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Quest Means Business
Fed Ex Makes $4.8 Billion Bet on Europe; European Stocks Rise; US Stocks Close Flat; Small Turnout at Pro-Government Protests in Brazil; US Prepares to Set Up Embassy in Cuba; Tomorrow Transformed: Mobile Tech Comes to Action Sports; HBO Offers Streaming Without Cable Bundle;
Aired April 07, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, CNN HOST: He was a touch late pushing the bell, but he got there in the end. The markets -- what a weird day it was on the markets.
The good gains that were seen throughout the session evaporated at the close. The market is off just a tad or two.
(GAVEL HITS)
QUEST: And -- ah, that's a middling gavel for the end of the trading session on Tuesday, it's the 7th of April.
Fed Exed to Europe. TNT's chief executive tells me why he thinks the deal with his rival will deliver the goods. You'll hear it on this program.
Also, HBO's chief exec says it's time to grow, and he's targeting the mighty millennial audience.
And Greece opens and reopens old wounds with Germany, saying its owed billions in Second World War reparations.
We have a very busy hour together. I'm Richard Quest, and of course, I mean business.
Good evening. Tonight, we start with a package deal quite literally. Fed Ex is placing a $4.8 billion bet on Europe's economy. That's how much it's
offering to pay for the Dutch shipping company TNT.
Now, $4.8 billion going from Fed Ex. It's a 30-odd percent premium over the closing price. TNT's board has already signed off on the deal, as
indeed has the major shareholders.
What does Fed Ex get in return? It gets TNT's European network. That seemed to be crucial. $4.8 billion for Europe.
Now, Fed Ex business in Europe had lagged far behind rivals like DHL and UPS. And the deal comes as the European economy is now showing signs of
life, helped by the European Central bank with its latest quantitative easing. And most particularly by cheap oil. A strong dollar means the US-
based Fed Ex can buy TNT at this bargain price.
Fed Ex isn't the first shipping company to try to pick up TNT. UPS, of course, made its own bid. You'll remember UPS big in 2013. Now, on that
occasion, a regulator sent it packing, saying its deal would be bad for consumers.
So, what changed? Why did US -- I mean, besides, maybe, competitive reasons -- why did UPS get a return to sender? Why is Fed Ex managing to
get the company cheaper than UPS would have got it a couple of years ago? And what's the regulator likely to say this time?
TNT's stock was sharply higher, 28 percent up in Amsterdam. Tex Gunning is the chief exec of TNT Express, and Mr. Gunning joins me now. Sir, so,
congratulations, as always, when there's a deal like this done. So, the question of course: what was so attractive about the Fed Ex deal, besides
that 30-odd percent premium?
TEX GUNNING, CEO, TNT EXPRESS: Thank you, Richard, for the question and for the invitation. Obviously, Fed Ex is a great company. Fed Ex has very
complementary geographies and services with us. Fed Ex is very large in the United States, of course has a massive lane between Asia and the US.
And TNT has an incredible European road network.
So, I think this deal complements the whole network for Fed Ex and for us. We get the lanes that Fed Ex is very strong in, we get access to the US
market much better, and we get access, of course, from the Asian customers much better, and Fed Ex gets the European road network --
QUEST: Right.
GUNNING: -- and therefore can start shipping into Europe out of Asia and out of the United States much better.
QUEST: The amount of money involved is less than, of course, when UPS made its run. So, to some extent, the regulators' decision then has cost
shareholders quite a bit in the difference in price.
GUNNING: Yes. We're talking, of course, about shareholders and customers, here. This is a great deal for our customers. The customers get a
European road network, they get a global network of Fed Ex, and obviously, we expect that the European Union will see this as a far better deal for
the customers than they saw the UPS deal.
You have to realize, the UPS deal was between UPS and DHL taking out TNT, so it would have left to large integrators in Europe. Of course, with Fed
Ex, you get three large integrators in Europe, and I'm sure the European Commission will be very favorable to that.
[16:04:57] QUEST: When we look at what this tells us about Europe -- because one of the things, whenever we cover these stories of results, the
new lease on life that online shopping has given to companies like TNT, the courier deliveries -- what does this deal tell us about the European
economy, do you think?
GUNNING: Well, I find it very difficult to look at the European economy and to be predictive about it. And I don't think we should see this case
in the current economic circumstances and motivate the case on the current economic circumstances.
This is a strategic deal for the future. We're bringing a US company with a European company together that creates a global network. I think our
customers will benefit from it, our people will benefit from it, and you're seeing today our shareholders benefit from it.
And I don't think that we should entirely say look or speculate that this will be based or the returns will come from the European economy. It's
going to be everybody's guess what the European economy is going to do. We have to work with the economy that we get, and I'm pretty sure that this
deal will strengthen the opportunities for our customers, as I said, who increasingly will go global.
QUEST: Right.
GUNNING: Whether it's American customers or European customers.
QUEST: Finally, these sort of deals are always crucially predicated to some extent on the personal relationship between the two chief execs. If
two chief execs get on well, then the deal stands a much better chance of not only being consummated, but to being successfully executed. Now, you
and Fred Smith get on well. What will you be doing in the new organization?
GUNNING: Well, it's a very nice remark that you make. Indeed, cultural fit is extremely important. As you know, Fed Ex has its People, Service,
Profit slogan, and we have positioned ourselves as the People Network.
So, we all believe that it's ultimately people who make the difference, that leads to higher service, and that ultimately leads to better profit.
And Fred and I share that philosophy that it's all about people.
And we have met the Fed Ex people, we're very impressed with the Fed Ex people. They seem to be exactly the same culture as we have, very
competent people, and we can learn a lot from them, and we hope that we can contribute to the future of Fed Ex as well.
QUEST: Tex Gunning, CEO of TNT Express, thank you, sir. Thank you for joining us, and good luck as this comes back. Come back and tell us more
as it is progressing. News of the deal pushed the shares of other shippers higher as well. Look at the shareholder --
(RINGS BELL)
QUEST: PostNL was up 12 percent. The stock market opened for the first day after Easter. Energy stocks also up sharply. Very strong gains in
London, up nearly 2 percent, 1.8 percent. The same across the board. And the best, of course, Amsterdam, the AEX, that's obviously as a result of
TNT and PostNL.
To the US markets. Well. My giddy aunt, what on Earth happened there? Cristina Alesci is in New York. Cristina, the market is robustly up for
the entire session. Then in this last half hour, it just, as you would say, turns turtle. What happened?
(LAUGHTER)
CRISTINA ALESCI, CNN BUSINESS CORRESPONDENT: Well, this is really the story of what's been going on all year. We've had these major swings, and
then at the end of the day, nothing really happened.
Now, most of the major indices were down just slightly, Richard, not really a major change at the end of the year, and that's really a reflection of --
excuse me -- of what's happened in the year itself. Major swings, but we're only up 1.7 percent this year.
And I think the market right now has digested a lot of major economic news. The jobs report came out, it was very disappointing. Now, the market's
looking forward to corporate earnings season, which is next week.
And many researchers and analysts are saying that earnings could drop as much as 3 percent collectively. And that is because the first quarter in
the US, when it comes to an economic standpoint, was not very strong. We had manufacturing, weak consumer spending, and now a weak jobs report. All
of that contributing.
Also, Richard -- and I know that you're well aware of this -- the strong dollar is putting pressure on a lot of US companies that ship their goods
and services overseas, making our goods here in the US more expensive overseas. So, that's putting pressure on companies as well.
Now, I know you and I like to talk about the Fed rate hike a lot. The fact is, most investors don't think the Fed's going to do anything crazy,
anything out of the ordinary that would cause the market to jolt. So, they're not too concerned about that.
[16:09:57] Morgan Stanley today put out a very interesting report saying the S&P 500 could reach 3,000 by the end of 2020. That is a huge swing up
from where we are now. So, clearly a lot of optimism still out there, Richard.
QUEST: Right. Thank you very much. A weird day on Wall Street, and Cristina actually giving us interpretation about why the market did turn
down.
Now, after weeks of anti-government protests on the streets of Brazil, supporters of the government offered their rebuttal. We're going to be in
Sao Paulo after the break. QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Brazilian labor unions have promised thousands of people would participate in protests around the country in support of President Dilma
Rousseff. The turnout was disappointing. It's expected to be dwarfed by much larger anti-governments protesters this -- or protests this weekend.
Shasta Darlington joins us from Sao Paulo. So, the government pro protesters not that many, or at least relatively smaller in numbers than
the anti-government protesters. But Shasta, what's it all about?
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Well, Richard, right now the country is very polarized. And what we're seeing is more and more
people taking to the streets to denounce corruption, political bribery, basically, and of course, problems with the economy. And they blame the
president and the government.
So, to sort of counter that, a lot of groups that support the government -- labor unions, social activists, student groups -- they've organized their
own marches. Now, they aren't necessarily explicitly out there to support the government, but they tend to support initiatives brought forward by the
government.
And they also say they're pro-democracy, and they point out that President Dilma Rousseff was reelected in democratic elections in October, so people
should just lay off. Especially because what we see at these very large anti-government protests is people calling for her impeachment.
And this just seems to be building, especially those anti-government protests that were about a million people out on the street last month.
This Sunday, they're claiming it's going to be a repeat --
QUEST: Right.
DARLINGTON: -- and it very well could be. People fed up with the -- especially the corruption at Petrobras, which we talked about.
QUEST: Right. Now, on this Petrobras question, it's obviously exceptionally complicated, and you tend to find if history is any judge,
that these corruption things -- they have a firestorm of interest, and then drift away as people get bogged down in the details. Is it your view that
Petrobras, the scandal and corruption of what took place, has legs, continues to be a thorn in Dilma Rousseff's side?
DARLINGTON: I do, Richard. This has already been dragging on for a year. I think we've sort of seen it snowball. Brazilians new about this
investigation and the alleged corruption at Petrobras with apparently -- supposedly construction companies paying bribes not only to Petrobras
executives, but also to politicians in Dilma Rousseff's party. They knew about this before the elections.
She still won reelection. But more details have emerged. The numbers involved, the millions of dollars involved, it's just jaw-dropping. And
so, what we're hearing is that even people who say the voted for Dilma are now disenchanted, they're frustrated with political corruption across the
spectrum.
[16:15:00] And at the same time, the economy is tanking. I think if the economy were doing better, this might go away. But at this point, more
details are emerging. It is going to drag out. This isn't going to be fast. But I don't see a quick solution.
QUEST: Shasta Darlington joining us from Sao Paulo, thank you.
Now, leaders from the Western hemisphere are gathering in Panama this week for the Summit of the Americas. Now, before it even begins, look at all
the flags. These are the countries that are involved. Brazil, of course, down there.
Before the Summit of the Americas has even begun, it's already been deemed historic, not because they're getting together, but in this Summit of the
Americas, it's the first time that Cuba will participate.
Barack Obama wanted a US embassy to be reopened in Havana before this summit, and the negotiations to normalize relations grind on, looks
unlikely. So, despite all these countries, the attention remains focused on two: the United States and Cuba, and the mission to try and restore
diplomatic relations. Our correspondent in Havana is Patrick Oppmann.
(BEGIN VIDEOTAPE)
PATRICK OPPMANN, CNN INTERNATIONAL CORRESPONDENT: All of these people next to me are waiting to go into the US Interest Section in Havana to apply for
visas to go to the United States. People waits, hundreds of them, for hours in the scorching sun to go inside and have an appointment.
Many people here want to be reunited with family. Others just want to improve their economic situation by going to the US. And actually, on the
other side of the park, just over there is a funeral parlor. And Cubans, in their typical black humor, have begun dubbing this park the Park Between
Life and Death.
So, here we are, right across the street from the US Interest Section in Havana, and really, until 1961, this was the US embassy. But of course,
Cuba and the US broke off relations. It reopened 16 years afterwards as an Interest Section.
And even though it's not an embassy, it has more staff, US diplomats tell us, than any other diplomatic mission in Havana. They have 50 US diplomats
here, they have 8 marines that guard the building. So really, in just about every way but its name, it works as an embassy.
With the warming of relations between the United States and Cuba, President Barack Obama had hoped to reopen this building as an embassy before the
Summit of the Americas in Panama this week, but that hasn't happened just yet.
Talks have been really slow going. And part of the issues, we're told, actually have to do with the Interest Section, whether the Cuban government
will remove the ring of police they have that surround the building, whether US diplomats will be able to travel freely throughout the island.
Right now, they have to ask Cuban government approval before leaving Havana.
All the same, though, preparations are underway. The flagpole is being redone to once again fly the US flag. There's a US Embassy sign, we're
told, that's ready to go up just as soon as for the first time in 54 years the United States and Cuba restore full diplomatic relations.
(END VIDEOTAPE)
QUEST: Now, the issue, of course, of Havana and Washington, the United States and Cuba, was one reason why we decided this month to go to Cuba.
And this Thursday, you can see plenty more from Havana with this month's edition of "Business Traveler."
It comes to you from the Cuban capital. Smoking cigars, driving old cars, and what it means for the tourist industry. All on Thursday, 9:30 in the
morning in London, 10:30 in Europe, repeated throughout the weekend. CNN "Business Traveler."
Premium cable without the cable company. HBO says all it needs is an internet connection when it's time to cut the cord. We'll unbundle the
news and hear from the CEO of HBO after the break. QUEST MEANS BUSINESS in London.
[16:19:00] (COMMERCIAL BREAK)
[16:20:31] QUEST: Samsung expects to beat earnings forecasts for the first quarter of this year. Preliminary guidance has been given, and the
phone company says it earned around $5.4 billion over three months. That's down on last year.
Now, there were plenty more -- plenty more -- to talk about at the ups and down at the Mobile World Congress in Barcelona. I went to see how mobile
phones can help you keep a check on performance.
(BEGIN VIDEOTAPE)
QUEST: This is Courage in name and nature. Extraordinarily impressive stuff. So, what's the technology behind me?
UNIDENTIFIED MALE: Well, what we're doing here is taking GPS to the next level with making it 3D. So, what you're seeing right now is our Xensr Air
product, and where you have typical GPS that gives you scene, like in your smartphone or another device, it doesn't give you any vertical accuracy for
anything.
What we want to know, like you saw on the course, how high our friends are jumping. So, this is packed with more sensors, accelerometers, gyroscopes,
magnetometers. And what it does is allows you to see everything in full 3D: jump height, distance traveled in air, air time.
QUEST: So, it's a GPS transmitter.
UNIDENTIFIED MALE: At the start, but then extra sensors so we can see the 3D exactly.
QUEST: And what do they do with it? All right, so you get a 3D view of this thing going up and down and around and around. But what use is that?
UNIDENTIFIED MALE: We wanted to use it for competitions. Because at the end of the day, when we were riding, we decide which one of our friends
jumped higher? We didn't know. It became who was talking louder, anything like that. So, we wanted to the hard facts.
And by doing this now, we can see, OK, you jumped three feet, but I jumped three and a half, and I beat you there. And now, with that idea, we got
competition.
So, where you have X Games or any of these other subjectively-based competitions in action sports, now for the first time, we're able to
integrate real data, so you can see exactly one rider or the other in the field, in the moment, to know who's going to beat out the other guy.
QUEST: What other sport would you use this on?
UNIDENTIFIED MALE: Well, you can use it for snowboarding or skiing, mountain biking. We started in windsurfing and kite boarding, actually.
Big wave surfing, where you don't know exactly how big the waves are. There are a lot of applications in sports, but as well as outside.
QUEST: This is all about the connected athlete, isn't it?
UNIDENTIFIED MALE: Precisely.
QUEST: Tell me what it means.
UNIDENTIFIED MALE: Well, for us, when we started, we wanted to know how high you can jump. But then, like you said, what if you can find it out in
real time, or what if you can use it for another application? What if you don't want your phone?
So, with all the devices that you see now at MWC, there's lots of tools for the rider. And at our foundation, the core is, what do they want it? And
if they want to see it on their wrist or in their goggle, or sync it with their video, our question is, how can we make that easier for them.
QUEST: How do you stop? There are no brakes on a BMX!
(END VIDEOTAPE)
QUEST: I promise you, I had absolutely no idea when I got on that BMX that it didn't have any brakes. And I soon found out, of course, as I was
going. Now, look.
(RINGS BELL)
QUEST: HBO has officially cut the cord with a new streaming service. It's called HBO Now. The company is selling online access to its programming
without a cable subscription. It's all part of this process of unbundling. Before we talk one iota more, remember, of course, HBO is a unit of Time
Warner, which also owns CNN.
Our senior media correspondent Brian Stelter has been speaking to the HBO chief exec. Brian is with me in New York. I need to understand, Brian,
because I'm of that old fogie age where, perhaps, these developments -- I can sort of understand the significance, but I need to understand. Is this
truly quantum leap, or is it incremental?
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: I guess I'm an old fogie, Richard. I've got to look at you with my glasses on. You don't look like
an old fogie!
(LAUGHTER)
STELTER: But listen, you and I, we both watch a lot of TV. People are addicted to TV. People traditionally are willing to pay a lot of money for
cable or satellite or whatever they can do to get access to TV.
But the cable bundle has come under a lot of threats. And I think what we're seeing from HBO today, we see the future of television coming into
focus. Because they're now coming up with a way for you to subscribe if you want to, if you don't have cable, directly via the internet.
In other words, you can subscribe like you can subscribe to Netflix. So, I talked to the CEO, Richard Plepler, in his office earlier today. I asked
him about this unbundling and what the ramifications could be.
(BEGIN VIDEOTAPE)
[16:24:59] RICHARD PLEPLER, CEO, HBO: This is a growth opportunity for everybody. And as you know, there are 10, 11 million broadband-only homes
in the United States who previously couldn't get HBO.
And that was just too big an audience for us not to go after. And that's part of what informed this. But I think you're going to see broad
dimensions of how people are going to subscribe to HBO going forward.
STELTER: But how is it possible for everyone to benefit if you are essentially unbundling HBO from cable for the first time? Is it not going
to hurt the cable -- the traditional cable business?
PLEPLER: No, because remember, of those 10 million doubling by the end of the decade, 20 million cord-nevers or cord-cutters, those people are never
going to have a cable subscription or a satellite dish.
STELTER: You've given up on those people?
PLEPLER: We haven't given up on them, but I think the research is that they're unlikely to have one. So, what we're doing is we're providing an
opportunity for our partners to go after those largely millennials -- we think HBO Now is something of a millennial missile -- and they can go after
those millennials, bundle it with broadband, and grow their businesses.
What we're interested in doing is making that programming, past, present, and future, available to our consumers whenever, however, wherever they
want to get it on whatever they devices they want to watch it on.
And so, that's the strategy of HBO's digital planning. We just want to produce kind of maximum flexibility in our business so that however people
want to watch on whatever screen they want to watch, we give them the option to do that. That's the strategy.
(END VIDEOTAPE)
STELTER: Richard, I think those last words were the most important: maximum flexibility. Companies like HBO, the parent company of CNN, Time
Warner, they're trying to put all these bets out on the table so no matter what happens --
QUEST: Right.
STELTER: -- to the future distribution and consumption, they're covered.
QUEST: OK. But the distributors, the existing distributors of both HBO and, indeed, let's face it, I'm not giving away any secrets when you say
that CNN and everybody else is looking at different things like this.
If you start salami-slicing or cherry-picking, whichever analogy you want to make, you eventually weaken the value of the traditional distributing
chain. So, what do the distributors get out of this, other than a pain?
(LAUGHTER)
STELTER: Other than a pain? Well, right now, only one US distributor, CableVision, is working with HBO on this. Apple is the other big launch
partner, because with Apple, you can just watch HBO Now and subscribe through your iPhone.
What HBO says is that the distributors, the traditional distributors, will get a cut of the broadband portion, and that they will grow with HBO.
Here's what Plepler told me when I put that question to him.
(BEGIN VIDEO CLIP)
STELTER: Do you think it's possible, though, that we'll look back, let's say, five years from now, and conclude the cable bundle began to unravel on
this week?
PLEPLER: No. I think the cable bundle is going to evolve and change, but I don't think the cable bundle is going to go away. Again, I think we're
going to have -- if you and I are sitting here in five years, if you and I are sitting here in ten years, I think we're going to have big, big
businesses with Comcast and Charter and Direct TV and AT&T and Verizon, Cox, and all of our partners
And we will have big businesses with Apple and other digital distributors as well. This is going to be an expansion of our business going forward,
which is good for everybody.
(END VIDEO CLIP)
STELTER: So, he says we're better together, grow with us. But there's going to be, obviously, pressures here. Creative destruction comes with
destruction. And some people believe that what's going to be hurt in the cable bundle are smaller channels, not the big CNNs and the ESPNs of the
world, not the ABC Families and the Foxes, but the smaller channels. They might be crunched as people increasingly subscribe to things like HBO Now
or sign up just for the most important channels they love.
QUEST: Brian Stelter in New York. Brian, thank you.
STELTER: Thanks.
QUEST: The prime minister David Cameron stopped by the Belfast set of HBO's "Game of Thrones" today. Cameron was in Northern Ireland campaigning
ahead of next month's elections. We'll look at the tight race between Cameron's Conservatives and Labour next.
[16:29:10]
(COMMERCIAL BREAK)
[16:31:28] QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. When Greece says it's owed more than $300
billion in a debt that goes back to the Second World War.
And a slice of American musical history is sold for more than a million dollars. Before all of that, this is CNN and on this network the news
always comes first.
A jury in Boston is now sifting through mountains of evidence in the trial of the accused bomber Tsarnaev. He's being tried on 30 total charges,
including setting off weapons of mass destruction at a public event as an act of terrorism. Seventeen of those charges carry a sentence of death or
life in prison.
Scenes of grief in Nairobi today as crowds paid tribute to the victims of last week's deadly attack on a Kenyan University campus. One hundred and
forty-seven crosses were planted in the ground - one for each victim.
They were shot in a rampage by al-Shabaab gunmen on Thursday. Mourners said the massacre had shaken the entire country.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I just feel lost, extremely lost that we cannot afford these shootings. You know, well actually I feel almost speechless because
people's lives cut short.
UNIDENTIFIED MALE: An extremely painful moment for some of us to imagine that terrorism continues to confront us each and every waking day, knowing
that each it strikes a family's destroyed and dreams are shattered.
(END VIDEO CLIP)
QUEST: An explosion at a power transfer line in the U.S. state of Maryland knocked out power across Washington, D.C. The outage has affected a number
of key government buildings including the White House.
The U.S. Department of Homeland Security says the outages are not linked to terrorism.
Kentucky Senator Rand Paul is the second major candidate to enter the race for the White House in 2016. Rand Paul officially launched his campaign to
stand for the Republican ticket two weeks after a Texas Senator Ted Cruz announced he would run.
Speaking to reporters, Senator Paul said he would not be a typical Washington candidate.
(BEGIN VIDEO CLIP)
SEN. RAND PAUL (R-KY), U.S. PRESIDENTIAL CANDIDATE: I have a vision for America. I want to be part of a return to prosperity, a true economic boon
that lifts all Americans, a return to a government restrained by the Constitution.
(CHEERS)
PAUL: A return to privacy, opportunity, liberty. Too often when Republicans have won, we've squandered our victory by becoming part of the
Washington machine. That's not who I am!
(CHEERS)
(END VIDEO CLIP)
QUEST: The former British Prime Minister Tony Blair told voters that a conservative victory in next month's general election could mean economic
chaos for the United Kingdom.
Mr. Blair spoke in support of his successor, the Labour leader Ed Miliband and he warned against the Conservative Party push to hold a referendum on
E.U. membership. Tony Blair said the very prospect of a referendum could plunge Britain into its most unstable period since World War II.
(BEGIN VIDEO CLIP)
[16:35:08] TONY BLAIR, FORMER BRITISH PRIME MINISTER: The Tory campaign - I hear talks of pales (ph) should Labour win. Think of the chaos produced
by the possibility - never mind the reality - of Britain actually quitting Europe.
Jobs that are secure suddenly insecure, investment decisions postponed or canceled, a pall of unpredictability hanging over the British economy. And
for what? To satisfy the insistent Europhobia of a group who will never be satisfied.
(END VIDEO CLIP)
QUEST: I'm joined by Robin Niblett, director of Chatham House and a former vice president of the Center for Strategic and International Studies.
Europe is the unspoken subject in many ways. While the candidates are battling about the minutia of tax policy and health policy, but it's Europe
that could perhaps define the election or not?
ROBIN NIBLETT, DIRECTOR, CHATHAM HOUSE: I do think Europe is going to define the election. You might argue that's why Tony Blair's talking about
Europe rather than Ed Miliband or Ed Balls. It's one of those hugely unpopular topics - no leader wants to touch it all. It is hugely important
if there is a Conservative victory, then there will be a referendum. So it is very important.
But no one wants to talk about it right now.
QUEST: Right. And to some extent, -- this just reminds me of (ph) - the Tories say they will do a renegotiation and that will be put to the
electorate. Labour says there will only be a referendum if there is a major treaty change which affects the relationship.
NIBLETT: Yes.
QUEST: That's the gist of it.
NIBLETT: That's the gist of it and therefore Labour feel that they can confidently say there will not be a referendum under - in the next
parliament if they win.
Because they know that no other European leader wants a treaty change of the sort that would trigger a referendum under their requirements.
QUEST: But if the British public do want change - and that's a big if, I'll concede - if the British public is unhappy with the relationship with
Europe - never mind whether or not they want in or out, but unhappy with the relationship --then surely Tony Blair's intervention saying, 'Well, you
really shouldn't really have a go at all of this' - it's not improper but it doesn't ring true to democracy.
NIBLETT: I think of all people to say that the British people shouldn't get a say on it, he is probably in a weaker position to do that. When the
Constitutional treaty was one of the last big treaties happened under his leadership in 2004, originally he was for a referendum on it but he changed
his mind and decided that - (inaudible)
QUEST: Very late in the day --
NIBLETT: Very late in the day.
QUEST: -- he changed. We all thought there was going to be a referendum.
NIBLETT: So if you're going to play to this idea that politicians don't trust the people, they're not in touch - he is not the person to counter
that message. But he is the person to perhaps counter the message that you can trust the Conservatives with business.
And I think it's this angle of trying to play the business angle takes something away from the Conservatives on this front. He may be is the
person who can do that.
QUEST: Bearing in mind Mr. Blair's discredited credentials in the U.K. - or particularly because of the war in Iraq - bearing in mind that and the
weapons of mass destruction, -- who was he talking to?
NIBLETT: My sense is he's talking to a kind of floating middle voter. Most Labour voters my sense is probably wouldn't vote for Tony Blair again.
So he's looking for that floating middle voter that's thinking, 'Hold on a minute, where am I safer?'
Somebody said 40 percent of British people still have to make up their mind who they'll vote for. If you can inject an element of uncertainty that you
can trust the Conservatives with Britain's foreign policy, -- two messages - one that maybe the Conservatives would be in UKIP's pocket, people say
Labour would be in SNP's pocket.
But secondly that David Cameron is a bit impulsive leader. He made an impulsive call as he did in Syria, Libya - impulsive call for a referendum.
These are subtle messages but they're ones for people in the middle.
QUEST: And you give an example - he gave an impulsive call opposed to devolution referendum, the very next day he promises greater devolution for
the other national countries in the U.K. without a word to anybody else.
NIBLETT: And Tony Blair's first part of his speech was all about the Scottish referendum and have we let these things happen. Look how
unpredictable they are.
QUEST: OK, so, let's bring it back down to the people, if we may. What's your gut feeling - do the people - now, again, never mind do they want to
be in or out, but do the public in the U.K. want that vote?
NIBLETT: On every poll that's been undertaken so far, a majority - a small majority - say that they would like a referendum. At the moment the polls
are saying that they would vote to stay in if such a referendum were given. But to your core question, people have said they want a referendum but it
is 10th or 11th or 12th on their list of priorities.
QUEST: The economy, the health service -
NIBLETT: Everything - like your pensions - a lot come before it.
QUEST: We're not talking pensions tonight. (LAUGHTER). Good to see you, sir. Thank you for helping us understand this.
Now here's a tale. Greece says it's owed about $300 billion and it's not a recent debt. It comes from Germany and it's not what you're probably
thinking. It's not a bailout or a loan request. Athens says the money is due for reparations from World War II.
[16:40:01]No formal demands have been made. Germany's economy minister branded the figure stupid. Other German lawmakers have warned that Greece
is taking the wrong approach.
(BEGIN VIDEO CLIP)
MARKUS SOEDER, BAVARIAN STATE FINANCE MINISTER, VIA INTERPRETER: Overall this is a very sensitive issue which must be dealt with very carefully.
But one thing is clear, this issue should not be exploited to explain possible budget deficits in Greece.
Also, it comes across as inappropriate and is in my view entirely wrong as a strategy.
(END VIDEO CLIP)
QUEST: Rana Foroohar is CNN's global economic analyst. Rana, good grief!
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: (LAUGHTER).
QUEST: When I read this this morning I just thought, I mean, let's start first of all with the -
FOROOHAR: Where to start?
QUEST: Where to start? I mean, Wolfgang Schaeuble says clearly if Greece thinks they're going to get rid of their deficit on the back of old debts
from - potential debts from - Germany, they've got another thing coming. What is the Greek government thinking?
FOROOHAR: You know, it's hard to know. One has to wonder about the timing. But I think that really this story is all about the fact that the
European debt crisis has become a kind of morality play. So usually it's the Germans taking the high ground saying, look, we've done all the hard
work over the last two decades, we've gotten our economy in shape, our economy is doing well, everyone else needs to shape up.
Well the Greeks want to take a little bit of that high ground back I think with these - with this - talk of reparations and going all the way back to
World War II. It is a very inopportune moment though and it underscores just how dangerously political the whole Eurozone crisis has become.
QUEST: Now you see, this is the fascinating part and I'm glad you brought that because, you know, supposedly everybody's in the same family.
FOROOHAR: (LAUGHTER).
QUEST: And there are certain -
FOROOHAR: It's a very dysfunctional family (LAUGHTER).
QUEST: Well that may be true, but there are - I remember - I'm reminded of the famous Fawlty Towers - Basil Fawlty - don't mention the war.
FOROOHAR: (LAUGHTER).
QUEST: I mean, you know what I'm saying. To that extent, there was a certain element that Germany has made its case, Germany has done its
apologies and whatever but everybody else moves on. To open this can of worms with the very country that's paid most of your bailout bill -
FOROOHAR: Absolutely.
QUEST: -- this (inaudible) belief.
FOROOHAR: It really does and it's such a pity because, you know, until this new government took office, until we had this sort of latest wrinkle
in the Eurozone crisis, things were actually getting a bit better in Greece, you know? Yes, they've been through hard times, yes their
economy's contracted 25 percent and that's why you've got this government, frankly. It was sort of they were at the end of their tether, there was a
lot of populous rage. It's just really too bad because the Eurozone was picking up, we were starting to see some green shoots.
Now we're being plunged back into this sort of political sniping and, you know frankly, it underscores -
QUEST: Right, but -
FOROOHAR: -- the fact too that you need a political solution to this problem. You need a real coming together fiscally I think which is a whole
'nother story.
QUEST: Now, finally, the one of the things about Germany that they're particularly proud of in many ways is that they have stood up and looked
themselves firmly in the mirror post-Second World War, and they have had this very deep, introspective view on that what happened, how it was done.
Children are taught about it from a very early age. Many Germans will find this particular claim in the manner it's being done
-- deeply offensive.
FOROOHAR: Absolutely. And I think it was meant to be offensive in a lot of ways. You know, I mean, we've seen over the last couple of years
pictures in the Greek newspapers of Merkel and Schaeuble dressed up as Nazis.
I mean, there has been a lot of really incendiary rhetoric around this issue. I think that the Greeks are just trying to distract from the fact
that they are really at the end of a process. They're going to have to blink, they're going to have to do more hard work, there's going to be more
austerity if the problem's going to get solved.
On the other hand, I do think that at some stage, there's going to have to be a serious transfer of fiscal power into the center so Germany can take
control of things because, you know, trusting the periphery to reform is - I don't think it's going to happen on its own.
QUEST: We'll argue about that and discuss that when I'm next back in New York. Come prepared.
FOROOHAR: (LAUGHTER). I will do.
QUEST: Rana Foroohar joining us. Now, here's a question for you - who was the jester and what about that thorny crown from the king? More
importantly, crucially, why was the levy dry? We'll answer that (RINGS BELL) after the break.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
(SONG PLAYING)
[16:46:49] DON MCLEAN, SONGWRITER, "AMERICAN PIE": Bye, bye Miss American Pie, drove my Chevy to the levy but the levy was dry.
(END VIDEO CLIP)
QUEST: It cost $75,000 a page. That's how much the original manuscript of the 1970s song "American Pie" sold for today. The singer Don McLean waved
'bye 'bye to his handwritten notes at the auction at Christie's in New York. In total -- $1.2 million was paid for this particular manuscript.
Nick Parker reports.
(BEGIN VIDEO CLIP)
MCLEAN: So bye, bye Miss American Pie, drove my Chevy to the levy but the levy was dry.
NICK PARKER, CONTRIBUTOR, CNN.COM INTERNATIONAL: A song that defined a generation. An 8-minute, 36 second ode to the social upheavals of the
1960s and early 70s.
TOM LECKY, CHRISTIE'S NEW YORK: It's the creative process from beginning to the end you see great moments of inspiration, you see him attempting
things that didn't work out or the direction that he was going in, that he then didn't want to follow.
And so these words that we all know so well and are fixed weren't (ph) fixed at the beginning.
PARKER: Sixteen pages of scribbles and scratches and the iconic words that made the final cut.
MCCLEAN: Long, long time ago I can still remember how that music used to make me smile.
PARKER: The song became a number one hit in 1972 and has stood the test of time, making the song of the century list by the Recording Industry
Association of America.
MCCLEAN: But February made me shiver.
PARKER: McClain acknowledges the February that made him shiver was about the plane crash that killed Buddy Holly, Ritchie Valens and the Big Bopper
- the day the music died. But much of "American Pie" still remains a mystery.
LECKY: UNIDENTIFIED MALE: You can hear it in coffee shops, it's ever present. And that makes it a work of popular art. It also happens to be a
work of high literary art and it gets constantly discussed and debated about what its lyrics refer to and might mean.
PARKER: Don McLean once said songwriters should make their statements and move on. Maintaining a dignified silence, his music has always spoken for
itself, yet these questions remain.
MCLEAN: Now do believe in rock and roll and music save your mortal soul and can you teach me how to dance real slow?
(END VIDEO CLIP)
QUEST: $1.2 million. Now the manuscript could contain hints about the meaning of the song's lyrics and it is a highly-debated topic. So, "Miss
American Pie" - what does it all actually mean? Well, the people sort of - the general view is it could refer to the music of the 1950s - "Miss
American Pie" - "drove my Chevy to the levy."
Some believe it's a reference to a 1950s era of beauty pageants - Miss American Pie.
[16:50:01] And then you've got that other line - "Drove my Chevy to the levy but the levy was dry." Now that could imply the music of the 1950s
had dried up. Some suggest it's about a failed romance. Or it could be a reference to popular Chevy commercials - "See the USA in your Chevrolet."
Good old boys were drinking whiskey and rye. Now that could be McLean's way of denouncing the rise of drug use in in the 1960s and into the 70s.
As for what McLean himself says, he's dodged questions about what the song means. When being asked what does "American Pie" mean, he says it means
I'll never have to work again. @richardquest might be where you can have your view. What do you think "American Pie" actually means? All 8
minutes, 41 seconds of it. We're back in a moment.
(COMMERCIAL BREAK)
QUEST: Last summer's controversial movie "The Interview" is of course been obviously banned in North Korea. Even so, a few North Koreans could
actually be watching it as Paula Hancocks now shows us. One South Korean activist came up with a very unusual way of getting the movie over the
border.
(BEGIN VIDEO CLIP)
SETH ROGEN, ACTOR: You want us to kill the leader of North Korea?
LIZZY CAPLAN, ACTRESS: Yes.
JAMES FRANCO, ACTOR: What?!
PAULA HANCOCKS, INTERNATIONAL CORRESPONDENT FOR CNN INTERNATIONAL, BASED IN SEOUL, SOUTH KOREA: A silly comedy in the United States seen as an act of
terrorism in North Korea as devastating cyberattacks and months of recriminations followed. Now the movie may have found its way into the
most isolated country on earth.
Lee Min-bok has been studying the wind direction from South to North Korea for weeks. A defector now living in the South, he's sending thousands of
copies of "The Interview," dollar bills and political leaflets across the border.
He very much doubts North Koreans will find the movie funny - he certainly didn't. But he says that doesn't really matter.
LEE MIN-BOK, NORTH KOREAN DEFECTOR, INTERPRETED BY HANCOCKS: "The regime hates this film," he says, "because it shows Kim Jong-un as a man, not a
God." "He cries, he's afraid like us and then gets assassinated. It destroys the idolization of the leader."
HANCOCKS: In the dead of night, his precious cargo hidden beneath black bin liners, Lee travels from his home to an area close to the border, an
area South Korean police and military following him do not want us to disclose. They also asked us not to film them.
These propaganda balloons infuriate North Korea. Its military fired on similar balloons several months ago. The South fired back. But Seoul said
it can't stop them as they're civilians and this is freedom of speech. Residents who live near the border disagree. Last October they physically
intervened to stop activists sending these balloons, angry that they were being put in the line of fire.
Which is why Lee says he flies his balloons at night and does not usually invite media.
MIN-BOK, KOREAN DEFECTOR, INTERPRETED BY HANCOCKS: "I want my people to know the truth," he says. "That is when revolutions happen. If you tell
the truth in North Korea, you die. But by sending balloons from here, I can tell the truth in safety and in secret."
HANCOCKS: Lee doesn't know for sure who if anyone will see this movie, but he says he knows he has to try. Paula Hancocks, CNN Seoul.
(END VIDEO CLIP)
[16:55:01] QUEST: The final image reminds you of the U.S. markets which had a very peculiar session. Come have a look at the Big Board and you'll
see what happened. The market was up most of the session and then right at the end, down it goes and we're off 5.4 points.
Although only a small move, but it's the trend that was most worrying. Very different story in Europe. Take a look at the European boards and how
they traded through the session. Good gains in London, the best of course was in Amsterdam. That was because of the TNT sale to FedEx. We will have
a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." The saga of Greece and its debts and bailouts in Europe took a very peculiar turn. When the deputy finance
minister suggested that there was $300 billion owing from Germany to Greece as part of war reparations from the Second World War.
If there is anything that is going to be calculated to enrage the Germans and probably cause great personal offense to many Germans, it'll be the
suggestion by Greece that Germany owes that side of money. And it's not easy to see exactly how they worked their way through this because maybe
the Germans have a point - that reparations were paid in the past, various treaty obligations have meant that there's no more money that is payable
and ultimately since everybody is now in the European Union and the Eurozone in this case, what purpose does it serve other than to annoy,
offend and ultimately irritate the very country that is paying your bills?
It's a very sad move when this was moved forward. And one that neither country is going to be able to back off from very easily. And that's
"Quest Means Business" for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.
END
