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Quest Means Business
Economists Skeptical of Chinese Growth Numbers; Oprah Winfrey Buys 10 Percent Stake in Weight Watchers; Dow Finishes Slightly Higher; Amazon Blasts "New York Times" Workplace Expose; Chinese Claim 6.9 Percent Growth; Royal Caribbean Expands Investment in China. Aired 4-5p ET.
Aired October 19, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Well, a very popular ringing of the closing bell, even on a day when there's a lot of red on the market. The Dow Jones
is off some 20-odd points, a very small --
(GAVEL POUNDS)
QUEST: Oh! Now, that is what you call a gavel to close trading on Monday, the 19th of October.
Tonight, you're just too good to be true. And indeed, economists are casting doubt on China's growth number.
Oprah throws her weight behind Weight Watchers.
And no more hot air. The world's biggest companies are backing the president's climate pledge.
I'm Richard Quest. We start a new week together, and I mean business.
Good evening. Tonight, it's a crucial number, and it's a number that few economists believe is actually accurate or real. China has posted its
worst quarter of growth since 2009, and yet, the number has caused such disbelief, but at the same time, an element of incredulity.
Now, I'm going to show you at the super screen the exact way in which this has come together. China initially had said that the official target
for growth, for GDP, was 7 percent. That was the official target, 7 percent.
(ARROW SOUND EFFECT)
QUEST: And now, of course, it has just reduced it -- brought out its numbers showing that the official number reached 6.9 percent over the past
12 months from the National Bureau of Statistics. Now, this is despite historic volatility and intervention. So, it has beaten the 6.7, it's
under the 7 percent target, and you may well want to ask, it all seems suspiciously close at 6.9.
And that suspicion is reinforced when you look at the other forecasts from various economists. For example, the analysts say that China is wide
--
(ARROW SOUND EFFECT)
QUEST: -- of the mark. Economists have China's growth somewhere between 3 and 4 percent, and they are looking on things like movie ticket
sales, online transactions, and the like. So, economists are much lower than the official level. And even --
(ARROW SOUND EFFECT)
QUEST: Oh! Look a that! Capital economics is more optimistic at 4.5 percent, and believes that growth is stabilizing. You have this wide,
disparate view on exactly what is happening with China's growth.
But what's the significance of that? Patrick Chovanec counts himself among -- I don't think I'm being disrespectful if I say you are, sir, one
of the disbelievers at 6.9 percent.
(LAUGHTER)
PATRICK CHOVANEC, : Yes, that's probably true.
QUEST: What's your number? What do you believe it really is?
CHOVANEC: I think that probably 4.5 percent, 4 percent is probably accurate. What we do know is that key drivers of the Chinese economy, or
things that were key drivers, like construction, heavy industry, are either stagnant or in contraction right now.
There are other sectors, like e-commerce, like services, that are growing. But we don't know whether that really offsets. And it is very
suspicious that they get so close to the target every single time.
QUEST: And so close to the target when everybody else is so disbelieving of the target.
CHOVANEC: That's right. And it's important to remember that a year ago or two years ago, everyone would have said that something in the range
of anything below 5 percent would have been a hard landing for China.
QUEST: We've seen growth sort of 8, 9, and above in the past. Those days have gone. But what is the significance of a number -- let's forget
6.9 percent, since nobody believes it. What's the significance of a 4 to 5.5 percent slowdown?
CHOVANEC: I think you've got to go back to what the Chinese themselves have been saying, perhaps not really believing, but saying all
along, which is it's the quality of growth that matters. And that a lot of the growth that we saw in the past was unsustainable build-out of capacity,
over-capacity. And to see that growth go away is actually a good thing.
QUEST: Right. But why are you having such difficulty getting real numbers? If you take the United States or the EU, where you do get
construction, you do get ISM, you do get PMI numbers. China does bring out those numbers that should be able to tell you -- you should be able to
extrapolate the full GNP, GDP data.
CHOVANEC: Yes, but it's a bit of a black box at how they get to particularly the real GDP data. There are some people who think that they
play a bit with the deflator.
If you actually look at nominal GDP in China, that's come down much more steeply than real GDP, and that's significant, because they have such
high debt levels, and it's real GDP that enables them -- it's nominal GDP that enables them to actually pay back those debts.
[16:05:01] QUEST: So, what is the problem, if you like, of a longer- term 5-to-6-percent GDP growth in China? And the reason I ask is, at the IMF in Lima just a couple of weeks ago, everybody was talking about a
slowdown in China that even Christine Lagarde said was welcomed.
It was managing properly this investment-to-consumption shift in the economy. So, if that's the case, is this just something we have to ride
out?
CHOVANEC: I don't agree that it's something that's being managed that well, but it is happening --
QUEST: They think it is.
CHOVANEC: But it is happening, and it is a welcome thing in the long run. I mean, China does need to go through this economic adjustment. What
matters to the rest of the world from China is not China's output growth, which in many cases has been excessive, but China's demand. And so, it's
really about whether they successfully shift to demand.
(CROSSTALK)
QUEST: But I -- I'm just going to jump in here because this transition from investment to consumption, to demand-led growth, it's like
turning the proverbial oil tanker. We're not going to see it happen next month, next year. It's going to be several years before that happens.
CHOVANEC: It's going to be several years --
QUEST: And -- one sec --
CHOVANEC: -- it's going to be --
QUEST: -- and at the same time, you've seen Boss, you've seen all at Burberry, you've seen those companies that should be showing evidence of
that not.
CHOVANEC: Well, some of them are, though. I mean, Apple's sales were up 70 percent year-on-year. Nike sales were up 30 percent year-on-year. I
don't think -- I mean, there are challenges in the Chinese market that are firm-specific. Some firms succeed, some firms don't.
All in all, if you look at Chinese outbound tourism, it's booming. We're actually seeing resilient demand out of China, and I think that
that's really the most important story out of China.
QUEST: Good to see you, sir. Thank you very much, indeed.
CHOVANEC: Thank you.
QUEST: Thank you. Now, Oprah Winfrey has been putting her weight quite literally behind Weight Watchers. A lady who's quite happy to talk
about her weight and seen the share price of her new investment absolutely grow.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Tonight, Oprah Winfrey has tipped the scales quite literally for Weight Watchers stock. The billionaire has bought 10 percent of the
Weight Watchers company, and in doing so, has joined its board of directors.
But she's done much more than just buy 10 percent. By joining and by putting in up to $40-odd million, she has completely and utterly
revolutionized the company.
[16:10:05] And just look at the way this share price moved. The shares have soared 105 percent. I mean, I'm sure that the market's going
to be looking at any trades in Weight Watchers International over the last week or who might have known, because that is the sort of dramatic reaction
in terms of investment that you very rarely see.
As for Winfrey herself, the stake cost around $43 million. The significance for the company is Weight Watchers has been struggling very
badly in 2015. In the first half of the year, profits were down some 50 percent, and the shares were off nearly three quarters in value. So,
putting it to -- getting the Winfrey bounce, if you like, has been dramatic beyond what most people would have expected.
Now, Weight Watchers is obviously hoping to expand into health and happiness brands, and Winfrey seems to be just the person to do it. She's
openly discussed her personal battle with weight many times, and she has said, Oprah Winfrey, that she believes in the Weight Watchers program so
much that she decided to invest in the company and in its evolution.
So, why is an endorsement from Oprah Winfrey such the gold standard of celebrity endorsements? If you look at the Winfrey universe, it becomes
clear.
The eponymous show, "Oprah Winfrey," which of course for decades gave her credibility, dedication, the trust of many Americans, particularly
women in this country. It ran from 1985 to 2011. It was the highest-rated talk show in history. Hillary Clinton was the guest in 1995.
But then, you have the movie -- the media mogul. She gets rid of the show and she creates her own network, OWN, the Oprah Winfrey Network, in
2011.
That's not all. You've got the business acumen, you've got the credibility, now throw in political force. She supported Barack Obama's
presidential run and is a personal friend of the US president.
In terms of being an actress, the versatility, nominated for an Academy Award for her role in "The Color Purple" and received an honorary
Oscar for humanitarian work. And that humanitarian work continues with her Leadership Academy for girls in South Africa in 2007.
What's it all showing? It's showing a unique celebrity, media person, business woman, that Jamie Turner is the co-founder of the Sixty-Second
Marketer, who joins me from the CNN Center. But the reality --
JAMIE TURNER, CO-FOUNDER, SIXTY-SECOND MARKETER: Hey, Richard.
QUEST: Good to have you, sir. What is it that she brings in terms of brand credibility, trustworthiness to Weight Watchers?
TURNER: You know, if you look at everything that you just pointed out, think about all the different things that she has done in her life.
Oprah really kind of represents our greatest self. In other words, people look to Oprah as an aspirational figure, and they say, hey, this is what it
looks like when you are authentic, genuine, when you are achieving everything that you possibly can in life.
And so, Oprah said, hey, I'm going to take that credibility and that trust and that value and buy into the Weight Watchers brand --
QUEST: Right.
TURNER: -- and she is a user of the product, and that ultimately resulted in the stock price going up like crazy.
QUEST: But I remember years go -- do you remember the Remington shaver commercial where he says, "I liked the product so much I bought the
company"? I mean --
TURNER: Yes.
QUEST: -- you've got to actually use the stuff, and your credibility goes on the line with it.
TURNER: Yes, absolutely. And that was a great campaign. I liked the product so much, I bought the company. She's basically doing the same
thing. She liked the product, the she used it, she used it to lose some weight.
She also likes where the company is going, that it's not just about points and all -- and meetings, but it's getting into an entire holistic
lifestyle. She liked that. She said, I'm going to invest in the company.
And because she's so good as a business person as well, she said, not only am I going to invest in it, but I'm going to make sure that investment
is tied to the brand and increases the value of the Weight Watchers brand, and that's exactly what happened.
QUEST: So, what does she have to do now? I mean, pardon the phrase, besides lose weight? What else does she have to do? It's not been clear
whether she's going to actually do commercials or become an ambassador more than a passive investor losing weight. What would you expect her to do?
TURNER: I think she'll probably become an ambassador. I don't see her doing TV commercials around Weight Watchers. Her brand is too powerful
and all-extensive for her to be tied too closely to any single brand.
But what I do see is that she will become an ambassador for Weight Watchers. I think people will be watching her. And of course, she'll end
up --
QUEST: OK --
TURNER: -- the value of her stock. She went up --
QUEST: So --
TURNER: -- $43 million this morning.
[16:14:57] QUEST: I was -- I'm sure, as I say, the Stock Exchange is looking at any trades in that stock over the last few days, because nobody
could have really forecast 100 percent or a doubling in the stock value. What's the big downside for Oprah in all of this? Is there a downside?
TURNER; There are a couple of downsides. One is, people are going to be watching her weight more closely now, and if she doesn't lose weight,
then they'll tie that to the Weight Watchers brand. The opposite can happen. If Weight Watchers does something wrong, for whatever reason, if
there's a scandal or whatever there is, that then tarnishes the Oprah brand.
QUEST: Right.
TURNER: Now, the Oprah brand is super powerful. She's not going to get tarnished that badly no matter what happens, but she obviously spends a
great deal of time making sure that she doesn't have anything tarnish her brand.
QUEST: Do you remember the name -- I'm cheating here, because somebody's just told me in my ear -- do you remember the name of "I like
the company so much I bought it?"
TURNER: Yes, it was Gillette. No, Remington.
QUEST: Remington!
(LAUGHTER)
QUEST: It was Remington.
TURNER: Richard, great point.
(LAUGHTER)
QUEST: It was Remington, and it was Victor Kiam who said, "I liked the company so much, that I -- I liked the product so much that I bought
it." Good to see you, sir. Thank you very much, indeed. All right, the markets --
TURNER: Good to see you.
QUEST: -- that closed virtually where they started the day. The Dow Jones Industrial -- wow, we were 19 points, now it's just -- you don't see
these small gains. Very sharp loss at the beginning, but it all drifted off.
Sharp fall in oil prices pushed down energy stocks. Morgan Stanley was down 5 percent after earnings miss. And there was a 42 percent drop in
bond trading at Morgan. Also, gold as well.
Amazon is giving "The New York Times" a one-star review. The online superstar says the paper's expose of Amazon's corporate culture failed to
meet basic journalistic standards. What actually happened? Remember? Samuel Burke is with me. Good to see you, sir.
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Good evening, Richard.
QUEST: So, "The New York Times" basically puts out this article saying Amazon's a dreadful place to work. Amazon has now responded.
BURKE: It's really making me scratch my head why two months after this article came out -- and I think everybody remembers this now kind of
iconic line of a grown man crying, that all of the sudden, Jay Carney, the former White House spokesperson, now puts out this blog post going after
"The New York Times" again saying, quote, "Had the reporters checked their facts, the story they published would have been a lot less sensational" --
QUEST: Right.
BURKE: -- "a lot more balanced and, let's be honest, a lot more boring."
QUEST: But why have they bothered? I mean, the "Times" article came out, the "Times" public editor said it wasn't data-driven and wasn't very -
- she wasn't very impressed by it. On top of that, Jeff Bezos says, "This isn't the company I recognize, I wouldn't work there if it was truly like
that." What do they gain by having a Carney article?
BURKE: Well, I think they have the power of Jay Carney. This shows the power that you get from hiring somebody like this. But I think now
what this has turned into is some type of war of words, a he-said-she-said. And at the end of the day, I think people just want to know the truth.
So, I want to show you some numbers, Richard, from Glassdoor.com, a company that reviews other companies. It allows companies like you and me
to review our own company.
And this has been well know in the tech community. You've got Google, 91 percent of their employees saying they would recommend the company to a
friend. Facebook, 90 percent. Apple, 82 percent. Microsoft, another company in Washington state, 82 percent.
And Amazon.com at 60 percent, Richard, and people have known this for years, that when it comes to employee satisfaction, it's been well-known in
Silicon Valley --
(CROSSTALK)
QUEST: Right, but then --
BURKE: -- that they've never been able to measure up to their tech company partners.
QUEST: But then, Carney is making a straw point by putting out this article, if clearly everybody is saying we know it's not a particularly
nice place to work.
BURKE: So, what Jay Carney did in this blog post, he kind of goes point by point, employee by employee, the people that "The New York Times"
mentioned. "The New York Times" rebuts and says basically the same thing. They say, "Our reporter spoke to more than 100 current and former employees
at various levels and divisions over many months. Patterns emerged."
But at the end of the day, those numbers that I just showed you, Richard, I think they speak for themselves.
QUEST: They may well do. Thank you very much, sir.
Throughout the course of this program, we're going to be talking to various people about the situation in China. You've already heard the GDP
number at some 6.9 percent. Well, one industry that's watching very carefully, the Chinese economy, is the cruising industry. We'll have Royal
Caribbean International on the program after the break. QUEST MEANS BUSINESS, good evening.
(RINGS BELL)
[16:19:48] (COMMERCIAL BREAK)
QUEST: We've been talking a lot about the China growth numbers. China says it wanted 7 percent. They came in at 6.9 percent. Nobody
believes those numbers are truly accurate.
Joining me now is our Asia Pacific editor, Andrew Stevens. If those numbers are not accurate, Andrew, and the number is, say somewhere between
3.5 to 5.5 percent, and that's a wide range, what's the effect of what that means?
ANDREW STEVENS, CNN ASIA PACIFIC EDITOR: Well, I think the bottom line here -- and there has been so much controversy, Richard, as we both
know, over the quality of Chinese numbers, not just this year, but for many, many years now. They have always bore a striking resemblance to what
the Chinese authorities had been predicting.
But I think what we need to do in this case at the moment, seeing it is so important now for global investors is to look more at what China does
than what it says. And the question is, is China pressing the panic button? Do they fear that the Chinese economy is in danger of the so-
called "hard landing" that we've been talking a lot about?
And if you look at what the Chinese authorities have been doing, the answer would be, at this stage at least, no. I mean, yes, they've cut
interest rates, like any normal monetary policy. Yes, they've taken money off the table of the banks to be pumped back into the system.
So, they're not panicking at the moment. Certainly growth is slowing. There is clearly a trend here. The numbers may not be accurate completely,
but the trend, as they say, is your friend in China. It is weakening. But at this stage, no sign of panic from Beijing.
QUEST: Right, but of all those range of options that they could do, Andrew, what is not being done that economists would like to see being
done?
STEVENS: Well, I -- they just think that the numbers that they use, the more traditional numbers, are becoming -- they're dated, they're not
really reflecting what's really going on in the economy. It's a model that's been set up to gauge something which doesn't really reflect the
Chinese economy.
Economists have lots of various different criteria now. Before, it was rail traffic. It was electricity consumption. That's always been a
big one. But as the economy now moves towards a more consumer base, at least that's what Beijing's trying to do.
And it's interesting, because if you dig down in these numbers, you will see the consumer spending. OK, caveat, can we believe it? But
consumer spending numbers are actually a little better than expected. That does fit in with the narrative that Beijing wants to hear.
[16:24:57] But -- people I've been speaking, they're looking at things like movie ticket sales, like sales on Alibaba. Issues like that.
And if you look at the numbers that they're coming up with on these criteria, it is quite a lot different.
So, yes, as you say, growth -- I would say 3 percent is too low. What I'm hearing, between 4 and 6 percent is closer, Richard.
QUEST: Andrew, good to see you. Thank you for staying up late to bring us the view from Hong Kong tonight. Half past 4:00 in the morning.
That's dedication, indeed.
China's economic performance, talking about consumer side to it, huge implications, including for those companies on land and in the sea. Now,
Royal Caribbean's expanding investment in China. Five cruise ships based in the country, makes it the largest fleet of any cruise brand.
Adam Goldstein is the president of Royal Caribbean, with me in the C Suite. Sir, you've just heard Andrew Stevens say consumer spending is
slowing down. You're putting more big ships there. Are you in trouble?
ADAM GOLDSTEIN, PRESIDENT, ROYAL CARIBBEAN: As it happens, I was there last week for the 10th China Cruise Shipping Conference. You don't
hear this kind of pessimism and concern there at any level. It's not a governmental thing. This is just not what people are talking about.
They're talking about more people traveling, more people cruising.
Are we concerned about the macro economic statistics that we hear? Yes, to a degree, but with 100-plus million outbound Chinese travelers, and
cruising just barely now getting 1 million of that 100 million-plus, we think there's a world of opportunity the way things are.
QUEST: But it's a long-term bet that may have a short-term hiccup if the economy is slowing down. Or, are the numbers so huge that there's
going to be enough there to take up that slack?
GOLDSTEIN: We believe that anybody who is thinking about China as a long-term material part of their business model, as we are, is going to
have to deal with ups and downs. There's no question about that.
But the response to what we're offering with the new ships coming that we've put there and that we're going to put there next year has been
excellent. And our view is that what we offer, the Chinese are looking to consume.
QUEST: Now, when you take a ship that's traditionally from a Western market, do you have to change the product, change the fitting, if you like,
for a Chinese consumer? Do they want different things?
GOLDSTEIN: Fundamentally, they want the same great entertainment, great culinary opportunities, great service. There are tweaks that we have
to do. More retail presence, because they're so wild about shopping.
QUEST: And you must just love that.
GOLDSTEIN: And we love that.
QUEST: Yes.
GOLDSTEIN: Different -- different preference in the casino, much more table-oriented, less towards slot machines that Americans tend to like.
Obviously, if you want to offer an entertainment program, you've got to do that in Mandarin, and you've got to have comedians and other people who
will resonate with a Chinese audience.
They tend to like to be where the action is indoors, not so much on the pool deck, so we work through these things.
QUEST: When we look now at the cruise industry, and the building that's going on, I remember -- I was at the cruise convention --
GOLDSTEIN: Yes.
QUEST: -- earlier this year and saw some very large numbers of -- everybody always says, boom versus bust. Has the industry learned its
lesson from previous occasions and managing new build?
GOLDSTEIN: Things seem to be on a much more stable platform right now. The shipyards, though, although their slots for the orders of the
ships are full going forward five or six years, it equates to about a 4 percent per year growth rate in the industry. So, a moderate growth rate
is essentially locked in, because there aren't any more shipyards to build the ships.
QUEST: And I'm still astonished -- you know I'm astonished by this -- by the number of people that go on cruises every year. I would have
thought it was in the 50, 60, 70, 100 million a year. How many is it?
GOLDSTEIN: It's 23, and I have quoted you, or quoted your reaction, if you want to call it that --
QUEST: At 23 million!
GOLDSTEIN: -- so many times.
QUEST: 23 million!
GOLDSTEIN: I know. You said, "I thought there would be a 123 million."
QUEST: I did! Good to see you, sir.
GOLDSTEIN: Good to see you.
QUEST: Thank you very much, indeed. When we come back -- 23 million, that's all, the total number of people worldwide who goes on cruises. I
was astonished it's so low.
The president of the World Bank says even big oil is behind putting a price on carbon emissions. Jim Yong Kim says we're at the tipping point
with climate change. You're going to hear from the president after the break. QUEST MEANS BUSINESS.
[16:29:23] (COMMERCIAL BREAK)
[16:32:40] QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when the president of the World Bank will
tell us why the market won't fix climate change on its own.
And the stars of the new Steve Jobs film defend their portrayal of the legendary Apple boss.
Before that, this is CNN and on this network the news always comes first.
Turkish prosecutors say they have identified one of the suicide bombers behind the attack on a peace rally in Ankara this month.
They've named Yunus Emre Alagoz as the man responsible for the blast which killed more than 100 people. Turkish media's reporting he had links
to ISIS and that he was the brother of a man thought to be behind another suicide in - back in - July.
Israeli authorities are looking into the death of an Eritrean migrant apparently mistaken for an attacker. It happened during a shooting inside
a bus terminal in Southern Israel on Sunday.
The gunman, who was an Arab Bedouin and an Israeli soldier were also killed. The police say a security guard thought the migrant was a second
gunman and shot him. He was then beaten by bystanders.
The Israeli Prime Minister Benjamin Netanyahu's warning civilians not to take the law into their own hands.
(BEGIN VIDEOCLIP)
BENJAMIN NETANYAHU, ISRAELI PRIME MINSTER, VIA INTERPRETER: We are in a continued struggle. It think it is clear that we will win it.
But this thing sometimes creates friction between citizens in the locations of the attacks. Citizens who are attacked act in a manner that
makes us proud, a crowd who finds himself at the site should evacuate the area and let the emergency services do their job.
We have a country of law. No one will take the law into their own hands.
(END VIDEOCLIP)
QUEST: Thousands of migrants are stranded in the cold as European governments tighten border controls. Refugees are being held at Croatia's
border with Serbia and Slovenia.
The United Nations is describing the situation as desperate, with migrants and refugees facing shortages of aid and shelter.
Voting is brisk in Canada where liberals are hoping to unseat the country's conservative prime minister for the first time in nearly a
decade.
Pre-election polls show a close race between Stephen Harper's Tories and Justin Trudeau's liberals. There's also potential for a three-party
split with the leftist New Democrats.
[16:35:08] China's president has arrived in the United Kingdom on a three-day state visit. Xi Jinping and his wife arrived in London a short
time ago.
It's the first time that a Chinese leader has made an official visit to the U.K. in ten years. Mr. Xi will meet with the Royal Family and hold
bilateral talks with the Prime Minister David Cameron.
More than 80 of the world's biggest companies have now signed on to a White House pledge to tackle climate change.
Now the companies are worth more than $5 trillion in total - Facebook, Coca-Cola, McDonald's, Google, Nike, Apple and Goldman Sachs are just a
variety that we've chosen for you.
They're employing around $9 million people and they're calling for an ambitious agreement at the Paris talks CMP21 which takes place in December.
More importantly, it's all about committing yourself to being a more sustainable business. They're now seeking to leave a legacy behind on the
issue of climate change.
President Obama noted the progress that his administration has made.
(BEGIN VIDEOCLIP)
BARACK OBAMA, U.S. PRESIDENT: We have now doubled our production of clean energy. We've been reducing our carbon footprint even as the economy
grows.
And this progress isn't just creating a safer planet, it's also creating job, it's creating business opportunities and it's something that
customers are increasingly looking for.
(END VIDEOCLIP)
QUEST: Our White House correspondent Michelle Kosinski joins me now from Washington. And so, why did they do it?
I mean, what was in it for the companies? We know all these companies have strong climate policies in place. Do they need to sort of sign up to
the president's agenda?
MICHELLE KOSINSKI, WHITE HOUSE CORRESPONDENT: Well, this is a big chance for them to show that they are committed.
I mean, to be in this sort of block together, aligned with the White House, not only wanting to do something now and start more in the near
term, but also serve as an example for other businesses.
So there's really no down side to this for them other than the expense that they might incur doing a little bit more. But some of them have been
on board for some time and today we saw all the tweets coming out from all of these companies.
I mean, you mentioned some of the huge ones - Walmart, Starbucks, Johnson & Johnson, Procter & Gamble - saying exactly what they're going to
do.
Now, the ultimate effectiveness is unknown and it's really specific what each company is going to do for -
QUEST: Right.
KOSINSKI: -- itself. For example, McDonald's wants to eliminate deforestation from its supply chain. So this is a big coup for the White
House. I mean, when they act on climate change, where their criticism comes from is from business groups - especially the energy sector.
So as President Obama put it today, these are not just tree-huggers, this is big business getting onboard with this issue that today the Vice
President called a "moral issue" and one that is "deftly serious."
QUEST: Michelle, thank you -- at the White House joining us with that side of it. We've also had the oil companies just a couple of weeks
ago. Now you've got the 83 big companies with the president of the United States.
And the World Bank and the IMF are also making a big push ahead of the crucial climate talks which take place in Paris.
The two organizations gathered leaders from around the world to call for carbon price. Maggie Lake spoke to the World Bank president Jim Yong
Kim and asked him why it's such an important strategy now.
(BEGIN VIDEOCLIP)
JIM YONG KIM, PRESIDENT, WORLD BANK: If you want to actually reflect the cost of putting carbon in the air - through taxes, fees or trading
schemes - it's the best way to get the incentives aligned.
We really believe that it's market forces that are going to help us solve the problem of rising global temperatures. And right now the
incentives are not aligned well enough.
What we need is for every great company to start thinking, wow, the future is in great new technologies that provide energy and all kinds of
other great services and human necessities but at a lower carbon emission rate.
Once that is established, I think you'll see innovation that will create the much more sustainable and brighter future that we all really
need to commit to.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: Does there need to be uniformity here whether you're talking about all the
countries saying more than just that they're thinking about it but they're actually going to do it?
And I'm talking about the United States and Brazil and countries like that as well. And do you have to have an agreement what the price is?
KIM: What we love to see is countries committing to that first step. And, you know, 80 countries in their national contributions have stated
that they want to put some kind of a price on carbon.
[16:40:03] And so then the next step after that is to look at the particularities of a particular - of a certain - country that maybe has
only one major industry that is polluting. In that case, a carbon trading scheme won't work very well.
In others that have different sorts of economies sometimes a trading scheme is more palatable to not only industries but maybe could lead to
faster action.
So we really are agnostic about the specific kind of intervention, we just are completely focused on making it actually happen.
On the Monday after the Paris meetings, we're going to be working with countries to put those carbon pricing systems in place, whatever they
happen to be.
LAKE: I found it interesting where we were talking about this as carbon pricing. You know, you would have heard of it calling carbon tax
before and it still is in some areas.
And I think people have rightly pointed out that as much as governments might be willing to, getting elected as an elected official to
push through new taxes is very difficult.
Consumers around the world don't want to pay more. They're stretched themselves. Ultimately, do we also need to work on getting consumers
onboard with this? Do you think they will support this?
KIM: Well, what the IMF has shown is that there are ways of reducing taxes in other areas as tax returns from a carbon tax go up.
So it doesn't necessarily mean that the overall taxation in a particular country will go up. But they very well may be able to lower
other kinds of taxes - income taxes on poor people, taxes on labor, taxes even on capital.
And adjust those downward as the carbon tax goes up. Christine Lagarde and I have talked about this at length.
We're ready to jump in and support countries to get the specifics right so that the carbon tax for example doesn't hurt the competitiveness,
the carbon tax doesn't hurt the poor and the carbon tax doesn't put an uneven and unequal burden on say the bottom 40 percent.
LAKE: Dr. Kim, what are your hopes as we head into Paris? Are we at a tipping point here?
KIM: Well, I think we've been at a tipping point for a long time. I mean, you know, we're already locked in at 1.5 degrees Celsius above
historical means
We're at a tipping point but I think what we're seeing now are new kinds of commitments that we just haven't seen before.
You know, 80 countries with a commitment to carbon pricing - we've never seen that before. The private sector and even the oil and gas
companies saying put a price on carbon now.
It's more predictable and it's going to be easier for us if you just go ahead and do it. These are things that hadn't before.
(END VIDEOCLIP)
QUEST: President of the World Bank talking to Maggie Lake. IBM shares are down sharply in after-hours trading as the earnings beat
analysts' expectations.
But the revenue fell for the 14th straight quarter. It's been helped by the stronger dollar and the long-term shift from hardware to services
which is the core of IBM's strategy.
The chief executive's calling that a strategic imperative, so it's not surprising maybe that the revenues are falling as the company turns around.
From "I want my MTV" to no need for cable TV. Viacom is feeling the pinch as the television industry changes landscape.
We're going to talk to Bob Bakish the boss of Viacom International Media Networks. And of course we'll be asking him about China. (RINGS
BELL).
(COMMERCIAL BREAK)
QUEST: Welcome back to "Quest Means Business." This weekend the world's biggest music stars are to descend on Italy's fashion capital.
It's the 2015 European Music Awards.
MTV and its parent company Viacom are hoping tens of millions of viewers are going to tune in to the event which takes place in Milan.
Joining me in the C-suite is Bob Bakish, the president and chief exec of Viacom International Media Networks. Good to see you, sir.
BOB BAKISH, PRESIDENT AND CEO, VIACOM INTERNATIONAL MEDIA NETWORKS: Good to see you.
QUEST: Before we talk about the event in Milan, we're asking everybody today of course China - so significant - we've head the growth
number this morning.
Does anybody believe what's really going on? Does anybody really know what's going in China do you think?
BAKISH: I doubt anyone really knows exactly what's going on, but what I can tell you from our perspective -
QUEST: Yes.
BAKISH: -- in the media business, actually it's been a very good story for us at Viacom International Media Networks.
And the reason is, is if you look at their traditional television business, it's let's say very heavily regulated.
But the advent of digital distribution has really changed the game. So for example, roughly a year ago we did one deal which kind of with the
stroke of the pen gave over 400 million Chinese access to Nickelodeon on demand in Mandarin.
And that's something that we couldn't have done in the traditional construct and we've subsequently done a variety of other deals.
So for us, the last 24 months in China have been very good.
QUEST: But as we heard from Adam Goldstein earlier from Royal Caribbean, if you're taking a long view, you're not concerned about a
temporary slowdown that might be happening at the moment.
But are you seeing that slowdown in your own business yet (ph)?
BAKISH: We haven't seen any evidence of a slowdown in China and we very much take a long view. Because, given the sort of context of China,
there's bound to be twists and turns whether it's growth, whether its regulation, what have you.
But fundamentally it's a very big market obviously, there's an extraordinary number of people there. And so we've been focused on
cracking it, and again, at the moment, you know, we're very optimistic and we like what we see.
QUEST: Right. Sir, concerning now to the weekend and to the event in Milan, when the awards came along originally they were pretty much the main
event and they were the only ones around.
As there has been more distribution and more companies and more different forms of distribution, is it getting more difficult for you?
BAKISH: I don't think it's getting more difficult per se. Look, the MTV EMA, we're focused - it's MTV International's biggest night of the
year.
QUEST: Right.
BAKISH: We're focused on making it the biggest night of music globally. It's really only the truly global show, and what I mean by that
is it combines superstar international acts set in a different city every year, and we run local music events around it and we have a worldwide act
competition - kind of a World Cup, if you will, of music where ultimately an act is crowned a winner at the show.
I can tell you that if you look at last year's show in Glasgow, that was the most consumed MTV EMA in history. And I mean - or at least in the
eight years I've been running it. Had the highest television ratings and the highest digital consumption.
So after 21 years, the MTV EMA franchise is alive and well.
QUEST: But trying to keep that franchise refreshed, regenerated in an era where, for example, so much of music now is consumed in a very
different way than it was in the 90s when you started.
MTV was the original disrupter that's now being disrupted by the Spotifys of this world and the similar.
BAKISH: Look, I think the only constant is change. If you compare the MTV EMA to - in 1998, the last time we were in Milan, --
QUEST: Ah.
BAKISH: -- and Jenny McCarthy hosted - yes, we were in Milan before - great city by the way - to the EMA that we're going to have this Sunday,
you'll see some similarities and you'll see notable differences.
So the similarities are, you know, you'll have great hosts. In that case it was Jenny McCarthy. In our case here, it's Ed Sheeran of "Music"
fame and Ruby Rose of "Orange is the New Black" fame. Great hosts, great music lineup in both of them. I'll come back to the music lineup in Milan.
Arguably, the 1998 show was really a linear television show. That's the way people watched it and that was it. There weren't a lot of other
options.
[16:50:03] You look at today's - or more accurately, Sunday's - show, and what you see is a very strong, if you will, television show with
enormous amount of digital and social product wrapped around it.
So for example, we have an MTV International channel on Snapchat that will be providing content live from the show.
We've set up a photo booth backstage that we're going to be providing images through Instagram. And we also have these Instagram reporters who
are from around the world that are going to be sending content from the show.
We're going to have a life Periscope feed from backstage, --
QUEST: Right.
BAKISH: -- we've got -
QUEST: It's how one changes -
BAKISH: Yes.
QUEST: -- but at the same time keeps the core in place.
BAKISH: Exactly right. So the core is celebrate the night in music, have engaging content, great performances, you know, well-crafted great
settings, great lights, etc. but now we're doing it in a contemporary way.
QUEST: OK, thank you sir. Good to see you.
BAKISH: Great seeing you.
QUEST: Thank you very much. A new film claims to paint a true picture of Apple's founder Steve Jobs. The critics say the warts-and-all
portrayal goes too far.
Before from that, some "Make, Create and Innovate."
(COMMERCIAL BREAK)
QUEST: The new movie about Steve Jobs had its European premier at the London Film Festival on Sunday. And such is the controversy that the
screenwriter and the star were forced to defend their portrayal at a press conference.
(BEGIN VIDEOCLIP)
Male Character from Movie: What do you do? You're not an engineer, you're not a designer. You can't put a hammer to a nail. I built the
circuit board, the graphical interface was stolen.
So how come ten times in a day I read Steve Jobs is a genius? What do you do?
MICHAEL FASSBENDER, ACTOR, "STEVE JOBS": I just tried to take my own sort of feeling from what was in the script and then I just watched what
was ever - whatever was - available on YouTube.
Male 2 Character from Movie: Musicians play their instruments, I play the orchestra.
AARON SORKIN, "STEVE JOBS" SCREENWRITER: If you asked 1,000 people who knew Steve Jobs for their impressions of Steve Jobs, I think you'd get
1,000 different impressions.
What you don't see in this movie is a dramatic recreation of his Wikipedia page.
FASSBENDER: Having met people that were close to him, both sort of in the workplace and, you know, and just sort of personal relations -
relationships, -- the effect that he still has on these people.
[16:55:14] Male from Movie: You see how this reminds you of a friendly face?
(END VIDEOCLIP)
QUEST: "Steve Jobs" movie. We'll have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Today is Monday the 19th of October and the Dow Jones Industrials well barely changed. Just 8/10ths of
a percent at 14 points.
How very different it was 28 years ago today at this time when the market fell more than 500 points, which then was 23 percent. I was a young
cub financial reporter in those days.
I can remember the fear of seeing this market, hearing the chairman of the New York Stock Exchange saying this is the closest he'd ever seen or
wanted to see to a financial meltdown.
Well, we've seen markets go up and down in greater points numbers, but we've never seen a percentage fall anything like that we saw back on Black
Monday.
And yet the financial world is still so insecure. The financial world's systemic risks are still there as we discovered in 2008 and 2009.
So although Black Monday may be in the history and just for the likes of those of us who lived it, perhaps we're still as unsafe as we've ever
been.
Now that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope
it's profitable.
Let's get together tomorrow.
END
