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QUEST MEANS BUSINESS
The United States Penalizes Moscow For Chemical Weapons Act On British Soil; Reports That The Media Giant, Tronc, Is Actually Planning To Sell Its Newspaper Business; The SEC Is Actually Looking Into Whether Elon Musk's Tweets About Taking Tesla Private In And Of Itself May Have Indeed Violated The Law; State-Owned China Tower Made Its IPO Wednesday In Hong Kong; MoviePass, The Subscription Movie Ticket Service That Has Been In A Lot Of Hot Water Says That It Has Finally Nailed Down Its Business Model; Disney Stock Closed Down More Than Two Percent After Earnings Failed To Beat Forecast; U.S. Congressman Indicted On Insider Trading Charges; Indonesia Earthquake Death Toll Triples; Drought Hits Farmers in Southeastern Australia; Heat Drought and Wildfires Scorching Europe; Church Complaint Against Jeff Sessions Dropped; Republican Senator Delivers Letter from Trump to Putin; Ohio Election Too Close to Call in U.S. Republican Stronghold; New York City Passes One-Year Cap on Ride-Hailing Services, Freezing New Licenses; Saudi, Canada Battle Escalates; Tinder Revenue-Surge Fuels Match Group Results. Aired: 4-5p ET
Aired August 8, 2018 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN INTERNATIONAL HOST: All right. Welcome. Well, that sound marks the end of yet another trading session on the Wall Street. Let's
take a look and how the Dow did right now. It's pretty much flat. It was around this territory all day. We are down 48 points or so, I've got to
mention that August is a bit of a quiet month. It is a very much sort of nothing to see here kind of day in terms of what is moving the markets, but
a lot of people are talking about the trade war escalation between the U.S. and China, both countries identifying $16 billion dollars' worth of goods
to slap tariffs on, but that is not having an effect on the market. It seems as though the market has priced that in already. My friends, it is
Wednesday, August 8th.
New sanctions on Russia. The United States penalizes Moscow for chemical weapons act on British soil. And Tesla drives into trouble, a big question
- has it actually violated SEC rules? Former SEC boss Harvey Pitt is going to be answering a few questions with me at this desk in just a few moments,
and New York City takes on the ride sharing explosion as the Big Apple limits Uber and Lyft growth. We have co-founder and CEO joins us live now
on the show in just a few minutes. Big show today, it's certainly a packed day in terms of news. I'm Zain Asher coming to you live from here in New
York, where I mean business.
All right, welcome, everybody. I'm Zain Asher. Tonight, some breaking news for you. More sanctions are coming for Russia and coming for its
economy. In the past hour, the U.S. State Department actually announced that it's going to impose new measures on Moscow, new measures on Moscow
over the poisoning of the former Russian spy Sergei Skripal and his daughter. They were actually the victims several months ago over suspected
assassination attempt that took place in England using a nerve agent. The nerve agent, Novichok, specifically.
Now, before this announcement, the ruble had actually already fallen to a two-year low over fears that these new sanctions were indeed coming. I
want to bring in Elise Labott, who joins us live now from the State Department.
So Elise, this is interesting, I mean, just the timing of all of this. Obviously, President Trump had that meeting with Vladimir Putin just a few
weeks ago and sort of intimated that he wanted better relations with Russia, that he was aiming for some kind of detente, and now these
sanctions, just help us make sense of it all.
ELISE LABOTT, CNN CORRESPONDENT: Well, Zain, I mean, these types of legal determinations take months to determine whether Russia violated this 1991
law on chemical and biological weapons use. Now, when this attack happened in March, Congress had asked the administration to try and determine
whether Russia was responsible for using this nerve agent against Sergei Skripal and his daughter, and you know that two other people were also kind
of affected with the residual effects of the Novichok when they came in to contact in it in recent months.
And so, that kind of takes time. The U.S. had already said that it suspected Russia had already imposed some sanctions against Russian
individuals, oligarchs close to Vladimir Putin and expelled U.S. diplomats for the totality of Russian bad behavior including the possible use of that
Novichok agent, but now, the administration has made this determination. I will say that it did come a few months Congress had asked for it.
After this happened in March, they were supposed to make notification before June, of course that was when the summit was coming up and the House
Foreign Affairs Committee Chairman, Ed Royce had pushed the administration last month to make this determination, which is why we're seeing it now.
ASHER: Okay, so the timeline didn't just happen sort of a few weeks ago. Obviously, the timeline is longer, but I'm curious about what the Kremlin's
response is going to be because - do they have - do they really actually have the economic power to really retaliate against something like this?
LABOTT: I think you'll probably see something more in the way of diplomatic retaliation. There's been a lot of tit for tat, expulsion of
diplomats. There's nothing they could really do in terms of major impact to the U.S. economy, but there are certainly things that could increase
tensions between the two countries at a time that President Trump said he wants to improve relations with Russia and you just say Senator Rand Paul
traveling to Russia for the very same aims.
ASHER: All right, Elise Labott live for us there, thank you so much. Appreciate that. Okay, so media stocks are actually on the move. Tronc
shares closed up about - let's see here - 13 percent, just a little bit more than 13 percent on reports that the media giant is actually planning
to sell its newspaper business. Tronc actually is going to be reporting earnings tomorrow, our time, so Thursday, and at the same time, Sinclair
Broadcasting is reportedly in talks to try and save its deal with Tribune Media even though Tronc and Tribune Media are both descendants of the
Tribute empire, so they are actually now completely separate.
Brian Stelter is here to literally - my head is spinning because this is so confusing to me. You're here to literally help us make sense it all.
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: I'll try.
ASHER: Just walk us through just this changing media landscape.
STELTER: Both these stories show us the beleaguered environment for the local news business in the United States. You know, we hear a lot about
how "The New York Times" is doing well, the CNNs of the world are doing well in the Trump age because there's so much interest in all things Trump.
But when you get to the local level, whether you're a newspaper owner or a local TV station owner, things are very difficult and they are getting
worse and worse and worse because Google and Facebook and are of course taking over advertising and taking away advertising dollars, so what you
see here is Tronc, which owns the "Chicago Tribune," "The Baltimore Sun" and really special local newspapers, looking to get out of the business,
looking to sell its operations to a private equity firm.
This is according to the company's own newspaper, the "Chicago Tribune" broke this news a few minutes ago. They are looking to sell. The company
is not commenting, but as you mentioned, earnings are tomorrow. I think we'll hear more from the company tomorrow about that. This is a company
that laid off half the staff of one of its papers, "The New York Daily News" just a few weeks ago - laid off half the staff. That's a sign of how
desperate things have become at these local papers, and frankly, how greedy the investors have been trying to suck profits out of these papers while
they still can.
So, we don't know if they'll end up selling, but the report is Tronc is looking to sell its papers.
ASHER: Okay, so just in terms of how sort of Sinclair fits into all of this. There was supposed to be a merger between Sinclair and Tribune
STELTER: And Tribune, yes.
ASHER: Where did things go wrong? It doesn't look like that is what is happening.
STELTER: No. This is the day that the merger deadline day where either side can break up, so sit back a few years, Tribune owned the paper and the
TV stations, then they broke up the TV stations, thinking that TV stations were the more valuable asset. Now, that is true, but local TV is
struggling in some ways just like all the newspapers. So, you have Sinclair come in trying to buy these Tribune stations, Sinclair wants to
get even bigger. It wants to become a kind of conservative media empire and take on Fox News, well, it looks like the Trump FCC was going to bless
that. It looks like the regulators were going to clear the way.
All of a sudden, last month, no. Actually, it's the regulators, the Trump White House regulators that had put the kibosh on the deal, so as of today,
they can break up. They can walk away from each other. Our sources are saying that's likely to happen sometime this week, in other words, Sinclair
will walk away. It will lose the deal, Tribune will break up with them and then we'll see if Tribune sells to someone else.
ASHER: Thank you so much for helping me navigate that. Brian Stelter live for us. Appreciate that. Okay, so let's talk about stocks that we've been
talking about in the past 24 hours that has made some major breaking news.
Tesla shares actually dipping at the end of the day, down about 2.5 percent. This all comes after reports that U.S. Securities and Exchange
Commission, i.e. the SEC is actually looking into whether Elon Musk's tweets about taking Tesla private, the tweet that sort of sent Wall Street
into a head spin yesterday, whether that tweet in and of itself may have indeed violated the law.
The shares as you can see there closed down slightly 2.5 percent. They're still up nearly 8 percent from Tuesday morning, that is before Musk
actually announced his intention. So I want to go straight now to Harvey Pitt, he is the former Chair of the Securities and Exchange Commission. He
joins us live now.
So, Harvey, thank you so much for being with us. You're the perfect person to help us make sense of this. I just want to start with Elon Musk's
tweet. The way he announced that he was considering taking Tesla private, a lot of people are saying, "Well, you know, yes, he said that funding is
secured, and of course, you know, he better have been serious about that." He must have funding secured, he's going to say that on Twitter, but what
do you make of how he made the announcement and what might the SEC be looking into?
HARVEY PITT, FORMER CHAIR, SECURITIES AND EXCHANGE COMMISSION: The way he announced this is highly unprecedented and very problematic. For one
thing, he announced that during the market and most announcements of this sort emanate from the company not from a CEO's Twitter account and in
addition, there may before the opens or after the market closes, it's not so much the medium as the message. He had a very bare bone statement and
he left out important details.
So there are a lot of issues I think that regulators will want to nail down before they conclude that he didn't violate any laws.
ASHER: And you know, obviously, Elon Musk has sort of made no secret of the fact that he is sometimes very angry with those who have been short
selling his stock. After the news that came out yesterday, share prices skyrocketed. It was up about 11 percent at the end of the day yesterday.
I mean, do they look into all of that as well in terms of if there is any sort of untoward motive for Elon Musk actually conducting business in this
PITT: I think the chief principal areas of concern are first, whether his statements might have been fraudulent and second, whether they might have
been uttered for the purpose of manipulating the market. With respect to fraud, the SEC would have a concern as to whether --
PITT: -- what he said was true at the time he said it. What is important here is he --
ASHER: Do you mean in terms of saying that the funding is secured. They have to verify whether or not at the time that he sent out that tweet
yesterday, whether or not he did indeed have funding?
PITT: Absolutely, and with respect to manipulation, it is illegal for somebody to make statements designed artificially to influence the price of
the stock. His statements yesterday caused an 11 percent or 10 percent thump in Tesla's stock price. So one issue will be why did he make those
statements, and why did he make them at the time and in the manner he did.
ASHER: Okay, so overall, do you think investors should be worried? What are your thoughts on that?
PITT: I believe that a lot of this can sort itself out, but I believe his conduct is very irresponsible. He may not want to be a public company, but
right now, he is in a public company and that means he has to follow the rules that are applied to all public companies.
ASHER: So if - and I really want to emphasize the word "if" because honestly, I don't know - nobody knows as of yet, but if it is determined
that there may have been something in terms of SEC regulations about Elon Musk actually ended up violating, what would be the ramifications of that
do you think?
PITT: Yes, they will have to look into it and see whether his conduct in some manner offended a number of rules and that includes rules relating to
companies that are public but want to go private. There is a real issue here about the manner in which he announced this and it's important to keep
in mind that he does not alone have the power to determine whether Tesla will go private. That's where the outside directors and the public
ASHER: Shareholders have to vote on it.
ASHER: Right, so we don't even - we're not even sure what's going to end up happening here. All right, Harvey Pitt, we'll leave it there. Thank
you so much for breaking that down for us. Appreciate that.
So literally, as Harvey and I was just talking about, Elon Musk's plan is certainly not a done deal by any stretch of the imagination. As we just
told you, he needs to deal with the SEC as well. He needs the Tesla board which says it is considering his plan and must also need, as I mentioned,
shareholder approval as well in order to take the company private. Ross Gerber is one of Tesla's most vocal and supported investors. He told CNN
he is not on-board with Musk's proposal.
(BEGIN VIDEO CLIP)
ROSS GERBER, CO-FOUNDER, PRESIDENT AND CEO OF GERBER KAWASAKI WEALTH AND INVESTMENT MANAGEMENT: I think he wants to take the company private in
420, I don't think that's going to happen. Shareholders aren't selling. Every shareholder I've talked to doesn't want to sell and being a private
company, I think lowers the potential return outcome over the long term for Tesla shareholders who are currently public shareholders.
So, we're going to fight to make Elon happy, keep the company public and have the stock be fairly valued which should be at around $571.00 a share.
We'll be buyers today in the market, if it opens under $420.00, we're going to buy every share we can and the short sellers are done.
(END VIDEO CLIP)
ASHER: All right, so to power new technologies like say a massive fleet of self-driving Tesla's, the world's biggest economies will soon be craving
the next generation when it comes to wireless networks. It is 5G I am talking about. Right now, China is racing way ahead of the United States
when it comes to 5G. State-owned China Tower made its IPO Wednesday in Hong Kong. It's the biggest stock listing the world has seen in the past
China Tower is rapidly rolling out 5G across the country. It now has 350,000 5G cell towers. The U.S. by the way just by comparison has a
measly 30,000. A study out this week by Deloitte says that China could actually be creating a 5G tsunami and soon the U.S. might never actually be
able to catch up. Here is why that is so significant.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Self-driving cars, smart cities, fully connected homes, robots. This is the future and it will be powered by 5G.
The G stands for generation, as in next generation wireless network and it's going to be fast. About 10 times faster than the 4G network on your
phone right now. Today, it takes about six minutes to download a 3D movie on 4G. With 5G, it will be 30 seconds. The 5G is about more than just
super fast downloads and fewer dropped calls, it's really about connecting the internet of things. All of those sensors, thermostats, cars, robots.
Right now, 4G just doesn't have the bandwidth for all of those devices, but 5G will.
UNIDENTIFIED MALE: That's why it's a game-changer. Imagine self-driving cars instantly communicating with traffic lights and other cars, or a
surgeon with ER equipment and special gloves, operating remotely on a patient thousands of miles away. 5G will make that possible. But when?
2020 is a working date for most of the wireless industry. Four nationwide carriers are already testing the technology. Chip makers are building
processors and radios for 5G communication and network equipment companies are building the backbone. But the future won't come cheap. 5G signals
are powerful, but they don't reach as far. Making it work will require thousands maybe even millions of many cellphone towers pretty much
everywhere you can imagine.
Lamp posts at the site of every building, maybe even in every room of your home, that's why rolling out 5G to the entire United States could cost $300
(END VIDEO CLIP)
ASHER: That is no small change. Daniel Ives is Chief Strategy Officer and Head of Technology Research at GBH Insights. Daniel, thank you so much for
being with us. So, when you compare the U.S. to China, China racing ahead when it comes to 5G, why is the U.S. lagging behind?
DANIEL IVES, CHIEF STRATEGY OFFICER AND HEAD OF TECHNOLOGY RESEARCH, GBH INSIGHTS: It also speaks to the Qualcomm-Broadcom situation in terms of
the national security threat that was deemed within the beltway, but I think part of it is that this is obviously a two-horse race, U.S. and
China. I think right now, China is definitely ahead, but I do believe this is something where from a technology and R&D perspective, they've had an
advantage, but this is something over the coming years, it's going to be key for the U.S. to really significantly double down on 5G development and
especially domestically in terms of the infrastructure buildout.
Because as that piece talked about, there's massive ramifications across really all of technology in the consumer ecosystem and I think this is
something that from a U.S. tech perspective, it's going to become more and more key over the coming, call it, six to 12 months.
ASHER: So, I just want to make sure that our international audience really understands the difference between 5G and 4G just in terms of how society
would be different. Obviously, 5G is a lot faster than 4G, we know that. I believe, it's ten times faster if not more. But when it comes to our
ordinary lives, how would 5G really make everybody's life that much better or different especially when it comes to things like - and that piece
talked about self-driving cars, it talked about the Internet of things. What changes?
IVES: I think it's really more an interconnected world. I mean, you see in the smart homes, you see what Amazon, Google, Apple as well as others
really getting into the smart home, interconnected. More and more consumers are going to become interconnected from a smart home to the
automobile, to what's happening at work, at home, and 5G is really infrastructure broadly because there are chips, telco, software that's
going to all be around 5G.
But the thing about it, it's going to make things go a lot quicker and the capacity of what consumers and enterprises are going to be if we have that
at their table are going to be significantly more than they are today.
ASHER: Okay, so that's what I am interested in. I am interested in what sort of new type of apps? What sort of new businesses can really thrive
from a 5G platform? Obviously, as we move towards 5G, I assume that you're going to see an explosion in different types of businesses and apps that
are going to take advantage. What types should we be looking out for?
IVES: When is all OTT, if you may just broadly define streaming and what's going on, obviously Netflix has been at the top of the heap, but look at
what Disney is doing with the Fox acquisition. Look at what's happening across media, across the world. You're going to see more and more
streaming apps and the ecosystem today, if you look at 5G and you look at some of the private companies, over the next three to five years, 5G from
an investment perspective, from a VC to private equity, it's going to along with cyber security, probably one of the biggest areas that you're going to
see investment dollars in.
So, I believe 5G, we're really in the early first inning of this playing out and even though AT&T and Verizon and a lot of others are sort of front
and center here in terms of building that out, I think right now, it's about U.S. versus China who are the winners, who are the companies that win
ASHER: Oh, yes, that's interesting and just what sort of competitive advantage China is going to have given that it's so much faster in terms of
implementing 5G. Daniel Ives, we'll leave it there. Running out of time, sadly. Thank you so much. We're going to be actually talking a little bit
more about this later on the show actually.
All right, so after the break, after spending millions of dollars living up to its promises, oh boy, MoviePass has actually changed its business model
and says, they are saying right now that this time, they believe they've actually, finally, finally gotten it right.
And, back in the day, Netflix was the only cowboy in town, now the streaming market is jam-packed. Will Disney's costly new offering soon be
the dragon slayer? That's next.
ASHER: All right, so MoviePass, the subscription movie ticket service that has been in a lot of hot water says that it has finally nailed down its
business model after burning $3 million each month, it's hoping to stem those losses by offering three movies a month for $10.00. Three movies a
month for $10.00. It's definitely to sort of scale things back.
The CEO Mitch Lowe told our Christine Romans that this is now viable position.
(BEGIN VIDEO TAPE)
MITCH LOWE, CEO, MOVIEPASS: What we've learned over the last year is that millennials really want to get back into the theater. What they have been
looking for is a better deal, and yes, our deal now is not as good as it was, but it creates a sustainable business model for us.
And it has incredible value. Three films in New York would cost you $45.00. You get all of that for $9.95.
CHRISTINE ROMANS, CNN ANCHOR: So, I know in May, so I think you were burning like $21 million and you see that there is some 15 percent of your
subscriber base who were seeing a ton of movies, right? For most of the people, they are seeing maybe just shy of two movies a week.
LOWE: Well, our average is under two, but if you take that 15 percent, they were consuming about 40 percent of our cost, so by bringing it down to
three and then giving those people a discounted way to go, we'll discount the tickets between $2.00 and $5.00, plus save you the Fandango charge,
we're still able to get - to have those people get a better deal.
ROMANS: One thing that subscribers have been asking, and Frank Pallotta is one of them, he works with us as you know and he was saying, "Look, we just
want to make sure that it's not going to change again." How do we know the terms aren't going to change again, because when we subscribe to something,
you don't want to be grandfathered in to what you agreed to or you want to know that it's not going to always be changing.
LOWE: It is really tough to launch a business that shoots up like a rocket ship, but hasn't completely got the business model right because our vision
is to get millions of people back into the theater, but you can't do that long term if you don't have a sustainable business model.
And so, we've had to fine tune the model as we go. We now have the right model.
ROMANS: So with the stock, I mean, the stock is - everyone is watching that, it's like $0.07 or something. I mean how much breathing space do you
have to fine tune? I mean, is it weeks? Is it months?
LOWE: Well, we have reduced the burn by 60 percent and we have the money and we are totally confident in our model. We've got three million
subscribers with a year of research, so we know this new model will work.
ROMANS: Do you think you will lose subscribers who don't want to commit to three a month?
LOWE: Yes, of course, there are people who go to 10, 15 movies a month and they will probably find different ways to go. We're still they're best
deal for their first three movies.
ROMANS: What about for competitors? You've got AMC, so it's rolling out something and we're going to show on our screens sort of what your model is
and what the AMC model is. They appear to offer more and they don't - you have to reimburse for the tickets when you send somebody. They don't have
to do that. So they have a bit of an advantage. Tell me about the competitors.
LOWE: Yes, well, the best thing is - I am a movie lover. I love the fact that --
ROMANS: Favorite movie?
LOWE: My favorite, "Lawrence of Arabia."
LOWE: We are - I mean, it's so amazing that now, the biggest theater chain in the world is catching on, but consumers love subscription, so anything
that makes going to the movies more attractive and more fun, we like.
(END VIDEO TAPE)
ASHER: All right, and stock in MoviePass' parent company, Helios and Matheson actually closed $0.07 a share, certainly a dramatic fall from
All right, so Disney stock closed down more than 2 percent after earnings failed to beat forecast. The media giant is investing big. And when I say
big, I mean, huge in its new streaming service to take on and compete with Netflix, but it's not the only player in this busy marketplace.
There is - look at that screen there - there is an abundance of choice especially in the United States. Disney's offering will have to stand head
and shoulders above all of these specifically Netflix. So, Trip Miller from Gullane Capital Partners is a Disney shareholder. Trip, thank you so
much for being with us.
So just walk us through what sort of content library Disney is going to have to come to the market with in order to compete against the likes of
Netflix. I understand obviously, they have not necessarily a monopoly, but they really do - they really can compete very, very well when it comes to
family movies. Is that going to be their target here?
TRIP MILLER, MANAGING PARTNER, GULLANE CAPITAL PARTNERS: Absolutely. I think that where they have an advantage is in the three areas that you
spoke of. Obviously, sports which is a place that Netflix really can't compete it right now to the family side of things where there is
irreplaceable brands that span generations.
I often say that my children now are watching movies that I watched as a child and my children's children will probably be watching those in 20 or
30 years. So, I think there's a huge advantage there and then the third piece, obviously owning the majority stake in Hulu post the Fox merger,
owning 60 percent of that, I think gives them more an adult oriented content outlet with over 20 million subs and growing.
We look to see that grow internationally in coming years, so going back to the family side of things, that core content that Disney has and that has
proven to be irreplaceable and I think will be a big loss for Netflix next year and a big opportunity for Disney going forward.
ASHER: That is interesting because I mean, there are a lot of people who are loyal, extremely loyal to Netflix, and I think that for Disney to
compete, they've talked about really having to come in at a much sort of cheaper price in terms of subscriptions. How much does that gap have to be
between Netflix and Disney just in terms of price for each subscriber in order to give them a real chance here?
MILLER: Well, on the family side and family content, if your children are screaming, you'll pay anything, so I would say that from that standpoint -
ASHER: You're a good dad, clearly.
MILLER: -- to the parent, thank you, but to your point, I think there will be fewer choices, at least initially on that space as Bob Iger has
talked about, but they will be able to charge a price that is a discount to Netflix, but yet provides an extreme value, and so, we believe that that
content library that is historic or growing going forward gives them pricing power over the long term.
And I really believe the story is not that they have to defeat Netflix to be successful. They just need to move into these new channels of
distribution of content. Again, whether it's sports, it's family or adult oriented films, we will be consuming this in a different way than our
parents did, but we'll still be consuming similar brands to what they were consuming.
ASHER: But just because Disney is such a prominent company already, I mean, they have a massive opportunity to do just in terms of marketing,
they can target people at their theme parks for example, they can target people watching Disney movies. I mean, how will they go about the actual -
I think Bob Iger actually mentioned this on the call yesterday, but how will they go about the actual marketing and advertising to really get
people to sign up?
MILLER: Well, I think it will continue to do what they are already doing and cross market to their existing customers you touched on. I mean,
across those different channels, whether it be their theme parks and resorts or whether it be already subscribers to a lot of their content or
purchasers directly of their Disney content, I think they've already got a pretty deep customer base to go and tap.
And I think that they are able to make that value proposition to more people as they have more media outlets and ways to distribute that content,
both direct to the consumer and internationally as we look potentially at them, and not only owning Star in India, but we'll see what happens with
Sky in Europe, and I think that what happened yesterday with Fox verifying and extending their offer there buys them time to September 22nd to
determine what they want to do, I think the fact that they said that they were going to stop repurchasing stock here in the short run, based on their
credit rating, is more of the fact that I think that they're assessing what they want to make for an offer to come over the top of what Comcast, $34
billion offer was.
So, we see a lot of ways for them to distribute this content and not only touch existing customers, but potential customers internationally.
ASHER: All right, Trip, thank you so much for being with us, appreciate that. All right, so a sitting U.S. Congressman arrested for alleged
insider trading dispute. From Australia to the White House to New York City, authorities say he skirted nearly a million dollars, nearly a million
dollars and lost it. That story next.
[16:30:05] (COMMERCIAL BREAK)
ASHER: All right, hello everyone, I'm Zain Asher. There's more QUEST MEANS BUSINESS in just a moment -- with Canada and Saudi Arabia in a tensed
standoff over criticism of a kingdom's human rights records. We'll have the latest in terms of the consequences coming up.
And investors are infatuated with Tinder, it's seen strong earnings at match-dot-com for how much love can be found online. All right, before
that bell, this is Cnn and of course on this network, my friends, the facts always come first.
The death toll from Sunday's earthquake in Indonesia has tripled with rescue workers still digging through the rubble. The government now says
347 people are confirmed dead and more than 165,000 people actually lost their homes. And ranches in southeastern Australia are now scrambling to
feed and water their livestock as an intense drought actually takes toll.
Already, it's in New South Wales, are now giving farmers more freedom to cull kangaroos that are competing for those resources. And much of Europe
is feeling the heat as well as soaring temperatures actually bringing drought conditions and wildfires.
Some farmers in Northern England are harvesting their crops early. And a complaint filed against U.S. Attorney General Jeff Sessions within its
United Methodist Church has actually been dropped as according to church officials, they say the church's judicial system cannot be used to address
More than 600 church members have issued a formal complaint regarding the government's zero tolerance policy on immigration, saying it was actually
against church rules. President Trump has been -- rescinded the policy. And Republican Senator Rand Paul said he was honored to deliver a letter
from U.S. President Donald Trump to Russian President Vladimir Putin.
The White House said it was a quote, "a letter of introduction written at the request of the Kentucky senator." All right, so U.S. Congressman has
actually pleaded not guilty after being indicted on charges of insider trading. Chris Collins left court just a few minutes ago.
He's a Republican Congressman who actually represents New York and the House of Representatives. He's also on the board of an Australian drug
company alleged used non-public information. He apparently used non-public information about their drug tests to sell stock, to sell their stock
before it cost him and his family hundreds of thousands of dollars.
The U.S. attorney for the Southern District of New York says that Collins had created or cheated rather the Justice system and the markets.
(BEGIN VIDEO CLIP)
[16:35:00] GEOFFREY BERMAN, UNITED STATES ATTORNEY FOR SOUTHERN DISTRICT OF NEW YORK: Congressman Collins who by virtue of his office helps to write
the laws of our nation acted as if the law didn't apply to him. The charges today demonstrates once again that no matter what the crime and no
matter who committed it, we stand committed in the pursuit of justice without fear or favor.
(END VIDEO CLIP)
ASHER: MJ Lee joins us live now. MJ, this is huge. This is absolutely huge because essentially what they're alleging is because of his apparent
insider trading, he apparently saved his family hundreds of thousands -- he was like $700,000 or something like that.
I mean, just walk us through. What sort of penalties he could be facing if he ends up being found guilty?
MJ LEE, CNN POLITICAL REPORTER: Yes, I know you're right. These are very serious charges and he's actually being charged for insider training --
trading, excuse me, wire fraud and lying to law enforcements. So obviously, very serious. And we just saw him at the courthouse, there he
is a few hours ago pleading not guilty.
And all of these charges have to do with an Australian pharmaceutical company called Innate Immunotherapeutic, he was on the board of that
company and he heavily invested in that company as well. And when you look through the indictment, it actually goes through in a lot of details, how
he came upon information about a drug trial that happened to be unsuccessful at the company.
He gets an e-mail from the CEO saying that the drug trial was not successful, and then you see him make these calls to his son who also
invested in the company. He calls him over and over again, they finally connect and then he tells his son, this happened, you should know about
And the next morning, you see that the son sells off the shares and the company which is just black and white typical insider trading is just kind
of hard to believe that a member of Congress --
ASHER: And not even necessarily hidden, he sort seems quite -- I mean, the way he went about it just seems quite blatant.
LEE: That's right, I mean, there are e-mails, there are phone calls, there are text messages and that's why it's all the more stunning that one of the
charges is lying to law enforcement, he was asked about this by the FBI and he denied that he participated in this kind of information.
And you were talking about how much money the family was able to save by having this information. When the son sold off his stocks, his shares in
this company, the indictment says that he actually saved himself $570,000 in losses. And obviously, there's particular interest in Chris Collins,
this member of Congress because he's such a big supporter of President Trump --
ASHER: And he is one of the first sitting member --
LEE: The first member of Congress --
ASHER: Right, before President --
LEE: To endorse the president, and obviously we haven't heard from the White House or the president yet. But I wouldn't write that off because
you know that this president has a tendency to want to defend the people who he feels like they have been loyal to him --
ASHER: Loyal, right. Just in terms of like the -- sort of -- just the implications on having a sitting member of Congress indicted just a few
months, I think it's what? Three months before the mid-terms. What has that -- what has that mean? I mean, I know they have a sort of 60-day limit
window, obviously where all sort of -- were outside of that.
But just the implication so close to an election.
LEE: Yes, you know, our reporting shows that investigators did take that into account, they are very weary of making it seem as though any of this
is politically motivated. They get that the election is only three months away now in the U.S., they get that Chris Collins is someone who will have
had to run for reelection in November and they don't want sort of anything to suggest that they're doing this so close to the elections.
But of course --
ASHER: Maybe, so what happened in 2016 --
LEE: Exactly --
ASHER: Yes --
LEE: That's exactly right, and I think that's on the minds of a lot of people who are looking at a headline like this. But when I think the
charges are this serious, they're not necessarily going to say, well, we don't want to look political or we're going to hold off on --
ASHER: Of course --
LEE: Making these charges, and of course, that's why we saw what happened this morning which was that he was arrested and he has been charged with
these alleged crimes.
ASHER: All right, MJ Lee live for us there, thank you so much, appreciate that. OK, so sticking with more U.S. politics. Now, there's actually
still no clear winner in the special election which does not -- does not bode well for President Trump. This in terms of what I'm talking about
right now is Ohio's 12th congressional district, you see it in there and red on your screen.
A solid Republican state home to American factories like AK Steel, the very people who Donald Trump actually promised to stand up for -- almost 24
hours after the polls closed. It is still too close to call. We want to bring on our Stephen Collinson who is joining us live now.
So Steve, I mean, this race, just about a little too close to call. This race should never have been this close to begin with at all. This should
have been an easy win for Republicans, the fact that it's not is a problem.
STEPHEN COLLINSON, CNN WHITE HOUSE REPORTER: That's right, this is banging the middle of Trump country. Of course, Ohio, one of those Midwestern
states that paved Donald Trump's way to the White House that Barack Obama had won twice in his election campaigns, and Trump really rewrote the
[16:40:00] As you say, this shouldn't be a race that's within 1 percent, and we shouldn't be saying right now, it's too close to call. Donald Trump
won this district in 2016 by 11 points, it's been a Republican district for 35 years and the fact that it is this close, the -- you know, the
Republicans may not have lost its seat, but it still really is a bit of disastrous result for them.
It's making, you know, all those predictions that the GOP was going to have a very tough year in the mid-term elections look even more on the mark.
You know, less than 3 months away from the mid-term elections. Those are real danger signs for President Trump and the Republicans.
ASHER: So why was it this close? I mean, is it because there's just much more sort of enthusiasm on the democratic side right now just because
they're the party that is motivated to make a change because obviously, they're not in power. Just walk us through that.
COLLINSON: Well, there's a number of reasons, first of all, you're right, there was a great deal of democratic enthusiasm and was seen through
special elections and primary elections throughout this year. The Democratic Party, it is very motivated heading into these mid-term
That's been building ever since they lost what was a deeply sort of damaging and upsetting 2016 election for them when they thought that
Hillary Clinton was easily going to win. But this race also show that there are some downturn in Republican turnouts in this race.
You could argue that it was August and people aren't really sort of looking at politics in August, but the great calling card of Donald Trump is that
he can get his supporters out. He is so charismatic and he has such a link with his base that he can drive them to the polls in a mid-term election
even when he personally isn't on the ballot.
After all, he was in the state, in the district in Ohio on Saturday. So if it turns out that we're getting a much higher Democratic turnout, a lower
Republican turnout, you know, that sort of captured the whole Republican strategy and puts the House of Representatives potentially in play in
November for Democrats.
ASHER: And truly an interesting ride, Stephen Collinson live for us there, thank you so much, appreciate that. OK, so after the break, flights to be
suspended, expulsions now, asset sales. Both sides digging as Saudi Arabia and Canada actually refuse to budge in a massive diplomatic grounds over
human rights, that's next.
ASHER: All right, welcome back, everybody, this just in. New York plans to cap ride-hailing services like Uber, Lyft, Via, making it the first U.S.
city to take such a step. New vehicle licenses will be frozen for one year while the city tries to find ways of reducing traffic congestion.
Taxi cab companies happy with the decision, how does the other side feel? Joining me now is co-founder and CEO of Via, Daniel Ramot who joins us live
now. So Daniel, obviously, this is great news for the traditional sort of taxi companies, not so good news for the ride-sharing companies.
A, what does it mean for riders, ordinary riders who rely on apps like Uber to get around a city, but what does it mean for, you know, the gig economy
drivers who actually rely on Uber and Lyft and Via to actually make money.
DANIEL RAMOT, CHIEF EXECUTIVE OFFICER, VIA: This is probably not great news for the riders, for consumers. I suspect that was likely going to
happen, it's like costs are going to rise, you know, effectively. We've sort of turned back the clock and tried to impose the original New York
City medallion system on the ride-hailing companies.
And we know that that didn't work out very well for us, it's not entirely clear why we think it would work very well here. And certainly, for a
company like Via where our model is really focused on shared rides, we're trying to get multiple passengers into every vehicle or as many of them as
This makes it very tough because there aren't that many of these large vehicles that we'd like to use in the city. There are 100,000, 400
vehicles, but very few that can seat more than three or four passengers.
[16:45:00] We'd like to add more of this high-capacity vehicles and this is going to make it quite tough. And that's where we are mostly concerned.
ASHER: Yes, it's interesting because, you know, one of the concerns is obviously cutting down congestion.
ASHER: And I don't really understand how -- a lot of these people -- a lot of these people who use -- drivers who use ride-sharing apps that they have
their own cars which might be on the streets anyway. There's also the issue of people who don't live in Manhattan, people who live in Brooklyn,
Queens, the Bronx, Staten Island who might not be able to just walk outside the house and just hail a yellow taxi.
They -- you know, it's very convenient for them to be able to use their phones and use the app or Uber, but now they can't do that.
RAMOT: That's right, so I think, we're again -- I don't think any of us want to go back to 2009, 2010 where it was extremely difficult to get a cab
certainly outside of Manhattan. Certainly, if you were a minority, and that's -- I don't think that's the world we want to come back to.
And I'm afraid that the cab may lead us in that direction. You know, I think for us, now that the vote is passed, we're trying to look forward and
say what can we do here? And I think one thing about this bill is that the TLC, the Taxi Limousine Commission has some discretion in approving new
One of the things that we at least at Via are hoping they'll do is that, you know, given their authority that the council gave them. They will
approve these high capacity vehicles that we think are totally in line with the goals of the bill, which is to reduce congestion, get people more
affordable rides and those vehicles just help to do that.
ASHER: It's interesting because I mean, listen, you know, Uber and Lyft are pretty dominant compared to Via just in terms of what is more popular
in New York City, and are you worried that this is going to now spread to other cities too, other major cities across the United States?
RAMOT: Why would I use -- when it comes to shared rides that Via is doing quite well. Howbeit, that aside, I think --
ASHER: I apologize --
RAMOT: No, I had to make that --
ASHER: I did not mean to -- just new company on TV, I'm sorry.
RAMOT: I will say that one of the concerns, you know, the idea behind this cab bill was that ride-hailing companies are contributing to congestion.
And I think we -- it's become a very popular notion and there are a 100,000 of these four higher vehicles now in the city that companies like Uber,
Lyft, Via used.
So I can understand the concern, I can understand why people look at that and say there's been this growth in the number of cars. But we actually
have data from a study that the city commissioned a few years ago, done by McKenzie (ph) that costs him $2 million, that show that in fact, ride-
hailing was not contributing to congestion.
That congestion was coming from truck deliveries and from construction and from just general growth and population and job growth. And you know,
we've had economists look at the data more recently and basically show that that's continuing to be true.
So I think the idea that we need to cap ride-hailing companies because they're contributing to congestion is not true and I sincerely hope other
cities don't follow up on that and impose a system that we don't really understand who will do this, artificial constraint on introducing new
vehicles for a service that frankly has made mobility better in the city.
When you think about mobility in New York City or any other city in the U.S., Europe and elsewhere without ride-hailing and ride-sharing, I think
we all agree that it was worse. So I hope that other cities will look at this --
ASHER: Right --
RAMOT: And say OK, what can we take out of this --
ASHER: Right --
RAMOT: That is smart. And there are things that the city council has done here that are smart, like working on driver wages and utilization.
ASHER: Daniel, we'll have to leave it there --
RAMOT: Thanks very much --
ASHER: Thank you so much for coming on. OK, so the round over human rights between Canada and Saudi Arabia continues, the Saudi Prime Minister
is blaming Canada for the dispute, and Saudi Arabia is actually selling off its Canadian assets.
Justin Trudeau spoke earlier today, he says that Canada will not stay silent about human rights concerns.
(BEGIN VIDEO CLIP)
JUSTIN TRUDEAU, PRIME MINISTER, CANADA: We continue to engage diplomatically and politically with the Kingdom of Saudi Arabia, we have
respect for their importance in the world and recognize that they have made a progress on a number of important issues.
But we will at the same time continue to speak clearly and firmly on issues of human rights at home and abroad where we see the need.
(END VIDEO CLIP)
ASHER: Right, Justin Trudeau there, standing firm. This is an extreme reaction from the Saudis. John, what can you tell us?
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, I think Zain, this is a blunt diplomatic approach by the Saudis, and I think it's an effort if you
will to say we're going beyond oil and we want to be a political and military force in the Middle East and North Africa.
They're putting two more very direct measures today. One is if Saudi patients are in Canada, they're going to move them outside of Canadian
hospitals and under care as well. We talk about the divestment of financial assets, we're looking at six direct measures in the last three
days of trading.
This is aggressive. The Foreign Minister of Saudi Arabia is suggesting Canada knows how to solve this kind of -- suggesting there has to be an all
right apology -- well, Justin Trudeau, the Canadian Prime Minister in Quebec decided to stick by his foreign minister today, saying we stand for
[16:50:00] We also have to remind our viewers here that Crown Prince of Saudi Arabia Mohammed bin Salman is taking a much more aggressive approach.
It could backfire on his position trying to attract foreign direct investment. He's gone deep into Qatar with the embargo, same thing in
Yemen leading that coalition there, a hard-line on Iran arresting 300 billionaires in Saudi Arabia and extracting billions of dollars under the
guise of corruption.
That was accepted in society, it has regional backing, but it has to think about the bigger picture here as you open up the economy to foreign direct
investment, you have to also try to encourage western countries to come in as well.
ASHER: All right, John Defterios live for us there, thank you so much, appreciate that. So after the break, a match made in heaven, match-dot-
com, investors are down-low by stunning earnings, thanks mainly to Tinder. People actually need Bozz (ph) at all anymore? That story after the break.
ASHER: All right, welcome back everybody. Investors certainly found love in the market on Wednesday, they swiped right on shares at match-dot-com,
the stock actually ended the session up 17 percent. Dating service company reported very strong results, and that was largely thanks to a 136 percent
rise in revenue in Tinder.
Speaking with money earlier, CNNMoney's Paul La Monica said it's not much they can stop the rise of match.
(BEGIN VIDEO CLIP)
PAUL LA MONICA, CNNMONEY'S DIGITAL CORRESPONDENT: A match is in a good position right now, I'm not sure I'd go so far to say it's all the way up.
Of course, there are market trends that could derail match, there could be increase competition, but right now, match particularly because of Tinder,
you have a lot of people, nearly 300,000 new paying subscribers added in the quarter which was better than what Wall Street was expecting.
So I think right now, match is in a very good position because that's what people are using to find love as you point out, luckily, I don't have to
play that game anymore because I'm happily married.
(END VIDEO CLIP)
ASHER: Neither do I, very happily married myself as well. OK, so match -- just for our viewers who don't necessarily know, match actually owns match-
dot-com, Tinder and OkCupid among others that finding the right date is hard, try find the right dating app.
It is certainly a vast field, so many to choose from, there's Hinge, which actually connects you with your friends or your friends, Patook, which
actually allows you to make strictly platonic friends.
Trek Passions for Sci-Fi fans and Seeking Arrangement described as a sugar daddy dating site. I'm going to keep quiet, OK. Apple actually removed
many of those apps after accusations that they promote prostitution. Mandy Stadtmiller is here, she's a dating columnist and author of "Unwifeable".
So many different apps --
MANDY STADTMILLER, AUTHOR: They really are. It's huge from match group owns --
ASHER: A lot of that --
STADTMILLER: Almost all of it, yes, OkCupid --
ASHER: So if you're -- if you're dating and you're single right now of a set of notes, you are -- but I am married, that's the twist --
STADTMILLER: OK --
ASHER: That's the twist of "Unwifeable" --
STADTMILLER: It was wifed-up, yes --
ASHER: So much better. But I'm -- if you're dating and you're out in New York City, how do you know which is the right dating app for you?
STADTMILLER: I think you have to try it on for size. It's like a fairytale, you know, what is the right fit where you see what makes you
feel good, what makes you feel creep out.
[16:55:00] And I have tried Tinder, I've tried Hinge, I never did try Bumble -- oh, and I did OkCupid, match, I think that --
ASHER: So you mean you met your partner online -- wow --
STADTMILLER: So, no, I didn't --
ASHER: OK --
STADTMILLER: But I met him because of a paid promotion I did for Plan- It(ph) Affairs which is also owned by match group --
ASHER: I see --
STADTMILLER: Oh, the tangled web. We've -- but Tinder is really the -- I think the best one in terms of if you're going to dip your toes in water --
ASHER: OK --
STADTMILLER: Because it's fun, I mean, I don't know if you've ever like looked at one of your single friends using Tinder, but it's like a game.
They have the gamification thing down --
ASHER: My friends -- my friends have told me that it's very addictive.
STADTMILLER: Very much so. If you're like God, you know --
ASHER: Just like --
STADTMILLER: I will consider you.
ASHER: Are people sort of ashamed to say they met online?
STADTMILLER: Well, so I think increasingly they are not. If you look at a lot of first person kisses, people talk about how now, more and more,
they're going to Tinder weddings or they say that, you know, call me Tinderella because I met my guy on there.
And I'm talking professional people who -- yes, probably back in 2012 when it had the reputation as a hook-up app, they would have made --
ASHER: Oh, it doesn't have that reputation anymore.
STADTMILLER: Well, actually, a study came out recently that showed that people aren't likely to hook up as much if they are on Tinder, even though
-- so it's actually shedding that perception even with the studies that are being done. But I think the revenue growth is so interesting because back
in May, it dove 20 percent when Facebook announced that they were going to compete in the market --
ASHER: Yes --
STADTMILLER: And I think it shows that people are a little freaked out about mingling who I am on Facebook and who I am --
ASHER: Yes --
STADTMILLER: When I am trying to find a date.
ASHER: Yes, but there are so many different apps to choose from including a sugar daddy website --
STADTMILLER: Yes --
ASHER: Which I had no idea about --
STADTMILLER: Yes -- no, I know women who have done that, yes, and to each their own, you know --
ASHER: Mandy, we have to leave it there, but thank you so much --
STADTMILLER: Thank you --
ASHER: You're welcome, and do join us tomorrow for a very special edition of QUEST MEANS BUSINESS and Richard will be live with very a very special
(BEGIN VIDEO CLIP)
RICHARD QUEST, CNN INTERNATIONAL HOST: Can you believe it? Yes, they've actually let me into the Boeing factory which for an up geek like me, it's
sheer bliss and joy. But to the serious stuff, tomorrow's QUEST MEANS BUSINESS comes live from Boeing. We'll be talking to the Chief Executive
Dennis Muilenburg about the issues of trade, policy, aviation.
You want to make sure you don't miss it. It's QUEST MEANS BUSINESS live from Boeing. Now, back to those planes.
(END VIDEO CLIP)
ASHER: You don't want to miss that -- OK, and that is QUEST MEANS BUSINESS. I'm Zain Asher in New York. He news continues right here on