Return to Transcripts main page
Quest Means Business
Apple Share Sell-Off Worsens; Sinking Apple Shares Weigh on Dow; Analysts Warn Oil Prices to Stay Low; One Analyst Believes Oil Prices Will Rise; Trump Turns Voicemail into Campaign Ad; Trump Holds Commanding Lead in Latest Polls; Greek Bank Stocks Fall 30 Percent for Second Day; Spain's Economy Finally Sees Turnaround; European Markets Flat
Aired August 04, 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, HOST: Lo, the closing bell rings, the Dow is off just some 43 points at the end of the trading day. The gavel is ready to be
hit, sir, hit the gavel.
(GAVEL POUNDS)
QUEST: That's what you call a real gavel on Tuesday, the 4th of August.
Tonight, investors take a big bite out of Apple's share price.
Also, Donald Trump towers above the GOP field as Republicans are now deciding on their presidential debate lineup.
And it's the hot topic of the cold offices: men versus women in the great air conditioning debate.
I'm Richard Quest in New York, and I mean business.
Good evening. Tonight, the world's biggest company just got a little bit smaller. Apple's shares are sliding deeper and deeper into the area
where you'd certainly call them a correction. Now, the shares just closed lower by some 3 percent on Wall Street. It's a loss of nearly 3.8.
At $114, that's still a sizable price for Apple, which was the world's wealthiest or richest or -- highest valued tech company. It's the fifth
straight day of losses. And, as we say, they're now down more than 10 percent from their peak. That is officially a correction.
Over the past few sessions, Apple's share price has taken a real bruising. Have a look and see the reasons why.
First, there's the wobble in China. Apple was the Chinese smartphone leader, and now, new details show it's trailing behind others such as
HuaWei and Xiaomi. iPhone sales worldwide have missed expectations. Analysts say sales may have peaked for the iPhone.
And there's the perennial: what next? Investors looking for a new hit product. Was the Apple Watch that product or not?
The 3 percent fall in Apple has helped push shares further down for the Dow for the fourth straight session. One of the reasons is, of course,
even though we start at the beginning, Dow was up, and now it is down 47 points.
Paul La Monica is with me. Paul, before we go to Apple itself, how much of that fall on the Dow is as a result of Apple?
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Apple's a big chunk of that because it is one of the most highly-weighted stocks in the Dow,
its stock price still above $100. But you did have strength with some other companies that minimized the damage. Disney, which is reporting
earnings in a few minutes, they were up today. Nike, another $100-plus stock also up.
So, that's why even though Apple is the world's most valuable company and it had a bad day today, the market damage was not as bad as you might
have thought.
QUEST: But on Apple itself, the -- you heard the reasons, slowdown in China, a question of whether sales of peaked, whether, for example, the
Apple Watch is the next big thing, and if it's not, then the iPad is already -- I wouldn't say that -- well, maybe lackluster. The larger
iPhone 6, but does it create a feeling of lost Apple?
LA MONICA: It is a problem. I think right now what Wall Street's grappling with is, is Apple a one-trick pony? Admittedly, the iPhone is
kind of like American Pharaoh. It's a triple crown winner. It's a great product, people love it. But what is next?
It's probably not going to be the Apple Watch. That's most likely a niche product at best. So now we're thinking, is it going to be something
more with TV? Could it be a car? Apple has gone on a hiring binge lately. They have hired several executives from Chrysler and other automotive
makers, and that's got people salivating about the prospect of whatever you want to call it, an iCar, an Apple car.
QUEST: But how does the company compare when you look, for example, at the -- at its consumer products with its, for instance, the Macs, the
Notebooks and the like?
LA MONICA: Yes. The Mac is still an important product for Apple, and it's actually now generating more revenue than the iPads. Because as you
correctly point out, the iPad's starting to get cannibalized by the bigger iPhones. Do you really need a tablet when you have a 6 or a 6-Plus that
has a pretty big screen? So, the iPad is losing some of its luster.
But the Mac is definitely still gaining market share. It was the only company to report market share gains for computers in the first quarter.
QUEST: Final question, comes to this core issue that we're talking about. Do you think -- or not you personally, but is there a feeling that
something is wrong with Apple?
LA MONICA: I don't think there's a sense that something is wrong, it's just that right now, you had a company that was worth $775 billion at
its peak price. Where's the growth going to come from? People are not yet sure where that's going to be, so you have this uncomfortable transition
period. But $203 billion in cash gives them a lot to play with.
[16:05:06] QUEST: Two hundred and two.
LA MONICA: Most of it parked overseas for tax reasons.
QUEST: Absolutely.
LA MONICA: Thank you.
QUEST: Leave the apples where they are. Thank you very much, indeed. Paul La Monica.
Oil is mounting a slight comeback after suffering a major fall on Monday. Take a look and see how Brent Crude traded. Brent Crude for this
contract is up 1 percent, having headed back, it's now above $50 a barrel. And that's the only thing that's sliding after more than 5 percent.
If you look overall, you will see how the trading -- has gone so far. We went up to a peak in early July over the last month up to $59, and now
we're back down just around $50.
Some are warning that these low oil prices may soon become the new normal. According to BMI research, three factors are continuing to weigh
on oil price in the current -- months ahead. These are the factors, and bearing in mind, keep in mind always this price and where it has gone. So,
as you look at this, remember, factor in whether it's going up.
You've got a US strong dollar. Everything's priced in dollars when it comes to oil. That has a negative effect. You have Iran, the higher oil
export. If Iran starts producing as sanctions get lifted and puts more oil into the market, we know how that one plays out.
And then you've got a China with its weakening economy. Less demand for oil, classic supply and demand, the price will fall.
Now, my next guest sees it all a bit differently, claiming oil prices will rise again. Mauricio Cardenas is the finance minister of Colombia,
producing about a million barrels of oil a day, and plans to keep it that way. He joins me now from London. Minister, good to see you, sir. Thank
you for joining us.
MAURICIO CARDENAS SANTAMARIA, COLOMBIAN FINANCE MINISTER: Thanks, Richard, good to be here.
QUEST: Right. You see the price. You see the price at $50, and can you live with that price? You have to, I suppose. But where would you be
more comfortable seeing it go?
CARDENAS SANTAMARIA: Well,we had made our assumptions based on a $60 price for this year. So far, it's been close to the average for the year,
so we very much hope that towards the end of the year, we'll see a recovery in prices and we'll go back to that range --
QUEST: Right.
CARDENAS SANTAMARIA: Sixty is what we think is the reasonable price at this stage.
QUEST: But you'd agree with me that the pressure is on the downside, particularly bearing in mind those three factors that I mentioned, not
least of which, OPEC's complete refusal to institute a price support mechanism. And non-OPEC companies like yourself, you're not about to cut
production, either, are you?
CARDENAS SANTAMARIA: No, we're not cutting production. On the contrary, we want to increase production. Now, you did not mention the
strength of the US economy. You mentioned the strength of the US dollar. But faster economic growth in the US could help demand, and that, of
course, will put upward pressure on oil prices.
So, I think that's going to play an effect in the second half of the year. I think the recovery in the US is looking stronger, and hopefully
that will have a positive impact on oil prices for us oil producers.
QUEST: When we look at the economy -- Colombia's economy at the moment, and we think back just 12 months of the difficulties and strains
that you've faced, what is your next major move to put the economy onto a firmer footing?
CARDENAS SANTAMARIA: Fiscal adjustment. We're implementing intelligent austerity. We have to accommodate by cutting expenditures. We
have raised taxes in other sectors of the economy to make sure that we keep our fiscal deficit low.
And at the same time, flexibility in the exchange rate. The Colombian peso has depreciated, and that depreciation will help other export sectors
--
QUEST: Right.
CARDENAS SANTAMARIA: -- and certainly that will play an important role.
QUEST: So, what you're describing to me is a classic IMF-style or IMF-type or traditional conformist type of recovery mechanism. You cut
spending, you raise taxes, and you hope that the currency will help boost exports.
CARDENAS SANTAMARIA: Yes. But on top of that, we have the private sector. The private sector is engaged in massive infrastructure
investments in Colombia. So, we think that the private sector will play that counter-cyclical role. It will help us offset the losses as a result
of the decline in oil prices. So, fortunately for Colombia, we have this infrastructure program in place.
[16:10:00] And the world is willing to finance it. International banks are putting money into these toll roads in Columbia.
QUEST: Sir, thank you for joining us. Thank you for -- appreciate you taking the time, joining us from London.
CARDENAS SANTAMARIA: Thanks, Richard.
QUEST: Now, as we continue tonight, Gawker trumped by Trump. The Donald has turned his voicemail into a campaign message after his cell
phone number was leaked online.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
DONALD TRUMP, REPUBLICAN PRESIDENTIAL CANDIDATE: Hi, this is Donald Trump, and I'm running for the presidency of the United States of America.
With your help and support, together, we can make America truly great again.
(END VIDEO CLIP)
QUEST: That's Donald Trump's voicemail greeting. It was recorded after the gossip website Gawker published his phone number, and published
it online. Now, not to be outdone, the presidential candidate then went out and tweeted the number himself, having changed the message, encouraging
his 3.5 million followers to call him -- the number, 917-756-8000 -- "and listen to my campaign message."
It was a shrewd, clever stunt in a campaign that's largely dismissed, the man, when it began. Now, the latest CNN polling shows Trump with a
solid, commanding lead in the GOP folds.
Look at how the Republican party. The average of the most of them -- you've got there, Donald Trump at 23, Jeb Bush at 13, Scott Walker, the
governor of Wisconsin, at 11. The -- clearly, way in ahead is Donald Trump.
At the top of the next hour, the candidates will find out whether they've made it for the first televised primary debate. Fox News says it
will only include the ten most popular candidates on Thursday. It's unclear which polls will be used to determine the candidates' popularity.
Mark Preston joins us from Washington. Let's get a couple of quick- fire questions if we may, Mark. First of all, there's no doubt Trump will take -- that Trump will be in that list, correct?
MARK PRESTON, CNN POLITICS EXECUTIVE EDITOR: No doubt, and there's no doubt he'll be in the center stage on Thursday night in this first
Democratic -- or Republican debate, Richard.
QUEST: Right. So, their positioning them in center outwards, depending on where they are, is that correct?
PRESTON: That is correct. And that's historically been done, so it's nothing new this campaign. That has pretty much been done every
presidential campaign.
QUEST: So, Mark, when we look at this, are you surprised at Trump's performance so far?
PRESTON: Ah -- no. And here's the reason why. There's so much anger and frustration here in the United States, Richard, when it comes to the
economy. Even though we've seen an upswing from certainly where we're at over the past couple of years, there are people still out of work, people
still have lost their jobs.
And I think there's this growing frustration here in the US, Richard, that the US doesn't have the standing that it once had. And Donald Trump,
to many people, speaks truth to power, so to speak.
QUEST: OK. Now, I'm not being disrespectful to you or, indeed, to the US electorate or, indeed, to the US political position, but viewers
around the world will say, this is the country that's elected a peanut farmer, that elected an actor, that elected somebody who'd never run
anything, and now, they're flirting with electing Donald Trump.
PRESTON: Yes. But a couple of things. To the credit of the United States is that they've elected folks from across a broad spectrum of
businesses.
[16:15:01] But even though Donald Trump is leading the polls right now, Richard, let's not confuse what could potential happen in February or
March. That's when it's really going to matter. That's when Republicans are actually going to go to the polls and that's when they're going to
choose who they want to be their nominee.
Even though Donald Trump is doing well in the polls, or certainly better than the other Republicans, there's another number that we don't
show that often, and it shows that basically 60 percent of the Republican electorate are turned off by Donald Trump. That's a huge number.
QUEST: So, what does he bring to -- if you're the head of the Republican party and you're sitting there, you're partly horrified that he
has just offended Mexico, your closest neighbor. You are disturbed that he has been rude about John McCain, a war hero. What does he bring to this
campaign, do you think?
PRESTON: He brings a circus, no doubt about that. He's created a circus atmosphere. It's been very unorthodox. To your point about him
taking -- his telephone number, which Gawker had tweeted out, had published, and he turned that around and made lemonade out of lemons.
Look, Donald Trump really hasn't talked a whole lot about policy initiatives and very in-depth specifics. When he starts doing that, that's
when we'll know if Donald Trump is for real.
QUEST: Ah, but, as I heard on "Erin Burnett OutFront" last night, that point, he -- all he has to say is, "I can't lay a brick, but I've
managed to build some of the biggest skyscrapers and successful skyscrapers in the world." Doesn't that resonate with people?
PRESTON: Oh, no, it does. And look, he's very successful, and a lot of people do like him, and they're certainly fascinated with his whole life
story. And let's not forget, he's been a reality television star for many years here in the US, gave huge ratings to NBC when he created "The
Apprentice" show.
So, listen, people do like him, they like the fact that he's talking straight and he talks bad about government. He's not from Washington, and
everybody hates Washington. But the question is, does have enough of policy behind him that will help drive him through February and March, when
it really, really counts, Richard?
QUEST: We will watch this. Mark, and you will be there for us. We need you to help us understand what is happening. Thank you.
Now, as we continue, we're going to be looking at the Greek banks, 30 percent down on the first day of trading. Another 30 percent down on the
second day of trading, which all, of course, raises the question, when do they go bust? QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: There's no stability for the Greek banks. For the second day in a row, shares were falling sharply, down nearly 30 percent, which is the
daily maximum allowed by the Hellenic Stock Exchanges. The index itself ended down just over 1 percent, which is quite remarkable, all things
considered. A paltry loss compared to the 16 percent sell-off.
Investors fear they're going to be wiped out when the Greek banks are recapitalized as part of the country's impending international bailout,
bearing in mind, if there is a recap -- or when there's a recap, those existing shares will be valued down.
So far this year, Greece's four biggest are down 60 percent or more. The crash has left them virtually worthless, and their combined market
value is just about $10 billion. Bill Rhodes is president and chief exec of William R. Rhodes Global Investors. Good to see you, sir.
BILL RHODES, PRESIDENT AND CEO, WILLIAM R. RHODES GLOBAL INVESTORS: Great to be back with you, Richard.
QUEST: Two hundred billion is what Apple is worth, and all the Greek banks' worth is about $10 billion.
[16:20:01] RHODES: Well, I --
QUEST: I'm not sure what that says.
RHODES: Well, I think what we're looking at here is the key, I think, to any successful economic plan for Greece -- and they're into their third
-- is to get the Greek banks up and running. Because without the Greek banks up and running, they provide 80 percent of the credit, the economy's
not going to go well.
QUEST: But we had stress tests. We've already had stress tests just last year on European banks.
RHODES: Yes, well, they -- I think they bent that a little bit. And since then, you've had 40 billion euros since December taken out of the
banking system, which is a big chunk of their deposits. Second of all, they're sitting with a lot of bad loans. There are four major banks --
QUEST: Still?
RHODES: -- in Greece. Still. Four major banks in Greece. You've got Alpha Bank, you've got Piraeus Bank, and you've got Eurobank and you've
got the National Bank of Greece. And some of them have some pretty big, bad portfolios. So, what do they have to do? They have to recapitalize
the banks, clean up that bad loans --
(CROSSTALK)
QUEST: Hang on --
RHODES: -- and be able to lend.
QUEST: Who recaps it?
RHODES: Well, supposedly, within this agreement, they've set aside 25 billion --
(CROSSTALK)
QUEST: 25 billion.
RHODES: Yes. Now, where that's going to come from is another story, because they're talking about that being backed up by privatizations, by
assets. And so far, in five years, there hadn't been much in the way of privatizations in Greece.
QUEST: Look, what you're telling me is -- and I'm putting words in your mouth, and I know that you're the sort of man who'll tell me to stop
it -- but what you're telling me is that this bailout deal that's being put together is a dog's breakfast.
RHODES: Well, there are two things that have to happen to make it go. First of all, they've got to recapitalize the banks rapidly. Now they're
talking about October. Too late. They've got to do it rapidly so they can start lending or the economy won't grow.
Second of all, the only other thing that's absolutely necessary here is to -- and this is very, very important -- is to have some sort of debt
restructuring or debt relief. And at the -- and the Germans --
(CROSSTALK)
QUEST: Merkel has already said there'll be no nominal debt relief. So, you're talking about extending maturities.
RHODES: Well, I'm -- debt relief and restructuring are different. Debt relief means to extend the maturities and to really move down the
interest rate. And they have to do that. How do you do it? I'll tell you how it was done when I did these restructurings. Most of the time, we
actually restructured principal, but where we didn't, we pushed out the maturities, way out, lowered the interest rates.
And the IMF is not in. The IMF is necessary, because the German parliament and Merkel don't want to move without the IMF. So, how does the
IMF come in? You say to the Greeks, if you move on privatization, you move on pension fund reform, you move on labor reform, then we will allow you
debt relief.
QUEST: In a word, are you optimistic, bearing in mind the complexity of the negotiations?
RHODES: If they do the two things that I am saying, and they do them rapidly, it's got a shot. If they don't, it ain't going to happen.
QUEST: You can't get more blunt than that, sir. Thank you very much, indeed.
Now, while the Greek economy flounders, the rest of the so-called region are doing much better. Remember, we're talking about Portugal,
Italy, Ireland, and Spain. And they seem to have washed off the economic mud from the recession.
Spain's economy has now grown steadily for the last 18 months at 3.1 percent. It's the best since 2007. The jobs outlook is a sore point, but
that's also improving, with Spanish unemployment being announced down nearly 2 percent in down. CNN's Isa Soares on the difference a few years
and a good dose of austerity can make.
(BEGIN VIDEOTAPE)
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT (voice-over): These were the scenes of anger and revolt in Madrid. That was 2012, the year that
Spain received a $125 billion bailout to shore up its banks.
Fast forward to 2015, the country's economy is growing at its fastest pace in seven years. In a critical election year, this is a major boost
for incumbent prime minister Mariano Rajoy who, in seeking a second term in office, is trying to convince voters that a recovery is talking hold.
MARIANO RAJOY, PRIME MINISTER OF SPAIN (through translator): Never in Spain's economic history has so much employment been created in a quarter.
The survey of the second quarter of this year shows excellent results, with strong job creation and a reduction in unemployment.
SOARES (on camera): Spanish prime minister Mariano Rajoy, there. Well, it's not just Spain's unemployment that's showing signs of revival,
as you can see by this chart. Look at how much it's dropped in the period of four years.
The economy, too, seems to be growing. According to the International Monetary Fund, the economy is expected to grow 3.1 percent this year, and
that is more than double the rate of the euro area.
And there's more reason to celebrate for Spain, because exports, too, have outperformed. They are up -- look at this -- 4.3 percent over the
first five months of this year.
[16:25:00] SOARES (voice-over): That all looks very promising, but can its effects be felt by ordinary Spaniards? And just how lasting are
they?
VINCENZO SCARPETTA, POLICY ANALYST, OPEN EUROPE: I think there are still open questions as to whether this recovery will be sustainable in the
longer term. And of course, Spain needs to keep working and keep reforming.
UNIDENTIFIED MALE: Daiquiri!
SOARES: Spain's service sector is doing particularly well, too, thanks in part to tourism. According to Spain's Ministry of Industry, the
country set a new record for tourists in the first half of this year, with just over 29 million visitors. With many escaping the crisis in the Middle
East and the economic crisis in Greece.
(CROWD SHOUTING)
SOARES: For many, the political tensions in Greece's debt crisis, which nearly saw the country out of the eurozone, has given Prime Minister
Mariano Rajoy something to celebrate: notably, a boost against Spain's leftist party Podemos which, early this year, closed in on Rajoy's
Socialist Working Party.
But that has now changed. According to a recent poll in Spanish Daily "El Pais," Podemos is losing ground, slipping to a third place on 19
percent.
SCARPETTA: I think Rajoy can benefit from two factors. One, which is the, of course, the Greek crisis and the Greek negotiations and how badly
Syriza has fared in the negotiations, and also, of course, the economic recover.
SOARES: Isa Soares, CNN, London.
(END VIDEOTAPE)
QUEST: European markets mostly ended the day flat. Take a quick look at the numbers --
(RINGS BELL)
QUEST: -- and you'll see. BMW was up 1 -- I beg your pardon. BMW was 1.3 percent lower after earnings. The company warns it could be hurt
by slowdown in China.
We've been talking about arctic temperatures in the office. It's left quite a few people hot under the collar. So, the chilly center of CNN New
York, find out why the air conditioning is being described as a big sexist plot.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. You bet there's more QUEST MEANS BUSINESS in just a moment, when we're going to hear from the woman who
turned up the heat on the office temperature. She calls it another big sexist plot.
And animal rights activists have bagged their own trophy. Policy changes at some of the world's biggest airlines. You're going to hear from
them.
Before all of that, this is CNN, and on this network, the news will always come first.
India has deployed its army and disaster relief teams to distribute aid to flood victims across the country. Officials say at least 178 people
have died. The Indian Home Ministry says 10 million people have been affected by days of heavy rain and flooding.
[16:30:06] Pakistani man convicted of killing a child when he was a teenager himself has been executed despite claims that he confessed only
under torture. Shafqat Hussain was arrested in 2004 when he was 14. He was tried as an adult. Human rights lawyers say his lawyer failed to
provide evidence he was a juvenile. The death penalty's illegal for anyone under 18 in Pakistan.
The International Organization for Migration says more than 2,000 people have now died this year attempting to cross the Mediterranean Sea.
Around 188,000 migrants have been rescued at sea while trying to reach European shores.
The IOM's regional director says the E.U. must try harder to come up with a collective approach to the problem.
(BEGIN VIDEOCLIP)
EUGENIO AMBROSI, INTERNATIONAL ORGANIZATION FOR MIGRATION: And the European Union and the 28 country (ph) in the region should have the
resources and the mechanism to face and handle this challenge in the appropriate way.
Having said that, it's true that the Mediterranean is and has been now for some time one of the deadliest route (ph) for migrants and one of the
route where the most migrants find their death instead of the future that they're looking for.
(END VIDEOCLIP)
QUEST: Israel's prime minister says the recent nuclear deal between world powers and Iran will make it easier for Tehran to get a nuclear
weapon. In a message to the Jewish community in the United States, Benjamin Netanyahu said Iran could get hold of a nuclear bomb whether it
stuck to the deal or not.
(BEGIN VIDEOCLIP)
BENJAMIN NETANYAHU: The nuclear deal with Iran doesn't block Iran's path to the bomb, it actually paves Iran's path to the bomb. Worst, it
gives Iran two paths to the bomb. Iran can get to the bomb by keeping the deal or Iran can get the bomb by violating the deal.
(END VIDEOCLIP)
QUEST: The world's top athletics body has hit back at claims that doping's been widespread at the Olympics. The IAAF says reports from the
"Sunday Times" and Germany's ARD are sensationalist and confusing. The reporter claimed that a third of medal-winning athletes between 2001 and 12
have recorded suspicious doping tests.
The view from outside on New York bureau where outside it is a balmy 31 degrees Celsius. That must be putting it into the low to mid-80s
Fahrenheit. Now - it's 88 degrees Fahrenheit. I still like to work in old money.
However, if it's 31 out there, in the building it's 23 degrees. And now we've found out why. The air conditioning is being set based on the
metabolic rate of a typical worker in the 1960s which is why many women take out the blankets to keep themselves warm.
In the 1960s, the average 40-year-old man weighed 155 pounds. Now of course women make up much more of the workforce. And they end being left
yet in the cold - literally huddled under blankets, jackets, sweaters in the office air.
So, to understand why the view of the men in the office is still so prevalent, I went deep inside Time Warner Center to find out more.
(BEGIN VIDEOCLIP)
QUEST: To discover the secrets of air conditioning, we have to go right to the top and that means meeting Ed. Where are we going?
EDWARD CAVANAUGH, DIRECTOR OF OPERATIONS, TIME WARNER BUILDING: Twenty-second floor on the counter corner (ph).
QUEST: This is only going to 21, what do we do?
CAVANAUGH: We have to get off here and take the freight car to 22.
QUEST: Any stairs?
CAVANAUGH: YES.
QUEST: We'll walk. What temperature do you keep Time Warner Center at?
CAVANAUGH: An average of 72 t o74 degree here out.
QUEST: Seventy-two to 74?
CAVANAUGH: Correct.
QUEST: So that's already on the low side for the women.
CAVANAUGH: Yes.
QUEST: This is the chiller plant. This is quite a piece of operation.
CAVANAUGH: Yes.
QUEST: So these chill the water, --
CAVANAUGH: Yes.
QUEST: -- and then the water goes downstairs, --
CAVANAUGH: Correct.
QUEST: -- and what happens then?
CAVANAUGH: They get - run through a coil and a fan blows air over the coil, creating cold air.
QUEST: And that's air conditioning?
CAVANAUGH: Basically, yes.
QUEST: So the water's 46 degrees, --
CAVANAUGH: Correct.
QUEST: -- and then when it goes downstairs?
CAVANAUGH: Right, it picks up the heat from the office floor off the air, the water temperature rises, comes back through here and it gets
chilled again and goes back down again - so it's a cycle.
QUEST: On a cycle?
CAVANAUGH: Correct.
QUEST: How precise can you get the temperatures out there?
[16:35:04] CAVANAUGH: Within two degrees of whatever we set it at.
QUEST: And where do you set it?
CAVANAUGH: We set it from a computer in the office. Could you pull up a floor for us?
QUEST: And now we're going to see the business end, now we're going to see the man who can make the temperature go up and the temperature go
down.
So now go the fifth floor news room.
Male: OK. It's going to 70 - 72, 74. This space is a little bit warmer so it has a 800 cfm - cubic feet per minute - maximum and it's doing
the maximum because it's trying to bring this down to 74 which is what we're looking for.
CAVANAUGH: So with open arms (ph).
Male: This (AUDIO GAP) 100 percent.
QUEST: How do you manage to balance this out?
CAVANAUGH: It's a balancing act, it's a balancing act. (AUDIO GAP) it's difficult but we try our best.
(END VIDEOCLIP)
QUEST: Petula Dvorak's article kicked off this whole debate. She's a columnist for the "Washington Post" and joins me now. Petula, you have a
right to say `vindicated.' You were right!
(LAUGHTER)
QUEST: The air conditioning is set for middle-aged men like me. (RINGS BELL).
PETULA DVORAK, COLUMNIST, "THE WASHINGTON POST": Exactly, bingo I was right. Here's my shawl by the way. This is what I have to wear at work
every day - our winter clothes.
QUEST: But so our building here is set at 72/74 and the metabolic rate difference means that you prefer it to be 75 to 77. What are you
going to do about it besides complain?
DVORAK: I am going to urge that you all start a fashion revolution. See, my theory was that this is all about you men which of course it does
go back to the patriarchy. With that report - the study - that it took two men to figure out. But it goes back with you all want to wear your nice
suits when it's completely hot outside.
See, women, we dress for the weather, for the environment. Men insist on manipulating the environment to suit them.
QUEST: Dress sensibly, keep a wardrobe all year around and you won't be cold. It's not that difficult, Petula.
DVORAK: Well, it's more than just putting on a sweater or a jumper, it's ruining the environment. We've pumped 100 million tons of carbon
dioxide into the air every year to keep us - keep you all - comfortable in your suits.
We spend $11 billion on air conditioning in America every year. Five percent of our electricity goes to this ridiculous business of keeping you
all in your suits.
QUEST: Hang on! Hang on, hang on. I think "The Washington Post" surely can afford for you to call up the man - I mean, there's Ed in this
building - you've got to find the Ed in your building and say, --
DVORAK: (LAUGHTER).
QUEST: -- `Turn up - or turn down - the air conditioning.' Why don't you do that?
DVORAK: Well, we could do that but then you all would be hot in your suits. You know, since about the times that y'all were wearing knee pants
and powdered wigs, you haven't had a fashion revolution. I want short shorts, I want to see you all in linen.
QUEST: Linen? Linen - how do you -
DVORAK: -- got out of Oscar (ph).
QUEST: Have you any idea how creased a linen suit gets after one wear?
DVORAK: Oh, it's charming to be that creased.
QUEST: (LAUGHTER). I don't think there's any answer to that one. Linen suits, indeed. You'll be wanting me to wear Bermuda shorts and a
sarong next.
Finally, have you been surprised at the sheer amount of support? I mean, this has really gone to the heart of it, hasn't it?
Men are basically saying -
DVORAK: (LAUGHTER).
QUEST: -- you're a bunch of complaining women who should dress sensibly and women are basically saying men should go and stick it.
DVORAK: Well, you know, I did get quite a bit of e-mail - hate mail. Many of the men theorized that it was all about menopausal women --
QUEST: (LAUGHTER).
DVORAK: -- setting the thermostat, and I just posited the idea that menopausal aren't necessarily the women in charge on K Street.
QUEST: (LAUGHTER). I - well I wasn't quite expecting us to go that particular avenue, but there we are. But look, Petula, next time I'm in
Washington or you're here in New York, please come and join me. Please, what are you wearing?
DVORAK: I'm wearing a very nice light cotton jacket, but here's my sweater so that I can be as warm and comfortable as the patriarchy.
QUEST: Buy some decent suits. Thank you, ma'am lovely to see you. Wonderful to have you on the program. Of course you'll have your own
thoughts. (Inaudible) is @richard quest is the Twitter then.
I guarantee you I've started a firestorm and one that I'm going to regret. Well, if that's what happens when people will wear inappropriate
clothes in the workplace.
Time to start the parade ( RINGS BELL). Disney has just released its third-quarter earnings and they may be enough to keep Mickey celebrating
all the way to the fourth quarter (inaudible).
(COMMERCIAL BREAK)
[16:42:03] QUEST: Some Disney numbers in to CNN. The company reported after the bell about a half an hour ago.
Disney's third-quarter earnings slightly better than expectations. Sales did fall short and the shares are off in after-hours trading.
There's Mickey and Minnie at Disney World. Our senior media correspondent Brian Stelter is with me now. Brian, what do you make of
this? As I - I have only seen them very briefly since --
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: Yes.
QUEST: What do you make of them?
STELTER: Well it's a decent picture certainly and Disney by some measures is the biggest media company in the world is doing quite well in
many areas. But you can see some of the challenges they, like other major media companies, are facing -- for example, some advertising weakness.
This is something across the board - companies like the parent of CNN, Time Warner, Disney, 21st Century Fox - all of them facing a slowdown in
advertising.
You can also see some challenges in the film business even though the studio - Walt Disney Studio - is a standout in this quarter --
QUEST: Thirteen -
STELTER: -- thanks to "The Avengers" up 13 percent.
QUEST: Right. So year on year for the studios -
STELTER: Yes.
QUEST: -- it's 13 percent, but everything else is just about 5 to 7 percent.
STELTER: That's right. You know like I said, decent. You know, OK growth but not the kind of thing that we had seen in prior quarters. I
think what we're seeing obviously is a mature business.
You know, the cable business - ESPN is Disney's single-most important revenue line. And there have been some concerns lately about some slight
subscriber losses at ESPN.
You can see a little bit of erosion happening. Not a lot of cable cord cutting, but a little bit. And that's ESPN's bottom line.
And then that's also - on the advertising side -
QUEST: Right.
STELTER: -- slightly ratings. Not dramatic drops but slightly lower ratings affecting the advertising side.
QUEST: So if you look at ABC, you've got traditional network -
STELTER: Right.
QUEST: -- which would be under pressure like every other network is. ESPN, we're cutting the cord. You've got the studios which are going to be
obviously facing that difficulty and then you've got the parks - the theme parks.
STELTER: Yes, the theme parks - the happiest place on earth, you know. And actually Disney, you know, doing quite well in that area, also
consumer products doing quite well in the quarter. But parks are a tough business to be in over time.
You know by the way, Comcast Universal also investing heavily into their park.
QUEST: I just need to ask you - let's just move away from Disney if I may. Don't look so worried.
STELTER: (LAUGHTER).
QUEST: Donald Trump and Rupert Murdoch and the whole battle that's going on between the two of them at the moment. Is there a love fest about
to break out with Donald Trump -
STELTER: Maybe not quite a love fest, but they are breaking - they're brokering - a peace treaty of sorts. I just put online a story a few
moments ago about how Murdoch and Trump got on the phone, they talked recently, they exchanged pleasantries, they complimented each other.
And this is a big deal, Richard, because a couple of weeks ago, Murdoch was calling Trump embarrassing, really writing him off and then
snarking all about it.
QUEST: But what's Trump - obviously what's Trump's game - what's Murdoch's game here? Is he just being mischievous in all of this?
STELTER: (LAUGHTER).
QUEST: Or is - does he - I can't work out why he would. I mean, because that tweet that he sent after the McCain -
[16:45:06] STELTER: Yes.
QUEST: -- (inaudible).
STELTER: He said when's Trump going to stop embarrassing not just his friends but the whole country?
QUEST: Right. So what changed?
STELTER: You know, I think perhaps what's happening here is establishment figures like Murdoch along with other established figures
like Bill Kristol, other conservative heavyweights are having a change of heart about Trump.
They're taking Trump more seriously and they're saying we have to pay attention to why Trump is doing so well in the polls.
I think that's what we're seeing from Murdoch. And of course Murdoch's influence is huge from Fox News and the "The New York Post," "The
Wall Street Journal." If Trump is courting Murdoch, that's a very big deal for Trump.
QUEST: The numbers for this debate on Thursday will be huge.
STELTER: And just the beginning too. We're going to have so many of these debates and whenever Trump is a part of it, you know it's going to be
big.
QUEST: Good to see you, sir.
STELTER: You too, thanks.
QUEST: Thank you very much indeed. Thank you for allowing me to take you into other waters.
STELTER: (LAUGHTER).
QUEST: Now, we moved off Disney to talk about Trump and Murdoch, but we'll stick with Disney now because Disney's latest theme park - remember
the numbers we've got at the moment are OK. The new theme park is going to be in Shanghai. It will join the ones in Tokyo, Hong Kong, Disneyland
Paris, Disney World in Orlando and the original Disneyland in Anaheim.
The theme park business is becoming ever more important for the company's bottom line. To find out more, I went to Walt Disney World where
I spoke to the president of Walt Disney World who says the most magical place in the world is also one of the most profitable.
(BEGIN VIDEOCLIP)
GEORGE KALOGRIDIS, PRESIDENT, WALT DISNEY WORLD: If you look at any of the earnings numbers, you'd see that we've set record attendance many of
the last consecutive years really.
Even during the recession, we had incredible performance. So these are busy places - they're the busiest in the world.
KALOGRIDIS: What I've seen lately also is the way in which even after the Great Recession, they bounced back so dramatically.
QUEST: You know, I think what we find is that certainly a theme park visit is discretionary. But there's something about company especially to
we believe a Disney theme park, that is something that a guest is willing to prioritize when they think about things that are important to them in
life. Creating memories - that's what we do here and guests know that.
And that child is only going to be that age one time and if they miss it, you can't get it back. And so while we continued during the recession
for example to make specific financial offers for resorts and things like that, the guests still came and we delivered every time they came.
QUEST: And what's interesting - paint for me please who your typical or who your targeting as your guest? Now I know you're going to tell me
that's like saying how long is a piece of string? But what age - what is your target range?
KALOGRIDIS: You know, there really is - there are no boundaries. That's what's so wonderful about Walt Disney World. I mean, for a place
this big, there is something truly for everybody.
We do focus to make sure that, for example -- most recently here in the Magic Kingdom - the seven dwarf's mine train opened. That's our newest
attraction. It was designed to be able to allow children who were a little bit bigger than the lowest rollercoaster and not quite ready for the big
rollercoasters to have an attraction.
But there are plenty of other attractions that were already here for them. And the same thing for - sometimes somebody just wants to go
fishing. We have fishing boats.
Sometimes people want to go parasailing, we have that. But sometimes people just want to come and check into a hotel, enjoy the hotel during the
day and then go to the theme parks at night.
And so, again, we have that for everybody.
QUEST: Where do you grow it? Where's the growth?
KALOGRIDIS: Right now, I mean, really we focused on Europe. The U.K. is a huge market. Canada and Mexico very big markets and then Latin
America. Latin America is one of our biggest growth markets.
(END VIDEOCLIP)
QUEST: That's the president of Walt Disney World and next week you see "CNN Business Traveller" which comes indeed from Walt Disney and from
the theme parks of Orlando.
After the break, animal rights activists have scored a major victory against poachers. I'm going to talk to the man who helped make it all
happen.
(COMMERCIAL BREAK)
[16:50:45] QUEST: Cecil the Lion and the battle for animal rights activists who now appear to have scored a major victory in the fight
against poaching.
The list of airlines refusing to carry big game trophies has grown after United and Air Canada announced they would join Delta and American in
banning the practice.
The news comes among mounting public pressure in the wake of Cecil the Lion's death.
(BEGIN VIDEOCLIP)
Males and Females: (CALLING OUT TO PROSECUTE WILLIAM PALMER).
(END VIDEOCLIP)
QUEST: Now my next guest helped organize an online petition which garnered more than 400,000 signatures that eventually persuaded Delta
to ban the shipment of big game. He's Chris Green, the director of Legislative Affairs at the Animal Legal Defense Fund.
Sir, good to see you.
CHRIS GREEN, DIRECTOR OF LEGISLATIVE AFFAIRS, ANIMAL LEGAL DEFENSE FUND: Good to meet you.
QUEST: You had been in touch with Delta, hadn't you, on this issue?
GREEN: Yes, I contacted them when my petition was translated into Italian, their communications director Kevin Shinkle had
reported on there that they did not engage in this type of activity which seemed to contradict an earlier statement that Delta had put out. So I was
trying to get some clarification but had - I was actually quite worried when South African Airways had decided to rescind their original ban on
transporting hunting trophies.
So but the Cecil news seems to have sort of shaken everyone's consciousness a little bit.
QUEST: OK, let's take this bit by bit, if we may because - now humor me for this question if you will.
GREEN: Sure.
QUEST: In the assumption that the game hunting is permitted or literally has a permit and is legal - OK? And that the correct
authorities have said, yes, this game hunting can take place, why shouldn't the airlines carry the trophy or the result of it back?
GREEN: Well, like all businesses, they deal with consumer feedback and rely on those consumers to want to use their products. And if
you get the vast majority of consumers feeling that it's unethical to do this even if it's technically legal, I think airlines are sensitive to
that.
And we certainly have seen recently with the Cecil story how - I think there's a recent poll that said 95 percent of Americans believe
that no species should be hunted for sport.
So -
QUEST: But you're - but just to push you on this -
GREEN: Sure.
QUEST: You're now saying that some - you know - another commercial interest, an airline, should basically make up its own mind on
what it's going to carry whether it's perfectly legal for the person to have done the act?
GREEN: Sure. I mean, they're a carrier. Everyone has a choice on who they -
QUEST: Where do you draw the line on this though?
GREEN: Well, I think you would say if there was an outfit that was operating a sexual tourism club that was using advertising they're
using a particular airline, even if it was perhaps legal in the country where they were doing it, I feel -- I still think airlines might feel like
that reflected poorly upon them.
And just think what would have happened to one these airlines if - because you know Cecil was shot many weeks ago. The news
story only broke ten days ago. So what if one of these airlines - Delta or South African Airways - had flown Cecil's body over the U.S.? Can you
imagine the PR disaster?
It would be (inaudible) - because even though this guy had the proper permits, he still killed this lion illegally. So to then have
the seconds, you know -
QUEST: But you can see my point that you are - you're expanding the - I mean, obviously it's a - you've had a great success in
getting the airlines to all agree to this, but you have expanded perhaps correctly the area where commercial organizations now have to consider what
are people going to say.
GREEN: It's a much - it's a much more integrated world. Everyone has access to information and people have spoken and said they
don't believe in this. So I think the companies are right to do what is best for the majority of their - or wanted by the majority of their
customers.
QUEST: What's your feeling now? Where - what's your next campaign? Because obviously I presume you'd like IATA or ICAO - probably
IATA - to come up with this. And I'm guessing that you're banging on the door of Tony Tyler, the director general, trying to get a worldwide ban.
GREEN: Well, one things that's an immediate step that's already being considered is lions - most people don't realize - but lions
technically are not listed under the Endangered Species Act. So you don't even need a U.S. permit to bring them back into the country - their
carcasses.
So there's currently a petition before the U.S. Fish and Wildlife Services - Service - to add lions to that. And there's a bill
before Congress that's going to be introduced by Cory Booker and some others that would even while the lion's being considered - an animal's
being considered, --
[16:55:11] QUEST: Right. We're coming to the end here. Were you surprised at the sheer overwhelming support for this campaign - or
the amount of that just happened with Cecil the Lion?
GREEN: I was not surprised by the amount of support. I was surprised that the companies listened. Any poll that you see and like the
one I just mentioned, show the vast majority of Americans want to see increased animal welfare and reduced animal cruelty.
QUEST: Sir, glad to have you on the program.
GREEN: Thank you too.
QUEST: Thank you. Wonderful to have you with us tonight.
GREEN: Goodbye.
QUEST: We will have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." It is the most beautiful day here in New York. The temperature way up there. The big
discussion point everybody's talking about is air conditioning and the fact that it's set for men, not for women.
And you expect me to apologize for that? Here in the Time Warner Center it's set at a very comfortable 72 to 74 degrees which is
absolutely perfect for people like me who are wearing a nice woolen suit with a nice heavy cotton shirt and a vest underneath.
And as for those colleagues, maybe female or otherwise, who choose to wear something skimpy - well they'll just have to put on a
sweater. That is unless they get to phone first and ring the man who controls the air conditioning and tells him to warm up the building.
This one is going to run and run. And the sexes are not going to agree. So for the moment, I'll simply leave you with a simple
thought - Men have won.
And that's "Quest Means Business" for tonight. I'm Richard Quest running as fast as I can. I do hope whatever you're up to in the
hours ahead, (RINGS BELL) it's profitable. And I'll see you tomorrow.
END
