We used to produce the right-hand drive vehicles for export to Australia,

to Japan, to Taiwan, to the United Kingdom. When president Clinton produced the opportunity of duty-free access into the U.S., we shifted the

production to U.S. supply. So, we were making three series for supply into the U.S. from South Africa.

We're now shifting that again, because we're installing the X3 into south America. It won't produce the 3 series anymore. Therefore, that plant

will provide X3s to other parts in the world. The reason I raised that, is that we have the flexibility and continue to hold that dearly to ourselves,

to have capacity which is able to produce right-hand drive, left-hand drive, this model, that model, underneath a platform, because ultimately,

that gives us the capability to supply our markets all around the world, in the most effective, most efficient way possible.


[16:10:00] QUEST: That's the head of sales for BMW.

Donald Trump has his son-in-law to be a senior adviser in the White House, according to a senior transition official. Jared Kushner, who's married to

Ivanka Trump, Donald Trump's daughter, played a key role in the presidential campaign. Jim Acosta is freezing himself outside Trump Tower.

Sir, you get extra marks for pulling duty like this. Look, as I read over the weekend, they're going to get over the nepotism rule by saying that the

White House is not an agency and therefore, he can get paid. Is that correct?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's essentially, I think, what's going to be argued. Transition officials are promising to

lay out some of these details in short order, Richard. We should have those details shortly. But there is a cold reality when it comes to

appointing your relatives in the White House or in the administration. I mean, anti-nepotism laws have been in place since the Lyndon Johnson

administration, which was a response to John F. Kennedy putting Robert Kennedy in as Attorney General.

Basically, it says you cannot have a close relative in an important position of power. Now, Kellyanne Conway, who's been a senior adviser to

Donald Trump and will be the counselor to the president, she has said recently that, well, Hillary Clinton ran health care reform, why can't you

have Jared Kushner working on the White House? Again, we're going to get those details shortly. But you mentioned earlier, Richard, that Jared

Kushner played a vital role in this campaign. That cannot be emphasized enough. Jared Kushner was one of Donald Trump's most important advisers

throughout all of this. And he certainly wants to have his son-in-law there at the White House.

QUEST: OK, so there are -- over the weekend in my weekend reading of the press, huge questions about the relationship between Kushner real estate

and Amgen of China. There are logistical and conflict of interest questions, which as I understand it, Jim, have not been addressed by the


ACOSTA: That's right. That's right. Those questions have not been addressed, Richard. And you bring up a very important distinction.

According to U.S. constitutional law, the president of the United States cannot have a conflict of interest. He can't be bribed by foreign

governments with gifts and so forth, but he can't have a conflict of interest. That rule does not apply to his relatives. Whether it's a

relative or cabinet appointment, those officials have to provide some kind of documentation, showing a severing of business ties, so there aren't

those conflict of interest questions.

And that is something that the transition team is promising to lay out. Donald Trump was asked about some of this earlier today. He came out into

the lobby of Trump Tower, with Jack Ma, the CEO of Alibaba. He didn't want to answer any of these questions about conflicts of interest or on Russia,

for that matter, we should mention. He's saying that those questions are going to be answered, at least by him at this news conference on Wednesday.

We haven't had a news conference from the President-elect up until this point. The first one is on Wednesday. But transition officials are saying

they're going to lay out this framework for getting Jared Kushner out of these potential entanglements, that would make it very difficult for him to

serve at the White House.

QUEST: Jim Acosta, full marks again, I know having poke my head out the door today for lunch and how cold it is. Thank you, sir.

ACOSTA: You bet, sure.

QUEST: Absolutely terrifying, the cold out in New York today.

The newsletter I've been writing about this question of conflict of interest and the ethics letters that are being produced and the nominees

that are now going. A scandal waiting to happen is how I describe it in today's QUEST MEANS BUSINESS newsletter. Please do subscribe. Get the

briefing on the New York day and be prepared for tomorrow. CNNMoney/Quest to subscribe.

The Dow moved further from 20,000. It slipped back 76 points, almost at the worst of the session, with energy shares the biggest losers. It was

triggered by a 4 percent drop in U.S. crude prices. So even though crude has been up recently, it can't hold on to those gains.

You heard BMW say it's committed to Mexico. BMW subsidiary Rolls-Royce insists it's committed to the U.K. Even as Theresa may warned Britain is

likely to leave the EU's single market. QUEST MEANS BUSINESS. We'll talk about sterling after break.


QUEST: The pound sterling fell sharply again after Theresa May, the Prime Minister, says -- she hinted that she doesn't believe Britain will stay

inside the EU single market. European leaders in turn, particularly, Angela Merkel. l have warned there's little room for compromise on the

four pillars when the Brexit talks get underway. So, the pound fell to its lowest level since October against the dollar. You can see this really

quite clearly. That's the big fall immediately afterwards. But then you get this little fall over here, which as a result of Theresa May's

comments. It's off less -- it's about 1 percentage point off over the course of today. The whole issue started with an interview that the

British Prime Minister gave on Sunday to Sky News


THERESA MAY, BRITISH PRIME MINISTER: We mustn't think about this as somehow, we're coming out of membership, but we want to keep bits of

membership. What we must say is, what is the right relationship for United Kingdom that is no longer a member of the European Union.

People who simply talk about issues around membership of the single market, access to the single market, are looking at the means. I'm looking at the

outcome. The outcome is a really good ambitious trade deal for the U.K. with the European Union.


QUEST: Now, the Prime Minister tried to clarify those remarks on Monday, when she accused the press of misinterpreting her statements.


MAY: I'm tempted to say that the people who are getting it wrong are those who print things. Saying I'm talking about a hard Brexit. It's absolutely

inevitable is a hard Brexit. I don't accept the terms, hard and soft Brexit. What we're doing is going to get an ambitious, good, best possible

deal for the United Kingdom in terms, as I say, of trading with and operating within the single European market. But it will be a new

relationship, because we won't be members of the EU any longer, we will be outside the European Union. And therefore, we will be negotiating a new

relationship across not just trading, but other areas with the European Union.


QUEST: Let's put some sense into all of this. And for that, we need to turn to Stephanie Flanders, global market strategist with JP Morgan Asset

Management. Stephanie, humor me, if you'll be as kind. So, she says the U.K. is leaving the European Union and that nothing will be left behind.

Therefore, he also says that they will have -- the U.K. will have control of immigration. Ergo, hard Brexit. One implies the other, by definition,

as we heard from Angela Merkel today.

STEPHANIE FLANDERS, GLOBAL MARKET STRATEGIST, JP MORGAN ASSET MANAGEMENT: Yes, I think she shouldn't be -- Theresa May shouldn't be surprised that

the markets and everybody else interpreted what she said as confirmation of what we've been hearing from her between the lines and certainly from other

members of the government over the last few months. Which is, if you're going to put control over your borders, control over free movement first,

which is what they say, then you have to be willing to give an awful lot of ground, when it comes to trade and particularly, you have to be willing not

to be in the single market.

And I think it was interesting to see her try and talk about, as you saw in that clip, talk about it, oh, I'm talking in terms of the outcome, not the

means. The trouble is, you know, Richard, when it comes to trade and certainly for businesses, thinking about the uncertainties ahead, the means

are crucial. How are we going to get to this wonderful new deal? How long is it going to take? What are the transitional arrangements, and how much

will we have lost in the end relative to the single market?

QUEST: She did have a valid point in her interview yesterday when she said, look, there are no plans for Brexit. I mean, if Brexit came out --

the planning had to begin only after she'd taken office as Prime Minister.

[16:20:00] Do you have any sympathy for this view that it's not as muddled as it seems?

FLANDERS: Well, I think, actually, I think I agree with those who say she's not really as muddled, maybe, as many people in the financial sector

and the business community would like. They have made quite clear, she has made clear for several months, that she will put this freedom of movement

control over our borders, for immigration, first. And that has always suggested that we would not be able to be in the single market.

And a lot of people who campaigned for remain last year, for staying in the EU, had also said they didn't think that halfway house was really

practical. Because if you're going to go to all of the trouble of leaving the EU, why still be subject to all of the rules of the single market?

QUEST: When do you believe we're going to start to see evidence -- macroeconomic evidence -- of Brexit weakness. I mean, looking at my pound

here, yes, the pound can certainly slip a bit further back if it looks nasty, at 1.22, it could slip to 1.50, maybe even go down to parody. But

in terms of economics, GDP and employment, investment, when do you think we'll start to see it?

FLANDERS: Look, I think what we're watching and certainly what the Bank of England is watching, is how consumers react to the byproduct of that fall

in the pound, which is the price of a lot of ordinary goods going up. In particularly energy prices that we've seen rising globally, as well. And

that could come in over the next few months, certainly by the summer.

And there's a worry that that's when you will start to see a real weakness in consumption, which has been very much driving the recovery, which is not

offset by any big return of investments, because there's so much uncertainty around Brexit. That's the concern. A lot of this will have to

do with -- when it comes to businesses anyway -- how much we get reassurance around a transitional arrangement, not so much a hard Brexit,

but whether there is at least a path through to whatever we get to that isn't just dropping off a cliff.

QUEST: Glad you're with us tonight, thank you, Stephanie. We needed your guidance and advice and help through that thicket. Thank you.

Now, it's a see saw we've become familiar. All in the pound and the stocks go higher. Well, it's not as perverse as it seems. Look at -- the other

three markets. And the DAX, the CAS and the MIB all and down. The FTSE ends at a record high. And other major indices were lower. And as I say,

it's not as perverse as it seems, because the lower pound increases British competitive exports.

One of those is for Rolls-Royce. It's a German-owned car company. Remember, Rolls-Royce Motor Vehicles, not Rolls-Royce aero engines. It's

quintessentially British. In fact, it doesn't get much more British than a Rolls-Royce. The car maker's chief exec says he's committed to the U.K.,

even after Britain votes to leave. Nina dos Santos spoke to Torsten Muller-Otvos, and asked him how Brexit will affect Rolls-Royce Motor Cars.


TORSTEN MULLER-OTVOS, CEO, ROLLS-ROYCE: So, we have seen in our whole market, plus 25 percent, which is remarkable. Brexit hand happen yet. So

far, it's what I would call business as usual. But of course, the more and more we are seeing uncertainty in terms of there is no clear understanding

of what will happen when, that is not always good for business. And number two is, we are fundamentally convinced that we need to have excellent trade

relations with other countries worldwide. Because we are exporting over 90 percent of all cars being produce are exported.

NINA DOS SANTOS, CNNMONEY EUROPE EDITOR: One of your big messages today is that you're going to be committed to the U.K., to manufacturing these

vehicles in the U.K.


DOS SANTOS: Why doesn't that make sense to you, the time when the UK will be leaving one of its biggest, if not its biggest trading partner, and a

place that takes up 28 percent of your sales?

MULLER-OTVOS: For us, Britain is fundamental. Britain as part of the DNA of the brand for Rolls-Royce Motor Cars. And to be British, if I may so,

as Germany, even, is fundamentally important for our customers worldwide. And that kind of authenticity and the heritage which comes with it, makes

it fundamental for us, that our home is here in Britain and that our home is in Goodwood, where Sussex, where we build all our cars. And I think

nothing will change here.

But of course, I'm interested that the company can also grow over the next couple of years. And knowing that we are exporting 90 percent of our

costs, I'm, of course, highly interested that we have excellent trade relations worldwide.

DOS SANTOS: Do you think Brexit is going to be brand negative, for things that are made in Britain?

MULLER-OTVOS: Very hard to say. Again, depends very much on how easy it is really for me as a consumer, worldwide, to get access through British

products. Do I see substantial price increases? That would be negative. Rest assured, because consumers are very intelligent and they understand

what's going on.

[16:25:00] And for that reason, every price increase is detrimental for your success story. And for that reason, if it is not sorted properly in

the way of excellent trade relations, it might hamper the British economy.


QUEST: The CEO of Rolls-Royce. This were you're looking at -- a splendid looking vehicle. Kind of retro. A little bit of a look to the future.

Well, it's Volkswagen's latest vision of the electric future. It's the ID Buzz Microbus. It was unveiled at the Detroit Auto Show.

The company itself, VW, continues to be haunted by its emissions scandal. A top VW executive has now been arrested over the weekend. He's Oliver

Schmidt. He's former head of the regulatory compliance. He's accused of aspiring to defraud customers and impede emissions regulators, particularly

when he said and knew nothing about the defeat device.

Now U.K. lawyers are trying to file a class action law that VW says it will defend itself. Damon Parker is head of litigation at Harcus Sinclair, the

U.K. law firm launching the suit. He joins me now from London. I mean, look, they say they're going to defend it, sir, but you're on a bit of a

win, are you? Let's face it, they're paying left, right, and center against class action lawsuits in the U.S. So really, it's money in the


DAMON PARKER, HEAD OF LITIGATION, HARCUS SINCLAIR: Well, who knows. I wouldn't quite put it like that. The playing field is rather, is rather

different from how it is in the United States. So, who knows.

QUEST: Well, what's your principle argument going to be? That the vehicles are not worth as much, or they were defrauded out of them? What's

your main argument?

PARKER: The main argument is that there was deceit in the sale of the vehicles. That they wouldn't have qualified as being fit for sale where it

were not for defeat device. And that translates into money in the sense that people pay too much for them, because they pay for vehicles that had

certain inherent characteristics, like being kinder to the environment than the average vehicle.

QUEST: I'm assuming you're hoping for a settlement rather than a trial. And if the U.S. experience is anything to go by, that's likely to be the

case. How many people are you representing?

PARKER: We began this morning with about 10,000. And when I left the office this evening with another 7,000 or so more.

QUEST: And just to be clear, are you taking this on a contingency basis? So, everybody contributes a little bit of whatever they get?

PARKER: Yes, that's exactly right. So, it's -- what we're doing, effectively, is, we're mimicking the effect of -- we're mimicking, really,

what U.S. lawyers do. It's sort of free to join, but you pay at the end. With the additional sort of overlay of the fact that in this country, if

you lose litigation, you pay the other side's costs. And I think the costs here are rather than higher than they are in the states. So, we also have

to have insurance arrangements for the clients.

QUEST: But, hang on. You've got 17,000 clients. Is that correct?


QUEST: And essentially, all 17,000 are evincing the same legal argument on the same principle facts, correct?

PARKER: That's right, Yes.

QUEST: So, I -- that sounds like it's going to be a fascinating one. How long do you expect this thing is going to take?

PARKER: Well, first hearing, first pre-trial hearing is on the 30th of January. That is an application for group litigation, not to be too boring

about it, but it's the equivalent of your class action.

QUEST: Good to see you, sir. Thank you very much. Please keep us informed. Thank you very much.

PARKER: Will do.

QUEST: Hollywood's contempt for Donald Trump was plain for all to see at the Golden Globes. The actress, Meryl Streep, pulled no punches in her

defense of a free press.


QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment, when the head of a committee to protect journalists will be

with me. Actor Meryl Streep asks the world to give them their support, and of also Darth Vader and Captain America. It's a rare interview with the

head of Walt Disney Studios, after their spectacular year.

But before all of that, this is CNN, and on this network, the news, it always comes first.

Russia says a declassified U.S. intelligence report on election alleged hacking is unfounded and amateur. The Kremlin is categorically denying to

try to help Donald Trump win the White House. The intelligence report says the order for cyber-attacks came from Vladimir Putin himself.

The U.S. navy ship fired warning shots at an Iranian boat near the strait of Hormuz. U.S. officials says the Iranian boat repeatedly approach the

Navy ship over a nine-hour period on Sunday. Washington says the U.S. ship tried to contact the Iranian vessels by radio. There was no response.

President-elect Donald Trump's transition team now says his son-in-law Jared Kushner will be named the senior adviser to the president. Kushner

is one of Trump's closest confidants, but he is married to Trump's daughter, Ivanka. That raises questions about nepotism and concerns also

about the real estate development firm that he currently runs, that it may present potential conflict of interest issues.

Police in Paris are questioning at least 17 people in connection with the robbery of the U.S. reality television star, Kim Kardashian-West. She was

robbed at gunpoint at a luxury mansion while attending Paris fashion week. The thieves took at least $10 million worth of jewelry and cash.

FIFA has announced its footballer of the year. No surprise, Cristiano Ronaldo, the 31-year-old had a momentous year winning the champions league

with Real Madrid and the European championship with his country Portugal. His old rival Barcelona's Lionel Messi came in second.

QUEST: Overrated. The words of Donald Trump. Overrated, a Hillary lover, and a flunky who lost big. That's Donald Trump's response to Meryl

Streep's roasting at the Golden Globes. It's hardly one of modesty and good grace. The President-elect gave back as good as he got. During

Streep's address, which went viral from the moment she left the stage, she also defended journalism and freedom of the press.


MERYL STREEP, WINNER, CECIL B. DEMILLE AWARD: We need the principled press to hold power to account, to call them on the carpet for every

outrage. That's why, that's why our founders enshrined the press and its freedoms in our constitution. So, I only ask the famously well-heeled

Hollywood Foreign Press and all of us in our community to join me in supporting the Committee to Protect Journalists. Because we're going to

need them going forward. And they'll need us to safeguard the truth.


QUEST: The man who thanked her for that is Joel Simon from the Committee to Protect Journalists. He joins me now. Joel. Good to see you, sir.


QUEST: Did you get warning of that?

[16:35:00] SIMON: We didn't know that she was going to give us that shout- out. We did get a very generous contribution through her family foundation just last week. So, we were very appreciative. But we didn't know that

she was going to mention this and call on others to support us.

QUEST: We think of the committee as being involved in the issues of democracy, violence, physical threats against the press and the media. But

you're asking me to think about it differently.

SIMON: I don't think I'm asking you. We've always been a frontline organization. We've defended journalists for 35 years when they're

confronting violence and repression in the most dangerous and difficult environments around the world. But the reality is that there are enormous

challenges that journalists are facing in this country and we have to stand up and defend them.

QUEST: What are those challenges? Because being berated by the president does not really class as a threat in the same way as -- I mean, that's up

to editors to stand up to it.

SIMON: Right. I think journalists know that they're going to get criticized, when you confront powerful people. They're going to lash out.

But I think what's alarming is that President-elect Trump, every time he's criticized, lashes out. Lashes out, we saw that with Meryl Streep. The

role of the press in his administration will be to criticize him. To hold him accountable. How is he going to react? Is these -- are these

outbursts going to be transformed into policies? It's intimated that will be the case. So, journalists should be concerned. We're concerned, we

intend to defend the rights of journalists and ensure they're able to do their job.

QUEST: What's your big fear here? Exclusion of press from press conferences, for journalists, not holding press conferences? I mean, he

continually finishes every tweet with "dishonest media." He believes, and let's put myself into this, I'm a journalist. He believes that we do not

reflect the truth of his situation.

SIMON: Yes, I mean, he expects the media to amplify his perspective. And to the extent they do that, he's quite happy. But when they criticize him,

he has a quite different response. He's said what he's going to do. He's excluded journalists. He's mocked journalists. He's incited attacks on

journalists, online trolling. The environment for criticizing Donald Trump as a journalist or as anyone else is a very intimidating one. So how will

that affect the work of the press in the coming years?

QUEST: You have an uphill struggle. And one very important respect, many of the public are not with you. Well, maybe the chattering classes, as

they became known, on the upper East Side and the Upper West Side of Manhattan and in LA might be, but Middle America is likely to say, a plague

on the press' house.

SIMON: Well, look, what is the press? What is the media? It is everyone. It's Fox News, it's CNN, it's the whole constellation of information. We

need that information and I think the public might be critical of certain segments of the media, but as an amalgam, they want to be able to

communicate, they want information, and I think the public will stand up for that.

QUEST: The press was not in favor in Nixon's time. He had his list and his witch hunt against the press. Ronald Reagan like the press, but it

wasn't hugely in favor then either. During the Iraq war, both Bushes were if not downright hostile to the press, at least they didn't facilitate it.

Why is this worse?

SIMON: I think because we are not hearing from the President-elect a basic articulation of the role of the media. What is the role in the media?

That sense that we have a first amendment, there is accountability, the U.S. has to set a standard for the world. We're not hearing that.

Instead, what we're hearing, constant disparagement, harassment, mocking, exclusion of journalists, threats to make it easier to sue journalists.

It's creating a hostile environment and the question is, is this just -- are these just empty words, is this angry expression? Or will we see an

administration that will turn this rhetoric into policies? That's what he need to be vigilant about?

QUEST: And will watch carefully. You are always most welcome to join us here, sir.

SIMON: Thank you so much.

QUEST: Thank you very much, indeed. Now, for the Golden Globes, this year's award season has officially begun. Lord help us, there will be

plenty of them between now and the Oscars. And while the stars get the glamour on the red carpet, behind the scenes, it's executives who make it

all possible. The chairman of Walt Disney Studios is next. QUEST MEANS BUSINESS.


QUEST: Part humor and a no-jerk policy. That's how Walt Disney Studio's chairman, Alan Horn, says his company has managed to thrive at a time of

great change in the movie business.

The keys to the Disney kingdom. And the keys to this kingdom and the huge profits that it has made, that has completely revolutionized the industry

and made it a standout is the number of studios that Disney has within its very empire.

So, let's take a look, before we hear from Alan Horn about the Disney Studio Magic. On the magic board, we have the Walt Disney Studios, the

pictures themselves. Walt Disney Pictures. You have Pixar, the animation. Lucas Films, which brought in "Star Wars," and the new acquisition of

Marvel Comics. Put all of those together, and you have an amazing collection of studios that are just churning out some tremendously

profitable movies.

Because all five of the top grossing films in 2016 were Disney films. Five were the top grossing and four of them actually made $1 billion. "Star

Wars: Rogue One," "Captain America," "Finding Dory," "Zootopia," and "The Jungle Book" all brought in over a billion, and the others were not far

behind. So, 2017, at the Magic Kingdom, the house that the mouse built, well, it promises to be just as lucrative. Because on the agenda will be

"Star Wars: Episode Eight." There's the live action "Beauty and the Beast," a new "Guardians of the Galaxy," another of the franchise of

"Pirates of the Caribbean" and "Tor." this is extraordinary in terms of one company. I spoke to Alan Horn, who joined me in the New York newsroom,

and he told me it took the entire Disney empire working together to achieve such a successful year.


ALAN HORN, CHAIRMAN, DISNEY STUDIOS: I think there's been a sea change in our business. There's no question that the audience has become more

selective. There are other alternatives available on Netflix and Hulu and Time Warner, Home Box Office, ShowTime, and so on. So, to get people to

get up, leave the house, go to the theater, we find ourselves asking of the prospective audience, we think they will ask, do I have to see it now and

do I have to see it on a big screen? If the answer to both of those is no, we have a big problem.

QUEST: Every studio, our own included, Warner Brothers, would say, quality is always king. So, I'm trying to get to, what's the secret sauce when you

put your family of movies together, your talent together, what are you looking at that others are not.

HORN: I think each of our projects as to share the common threads of heart and humor. We have to have both in each of our movies. Also, we have to

have an extraordinary lineup of stars, if you will, and that the heads of each of our divisions, Pixar, Disney animation, Marvel, Lucas, and the

internal group, the heads of each of those organizations is the filmmaker.

QUEST: How much are you prepared to take risk, when they come to you, a project is on the table, and you look at it and you say, well --

[16:45:00] HORN: Each of these pictures represents substantial risk, because they're so expensive. When we have these sorts of tent pole

movies, as we say, with size and scope and scale, they cost a lot of money. And the audience has become accustomed to spectacular films in the theater.

And they expect scenes with effects and so on. So, it's really -- they're risky just coming in. But we have to take a swing. We have to go for it.

QUEST: Is there a movie that you've sort of winced when you saw the early budget and you thought, I'm going to agree with this, but I'm doing it --

HORN: When we first saw the cost of "The Jungle Book" and what it meant to convert this picture to essentially a digitally imagined recreation --

JUNGLE BOOK SONG: All you gotta do is. Look for the bare necessities.

HORN: -- In combination of Walt Disney's 67th picture and Robert Kipling's book from 1895 or 1894, it was daunting. We said, oh boy. But you have to

take swings in this business.

QUEST: And what do you have for me next year?

HORN: We have "Beauty and the Beast" coming soon to a theater near you.

QUEST: The amazing part about Disney that I think is unique to your company is your ability to get all sections of the company to work

together. And I saw this when I was at the theme parks last year for business traveler. You were already planning which characters from which

movies would be in the park in 12 months' time.

HORN: Yes.

QUEST: This is a crucial part of Bob Iger's strategies, isn't it?

HORN: Yes.

QUEST: That the whole thing has to --

HORN: He brought these companies, which contributes to this movie-making process. These different entities, the components of the Disney formula,

if you will. He brought them into the company. 2006, Pixar. 2009, Marvel. 2012, Lucas. We wouldn't have these star athletes without that.

Now, he then directs a synergy between and among the different parts of our Walt Disney group, including parks and resorts, ESPN, ABC, consumer

products, and of course, my studio group. And the synergy, I know it's another tired word. The synergy that results in that is fantastic.

QUEST: How do you prevent silos?

HORN: We just communicate with one another. We have a non-ego kind of let's just talk to one another, philosophy of the company. Kind of a no-

jerk policy. And it works.

QUEST: What happens inside you when you sit in the big chair in the movie theater, either in your own screening rooms, or you've gone to the movies,

the music plays, curtain opens, the movie begins. What happens inside you that's a really good thing?

HORN: I am transformed. I sit there and I am transported to a different place. And when that journey, with a beginning, a middle, an end, with

characters I care about, with something at stake, with a good versus evil or whatever it is, when I am transported, there's nothing else that invades

that space until that picture's over.


QUEST: After the break, there's a killer in our midst. And it wiped this off the face of the earth. And this took about ten years to do the job

properly. Chances are, you have one of these killers in your pocket.


QUEST: An oblong piece of glass, black glass at that, and it totally changed the course of history. Ten years ago, today, Apple launched the

iPhone. And since then, the device has evolved to the point where it's taken over our lives in so many ways. Now, to appreciate it, watch how the

late Steve Jobs in 2007, predicted the iPhone would kill off the rivals.


STEVEN JOBS, LATE CEO OF APPLE: The problem with them is really sort of in the bottom 40 there. It's this stuff right here. They all have these

keyboards that are there, whether you need them or not, to be there. And they all have these control buttons that are fixed in plastic and are the

same for every application.

Well, every application wants a slightly different user interface. A slightly optimized set of buttons, just for it. And what happens if you

think of a great idea six months from now. You can't run around and add a button to these things, they're already shipped. So, what do you do? It

doesn't work, because the buttons and the controls can't change. They can't change for each application and they can't change down the road if

you think of another great idea you want to add to this product.


QUEST: Many said this product wouldn't sell.

Ten years ago, Microsoft's boss then, Steve Ballmer, decreed, "There is no chance the iPhone is going to get any significant market share."

Well, who won and who lost? Peter Pachal, the tech editor of Mashable, is with me. I've answered my own question there, haven't I? To the extent

that android -- well, Samsung has the largest market share, but that's because it's on the open source android.

PETER PACHAL, TECH EDITOR, MASHABLE: And it also sells many, many different models. Apple has always -- well, not always, honestly. Because

now they have two different models, three, actually, if you count the iPhone SE. but Apple has generally gone with the one-sized fits all kind

of mentality. Where Samsung tries to cookie cut every possible piece of the market and give them a different phone.

QUEST: To what do you attribute the iPhone's success? I know it's sort of a very broad, wide question. Was it genius? Was it the right machine at

the right time? The iPad, Jobs gave us something we didn't even know we needed. But I was a Treo user, so I was always using something -- an early

version of a Smartphone.

PACHAL: If I had to set -- you settle on one thing that the iPhone did differently than everyone else, is that precision of the user experience.

That right out of the gate, the very first iPhone, it was very fluid in your hand. It was very, like, you tapped something, it opened. You

swiped, the screen moved under your fingertip.

Previous attempts at touch screens -- like a lot of phones had touch screens before then, but they were resistive touch screens and you would

sort of poke at them and they wouldn't respond and you would have to use a stylus to properly use them. The iPhone made sure you could use your

fingers, and not only that, it just worked when you tapped it.

QUEST: At what point did you realize the iPhone was going to kill off Nokia, it was going to kill off Blackberry, it was basically going to do

them all in.

PACHAL: Yes, I wasn't as wise as some of my fellows in the tech press, who said they knew it or they say they knew it right when they touched it. It

took a couple of years. I kind of thought the business user, there would always be a significant market for people who liked keyboards on phones and

indeed there is. A market, I believe, you yourself are one, who enjoys keyboards on phones, but it's turning out to be a shrinking market. That

the touchscreen --

[16:55:00] QUEST: There are still some of us around.

PACHAL: There are. And blackberry is there, and they're still around, but they're certainly not what they once were. A lot of people, especially

consumers have moved on to the touch screen and get a lot of that experience.

QUEST: So is it your feeling that iPhone's on the back foot now. That Apple with iPhone are on the back foot or are they still tonight front


PACHAL: I think they definitely are challenged to grow that business now. We've not just reached peak iPhone, we've passed peak iPhone.

QUEST: You do?

PACHAL: Yes. The mobile phone and iPhone in particular, will be a central part of our lives for years and years to come. But I think we're at a

point where the technology is so replicable now. Every other smartphone maker on the market has the same, if not better, technology. Apple needs

to look for others way to grow. And I think it's connecting this with things like the car, like the kitchen, like your living room and they're

already doing that.

QUEST: Good to see you, sir.

PACHAL: Good to see you.

QUEST: More connected life. I just want a cup of tea.

PACHAL: That's the dream.

QUEST: Thank you. We'll have a Profitable Moment after the break.


QUEST: Four Disney movies make a billion and many make near that amount. It is simply a reflection of the fact if you've got a good story and you

tell it well, people will come and watch. And Disney is the best example of that par excellence. And that's QUEST MEANS BUSINESS for tonight. I'm

Richard Quest in New York. Whenever you're up in the hours ahead, I hope it's profitable. I'll see you tomorrow.