Return to Transcripts main page
QUEST MEANS BUSINESS
Dow Is In The Red For The Last Day Of The Month; Sprint And T- Mobile, The Merger Deal Is Done; Shake Up In Aisle Three As Supermarket Merger Creates A New Top Dog In Britain; Donald Trump Gives Another Strong Signal That He Is Ready To Pull Out Of The Iran Nuclear Deal; Oil Prices Rise To Their Highest Level In More Than Three Years; Trading Was Back To Normal In Toronto After A Massive Technical Problem Forced All Businesses To Stop Early On Friday; Israel's Prime Minister Netanyahu Says He's Obtained New Proof of Iran's Secret Nuclear Weapons Program; More than 30 Killed in Afghanistan Attacks; Trump Suggests Holding Kim Jong-un Meeting at Demilitarized Zone; Stormy Daniels Sues Trump for Alleged Defamation; AT&T-Time Warner Trial to Be Decided on June 12; T-Mobile and Sprint Cite They're Racing China For 5G; "Avengers Infinity War" Makes Box Office History; Saudi King Launches Massive Entertainment Project; Fake Arts Scandal Rocks France; Brent Crude Oil Hits $75 on Middle East Tensions. Aired: 4-5p ET
Aired April 30, 2018 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHANIE SY, CNN ANCHOR: There is the closing bell. The Dow is in the red for the last day of the month. Stocks couldn't hold on to their early
gains. Trading is over on Monday, the 30th of April.
Tonight, third time lucky for Sprint and T-Mobile, the merger deal is done, you'll hear the CEOs of both companies on this program.
Shake up in aisle three as supermarket merger creates a new top dog in Britain. And the "Avengers" assemble a record-breaking weekend at the box-
office. I am Stephanie Sy. This is QUEST MEANS BUSINESS.
Good evening. Tonight is a classic merger Monday, whether it is telecom tie ups on Wall Street or supermarket mergers on the British high street.
The trading week has begun with a flurry of big name deals. Tonight, we'll take you through each one starting here in New York.
Years of negotiation, two failed deals and finally, a breakthrough for Sprint and T-Mobilee. The third and fourth largest carriers in the United
States are coming together in a $26 billion deal.
The last merger which have failed after the Obama administration raised concerns about competition. Well, Sprint and T-Mobilee hope they'll have a
better shot under the Trump administration. The companies say this deal is about competition -- the United States versus the world, for faster
Sprint and T-Mobile argue their merger will help them roll out a next generation 5G network. Investors are skeptical. Shares of T-Mobile fell 6
percent as Sprint stock dropped 14 percent.
The CEOs of T-Mobile and Sprint had a front-row seat to see their stocks take a beating and they joined Richard Quest on the floor the New York
Stock Exchange insisting the third try at a merger will be the charm.
MARCELO CLAURE, CEO, SPRINT: First one is a simple realization that both companies need each other. We're set to build the world's most advanced 5G
network. We have the spectrum assets combined. We can get this done. I couldn't do this without T-Mobile. I don't think T-Mobile could do this
without Sprint. You put these two companies together, you build the world's best product. You build the world's best 5G network, so that's why
RICHARD QUEST, CNN HOST: Who called who to say, "Let's have another go."
JOHN LEGERE, CEO, T-MOBILE: Richard, two things. One is, these deals that get talked about, a lot of times, it's about governance questions, price
questions et cetera and those are the things that come and go.
Marcelo and I, since we've met, had an ever increasing never letting go belief that these two companies belong together, and this time around,
Marcelo actually called me ad he -- I mean, more so in a communication process that we said, "You know what, I have been doing a lot of these
things on 5g with other investments at CTIA, and I am more convinced than ever that these two companies belong together.
So, 5G was the pinnacle here, but we've always stayed in touch on this.
QUEST: Right, but how did you overcome the issues that have prevented previous fruition on the deal?
CLAURE: You know, we never had a deal. This has been an idea since 2012- 2013. At that point in time, the government had an objection to us doing it together and then we have been flirting with the idea for a very long
You know, there is a time that the stars had to get aligned, the country needs 5G, that's the next wave of evolution. We cannot fall behind with
China and South Korea who are ahead of us on a 5G perspective, and if you look at what is happening right now, the only spectrum that both companies
have makes us the only choice to go build and amazing 5G network or competitors can do it; AT&T and Verizon cannot do it because they do not
have a spectrum.
So, therefore, you think that -- you know, every great company needs to have great products and services, so that is the foundation behind what we
QUEST: Four down to three...
LEGERE: Eight down to three, zero up to one.
QUEST: Would suggest an anti-competitive potential, not a reality and that is something that the government is going to be looking at particularly
since I think you'd agree this is a horizontal merger, not a vertical merger.
LEGERE: OK, well, listen, today Richard, there's two things that we're all talking about. And both of these have changed in the recent past. One is
the value of this deal to shareholders, gigantic, $43 billion worth of synergies, $6 billion of run rate and a company with the fortitude to
On the other side, the regulatory approval prospects have never been better, right? What we have now is we are going to invest $40 billion to
create the nation's first deep and broad 5G network that the country needs.
Second, the un-carrier of a competitor that we have created, we are going to super charge it. Consumers can look to broader services, faster speeds
and lower prices and the country can look forward from Day 1 more jobs.
QUEST: You would agree that if you were looking at this just on paper...
QUEST: ...you would say, "Well, hang on a second." You two have been competing against each other for years. You've been beating the living
daylights out of each other for years. Now, you want to get together that could be a potential problem.
LEGERE: I would point out that Comcast has added more wireless customers in the last five quarters than AT&T and Verizon combined. Charter is
entering this year. It's expected that those two will take five million wireless customers in the next two years, 20 billion, so that's five, six
Did you know AT&T is the largest cable TV provider in the United States? So, the industry that we are looking at that we compete in is changing.
Rural has no competition. Broadband has no competition and that's all of what we're going to create.
CLAURE: So, I look at it backwards. I say, when you put two disruptor companies, you're going to create a bigger disruptor, so we're going to
turbo-charge what we have been doing, just go back to a year or a year and a half ago, every American had -- went to AT&T and Verizon, had to pay over
charges. There were no unlimited. Combined, we both introduced unlimited and we changed the wireless landscape in the US forever.
We plan to imagine that, we plan to put it on steroids.
LEGERE: Who do you use? Who is your wireless provider? Who is your wireless provider?
QUEST: Yes, in the interest of disclosure, I am a T-Mobile subscriber and yes, I am a very satisfied T-Mobile...
LEGERE: How would you feel about lower prices, faster speed, and better capabilities.
QUEST: Of course, I'd be -- don't, don't -- no...
LEGERE: Just come right down to Washington and tell them, "I'm satisfied and if we can take what I get and give more of it...
QUEST: But what did you with release as prices, because you can...
LEGERE: I, John Legere solemnly swear -- listen, prices are going down. Jobs are going up.
QUEST: What I see going, John, at the moment is your share price, you're off 91 percent, why?
CLAURE: I mean, there's a lot of people who doubt this merger in the past, and these are the same people. Our job is now to go to Washington and make
a very clear explanation. We believe that this is the poster child of our mergers. Best product, best services, lower prices, more jobs.
QUEST: Final question...
LEGERE: The value of this company is huge. Regulatory approval is starting today. When this goes to probable, what do you think is going to
happen to this one?
QUEST: Final question, if I take my own company, which of course -- CNN, Turner, Time Warner, AT&T -- the big move is for video...
LEGERE: ... and you use us which is amazing.
QUEST: Stop it. Don't be mischievous.
LEGERE: Wow, how can you work. You know what? Did you watch White House Correspondents' Dinner the other day?
LEGERE: Did you like the story when they said, "Hey, CNN, you're into breaking news. Congratulations, you did it." I thought that was really
funny, didn't you?
QUEST: Can we stick to your deal.
LEGERE: OK, go ahead.
QUEST: What are you doing on video and content? If you look at the way Verizon has bought, and if you look at AT&T is attempting to buy Time
Warner, what are you going to do? I don't see the same macro gigantic moves towards that?
LEGERE: Yes, you want me to start?
CLAURE: Go ahead.
LEGERE: First of all, when you create this 5G network, all of a sudden broadband is replaced the potential wireless utilization of broadband. We
don't see the necessity to own and control content and curate what we watch. What we want to do is be able to provide the capability for the
user to use it anyway.
Now, we bought a company called Layer3 TV, and we plan on offering our own version of pay TV service and cable service and over the top service this
year and the concept for us is, that the telephone, the phone has never met the TV and we are going to introduce the two of those, so yes, we are.
QUEST: So, you're not going into content production.
LEGERE: No, we're not going to spend $30 billion of shareholder value buying a UK-based Sky company. We just don't think that's the best use of
CLAURE: It costs than that, right? When you have a 5G network with a hundred times the speed you have today, there's really no reason why you
should have home broadband. You're going to be able to have faster speeds right in your home, to your mobile phone you can project to your TV.
So, if I am a cable company, I'll be very, very worried in terms of what happens when 5G comes to America.
SY: And as Richard said, investors don't seem to like the deal. Shares of both companies falling sharply. Ross Gerber calls the merger "garbage."
Ross is a veteran money manager. He leads Gerber Kawasaki, which has more than half a billion dollars in assets under management.
Ross, how much have you invested in these companies and what don't you like about this merger?
ROSS GERBER, CO-FOUNDER, PRESIDENT AND CEO, GERBER KAWASAKI WEALTH AND INVESTMENT MANAGEMENT: Well, we used to have an investment in T-Mobile up
until last year when this heated up again because we really thought that they actually do need to merge with somebody that is more content driven so
that they can provide more than a commodity which is basically internet service over your phone.
But we also think that the cost of putting out 5G and the potential revenue that they will get back doesn't seem to be very good math by the work we
have been doing with it and on to top of the fact, Sprint -- I don't know if T-Mobile even needs Sprint to roll out 5G, and then lastly...
GERBER: ... Sprint has a ton of debt, and it's just not a good company. So, I really don't like the deal. You know, I get why they're doing it,
but they will not create jobs they will cut jobs. They have to cut jobs to make it profitable, and you know, they are going to invest a lot of
money into a service that hopefully works and it can really be rolled out in a rapid manner.
SY: All right, let me just parse out what you said about the 5G stuff because this play is obviously focused on that. Everyone keeps saying this
is going to be world-changing technology. Both companies want more scale. They want to be able to deliver 5G, why do you think that is not a smart
play -- super fast, wireless Internet connection and phone connection?
GERBER: I don't know if it's -- whether it's a smart play or not. It's whether the cost makes the benefit worth it and we've seen this with a
couple of technologies recently where you know, they're super good technologies, but by the time you've paid for it all, there is really no
return on it like what we have seen with VR for example recently.
But like, I think the real issue is, is that, there's a lot of competition here. There are other players doing 5G. I think people -- we do have
pretty good Internet already, and nobody has talked about the potential health risks of 5G, which uses a different wavelength and spectrum that's a
lot more powerful.
So, you know, this is still unproven on technology in a lot of ways, and they're just starting to roll this out. Over the next several years, we
will see how good it is.
SY: All right, we're going to talk more about 5G later in the show, but I want to ask you about this. The Time Warner/AT&T merger roadblocks, you
think this was a pretty tough regulatory environment to make a deal like this, especially as Richard said, this is a horizontal merger, not even a
What are the odds you think that this combo is blocked for similar antitrust concerns and if this is allowed, the US wireless market of course
will be dominated by only three national players.
GERBER: Well, I think that things have changed and it reminds a lot of when XM Satellite bought Sirius Radio years ago where you know, it was sort
of like, "Oh, who is our competition," it's two companies buying each other, but actually, everybody was their competition, and that's I think
the case. And that's why I don't like the merger, too. It's just being a wireless provider is kind of scary if that's all you do.
I think the different types of integration like the Time Warner deal is much more interesting to me and certainly AT&T needs this deal.
So, I really think the future is not about creating the commodity of providing internet service, it's about creating margin like what Netflix is
doing and Disney is doing with content that people are willing to pay for, and then provide the access as well like Comcast is doing.
SY: But do you think it will pass regulatory muster, all of these issues aside.
GERBER: I think it has no problem going though this. These are two, you know, weakened companies that together are just two weakened companies
still, you know.
SY: We've seen a lot of mergers and acquisitions in telecommunications and media in the last several years, how does this particular merger fit in to
the larger trends in these industries.
GERBER: Well, I have to say, it's really, really interesting time as media and telecom and entertainment and all of these stuff kind of merges and how
people today watch you know, video content in so many different ways and places. I think it's too early to tell what the future brings for all of
these companies involved whether it's the Disney-Fox, you know, Time Warner-AT&T side or the Netflix-Apple-Facebook side.
There's a lot of things going on here and I don't think there's a clear winner or loser yet, but we do think the players that have the most money
and the most viewers have the best chance of winning.
SY: Ross Gerber, thank you so much for sharing your perspective with us.
GERBER: Thank you.
SY: Later in the program, we're going to hear how America's second largest cellphone carrier, AT&T is reacting and why 5G is so important to all the
players in this race.
Walmart, America's biggest retailer is backing out of Britain. It is merging its British supermarket chain, ASDA with its bigger rival,
Sainsbury. Clare Sebastian is here to ring the changes at the checkout. Clare?
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Stephanie, welcome to the QUEST MEANS BUSINESS minimart, the retail landscape here is changing, but what we
need to understand is that if Walmart checks of the UK, what does it take with it?
Well, first of all, $4.1 billion in cash that's part of the deal. It also takes with it 42 percent of the combined company of ASDA and Sainsbury,
then after the ASDA and Sainsbury sale, they are going to be 31 percent of the British grocery market.
As you can see, this is a fundamental reshaping, not only of the British grocery market. ASDA and Sainsbury together with this 31 percent will be
bigger than its biggest rival, Tesco, but you could argue that with this 42 percent, Stephanie, they're not actually checking out at all out of the UK,
they're still going to be maintaining a 42 percent stake in a company that is 31 percent of the British grocery market.
So, the question is now, will the regulators approve it?
SY: OK, first of all, you were terrific at the checking out of the stuff. Clearly, you've done that before. What is Walmart's larger play here? I
mean, yes, it's still a significant stake there in Britain, but we've seen it do this in Britain, we've seen it do it in Germany. I think it's doing
it in Brazil. Where is it putting all of the extra cash it is getting out of these deals?
SEBASTIAN: Well, it's really narrowing its focus, Stephanie. It is focusing on more high-growth markets, things like India where it is rumored
to be looking to take a stake in Flipkart, which is India's biggest e- commerce company.
There are also reports that it could be exiting most of its Brazilian operations, international in terms of Walmart, hasn't been doing badly, but
it has really been underperforming the rest of the business. It's more than half of these stores in total, but less than a quarter of the revenue
in the last quarter.
So, I think, you know, we've seen Walmart make some big decisions in the US in terms of acquiring companies like Jet.com and we are now seeing them
focus more on things like these partnerships and its overseas markets as well, and really, as I said, narrowing its focus.
SY: OK, so from the ASDA-Sainsbury perspective, Clare, I wonder if this is a hedge against Amazon. I mean, are they dealing with sort of the same
concerns about Amazon eating up all of those customers in Britain?
SEBASTIAN: Yes, the fight against Amazon is definitely global, and not just Amazon, but e-commerce in general. Grocery as you know, a very low
margin business, so, scale really matters. So, this really does give them a really strong foothold in the UK and shareholders in Sainsbury really
liked it as those were up almost 17 percent in London.
Walmart shareholders also not unhappy to show about 1.4 percent, but this really is a hedge against, not just Sainsbury and ASDA, but also Argos,
which is currently owned by Sainsbury.
So, you know, a really strong play, but I think the regulators are going to be looking at it and that could take 12 to 18 months and there are
questions about competition.
SY: All right, we'll keep our eye on that. Clare Sebastian, thanks so much. And as Clare mentioned, the ASDA deal pushed Sainsbury shares of 17
percent in London. The optimism boosted stocks around Europe. The major markets all closed higher. The shares of Sainsbury's rival, Tesco, fell 1
Donald Trump gives another strong signal that he is ready to pull out of the Iran nuclear deal claiming this video from Israel's Prime Minister
proves he is right to be skeptical.
Donald Trump says, new evidence from Israel shows he is 100 percent right to be skeptical about the Iran nuclear deal. Mr. Trump was referencing
this video from Israeli Prime Minister, Benjamin Netanyahu claiming he has got evidence that Iran violated the terms of the deal by lying about its
The video was released publicly, though it seems its target audience was likely the US President himself. Judging from Mr. Trump's comments in a
SY: ... conference earlier with the Nigerian President, the message seems to have gotten through.
(START VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: What Israel has done today with the news conference and Prime Minister Netanyahu just gave a very -- I
don't know if everybody has seen it, but I got to see a little bit of it, and that is just not an acceptable situation.
And I have been saying this happening. They're not sitting back idly. They're setting off missiles, which they say are for television purposes.
I don't think so. So, we'll see what happens. I am not telling you what I am doing, but a lot of people think they know, and on or before the 12th,
we'll make a decision.
(END VIDEO CLIP)
SY: Jeremy Diamond is live at the White House, so Jeremy, as the President said, on May 12th, he has to decide whether to recertify the Iran nuclear
deal. It seems pretty clear though which way he is leaning.
JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: That's right. The President explicitly would not tip his hands on the Iran nuclear deal and
which way he is leaning, but the rhetoric that he talked about today, the way in which he seemed vindicated by the information released by the
Israeli Prime Minister claiming that he was 100 percent right about the flaws that he has long railed against in this Iranian nuclear deal seemed
to suggest that the President is moving in a direction in which he would actually decide to nix the Iranian nuclear agreement.
So, there is this deadline coming up on May 12th for the President to decide whether or not he wants to waive those sanctions or reinstate them,
and as of now, it's looking very likely that he will put those sanctions back on the table.
That's despite the efforts from some of the US's closest allies -- the President of France, the Chancellor of Germany, Angela Merkel -- both of
them were at the White House last week to make the case for the President to remain in the nuclear agreement. That now appears unlikely, but the
President did say that despite that, he is open to renegotiating a new agreement. So we'll have to see what that is.
SY: Right, and French President Macron did also talk about the potential for a new agreement. I am curious how big of a deal be this video was.
President Trump makes it sound like there was a smoking gun among those files that BD presented. Do we know that there was or was it theatrics?
DIAMOND: Well, you know, it does appear to be solid information, you know, and the US officials seem to believe that the information obtained by the
Israelis is indeed accurate and it does show that Iran perhaps lied to the IAEA about the contents of its nuclear program, and so that could be
potentially a violation of the Iranian nuclear agreement.
The Israelis said that they do plan to hand that information over to the IAEA and that's when we will probably see what the next steps are there.
SY: OK, a lot of foreign policy experts, as you know, Jeremy are asking how is Trump possibly going to negotiate a deal for denuclearization with
North Korea with which there is equal mistrust as there is with Iran when the North now sees Trump potentially backing out of a deal in which there
were international verification measures? The very measures that Trump has talked about, they need to see in a North Korea deal?
DIAMOND: Yes, that's right. Certainly, those who have argued for the President to remain in the nuclear deal make the case that you know, by
getting out of the Iranian deal, that could potentially send bad signals to North Korea. That is certainly a case that has been made.
So far, this White House appears to discount those arguments and believes that it is pushing ahead. I believe, the National Security Adviser, John
Bolton was asked about those claims yesterday and pushed back on that saying that they are pursuing North Korea separately that they believe that
North Korea will be serious about these talks if indeed, they are serious about this idea of denuclearization and kind of view it as a separate
But, the President today did address those talks. He also talked about a potential location for the talks -- Singapore and Mongolia -- two different
countries had been considered as a potential neutral venue, but the President today bringing up again, this idea of the DMZ. Listen in.
(START VIDEO CLIP)
TRUMP: We're looking at various countries including Singapore and we are also talking about the possibility of the DMZ -- Peace House, Freedom House
-- and there is something that I thought was intriguing. I think that some people may be -- don't like the look of that, and some people like it very
much. I threw it out today as an idea. There's something that I like about it because you're there. You're actually there where if things work
out, there is a great celebration to be had on the site, not in a third- party country.
(END VIDEO CLIP)
DIAMOND: So, as you can hear there, it appears that the potential for a celebration right there on the grounds of the Demilitarized Zone could be a
potential reason why the President wants to have the talks there. Those discussions are, however, still ongoing. Until this point, US officials
have really favored Singapore as the potentially ideal location for this summit because it's pretty easily accessible and it's also viewed as a bit
of a more neutral zone because it's an independent country.
SY: Yes, but the President again is setting high...
SY: ... expectations for that summit. Jeremy, thank you so much. Oil prices have risen to their highest level in more than three years. Brent
crude rose about $75.00 a barrel earlier Monday. The war of words in the Middle East is one factor driving it including Israel's Prime Minister
saying he can prove Iran lied about its commitment to the nuclear deal.
It was a down day for US stocks. Early gains quickly disappeared leaving the Dow to end the session lower by almost 150 points. Trading was back to
normal though in Toronto this morning after a massive technical problem forced all business to stop early on Friday.
The Chief Executive of the Exchange said it was a hardware problem like he's never seen before and he spoke to Richard earlier on QUEST EXPRESS.
LOU ECCLESTON, CEO, TMX: What happened was really an unprecedented failure in a piece of equipment, an appliance that is well proven had been running
at our center for over a year and is used by lots of very large companies - - technology, banks, and other markets around the world, and it's something that we had never seen the manufacturer had never seen before.
So, given the nature of it, it actually prevented the over to the failover in the primary system and given the nature of that and the time of day that
it occurred, we made a decision to have an orderly end to trading and reopened in a robust full wave this morning versus trying to move
(inaudible) recovery and bring up the markets (inaudible).
QUEST: Of course, everyone will be asking, all the too clever by half questions what happened to the backup? I mean, what happened to the fail-
save systems. Isn't that the whole point of them? I am sure you have been asked a million times why wasn't there a Plan B, a Plan C, and a Plan D.
ECCLESTON: Well, there were all of those and as I said, even in our primary system, there is a failover. The nature of what happened though in
that appliance actually prevented the failover from kicking in and becoming live.
So, we would have had to move to full disaster recovery. And what we chose to do, given the time of day is to make sure that there were no issues with
data integrity, no issues with cyber, all proved to be the case and in consultation with our clients, with the markets, with regulators, we
thought it better to come up Monday morning in an orderly fashion versus trying to come back right before the close.
QUEST: And I presume that there will be the normal settlement process and that those quest trades were questionable or that where they are
problematic, will be unwound.
ECCLESTON: You know, we issued a closing price as of the last board watch trade on our securities so the clients had that correction.
And we started literally on Friday and are still going through it this morning and into the afternoon to make sure that we clear all pending
trades, all orders and all strategy as part of the execute and that's going well and we'll work through that through the course of the day.
SY: A corporate legal drama is in its finishing stages in Washington. Closing arguments have just wrapped up in what is being described as the
antitrust case of the century.
[16:30:00] SY: Hello, I'm Stephanie Sy, coming up on the next half hour of QUEST MEANS BUSINESS, a TV exclusive interview with the man who wants to
bring some "Disney" magic to South Arabia's new entertainment park and a brand new exhibit at a French art gallery doesn't go to plan when most of
the paintings turn out to be fake.
First, these are the top news headlines we're following on CNN this hour. Israel's Prime Minister says he's obtained new proof of Iran's secret
nuclear weapons program. In a global address, Benjamin Netanyahu showed an array of material that he says will be shared with world powers and the
UN's nuclear watchdog.
A little while ago, Iran's foreign minister called Mr. Netanyahu "the boy who cries wolf" and his speech a quote "rehash of old allegations".
More than 30 people have been killed in a state of attacks across Afghanistan. Twin suicide blasts in Kabul for most lives as journalists
and rescuers race to the scene of an initial bombing. Nine journalists were among those killed.
U.S. President Donald Trump has confirmed that Singapore is one of the possible locations for a summit with North Korean dictator Kim Jong-un.
President Trump also has suggested holding the meeting at the demilitarized zone between North and South Korea, saying, he finds the idea intriguing.
Porn star Stormy Daniels is now suing U.S. President Donald Trump for alleged defamation. It involves the release of a sketch of a man who
Daniels says threatened her about her alleged affair with the president. Mr. Trump had called the sketch, quote, "a total con job".
Those comments have now triggered her lawsuit. As we told you in our top story tonight, Sprint and T-Mobile are the third and fourth biggest U.S.
cellular career, say, they are merging. But what about their bigger rival AT&T and its $85 billion bid to buy CNN's parent company "Time Warner".
Well, the government's legal case to block the deal has just wrapped up in court, and Jessica Schneider is at the court house in Washington for us.
JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: Well, Stephanie, no, the case now in one man's hand, that man is the federal district court judge
here Richard Leon, he was appointed by George W. Bush and he is the one who's presided over all six weeks of this trial.
Now, Judge Leon after the government as well as AT&T has wrapped their case, he is under a tight deadline to actually rule in this case. He's up
against a June 21st drop-dead date by AT&T and "Time Warner".
That is the date where either party can walk away from this proposed merger. So Judge Leon at the end of court this afternoon, it just finished
moments ago, he said that he's very cognizant of this June 21st date and as such he is promising ruling in this case by June 12th.
He has already scheduled a hearing at 4:00 p.m. on that date, and he said that that date, he will let the parties know what his decision is, he said
in an opinion, a much longer was anticipated to be about a 200-page decision that could be after that.
But as of June 12th, the judge has promised that he will decide whether or not to let this merger go through. He said that will be enough time for
the parties to decide whether or not they'll appeal this decision well in advance of that June 21st drop-dead date where AT&T and "Time Warner" have
to have this deal done by.
Of course, these closing arguments capped off a six-week trial in this case, the government's case in this is that they say that if AT&T and "Time
Warner" are allowed to merge, AT&T of course being the distributor, "Time Warner" controlling the content, content-like "Turner" which does own CNN.
The government says that AT&T could increase prices for consumers, they also say that they might conspire with Comcast to perhaps withhold
programming. But AT&T said look, in this day and age with this changing media landscape, AT&T needs to merge with "Time Warner" because they need
to join forces to go up against these new emerging entities like Facebook, Amazon, Apple, Netflix and Google.
[16:35:00] So that is the big debate here. And of course, this is a typical debate because this is a vertical merger, these two companies, AT&T
and "Time Warner", they don't directly compete, and the last time the government sued to block this sort of vertical merger was more than 40
And a lot of court watchers, industry watchers, they have agreed that the court -- the government, I should say, has had an uphill battle in this
case. A lot of observers say that AT&T has made the better case, that AT&T has poked sufficient holes of experts arguments that the government has
And that the government's own witnesses have at times contradicted the government's own arguments here. So all of this now coming to a close
after what was a very long six weeks of expert testimony, industry witness testimony, and now Stephanie, it is in the judge's hands, he said that he
will have a ruling at the very latest on June 12th, just about a month and half from now.
So of course, this will have big implications for business mergers in general, and particular, the media industry and of course like you said, it
comes on the heels on the announcement this weekend about that proposed merger between Sprint and T-Mobile.
Of course, the judge won't be considering that proposed merger, but you can bet, Stephanie, that that proposed merger was looming large over the
closing arguments today. A very different merger of course, that a horizontal merger because they're direct competitors, but a lot riding on
this case as well, Stephanie --
SY: Yes, absolutely --
SCHNEIDER: Again, Judge planning to issue a ruling June 12th --
SY: All right, Jessica --
SCHNEIDER: This year --
SY: Schneider laying that out so well for us, thank you. And as Jessica said, AT&T, Sprint and T-Mobile all say that 5G technology is at the heart
of their new corporate strategies. Five-G is around ten times faster than the 4G technology we use now.
It's crucial for the widespread adoption of things like virtual reality, self-driving cars and smart cities. Studies have concluded that the
countries that rules out 5G first will get a massive economic boost that would otherwise go elsewhere.
Now right now, China and South Korea are closest to the price. The U.S. was an earlier adopter of 4G tech, but Japan and Europe won the race for 2G
and 3G. For more on how 5G will affect you and me, we turn to tech expert Shelly Palmer.
You know, I said those words that 5G is going to affect things like self- driving cars, virtual reality and smart cities. But I need you, Shelly to explain what I really meant by that.
SHELLY PALMER, ADVERTISING, MARKETING & TECHNOLOGY CONSULTANT: Well, what you really meant is that 5G, the next generation network is going to be --
turns to hundreds of times faster than the way an average person accesses the Internet or accesses information online right now.
And that access will come at extremely low late this year. What that means is the time it takes for your information to go up and down is going to be
near real-time. Why is that important? If you've got a self-driving car and it asked the network a question and the network takes too long to
answer, nothing good is going to happen.
So the speed of that communication is important and 5G offers that speed, but the delay in receiving that information also is going to be quicker
than anything we've ever seen on the order of one or two milliseconds as opposed to the seconds it can take now.
SY: And when you consider how everything is plugged in online, it's really sort of mind-blowing what the impacts could be. But this is like massive
infrastructure right? So I want to ask you this question in China, which is way ahead apparently of the U.S. according to one study in the 5G race.
Is that because the government has actively taken a role in building 5G infrastructure? And does the U.S. government need to start considering
PALMER: So I think it is very difficult to compare infrastructure in China and the way it gets built, approved and funded with infrastructure in the
United States --
SY: Of course --
PALMER: I think it's built and funded. Five-G, because of the nature it works from a physics standpoint requires a lot of closed together cells.
So you need cell towers that are close to one another because of the nature of the physics which we can go into.
Shellypalmer.com, there's a 5G article right now, you really are deep into it, you can go there. But just understand that you need a lot of towers in
a small area because of the nature of 5G.
So China doesn't have the pesky rule of law and they can just put towers anywhere. On the island of Manhattan, we do have the pesky rule of law and
you can't just put towers everywhere. And so rolling it off from just an infrastructure standpoint is going to be different from country to country.
Now, throughout history, the speed of communication has been directly equated to economic success. You know, the stock exchange had a problem,
yes, and in Toronto, and they lost an appliance. Well, we've got people who are co-locating servers at the Stock Exchange because they want
nanosecond cell trades to happen.
So you know that the speed of information of economic success are very well equated there. Now imagine what happens if you take an entire society and
you speed up their communication to that level, turns to hundreds of times faster that's going to give any country to get that kind of boost.
[16:40:00] An incredible advantage economically for cottage industries, for the doing of all kinds of network communications, drones, self-driving
cars, content distribution. Imagine, just plugging in a TV set instead of maybe a cable box or anything, it works like your phone, you just got
video, a completely different world in 5G.
SY: So the president has even said this is a national security issue, who has the 5G urge. And so you have Sprint, T-Mobile merging with this sort
of selling at the merger by saying this is an America first sort of 5G advantage we're getting.
Does that make sense to you and do you think that's a salable idea to the anti-trust regulators?
PALMER: I can't believe I'm going to say this, but I agree with that statement in every way. I think that it is a national issue, I think that
America deserves the best broadband access for every man, woman and child, for every company that's formed or now are going to form.
For every start-up, for everyone who aspires to do business in a digital world, we need the best connectivity possible, and anywhere that we can get
-- any way that we can get there and the way that we get there first is going to be best for America, no question is asked.
SY: Shelly Palmer, this is fascinating stuff, thank you so much for your - -
PALMER: Thanks for having me --
SY: Expertise. Well, call it "Avengers" Box Office war. "Disney's" latest film has made history.
SY: "The Avengers" have made history. They pushing bad guys and Box Office records. "Avengers: Infinity War" brought in $641 million in its
opening weekend, that is 100 million more than the previous record set by the "The Fate of the Furious" last year.
Shares of "Disney" moved more than 1 percent higher on Monday. Frank Pallotta is tracking the numbers. Frank, there's so much excitement around
this film. There's so much money around it. I went back, "Disney" acquired "Marvel" for $4 billion back in 2009, "Infinity" made $640
million, that must look like a bargain now, the idea with "Marvel".
FRANK PALLOTTA, CNNMONEY MEDIA REPORTER: It's not even that. The 18 -- the 19 movies that "Marvel" has put out has made about $15.3 billion.
PALLOTTA: Imagine buying something for $4 billion and then have it ten years later made $15 billion, that's a good investment.
SY: And there was like all this initial concern that these beloved "Marvel" superheroes would be somehow Disney-fied, but clearly, "Disney"
knows what it's doing. What is the formula behind the success of this movies?
PALLOTTA: I will say that these movies are really like a study in choreography. For how the "Marvel" and "Disney", they have an
understanding what their audience is, they know how to market these movies.
Like this movie, the reason it was so big, the reason it was an event is because it was less of a major motion picture and more of like a TV series
finale. Like if you like "Spiderman", he's in the movie, like "Ironman", he's in the movie.
SY: And we've heard all 20 of them.
PALLOTTA: More than 20, it was more than 20. But the thing is that you go and see it because you want to be there on the opening weekend because you
never know if you're going to have an event like this again.
[16:45:00] SY: All right, they set this record of opening day weekend, and they haven't even opened in China yet --
PALLOTTA: No --
SY: So how many more records are set to be broken?
PALLOTTA: I think it's going to be easily the fastest $2 billion which it might do before the end of next weekend which is incredible. And then once
it hits China, China has embraced the "Marvel" superheroes a little bit more than it has even like the "Star Wars" franchise.
So it might make a bunch of money. I think that we could be talking about a movie that could be in the top three all time. I think it's going to
break $2 billion before it's all said and done. It's just -- it's going to be a runaway success, it already is.
SY: So we found a "Disney" stock price jump a percentage --
PALLOTTA: Yes --
SY: They probably have more "Marvel" movies in the pipeline. I imagine, how big is "Marvel" part of "Disney's" recipe for success?
PALLOTTA: I mean, the "Disney" studios have been knocking it out. They really have five brands: live action, animation, Pixar, a "Marvel" and
"Star Wars". They have another "Marvel" movie in two months with "Ant-Man and the Wasp", they have a "Star Wars" movie again this month.
But at the end of the day, the "Walt Disney" company is not just movie studios like it was back in the 20s with "Mickey Mouse" and all of that.
It's a major media corporation and "Espn" and the TV -- I should say, "Abc" and cables all a part of that.
So unless, you know, "Black Panther" and "Spiderman" are going to be hosting "SportsCenter", it might lag a little bit with the stock price
because a lot of investors are looking at other aspects of "Disney's" business --
SY: Right, what does this pertain for the industry as a whole this year, this one film?
PALLOTTA: We'll look at it this way, the domestic Box Office was down 3 percent going into the weekend. Just with "Infinity War", it's now up 3
percent. That's how much of a big movie this was and how much it can really change things.
Plus, it gets people like yourself who hasn't the movie, now you're like man, it made $700 million, I have to go see this movie --
SY: And that's the kind of movie you want to see in the theater?
PALLOTTA: Yes, I have to be a part of this conversation --
SY: Versus it's fun to be on Netflix.
PALLOTTA: In this time -- in this time and age where you can watch majority of stuff at home, you want to be a part of the conversation, and
that's what these movies really bring in people who are not just fans, but people who really want to enjoy things with the community.
SY: All right, Frank Pallotta, thank you so much.
PALLOTTA: Thank you.
SY: Saudi Arabia has turned to a former "Disney" executive to help create a new entertainment resort. This weekend, King Salman was on hand to lay
the foundation stone at Qiddiya which is designed to be the world's biggest leisure and hospitality complex with theme parks, water sports, hotels and
Michael Reininger who used to work on "Disney's" theme parks is in charge of the lavish development. And in an exclusive interview with our John
Defterios, he says Saudi Arabia could become the next Orlando.
(BEGIN VIDEO CLIP)
MICHAEL REININGER, CHIEF EXECUTIVE OFFICER, QIDDIYA ENTERTAINMENT RESORT: You think about it as the new epicenter of entertainment, culture, sports
and the arts for the entirety of the kingdom.
And when you talk about an aspiration that's that big, it implies a pretty sizable, both financial commitment and investment on the part of the
enterprise, but also a requirement for plenty of elbow room to make that vision become a reality over an extended period of time.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: You know, there's a danger that becomes a wide elephant in the desert, and you have an American
business background, international background as well. How do you prevent that?
REININGER: Well, so, this is -- this is very much driven by sound, sort of business logic. I mean, at the very core of this, there's a couple of
Like number one is, there are soon to be some 7 million people resident in this city of Riyadh about 40 kilometers from the center of the site who are
starved for the kinds of experiences that we will create at Qiddiya in the world of entertainment and hospitality and sports for which there's no
So we like the demand-supply sort of profile from a pure business perspective.
DEFTERIOS: It's a fascinating number out there. After $30 billion of years spent outside the country on entertainment and services by Saudis,
that's about 5 percent of GDP in the country.
REININGER: That's the best representation of the demand side of this equation that you can think of. So it says that, that in fact, $30 billion
are leaving the country today for people that desire the kinds of entertainment and hospitality services that are not yet fully matured
within the kingdom.
DEFTERIOS: I don't want to run too fast, but do you see yourself as an eventual competitor to Dubai because it pulls a lot of traffic from Saudi
Arabia and the broader Middle East and North Africa.
REININGER: We will be a competitor to the things that are happening in Dubai in so much as if people are now leaving to go have some of those
experiences in Dubai, we hope to compete with them and capture that economic opportunity and keep it in the local economy here in Saudi.
DEFTERIOS: You worked at "Disney" for 12 years including on theme parks, have you seen something of this sort of scale or does it outdo anything
that "Disney" did including a Disneyland or what we see in Florida?
REININGER: Well, it depends on how you look at it, if you look at it on land area alone, the site that we have here at Qiddiya is something on the
order of magnitude of two and a half times the size of World Disney World which is the largest land holding of the company, the "Walt Disney"
[16:50:00] Another way to think about it is, you know, we have land that's equal to a hundred times the size of Central Park in New York.
(END VIDEO CLIP)
SY: After the break, there's outrage and anger in France after a gallery finds its treasured works of art are not quite what they seemed, we'll
review why, next.
SY: There's uproar in France after it was discovered that half of the works in a museum dedicated to a local painter were fake. Eighty two out
of 140 paintings in the museum in Arles in Southern France have been judged to be counterfeit.
A visiting art historian made the discovery in the course of studying the works of Etienne Terrus, local people are furious, saying, they've been
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (through translator): I'm angry, I think about the families that gave money to buy Taurus'. I think about the associations,
and angry as the former mayor from 2001 to 2014, we've been victims of counterfeiters, of scrooges, it's unacceptable.
They took advantage of the situation, it's unacceptable.
(END VIDEO CLIP)
SY: Erin Thompson is assistant professor of art crime at John Jay College of Criminal Justice and joins us now to talk a little bit more about this.
Erin, thanks for being here. First of all, how unusual is this to have a smaller museum, a smaller local artist find out that those are fake.
ERIN THOMPSON, ASSISTANT PROFESSOR OF ART CRIME, JOHN JAY COLLEGE OF CRIMINAL JUSTICE: Strange as it may seem, this isn't the only museum in
the last couple of years that's discovered a significant portion of its collection are fakes.
If you're a small museum without a lot of experts on stuff and you make it known, I want to buy a lot of art by this particular painter. That's like
an invisible order form for forgers.
SY: Really? OK, so they're obviously going to investigate who the forgers are. How do they go about figuring that out forensically the source of the
THOMPSON: There are all sorts of ways. In one recent case, the FBI used cat hair to genetically match to the cat owned by the deceptive forger.
SY: OK, is there anything about this artist that might be a red flag for fakers, and it might point to a certain network? I mean, I don't know, I
mean there're certain places where fakers -- are they in France? Are they outside of France?
THOMPSON: They're everywhere. Some experts estimate that 20 percent to 40 percent of all arts in museums is fake or so over restored as to be a fake.
This is a huge problem especially for people whose tax dollars or donations have gone to purchase suspect works.
SY: And for people that actually pay admission to go to these museums, is this just a problem in France or does this happen everywhere?
THOMPSON: Well, maybe the museum should rebrand itself. Now, we have one or more additional great painters in our region, not just the one whose
name is on the museum.
[16:55:00] SY: Is it easier to fake certain types of art than other types. And I don't know the providence of this particular painting or anything
about the style. But are there certain types of paintings that are more susceptible to being counterfeited?
THOMPSON: This painter is lead impressionist, so it's a style that's on every desk to waiting room, you can counterfeit easily, make it -- but
really, for just import anything as long as people are willing to accept it without any paperwork and asking a lot -- not asking a lot of questions.
SY: OK, it sounds like the way you're talking about this is that this is just sort of a known part of the art world. Is this only the case when it
comes to smaller artists or should we be concerned that when we go to the roof, there's a fake on the wall?
THOMPSON: Well, in 2016, $250 million worth of fake old masters were uncovered, sold by major auction houses --
SY: Wow --
THOMPSON: It's a problem everywhere.
SY: Finally, are you surprised that it took a visiting curator to discover this and that there weren't experts within the museum that could have
identified that 82 of the works are fake?
THOMPSON: I'm not surprised at all because the museum employees, they don't have any incentive to this day -- oh, I've been taking care of a fake
for years. There's always an outsider who says you might want to read this up --
SY: That really undermines the credibility of some of these art galleries in France which is unfortunate. Erin Thompson, assistant professor of art
crime at John Jay College of Criminal Justice, thank you so much for joining us with insight --
THOMPSON: Thanks for having me --
SY: All right, just about time to recap the day's stock market action. The Dow fell triple digits on the last trading day of April, meanwhile,
oil prices rose to their highest level in more than three years, Brent crude broke through $75 a barrel on Monday.
And that is QUEST MEANS BUSINESS. I'm Stephanie Sy in New York. The news continues here on CNN. Thanks for watching.