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American Morning

Aftermath of Jackson Acquittal; Schwarzenegger Calls for Special Election

Aired June 14, 2005 - 09:31 ET

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

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

SOLEDAD O'BRIEN, CNN ANCHOR: That's a sign of things to come today, isn't it?
BILL HEMMER, CNN ANCHOR: Going to need a lot of that water today to stay cool.

O'BRIEN: Hanging out by the pool today.

HEMMER: Morning, everybody. On this AMERICAN MORNING, jurors in the Jackson Trial have been explaining their verdict pretty much since that trial end. Non-stop interviews for the 12.

O'BRIEN: Some of the most intriguing comments have come from juror number one. He says he thinks that Michael Jackson probably has molested boys. And he explains why that wasn't good enough, though, for a guilty verdict. We'll have a look at that, just ahead this morning.

HEMMER: All right. First the headlines and back to Carol Costello with those now. Hey, Carol.

CAROL COSTELLO, CNN ANCHOR: Good morning. Good morning to all of you.

"Now in the News," two men held in the disappearance of an Alabama teenager are free this morning. Abraham Jones and Mickey John were released on Monday night. They work at a hotel near where Natalee Holloway was staying in Aruba. The two were arrested June 5th, but never formally charged. Holloway, as you know, was been missing since May 30th. Her mother had said she thought the two guards were innocent.

Pakistan's president Pervez Musharraf says al Qaeda suspected number three has not given any clues as to where Osama bin Laden might be hiding. Abu Faraj al Libbi was captured by Pakistani agents last month. He was later transferred to U.S. custody. Al Libbi is suspected of masterminding two assassination attacks against Musharraf back in 2003.

A tragic incident at Disney's Epcot Center in Florida. A 4-year- old boy has died after riding on the Mission space ride, which stimulates a rocket launch and a trip to Mars. The boy apparently passed out while on the ride, which has been described as intense. Paramedics tried to revive him, but could not.

And obesity may actually accelerate aging. Researchers found the more a person weighs, the older their cells appear. The study found being overweight on average adds the equivalent of nearly nine years to a person's body. But skeptics say other factors like not getting enough exercise could lead to premature aging. The study appears in the medical journal "The Lancet." So something else to ponder, about the confusing stories we hear on obesity.

O'BRIEN: Well, that makes sense, I'd say, too. I mean, it's just not good for your body. Everybody knows that.

COSTELLO: Nine years is a long time to take off, though.

O'BRIEN: Yes, it sure is.

O'BRIEN: All right, Carol, thanks.

Well, it was clearly a disastrous day for the prosecution in the Michael Jackson case. The pop star acquitted of all ten counts against him. The defense says, quote, "Justice was done." But even one of the jurors says he thinks Jackson has probably molested children. I asked him if that contradicts the jury's verdict.

(BEGIN VIDEOTAPE)

RAYMOND HULTMAN, JUROR NO. 1: Well, you know, you have to consider the evidence. You have to consider the instructions that we were given in this case. When the 1993-'94 cases were introduced into the trial, the jury was told that we were to weigh the evidence in those cases and determine if there was a possible pattern that would indicate that Michael Jackson had molested children. And I, for one, could determine from that evidence that I thought that that had occurred. Could I be certain that Michael Jackson had molested this particular accuser in the end? We couldn't. There was reasonable doubt, based on a number of considerations.

O'BRIEN: In light of that, then, do you have any second thoughts in both letting a man who you believe may have molested boys go free?

HULTMAN: I don't have a problem with the decision that I made in this particular case. I have a problem with Michael Jackson's behavior. And all I can say at this point is that I hope that he recognizes that this is a serious problem, and that his behavior is going to be affected in some way by it. I've learned a lot from this case, and I hope he does as well.

(END VIDEOTAPE)

O'BRIEN: I asked Jackson's attorney, Tom Mesereau, what he thinks about that Juror No. 1's comments.

(BEGIN VIDEOTAPE)

THOMAS MESEREAU, JACKSON'S ATTORNEY: Michael Jackson has not molested anyone. He's been too nice to a lot of people that took advantage of him. And he didn't just let boys in his room, he let families come in and out of his room. He let them play and stay over. And basically he was just too open and too nice to too many people, and that will change.

O'BRIEN: Michael Jackson, coming out of the courtroom. I had expected him really to be a little more jubilant. And he looked very tired. He looked awful, honestly. Obviously, the case has taken a huge toll on him. How is he doing?

MESEREAU: Well, he's very relieved. He's very grateful. He's back with his children and his family. He now has a future in front of him. But he's exhausted. It's been a terrible ordeal for him, emotionally and physically.

O'BRIEN: You say he's got a future in front of him and a moment ago, you talked about things that are going to change. What specifically is going to change and what do you envision in his future?

MESEREAU: Well, he's -- as far as his entertainment career goes, I'm not the expert on that and I haven't talked to him about it. But as far as Neverland and his home, he's been too nice to too many people. You know, people get to Michael with a sad story about their life, and he's so generous, he's so kind-hearted, he takes people in and does nice things for them and they suddenly decide they want to get rich off of Michael Jackson. And that has to change. He has to get a lot tougher with who he lets into his life and who he allows to run around his home. And that will happen.

O'BRIEN: Does that mean the sleepovers are over?

MESEREAU: Well, it means that he's going to be a lot more careful about who he lets into his life.

O'BRIEN: I'm not sure that you answered my question. Does that mean that the sleepovers are over?

MESEREAU: I don't know what you mean by sleepover, because he's allowed to have his own children in his room, he's allowed to have friends come into his room if he chooses. But he's not going to allow people like the ones who accused him of this to enter his life.

O'BRIEN: I guess what I'm specifically asking is -- have you had discussions with him about ending the visits by young boys who come into his room and spend the night? About how that...

MESEREAU: Well, it's not a question of -- well, you've misinterpreted what he has said in the past. He has allowed families to come into his life, not just young boys. Their parents were allowed to stay over. They did stay over. Everything was done with the parents' permission. They were allowed to come in and out of his room. The prosecution tried to misinterpret and misconstrue what Michael Jackson did, and they failed, as they should have.

O'BRIEN: So, then, you're saying the sleepovers with family members is over. How about the sleepovers with specifically young boys? Over as well, I guess is my question I'm trying to get to?

MESEREAU: Michael Jackson will do what he's allowed to do in his own home, but he will be very careful who he allows into his home.

(END VIDEOTAPE)

O'BRIEN: You want to be sure to catch much more from Tom Mesereau. He's got primetime exclusive interview tonight on "LARRY KING." That's at 9:00 p.m. Eastern time -- Bill.

HEMMER: It's now 22 minutes before the hour. What will life after acquittal hold for Michael Jackson? Will he be able to repair his image, rebuild a credible career? Does he have a second act, in other words?

Anthony DeCurtis is a contributing editor for "Rolling Stone," my guest here now. Good morning to you.

ANTHONY DECURTIS, CONTRIB. EDITOR, "ROLLING STONE": Good morning.

HEMMER: "Wall Street Journal" this morning, Ethan Smith writes, "Michael Jackson does not have a criminal record, but does he have a music career?" Can we answer that this morning?

DECURTIS: I don't think we can answer it. I mean, Michael -- you know, you talk about second acts and the famous line about there are no second acts in American lives. Michael has had a series of second acts. I mean, he's had close to nine lives. I mean, there's a situation here where, you know, over the last decade or so, there have been many, many instances where Michael's back, this is the moment. And it just has not transpired. He has been unable to re-engage his audience. And that is an issue that's completely separate from these allegations, which -- of course, it was good for him to get acquitted.

HEMMER: Yes, I think -- you know, Anthony, the product is one issue. How good is the music if it's recorded again? How good is the re-creation of Michael Jackson, the music? His health, apparently, is another issue. Can he get onstage and physically perform?

DECURTIS: I think -- I mean, I am not a doctor, but I think his health is a function of the stress that he's been under. Presumably, once -- I mean, now that this case has been settled. You know, I -- I mean, he's somebody who -- you know, he's 46 years old and he's taken care of himself in his life, I think. So I'm not sure how significant the health issue is going to be.

I think the question is just mentally and emotionally, is he going to be able to -- I think Michael has confounded his audience. I mean, I think people, even who are very sympathetic to him, don't know what to make of him any more. And that doesn't make people buy your records. People like to feel some sense of identification.

HEMMER: And the point you made to our producers last night, that he has to reconnect with his audience.

DECURTIS: Yes.

HEMMER: But can we even identify who his audience is today? DECURTIS: Well, I think that's also a significant issue. Because Michael has spent a lot of time trying to remake "Thriller." He's done it over and over again.

HEMMER: And the point you made to our producers last night is that he has to reconnect with his audience. But can we identify who his audience is today?

DECURTIS: Well, I think that's also a significant issue, because Michael has spent a lot of time trying to remake "Thriller." He's done it over and over again. That's never going to happen again. I mean, everything has changed in the music industry since then. There's an audience -- there's potentially an audience, if Michael would make a record that was -- the same way that he made "Thriller," he was reinventing soul music at that point, reinventing R&B, not because somebody had a grand plan, but because that was what he was feeling. And if he could connect with something identifiable in himself that an audience can relate to, well, yes, he can have a career.

HEMMER: If he is pushed for cash -- apparently he's got a lot of assets; he can sell them and generate revenue -- do you see him going the way of, like, a Barry Manilow who just signed this monster contract to perform for months in Las Vegas. Is that an avenue that Michael Jackson would want to pursue?

DECURTIS: Well, I would think of it almost as more like, I mean, Barry Manilow or Elton John. You know, I think that you have a -- you're almost like the house act at a place, and people spend a lot money to come and see you. I don't think he's going to do that. I think it's probably something that's being offered to him, and you know, maybe he's considering it.

As far as his financial situation, I think in many ways, that's the likeliest thing to benefit from this acquittal. I mean, Michael is not untouchable anymore, and the kinds of people who can come in and make deals with him, and restructure his finances can get in there and do that. That's all on the table. And the kind of disasters scenarios that people are painting, I don't see those as transpiring.

HEMMER: That's the way fortunes change in a day.

DECURTIS: Yes, indeed.

HEMMER: Anthony DeCurtis, nice to see you.

DECURTIS: Thanks for so much.

HEMMER: Contributor for "Rolling Stone" magazine. New book out, too... DECURTIS: Yes, indeed.

HEMMER: ... a bit later in the month. "In Other Words: Artists Talk About Life and Work," a new book from Anthony coming soon. Thanks. Nice to see you.

DECURTIS: Thank you.

HEMMER: All right.

(WEATHER REPORT)

HEMMER: In a moment here, another nail in the coffin for the VHS tape. We'll explain that in "Minding Your Business."

And coming up next, Governor Arnold Schwarzenegger calls for some big reforms in California. But is he risking his political future in the process?

CNN's political analysts Carlos Watson joins us. That's up next on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: The announcement of the Jackson verdict overshadowed another important story out of California, one that's going to be closely watched in all 50 states. California Governor Schwarzenegger will hold a special election this November. He says changes needed cannot wait until 2006.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I know that some people say, Arnold, why not wait until next year? Why have a special election now? But how can we just stand around while our debt grows each year by billions and billions of dollars. If you break your arm, you don't wait until your next physical, you get it fixed now.

(END VIDEO CLIP)

O'BRIEN: CNN's political analyst Carlos Watson in Mountain View, California this morning.

Hey, Carlos, good morning.

Kind of a strange analogy to begin with. If you break your arm, you get it fixed; you don't wait a little while.

Let's talk about what he specifically is referring to. He wants three changes. One, budget setting. Two, promoting teachers. Three, political districts. Why?

CARLOS WATSON, CNN POL. ANALYST: He fundamentally feels that the legislature, the Democratic-controlled legislature isn't willing to move on these critical items. And the way Arnold has put it forth, Governor Schwarzenegger has put it forth, he feels like these items are substantial enough to the voters of California, how they elect their representatives, whether or not a teacher gets tenure of two years or five years, and whether or not there will be chronic budgets overruns that he actually needs to go to the people, quote/unquote, through a special initiative which actually will cost somewhere between $50 million and $80 million.

O'BRIEN: The legislators have resisted the change. Why have they been so resistant?

WATSON: Because again, Soledad, these aren't small changes around the edges. These are huge tectonic plates moving. The change on education would have a massive ripple effect not only here in California, the largest state in the nation, but that arguably would be almost as substantial as President Bush's federal legislation, No Child Left Behind, and the ripple effect it may cause. Similarly, the changes in terms of how you elect members of Congress and members of the state legislature here could have a huge effect. Democrats don't seem to be anywhere close to overcoming the Republican advantage in the House of Representatives, but if Arnold's changes take place, that could be the biggest threat, if you will, to Republican majority in the House of Representatives, because other states could follow his example.

So there are big changes, and that's why you see a lot of different groups from unions to members of Congress up in arms about what he's doing.

O'BRIEN: How big do you think the risks are to Arnold Schwarzenegger politically?

WATSON: Substantial. He's putting a lot of political on the line here. He'll spend more money over the next 148 days, 150 days on this special election campaign, about a quarter of a billion dollars, Soledad. Just to put it in perspective, that all the money that will be spent on the Virginia governor's race, on the New Jersey governor's race and probably on the New York and the L.A. mayoral race, probably the four biggest races this year. So this is a big deal. Arnold's poll numbers right now are fairly low. Approval numbers are below 50 percent, whereas they were above 60 percent at the beginning of the year. And so many people see this as a prelude to next year's 2006 gubernatorial election.

O'BRIEN: You've compared this to the shifting of tectonic plates. What are the implications inside California and outside California should these go ahead and pass?

WATSON: Well, remember, and I hate to be a little bit cliche, but so goes California, often so goes the nation. We've seen California put issues like a tax rebellion, medical marijuana, more recently gay marriage, more recently stem cell; things that started as a state move become a national issue.

And in addition, Soledad, to the three that we talked about, the reality is there could be as many as eight different initiatives. Some of them include things like prescription drug prices, including whether or not some of them will ultimately come from Canada. Whether or not to change some of the regulation of the electricity industry. Whether or not minors need to get parental notification on abortion.

This is a big, meaty political diet, if you will here, in an off election year, and they could have massive ripple effects all across the country, as other legislatures look to see what California's done.

O'BRIEN: Well, we wait and see what happens. Carlos Watson, joining us this morning. Thanks, Carlos.

WATSON: Good to see you.

O'BRIEN: Thanks, you, too. Bill?

HEMMER: Daryn Kagan's coming up next. 10 minutes away. What you working on, Daryn? Good morning.

DARYN KAGAN, CNN ANCHOR: Oh, we got some good stuff for you today, Bill. Coming up on "CNN LIVE TODAY," a mission of mercy. The U.S. hospital ship Mercy is back home, following an emotional trip to help the victims of the tsunami. I'll talk live to the ship's captain.

Plus, he is the king with bling. He's back. King Tut is one of the hottest tickets in the country this summer. We will take you inside this amazing exhibit on "CNN LIVE TODAY."

Born in Arizona, moved to Babylonia. King Tut.

HEMMER: Is that it? Was it born in Babylonia?

KAGAN: No, born in Arizona, moved to Babylonia.

HEMMER: I take your word for it.

KAGAN: I looked up the lyrics this morning online...

HEMMER: Well done.

KAGAN: ... to tell you what a geek I am.

HEMMER: See you in nine minutes. See you, Daryn.

In a moment here, McDonald's offering something new in their menu and you definitely do not want to eat this. We'll explain next. "Minding Your Business," right after this.

(COMMERCIAL BREAK)

HEMMER: Welcome back, everyone. McDonald's is asking if you'd like a DVD with that. And a check on Wall Street with Gerri Willis, working for Andy Serwer, "Minding Your Business." Good morning. How the markets doing?

GERRI WILLIS, CNN CORRESPONDENT: Hey, good morning, Bill.

Well, markets are higher already this morning. We've seen the Dow up about 28 points, Nasdaq up as well. Good news, as you can see right there, Dow Industrials up 21, almost, now.

Bill, big story today. Really going to affect the markets here, I think. A big drop in wholesale inflation numbers. Now, you may not pay a lot of attention to this, but this is...

HEMMER: You do.

WILLIS: I do. This is wholesale inflation, this is what businesses pay. Big drop. The takeaway from consumers here is that the Federal Reserve may decide that they don't need to raise rates anymore. And you know, they've been on this tear, raising rates eight times. So that will be the big question in the market.

HEMMER: So then it gives a better reflection of the economy, with the bigger sample, you're saying, with the wholesale prices?

WILLIS: No. Actually, what I mean by that is that the Federal Reserve may decide not to raise rates anymore.

HEMMER: Sure.

WILLIS: Because inflation is on the decline. And that's what they've been trying to prevent for some time now. So you'll have to wait and see. I know we'll be following it closely.

HEMMER: OK. What's happening with Wal-Mart?

WILLIS: Well, Wal-Mart has decided to get out of the VHS business. Now, I don't know what they're going to do with all these VHS tapes. Maybe they'll put them where the eight tracks are. I don't really know. But they're important. They have a third of the video market. So they're key in that business. They're getting out of it. Do you know 60 percent of homes have DVD players?

HEMMER: Hmm.

WILLIS: Hot technology.

HEMMER: It was the number one selling component a few years ago during the holiday season. Big sales. Finally, McDonald's. They are doing this? What, DVD business?

WILLIS: Right. They're testing a rental service -- a DVD rental service business, so you can drive up and say, I want "Madagascar" and an extra large fry with that. It's going to be interesting to see how they do. Everyone wants to get in this business. Big dollars.

HEMMER: Well, they're not giving them away.

WILLIS: It's rental. It's rental.

HEMMER: Surprised with that, and more. Thank you, Gerri.

WILLIS: You're welcome.

HEMMER: We'll see you tomorrow, OK? Here's Soledad.

O'BRIEN: And in fact, coming up tomorrow on AMERICAN MORNING, we continue our special series "Just for Dad." And get this. Moms-to-be aren't the only ones who pack on the pounds during pregnancy. Sometimes dads do, too. We've got some tips on how the soon to be father can keep off that sympathy weight. That's tomorrow, 7:00 a.m. Eastern, right here on AMERICAN MORNING.

A short break and we're back in a moment.

(COMMERCIAL BREAK)

COSTELLO: ... because you know he's going to have a press conference. HEMMER: You think so?

(CROSSTALK)

O'BRIEN: You think he's going to have a press conference. We're talking about Michael Jackson. Of course, we've been talking about Michael Jackson all morning. But I don't think it's over today. I think...

COSTELLO: No. He's going to have a press conference. He'll probably put out one of those videotapes.

HEMMER: You're guessing that. You don't know that, right?

COSTELLO: I'm guessing. But he's going to have to come out and say...

HEMMER: What, 7:00 in the morning...

O'BRIEN: You think? I don't know. I think that maybe he just releases a statement to the Web site and...

COSTELLO: And we move on. Wouldn't that be great?

O'BRIEN: Not going to happen!

HEMMER: Why isn't there a statement on the Web site already? You'd think, that from the...

COSTELLO: I haven't checked it out. Have you?

HEMMER: No.

COSTELLO: Let's go do that after this show.

HEMMER: I'm onto this press conference you've been talking about.

O'BRIEN: It wasn't there this morning.

COSTELLO: Yes. What do you know what we don't, Bill? HEMMER: Not a darn thing. And clearly after the verdict yesterday, nothing. Here's Daryn Kagan down at the CNN Center, taking you through the next hour. Hey, Daryn, good morning.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

Aired June 14, 2005 - 09:31 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: That's a sign of things to come today, isn't it?
BILL HEMMER, CNN ANCHOR: Going to need a lot of that water today to stay cool.

O'BRIEN: Hanging out by the pool today.

HEMMER: Morning, everybody. On this AMERICAN MORNING, jurors in the Jackson Trial have been explaining their verdict pretty much since that trial end. Non-stop interviews for the 12.

O'BRIEN: Some of the most intriguing comments have come from juror number one. He says he thinks that Michael Jackson probably has molested boys. And he explains why that wasn't good enough, though, for a guilty verdict. We'll have a look at that, just ahead this morning.

HEMMER: All right. First the headlines and back to Carol Costello with those now. Hey, Carol.

CAROL COSTELLO, CNN ANCHOR: Good morning. Good morning to all of you.

"Now in the News," two men held in the disappearance of an Alabama teenager are free this morning. Abraham Jones and Mickey John were released on Monday night. They work at a hotel near where Natalee Holloway was staying in Aruba. The two were arrested June 5th, but never formally charged. Holloway, as you know, was been missing since May 30th. Her mother had said she thought the two guards were innocent.

Pakistan's president Pervez Musharraf says al Qaeda suspected number three has not given any clues as to where Osama bin Laden might be hiding. Abu Faraj al Libbi was captured by Pakistani agents last month. He was later transferred to U.S. custody. Al Libbi is suspected of masterminding two assassination attacks against Musharraf back in 2003.

A tragic incident at Disney's Epcot Center in Florida. A 4-year- old boy has died after riding on the Mission space ride, which stimulates a rocket launch and a trip to Mars. The boy apparently passed out while on the ride, which has been described as intense. Paramedics tried to revive him, but could not.

And obesity may actually accelerate aging. Researchers found the more a person weighs, the older their cells appear. The study found being overweight on average adds the equivalent of nearly nine years to a person's body. But skeptics say other factors like not getting enough exercise could lead to premature aging. The study appears in the medical journal "The Lancet." So something else to ponder, about the confusing stories we hear on obesity.

O'BRIEN: Well, that makes sense, I'd say, too. I mean, it's just not good for your body. Everybody knows that.

COSTELLO: Nine years is a long time to take off, though.

O'BRIEN: Yes, it sure is.

O'BRIEN: All right, Carol, thanks.

Well, it was clearly a disastrous day for the prosecution in the Michael Jackson case. The pop star acquitted of all ten counts against him. The defense says, quote, "Justice was done." But even one of the jurors says he thinks Jackson has probably molested children. I asked him if that contradicts the jury's verdict.

(BEGIN VIDEOTAPE)

RAYMOND HULTMAN, JUROR NO. 1: Well, you know, you have to consider the evidence. You have to consider the instructions that we were given in this case. When the 1993-'94 cases were introduced into the trial, the jury was told that we were to weigh the evidence in those cases and determine if there was a possible pattern that would indicate that Michael Jackson had molested children. And I, for one, could determine from that evidence that I thought that that had occurred. Could I be certain that Michael Jackson had molested this particular accuser in the end? We couldn't. There was reasonable doubt, based on a number of considerations.

O'BRIEN: In light of that, then, do you have any second thoughts in both letting a man who you believe may have molested boys go free?

HULTMAN: I don't have a problem with the decision that I made in this particular case. I have a problem with Michael Jackson's behavior. And all I can say at this point is that I hope that he recognizes that this is a serious problem, and that his behavior is going to be affected in some way by it. I've learned a lot from this case, and I hope he does as well.

(END VIDEOTAPE)

O'BRIEN: I asked Jackson's attorney, Tom Mesereau, what he thinks about that Juror No. 1's comments.

(BEGIN VIDEOTAPE)

THOMAS MESEREAU, JACKSON'S ATTORNEY: Michael Jackson has not molested anyone. He's been too nice to a lot of people that took advantage of him. And he didn't just let boys in his room, he let families come in and out of his room. He let them play and stay over. And basically he was just too open and too nice to too many people, and that will change.

O'BRIEN: Michael Jackson, coming out of the courtroom. I had expected him really to be a little more jubilant. And he looked very tired. He looked awful, honestly. Obviously, the case has taken a huge toll on him. How is he doing?

MESEREAU: Well, he's very relieved. He's very grateful. He's back with his children and his family. He now has a future in front of him. But he's exhausted. It's been a terrible ordeal for him, emotionally and physically.

O'BRIEN: You say he's got a future in front of him and a moment ago, you talked about things that are going to change. What specifically is going to change and what do you envision in his future?

MESEREAU: Well, he's -- as far as his entertainment career goes, I'm not the expert on that and I haven't talked to him about it. But as far as Neverland and his home, he's been too nice to too many people. You know, people get to Michael with a sad story about their life, and he's so generous, he's so kind-hearted, he takes people in and does nice things for them and they suddenly decide they want to get rich off of Michael Jackson. And that has to change. He has to get a lot tougher with who he lets into his life and who he allows to run around his home. And that will happen.

O'BRIEN: Does that mean the sleepovers are over?

MESEREAU: Well, it means that he's going to be a lot more careful about who he lets into his life.

O'BRIEN: I'm not sure that you answered my question. Does that mean that the sleepovers are over?

MESEREAU: I don't know what you mean by sleepover, because he's allowed to have his own children in his room, he's allowed to have friends come into his room if he chooses. But he's not going to allow people like the ones who accused him of this to enter his life.

O'BRIEN: I guess what I'm specifically asking is -- have you had discussions with him about ending the visits by young boys who come into his room and spend the night? About how that...

MESEREAU: Well, it's not a question of -- well, you've misinterpreted what he has said in the past. He has allowed families to come into his life, not just young boys. Their parents were allowed to stay over. They did stay over. Everything was done with the parents' permission. They were allowed to come in and out of his room. The prosecution tried to misinterpret and misconstrue what Michael Jackson did, and they failed, as they should have.

O'BRIEN: So, then, you're saying the sleepovers with family members is over. How about the sleepovers with specifically young boys? Over as well, I guess is my question I'm trying to get to?

MESEREAU: Michael Jackson will do what he's allowed to do in his own home, but he will be very careful who he allows into his home.

(END VIDEOTAPE)

O'BRIEN: You want to be sure to catch much more from Tom Mesereau. He's got primetime exclusive interview tonight on "LARRY KING." That's at 9:00 p.m. Eastern time -- Bill.

HEMMER: It's now 22 minutes before the hour. What will life after acquittal hold for Michael Jackson? Will he be able to repair his image, rebuild a credible career? Does he have a second act, in other words?

Anthony DeCurtis is a contributing editor for "Rolling Stone," my guest here now. Good morning to you.

ANTHONY DECURTIS, CONTRIB. EDITOR, "ROLLING STONE": Good morning.

HEMMER: "Wall Street Journal" this morning, Ethan Smith writes, "Michael Jackson does not have a criminal record, but does he have a music career?" Can we answer that this morning?

DECURTIS: I don't think we can answer it. I mean, Michael -- you know, you talk about second acts and the famous line about there are no second acts in American lives. Michael has had a series of second acts. I mean, he's had close to nine lives. I mean, there's a situation here where, you know, over the last decade or so, there have been many, many instances where Michael's back, this is the moment. And it just has not transpired. He has been unable to re-engage his audience. And that is an issue that's completely separate from these allegations, which -- of course, it was good for him to get acquitted.

HEMMER: Yes, I think -- you know, Anthony, the product is one issue. How good is the music if it's recorded again? How good is the re-creation of Michael Jackson, the music? His health, apparently, is another issue. Can he get onstage and physically perform?

DECURTIS: I think -- I mean, I am not a doctor, but I think his health is a function of the stress that he's been under. Presumably, once -- I mean, now that this case has been settled. You know, I -- I mean, he's somebody who -- you know, he's 46 years old and he's taken care of himself in his life, I think. So I'm not sure how significant the health issue is going to be.

I think the question is just mentally and emotionally, is he going to be able to -- I think Michael has confounded his audience. I mean, I think people, even who are very sympathetic to him, don't know what to make of him any more. And that doesn't make people buy your records. People like to feel some sense of identification.

HEMMER: And the point you made to our producers last night, that he has to reconnect with his audience.

DECURTIS: Yes.

HEMMER: But can we even identify who his audience is today? DECURTIS: Well, I think that's also a significant issue. Because Michael has spent a lot of time trying to remake "Thriller." He's done it over and over again.

HEMMER: And the point you made to our producers last night is that he has to reconnect with his audience. But can we identify who his audience is today?

DECURTIS: Well, I think that's also a significant issue, because Michael has spent a lot of time trying to remake "Thriller." He's done it over and over again. That's never going to happen again. I mean, everything has changed in the music industry since then. There's an audience -- there's potentially an audience, if Michael would make a record that was -- the same way that he made "Thriller," he was reinventing soul music at that point, reinventing R&B, not because somebody had a grand plan, but because that was what he was feeling. And if he could connect with something identifiable in himself that an audience can relate to, well, yes, he can have a career.

HEMMER: If he is pushed for cash -- apparently he's got a lot of assets; he can sell them and generate revenue -- do you see him going the way of, like, a Barry Manilow who just signed this monster contract to perform for months in Las Vegas. Is that an avenue that Michael Jackson would want to pursue?

DECURTIS: Well, I would think of it almost as more like, I mean, Barry Manilow or Elton John. You know, I think that you have a -- you're almost like the house act at a place, and people spend a lot money to come and see you. I don't think he's going to do that. I think it's probably something that's being offered to him, and you know, maybe he's considering it.

As far as his financial situation, I think in many ways, that's the likeliest thing to benefit from this acquittal. I mean, Michael is not untouchable anymore, and the kinds of people who can come in and make deals with him, and restructure his finances can get in there and do that. That's all on the table. And the kind of disasters scenarios that people are painting, I don't see those as transpiring.

HEMMER: That's the way fortunes change in a day.

DECURTIS: Yes, indeed.

HEMMER: Anthony DeCurtis, nice to see you.

DECURTIS: Thanks for so much.

HEMMER: Contributor for "Rolling Stone" magazine. New book out, too... DECURTIS: Yes, indeed.

HEMMER: ... a bit later in the month. "In Other Words: Artists Talk About Life and Work," a new book from Anthony coming soon. Thanks. Nice to see you.

DECURTIS: Thank you.

HEMMER: All right.

(WEATHER REPORT)

HEMMER: In a moment here, another nail in the coffin for the VHS tape. We'll explain that in "Minding Your Business."

And coming up next, Governor Arnold Schwarzenegger calls for some big reforms in California. But is he risking his political future in the process?

CNN's political analysts Carlos Watson joins us. That's up next on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: The announcement of the Jackson verdict overshadowed another important story out of California, one that's going to be closely watched in all 50 states. California Governor Schwarzenegger will hold a special election this November. He says changes needed cannot wait until 2006.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I know that some people say, Arnold, why not wait until next year? Why have a special election now? But how can we just stand around while our debt grows each year by billions and billions of dollars. If you break your arm, you don't wait until your next physical, you get it fixed now.

(END VIDEO CLIP)

O'BRIEN: CNN's political analyst Carlos Watson in Mountain View, California this morning.

Hey, Carlos, good morning.

Kind of a strange analogy to begin with. If you break your arm, you get it fixed; you don't wait a little while.

Let's talk about what he specifically is referring to. He wants three changes. One, budget setting. Two, promoting teachers. Three, political districts. Why?

CARLOS WATSON, CNN POL. ANALYST: He fundamentally feels that the legislature, the Democratic-controlled legislature isn't willing to move on these critical items. And the way Arnold has put it forth, Governor Schwarzenegger has put it forth, he feels like these items are substantial enough to the voters of California, how they elect their representatives, whether or not a teacher gets tenure of two years or five years, and whether or not there will be chronic budgets overruns that he actually needs to go to the people, quote/unquote, through a special initiative which actually will cost somewhere between $50 million and $80 million.

O'BRIEN: The legislators have resisted the change. Why have they been so resistant?

WATSON: Because again, Soledad, these aren't small changes around the edges. These are huge tectonic plates moving. The change on education would have a massive ripple effect not only here in California, the largest state in the nation, but that arguably would be almost as substantial as President Bush's federal legislation, No Child Left Behind, and the ripple effect it may cause. Similarly, the changes in terms of how you elect members of Congress and members of the state legislature here could have a huge effect. Democrats don't seem to be anywhere close to overcoming the Republican advantage in the House of Representatives, but if Arnold's changes take place, that could be the biggest threat, if you will, to Republican majority in the House of Representatives, because other states could follow his example.

So there are big changes, and that's why you see a lot of different groups from unions to members of Congress up in arms about what he's doing.

O'BRIEN: How big do you think the risks are to Arnold Schwarzenegger politically?

WATSON: Substantial. He's putting a lot of political on the line here. He'll spend more money over the next 148 days, 150 days on this special election campaign, about a quarter of a billion dollars, Soledad. Just to put it in perspective, that all the money that will be spent on the Virginia governor's race, on the New Jersey governor's race and probably on the New York and the L.A. mayoral race, probably the four biggest races this year. So this is a big deal. Arnold's poll numbers right now are fairly low. Approval numbers are below 50 percent, whereas they were above 60 percent at the beginning of the year. And so many people see this as a prelude to next year's 2006 gubernatorial election.

O'BRIEN: You've compared this to the shifting of tectonic plates. What are the implications inside California and outside California should these go ahead and pass?

WATSON: Well, remember, and I hate to be a little bit cliche, but so goes California, often so goes the nation. We've seen California put issues like a tax rebellion, medical marijuana, more recently gay marriage, more recently stem cell; things that started as a state move become a national issue.

And in addition, Soledad, to the three that we talked about, the reality is there could be as many as eight different initiatives. Some of them include things like prescription drug prices, including whether or not some of them will ultimately come from Canada. Whether or not to change some of the regulation of the electricity industry. Whether or not minors need to get parental notification on abortion.

This is a big, meaty political diet, if you will here, in an off election year, and they could have massive ripple effects all across the country, as other legislatures look to see what California's done.

O'BRIEN: Well, we wait and see what happens. Carlos Watson, joining us this morning. Thanks, Carlos.

WATSON: Good to see you.

O'BRIEN: Thanks, you, too. Bill?

HEMMER: Daryn Kagan's coming up next. 10 minutes away. What you working on, Daryn? Good morning.

DARYN KAGAN, CNN ANCHOR: Oh, we got some good stuff for you today, Bill. Coming up on "CNN LIVE TODAY," a mission of mercy. The U.S. hospital ship Mercy is back home, following an emotional trip to help the victims of the tsunami. I'll talk live to the ship's captain.

Plus, he is the king with bling. He's back. King Tut is one of the hottest tickets in the country this summer. We will take you inside this amazing exhibit on "CNN LIVE TODAY."

Born in Arizona, moved to Babylonia. King Tut.

HEMMER: Is that it? Was it born in Babylonia?

KAGAN: No, born in Arizona, moved to Babylonia.

HEMMER: I take your word for it.

KAGAN: I looked up the lyrics this morning online...

HEMMER: Well done.

KAGAN: ... to tell you what a geek I am.

HEMMER: See you in nine minutes. See you, Daryn.

In a moment here, McDonald's offering something new in their menu and you definitely do not want to eat this. We'll explain next. "Minding Your Business," right after this.

(COMMERCIAL BREAK)

HEMMER: Welcome back, everyone. McDonald's is asking if you'd like a DVD with that. And a check on Wall Street with Gerri Willis, working for Andy Serwer, "Minding Your Business." Good morning. How the markets doing?

GERRI WILLIS, CNN CORRESPONDENT: Hey, good morning, Bill.

Well, markets are higher already this morning. We've seen the Dow up about 28 points, Nasdaq up as well. Good news, as you can see right there, Dow Industrials up 21, almost, now.

Bill, big story today. Really going to affect the markets here, I think. A big drop in wholesale inflation numbers. Now, you may not pay a lot of attention to this, but this is...

HEMMER: You do.

WILLIS: I do. This is wholesale inflation, this is what businesses pay. Big drop. The takeaway from consumers here is that the Federal Reserve may decide that they don't need to raise rates anymore. And you know, they've been on this tear, raising rates eight times. So that will be the big question in the market.

HEMMER: So then it gives a better reflection of the economy, with the bigger sample, you're saying, with the wholesale prices?

WILLIS: No. Actually, what I mean by that is that the Federal Reserve may decide not to raise rates anymore.

HEMMER: Sure.

WILLIS: Because inflation is on the decline. And that's what they've been trying to prevent for some time now. So you'll have to wait and see. I know we'll be following it closely.

HEMMER: OK. What's happening with Wal-Mart?

WILLIS: Well, Wal-Mart has decided to get out of the VHS business. Now, I don't know what they're going to do with all these VHS tapes. Maybe they'll put them where the eight tracks are. I don't really know. But they're important. They have a third of the video market. So they're key in that business. They're getting out of it. Do you know 60 percent of homes have DVD players?

HEMMER: Hmm.

WILLIS: Hot technology.

HEMMER: It was the number one selling component a few years ago during the holiday season. Big sales. Finally, McDonald's. They are doing this? What, DVD business?

WILLIS: Right. They're testing a rental service -- a DVD rental service business, so you can drive up and say, I want "Madagascar" and an extra large fry with that. It's going to be interesting to see how they do. Everyone wants to get in this business. Big dollars.

HEMMER: Well, they're not giving them away.

WILLIS: It's rental. It's rental.

HEMMER: Surprised with that, and more. Thank you, Gerri.

WILLIS: You're welcome.

HEMMER: We'll see you tomorrow, OK? Here's Soledad.

O'BRIEN: And in fact, coming up tomorrow on AMERICAN MORNING, we continue our special series "Just for Dad." And get this. Moms-to-be aren't the only ones who pack on the pounds during pregnancy. Sometimes dads do, too. We've got some tips on how the soon to be father can keep off that sympathy weight. That's tomorrow, 7:00 a.m. Eastern, right here on AMERICAN MORNING.

A short break and we're back in a moment.

(COMMERCIAL BREAK)

COSTELLO: ... because you know he's going to have a press conference. HEMMER: You think so?

(CROSSTALK)

O'BRIEN: You think he's going to have a press conference. We're talking about Michael Jackson. Of course, we've been talking about Michael Jackson all morning. But I don't think it's over today. I think...

COSTELLO: No. He's going to have a press conference. He'll probably put out one of those videotapes.

HEMMER: You're guessing that. You don't know that, right?

COSTELLO: I'm guessing. But he's going to have to come out and say...

HEMMER: What, 7:00 in the morning...

O'BRIEN: You think? I don't know. I think that maybe he just releases a statement to the Web site and...

COSTELLO: And we move on. Wouldn't that be great?

O'BRIEN: Not going to happen!

HEMMER: Why isn't there a statement on the Web site already? You'd think, that from the...

COSTELLO: I haven't checked it out. Have you?

HEMMER: No.

COSTELLO: Let's go do that after this show.

HEMMER: I'm onto this press conference you've been talking about.

O'BRIEN: It wasn't there this morning.

COSTELLO: Yes. What do you know what we don't, Bill? HEMMER: Not a darn thing. And clearly after the verdict yesterday, nothing. Here's Daryn Kagan down at the CNN Center, taking you through the next hour. Hey, Daryn, good morning.

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