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Quest Means Business
Blaring Protests On Donald Trump's First Visit As President In Great Britain; Today's Strong Rally On The Dow And The Record On The NASDAQ; Papa John's Has Lost Papa John; Stormy Daniels' Charges Dropped; Former British Ambassador to the U.S. Weighs in on Trump's Visit to the U.K.; Trump Visits U.K. Amid Government Turmoil; Justice Department Appeals AT&T-Time Warner Approval; Comcast Increases Bid for British Broadcaster Sky; U.K. Government Releases White Paper on Brexit; Security Robot Maker Trying to Raise $50 Million; Security Robots Spark Controversy; Trump to Crackdown on China's Tech Investments. Aired: 4-5p ET
Aired July 12, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: There's now ringing on Wall Street, AngloGold Ashanti is celebrating an anniversary ringing the bell, but the
markets are very soft and we've got the rest of them at the NASDAQ, I'll go into the details of that later for you. Oh, good grief. That was
exhausted after two of that - I think we certainly call that an aggressive gavel that's brought trading to a close. It's Thursday, it's July the
12th.
"Shame on him," it's the call as the new day greets Donald Trump, blaring protests on his first visit as President. Now, the President is dining
with dignitaries including Theresa May. It's not a trade war, it's a series of trade disputes, so says the Treasury Secretary, and markets are
down and the NASDAQ hits a record and a conference call outburst that cost the founder of Papa John's his job. We'll get into the details of that in
the hour.
I'm Richard Quest, live in the world's financial capital, New York City, glorious day in New York where of course, I mean business on a good day in
the markets.
Good evening. We begin tonight as Donald Trump spends his first night on his U.K. tour rubbing shoulders with Britain's business and political
leaders. President Trump and Melania, the First Lady are to join a black tie banquet which is hosted by the British Prime Minister, Theresa May.
The P.M. greeted their arrival with a military fanfare outside one of England's most august and stately of stately homes, Blenheim Palace. And
then back, waiting for him in London, thousands of protesters have gathered near Winfield House, the U.S. Ambassador's residence where Donald Trump
will spend the night. Our own Nick Paton Walsh is out in Winfield House. He joins me now. Nick Paton Walsh, the number have dwindled, but the
protesters are still there waiting for the President.
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, yes, but actually the park warden have seen such a British scene. Richard, the park
wardens have come around with a loud holler and told the straggling 10 protesters and ranks of media frankly here that the park is closing and
it's time for them to go home. Anarchy in the U.K. is certainly not - there is in fact one man banging on the fence still with a stick
accompanied by another man playing the xylophone recently playing the football hymn, "Here we go."
But that is a much more calm seen than we've seen in the past two hours or so. The arrival of Donald Trump in two helicopters, Osprey rotor wing
aircraft caused a substantial yelling of boo from this crowd as well. They tried to make their noise felt by him. He would have been at 300 to 400
meters further inside from this secure fence around me here. I should say, it takes up an enormous amount of regions, about a seven, but extending the
secure perimeter in which there is Winfield House, the U.S. Ambassador's residence, Richard.
QUEST: As we look at this, protests were inevitable, containing them was the goal and shoving everything to Blenheim Palace out of the way seems to
have been a good way to solve that.
WALSH: Well, certainly, but I mean, you have to say it's quite surreal to have a sitting U.S. President come to London and not have a state visit,
frankly, because they didn't want to give him that honor, have a working visit, but one that is purposely designed to keep him away from the
institutions that are all family or government in Central London. This is the only part of Central London that he will touch foot in inside a secured
perimeter that is frankly U.S. government property that some would agree, Winfield House here.
So remarkable, that it's 60 miles northwest of where I'm standing where that pomp ceremony you're seeing actually occurred, and tomorrow is a toke
of a different story that will explain exactly why that careful geography of the itinerary was put into place today and tomorrow. Tens of thousands
of protesters will be moving through Central London from Oxford Circus to Trafalgar Square that clear message, they don't want to see Trump here.
They don't agree with his policies on climate change, immigration - you name it, women, racism - it's all there in their placards.
The question is does it remain peaceful? Does it remotely impact Donald Trump? I suspect not. He must be used by now to being greeted in that way
where he goes, but also to what happens behind the closed doors and his meetings with Theresa May.
In her statement welcoming this visit, she didn't mention him by name remarkably. That's the kind of distance British politicians have to keep
and the geographical distance that he's being kept at from the capital here, and because they don't have no track on his world view --
QUEST: But Theresa May is in an impossible political position. She can't annoy the President. She is going to need a trade favor in the future.
[16:05:04]
QUEST: He has already praised her archrival, Boris Johnson, and the NATO Summit was a shambles at best.
WALSH: Look, I mean, he talks about the hot spots and the turmoil he's coming to here, certainly, she's at a very vulnerable time. Some say, in
fact, she may have possibly ridden out the remainders of the kind of challenge she faced over the policies she wants to take - of taking Britain
out of the E.U., but the global Britain that she sells to the British people that she will be able to create after they leave the European Union,
however hard that exit - that Brexit actually is. Key to that is the relationship with the United States.
So, perhaps, to some degree, her ability to try and perhaps deal with the thorns of welcoming Donald Trump in here perhaps has an economic benefit to
some degree and the enduring nature of that transatlantic relationship as well know, Richard is pretty much unbreakable.
Even with George W. Bush and the Iraq War, Donald Trump want to assure people can get their way through that as well.
QUEST: Nick Paton Walsh, thank you, sir for staying at Winfield House. We appreciate you. Mr. Trump says he's fine with the protests, after all, the
President's come after a self-proclaimed victory at the NATO Summit. He claims he managed to win concessions from U.S. allies on military spending.
The only problem is, NATO's Secretary General wouldn't release the form of the agreement and the agreement that we've seen merely suggests 2 percent
spending, which of course, is already the Windsor Agreement and those are already in the NATO guidelines.
Jeff Zeleny has more on that, he joins me now. Jeff is London and joins me. Jeff, am I being unkind when I say Donald Trump has commandeered if
you like the NATO Summit agreement and actually, they agreed nothing along the lines of which he has suggested?
JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Richard, there is no question, the facts were not front and center in that press conference we
saw earlier today in Brussels. The President - President Trump seizing victory taking a victory lap and getting out of town without sticking
around for the fine print, and that fine print was this.
Other world leaders - French President Emmanuel Macron, German Chancellor Angela Merkel and other countries said, "We did not agree to anything new."
What the agreement was to live up to the old agreement, which they have not been doing, so there was some progress made, but it was certainly not the 4
percent spending of GDP on military spending that President Trump sort of insinuated. There has never been much fine print that he is willing to
study. He is happy to look over that.
That audience - that speech we saw him giving earlier today was for a domestic audience back in the United States. It was to show that he came
to Brussels, that he came to NATO to show his America First policy, but there is no sense that there will be 4 percent of GDP spending. The U.S.
doesn't do that as you know, Richard.
QUEST: But here is the problem, Jeff, here's the problem. Look, he comes to Europe, he insults Germany and Angela Merkel which plays down very well
at his base of showing Make America Great Again, America standing up to this laggard, delinquent allies. He then claims total success and nobody
comes out and says, "You're wrong." No other leaders says actually, except maybe Macron and even he did it in a slightly obscure way. Game set and
match, Donald Trump.
ZELENY: No doubt. At least, politically speaking, I think both here in Europe as well as back in the United States. I mean, the President sort of
came in like a bullet in China's shop if you will and he did seize a victory. The question is, what does that mean in the long term? We know -
from here, he'll be of course, on Monday be- he will be at that summit in Helsinki with Vladimir Putin, who of course, must have been smiling at the
entire scenario unfolding in Brussels.
I mean, the Western alliance, the treaty organization in place for seven decades come next year is beginning to, not unravel at all, but certainly
show cracks in it. And don't forget, that's exactly what the election meddling was designed to do by Russia, at least in the words of the U.S.
Intelligence Community wants to so disport, wants to sort of raise questions about the alliances.
So, interesting tonight, here in London, the President - President Trump at Blenheim Palace with Prime Minister Theresa May and his relationship with
her, she needs him now of course more than he needs her. She is in a weakened state. The relationship here is still special, but it's a
different kind of special, I think, Richard.
QUEST: I think that's a good word, but Jeff Zeleny - the special relationship of specialists. The thawing of relations seems to have given
the markets a bruise - they mostly closed higher recovering from the hefty losses we saw earlier in the week. Some investors believe the market
reaction to trade tensions may have been overblown. Scott Shellady joins me now from London. The markets that we saw and today's strong rally on
the Dow and the record on the NASDAQ, difficult to understand.
[16:10:14]
QUEST: The trade tensions haven't gone away, Scott, so what justifies a rally of this magnitude?
SCOTT SHELLADY, MANAGING DIRECTOR, TJM EUROPE: Well, we're in the middle of earnings. Earnings are going to help justify rallies and they actually
are more important than anything else out there. The trade tiff or the tariff tiffs that you want to talk about, a lot of folks, at least in the
financial markets, so far, what Donald Trump has done, a lot of the things he's done have been good for the markets, and I'm not saying good for the
direction. Obviously, that's benefits to itself anyway.
But you know, you sprinkle a little water on the market with tax cuts, you sprinkle a little more growth - and these things have helped, so they're
going to give him a little bit of a pass here when this tariff stuff comes around because we don't know what's going to come of it for sure, number
one. And number two is, nobody has given anybody a cogent argument to stand there and say, "You know what, you can still rip us off, it's okay.
Keep doing what you're doing."
QUEST: Now, listen to what Mnuchin, the U.S. Treasury Secretary had to say today on the question of tariffs and trade wars?
(START VIDEO CLIP)
STEVEN MNUCHIN, U.S. TREASURY SECRETARY: I don't think we're in a trade war. We're in a situation of trade disputes. These are not trade wars. I
wouldn't say we're in a fight at all. As a matter of fact, the President has specifically commented on his relationship with President Xi and how
they are helping us with North Korea and other areas and again, as I have just said, I don't think in any way we are in a fight with Canada and
Mexico, quite the contrary. We're very focused on these agreements and I'm going down to Mexico tomorrow as a sign of the importance of that.
(END VIDEO CLIP)
QUEST: So, Scott, it's not a trade war. It's a series of trade disputes.
SHELLADY: Well, I'll tell you why. He is a politician and he is wording it the way he needs to word it, but I would say this, we're absolutely in a
trade war and we have been in a trade war. We're just calling it what it is, that's okay. We've been in a trade war for 20 years and now, we're
just calling it out and saying, "Hey, it's not fair the way it is." I'm not sure what we're going to do to make it fair, but I can't give - nobody
can give me an argument to make sure that we should keep doing this and let them keep ripping us off because we're worried about upsetting the global
economy.
QUEST: OK, where do we go from here? What will it - because earlier in the week, I was in the market and we saw, not a crack, but we saw concerns
- caution as one trader put it to me. Now, we see the other way around. But the markets can't withstand this pressure forever?
SHELLADY: No, the markets are going to be worried about what happens with the tariffs obviously and if we are in some sort of new trade war, a new
named trade war, but at the end of the day, is that there's a wall of money that needs to be invested. There isn't a better place to put it around the
globe. The U.S. economy is the shining light on the hill right now, so we have a lot of reasons why a lot of this money is going to still go to the
U.S. market and still go to the U.S. economy regardless of the little things that might come day in and day out as far as Trump's talks with
NATO, Trump's talks with China or whatever.
So, there's still a lot of investible cash out there that has got FOMO, right? Fear of missing out. That's the problem.
QUEST: I love that phrase, FOMO. Farewell, thank you, sir. To you, have a good time in London.
SHELLADY: All right.
QUEST: As we now continue to put what we were just talking there - put it into perspective because the U.S. markets rose sharply and we need to go to
the trading post.
So, it was tech that led the way and not surprisingly, you had Amazon, Facebook and Microsoft both - or all of them hitting intraday highs. The
NASDAQ as you could see from the triple stack, the Dow was up strongly there at one percent, similar numbers there, but the NASDAQ at 1.3 percent
and that's at a record, which means I have to do a bit of - interesting in this because we've had quite a few NASDAQ records. We're now in the 22nd.
Twenty second of NASDAQ records. We haven't done any Dow and S&P, that is still languishing at the lower levels that we saw earlier and still one on
the DAX, the SMI and the FTSE.
So Europe is well and truly in the background on this. But the NASDAQ has a record one more - seemingly, relatively unaffected by the trade wars,
which is interesting, Paul La Monica, Guru La Monica.
PAUL LA MONICA, CNN CORRESPONDENT: How you doing, sir?
QUEST: We need to get to, to grips on this idea because the companies on the NASDAQ should be surely affected. They're either tech related, so
they're manufacturing over there, or they have subsidiaries or they require business in China.
LA MONICA: Yes, there has been volatility in the tech sector, but by and large, investors are not worrying about these macro concerns as much with
regards to Apple and Microsoft. Amazon doesn't have as big of a presence in China as a company like Apple does, but I think investors are getting
ready for earnings, and they still see that many of these companies are going to report very solid sales and profit growth and despite --
[16:15:16]
LA MONICA: -- the fact that we had that comment from the Caterpillar executive about first quarter earnings being peak earnings season, second
quarter still looks pretty darn good.
QUEST: I know 224 isn't what it used to be, it's 1 percent, but it's still an impressive performance on the market at a time when there are these
geopolitical concerns, certainly on for example, trade. You still got worries over North Korea and oil. The volatility of oil continues even
though it fell - we've had some falls of late.
LA MONICA: Yes, I think investors are proving to be resilient and I think in many respects, people are maybe just growing a little tired of all of
the trade talk. I'm not going to say it's the boy who cried wolf necessarily, but we've heard so much about trade wars this and trade wars
that and what is it going to mean? I think at the end of the day, investors still haven't heard too much from many companies about how they
think this is going to hurt their profits going forward or we're probably going to start thinking more about that in the coming weeks.
QUEST: So in actual fact, in the earning season, you either say something and we learn more or you don't say something and we wonder why you haven't
said something in the earnings?
LA MONICA: I think that's possible. I don't think you're going to have too many skeptics wonder if a company executive doesn't say that, "Oh,
we're worried about the trade war." Should they be worried? But if people do say that they are seeing tangible evidence that sales and profits are
going to slow, that's going to be a problem.
QUEST: Good. Thank you, Paul. As we continue tonight on QUEST MEANS BUSINESS Papa John's has lost Papa John. He used a racist slur at a phone
call that was actually teaching him how to answer controversial questions. When we come back, we will talk about the survival company now the face of
the company has gone and also the pizza, pizza, pizza --
Yesterday, we talked about Papa John's and I pointed out that the share price had fallen by some 5 percent. What a difference a day makes? Today,
it is up 11 percent, 5:30, Papa John's putting on quite a hefty gain after John Schnatter resigned and apologized for using the "N" word on a
conference call. There is only one problem -
John Schnatter is Papa John. Yes, he's in the adverts. He is the face of the company. He has resigned as Chairman and Chief Executive. He gave up
Chief Executive some time ago. It's not his first controversy. After all, he stood down as CEO last year after he said that the NFL's handing of the
kneeling players has hurt sales because Papa John's is the pizza provider to the NFL.
[16:20:12]
QUEST: Joining me now is our branding help, the man we turn to in Miami for all things on this matter, Bruce Turkel, so I mean, what would Bruce
Turkel be without Bruce Turkel in the same sense Papa John's without Papa John? Does he stay as the figure head? He is no longer Chairman or Chief
Exec?
BRUCE TURKEL, FOUNDER, TURKEL BRANDS: Here is the problem. When you're ordering, you're ordering pizza, or more importantly, you're ordering a
quick way to get your belly filled. The problem is that now, this personality, this guy and the name stands for something we feel is kind of
icky, and worse, it's a mature enough business that we can choose, Richard from lots of other choices.
So, does he stay? No, he does not stay. Does the name stay? Yes, of course, the name stays. You're not going to change it. The question is,
how do we disassociate the name from the horribleness that came out of his mouth? That's the challenge that this company has now.
QUEST: But let me, devil's advocate. Haven't consumers got a short memory? In two weeks' time, will anybody remember this particular
incident?
TURKEL: So, yes, consumers have short memories. You're absolutely right; however, this is the kind of simple powerful upsetting thing that people
will not forget, and here's how you know. Because the jokes are already going around. What does Papa John call black olives? No one is going to
forget that joke.
What is the domino effect when Papa John has to resign because of what he says? These kinds of things will make it get worse and worse and worse.
These are going to become part of the lexicon and they are not going to be able to separate them. So, yes, short attention spans and short memories,
but no, people are not going to forget this so easily. It's too simple.
QUEST: But even if he is not associated with the company, the name which you've just said you don't get rid of, de facto, you can't separate the
two?
TURKEL: Well, you can't get rid of the name is what I said. It's too big. It's out there. I mean, Kentucky Fried Chicken became KFC how many years
ago? They still haven't gotten rid of the name. The name is not going to go away. And nobody cares about the guy, but that will be the logical
answer. I don't want to get pizza from there because of what the CEO said. Oh, he quit years ago. He quit months ago. He's not there anymore.
What they need to do is build something that connects to the name, better ingredients, better pizza, better tone down the racism. That ain't going
to cut it. They need something more. They need to reframe those two words, Papa John's.
QUEST: Right. Stay with me, Bruce, because you just neatly and elegantly led me into talking about what they need to do? Papa John's was already
struggling for a slice of sales. Join me in the "Quest Means Business" Pizza Parlor. Now, as we look at exactly how they are going to reframe
themselves, you have Dominos and you have Pizza Hut battling for dominance. More than $5.5 billion each in sales. They are investing in technology and
they are improving recipes.
These two - Dominos and Pizza Hut - the market leaders. But turn to Papa John's, and that is docket number three. It's more expensive than the
others, and it's marketed itself with better ingredients mean better pizza. But of course, it has a problem and let us not forget, our old dear friend,
Mariella because these are the chains, but forget the chains, your local pizza parlor, Mariella.
Mariella has been squeezed by all the fast casual chains, taking a bite out of higher end business, putting all of these together, hopefully, Bruce
Turkel is still with me. Bruce, as we look at what's happening in the pizza business, you're right, Papa John's has a problem and it's these
other big companies.
TURKEL: Here is what people don't tend to understand about these kinds of businesses. You have to separate what you sell for money and what business
you're in. What do they sell for money? Pizza. You give Papa John's, you give Dominos money. They give you pizza, but what business are they in?
Up until now, Dominos has always been in the delivery business. Now, they are in the technology business. They are not selling you pizza. They are
selling you a solution to being hungry.
I am hungry. The kids are crying. My wife is mad at me. I can make a phone call. Boom. And the pizza gets delivered. They've now played that
out in lots of different locations, so the question becomes, what does Papa John's exchange for money? Pizza. But what do they sell? Up until now,
they've been selling quality. They've been saying if Dominos and Pizza Hut is not --
[16:25:16]
TURKEL: -- good enough for you, we have better ingredients and better pizza and that's how they also pushed out Mariella as you said because they
could get rid of the local guy who you believed was better. But we don't that believe that anymore. So, the question becomes, what will Papa John's
stand for? It's got to be big, it's got to be provocative and most importantly, it has to be about what the consumer wants, not what Papa
John's is trying to sell.
QUEST: And as we look at that and we see everything that is available, it creates an interesting dynamic. Good to see you, Bruce. Do you like
pizza?
TURKEL: I love pizza. It's my favorite food.
QUEST: Well, next time, I am in Miami, I'm sure you've got a pizza place that we need to go and investigate.
TURKEL: I do indeed and I would love to take you there, Richard. I'm looking forward to it.
QUEST: And I'll pick up the bill. All right, thank you very much, indeed. We will continue. It is QUEST MEANS BUSINESS live from New York. Good
evening.
Hello, I'm Richard Quest, a lot more QUEST MEANS BUSINESS in just a moment. We'll have more of the noisy Anti-Trump protests on his first U.K. visit as
President Trump, and she saw it all. The FT's Gillian Tett joins me to discuss roboguards on patrol at La Guardia Airport. As we continue, you
are watching CNN and I guarantee you, because on this network, the facts will always come first.
President Trump is dining tonight with the British Prime Minister at Blenheim Palace on the first evening of his U.K. tour. Meanwhile in
London, demonstrators have spent the day protesting against his arrival. Thousands more demonstrators are expected to join over the weekend.
Ahead of his U.K. visit, Donald Trump finished two days at NATO headquarters. He said the members had agreed to substantially up their
commitment on defense spending. Although, France's President, Emmanuel Macron rejected that claim saying members of the alliance only recommitted
spending 2 percent of national GDP by 2024 - something that had agreed years ago.
The U.S. Treasury Secretary is talking down the possibility of a trade war. Steven Mnuchin insists the U.S. is in what he calls a trade dispute, not a
war between trading partners. He also says he has yet to see any negative impact on business sentiment as a result of the Trump administration's
trade policies.
Charges against the porn actress, Stormy Daniels have been dropped after undercover police arrested her earlier on Thursday at a strip club. She
was accused of illegally touching patrons which is a violation of Ohio State Law. After posting bail, she was released and the charges were later
dropped.
[16:30:16] Let's go now to President Trump's visit to Britain where now he's dining with Theresa May, the British Prime Minister and hundreds of
guests at Blenheim Palace. The former British ambassador to the United States, Peter Westmacott. said the three planners went out of their way to
keep Donald Trump happy.
(BEGIN VIDEO CLIP)
PETER WESTMACOTT, FORMER BRITISH AMBASSADOR TO THE UNITED STATES: My guess is at the White House, it would have been pretty key not to have hostile
demonstrations which distracted the president from the visit, and I'm sure that British authorities as well didn't particularly want to shut down the
whole of London because of that.
Now, the program looks to me like it's pretty carefully choreographed, to fly him in, fly him out, do the essentials, go to Blenheim Palace tonight,
echoes of Winston Churchill, tea with the queen at Windsor Castle, wonderful historic site about the president down the first stage more, I
think it's deliberately avoided to have minimal contact with people who might have made him feel uncomfortable.
UNIDENTIFIED FEMALE: It's a tricky visit for Theresa May here because two of her senior cabinet members resigned including her foreign minister, her
Brexit secretary, and then this comes off of a very controversial contentious NATO summit in Brussels. How does she play her card?
WESTMACOTT: It's a really complicated week, you're absolutely right. The nature of the summit was already a worry, often, it was a bit of snoozer,
major summits, nobody really expected much to come out of it.
This time, because of what President Trump had said in advance about NATO spending on the American contribution, of course there was rude remarks
about Germany at the beginning because of its other remarks about Germany, you know, bought by Russia, controlled by Russia, all that sort of thing.
This was more controversial.
And many of the allies are worried that an aggressive Russia is somebody with whom the president seems to be very comfortable rather than reassuring
them that he will be at their side, that he's got their back if something goes wrong. So you're right, there's a NATO summit and then overshadowing
that is the fact that on Monday after he's seen the queen, seen the Prime Minister, played some golf, the president is going to be seeing Vladimir
Putin in Saint Petersburg.
And people are saying to themselves, well, what's he going to say to his friend Vladimir because he's given some indication for example by saying
that Russia to be admitted into the G7 and let's not worry too much about Crimea and why renew sanctions after all.
He said a number of things which have got their allies a bit rattled. So you put all that together, plus our own domestic dramas around Brexit and
it's a complicated week.
UNIDENTIFIED FEMALE: The perception is that the U.S. president is attacking allies and being a lot more charitable where you know, the leader
of North Korea Kim Jong-un are saying positive things about the president of Russia, Vladimir Putin.
Do you believe -- what do you think -- do you think there's a strategy behind this?
WESTMACOTT: I think a lot of this is impulsive, and remember that --
UNIDENTIFIED FEMALE: There's a pattern --
WESTMACOTT: There's a pattern at least --
UNIDENTIFIED FEMALE: It seems like it's more than impulse.
WESTMACOTT: He's with a pattern of saying some critical things about Britain, about Canada, about Mexico, about Germany, even about the French
president, all that is true. But then quite often, he grabs it back and says more controversial remarks afterwards.
You know, let's remember, America doesn't have a monopoly on politicians who kind of a bit being glorious and thump their chest and play fast loose
with some of the facts and some of the things --
UNIDENTIFIED FEMALE: Yes --
WESTMACOTT: That, you know, we've got some of those two --
UNIDENTIFIED FEMALE: Are you talking about Boris Johnson?
WESTMACOTT: I am not mentioning any names --
UNIDENTIFIED FEMALE: And well, he's left the government if that's who you were referring to --
WESTMACOTT: Not unique to America --
UNIDENTIFIED FEMALE: Yes, should not get --
WESTMACOTT: So yes --
UNIDENTIFIED FEMALE: Yes --
WESTMACOTT: And I simply have to live with the different sort of president.
(END VIDEO CLIP)
QUEST: Now, some news into CNN. The U.S. Justice Department says it will appeal against the judge's approval of AT&T's purchase of our parent
company which was Time Warner. Judge Richard Leon ruled last month that the government had failed to show the deal would violate anti-trust law.
AT&T and Time Warner have since closed the acquisition, the company is now called Warner Media. Hadas Gold and I both work for AT&T in some shape or
form which obviously, you know, unscrambling the eggs will be very difficult now this merger has completed.
I'm guessing this is more about the question of principle of what the law is rather than trying to undo this transaction.
HADAS GOLD, CNN POLITICS, MEDIA & GLOBAL BUSINESS REPORTER: Well, principle and also a message to other companies. Well, this is something
that Judge Leon in his opinion also referred to. He said that this should not be taken as some sort of broad(ph) directive and this Justice
Department is taking a different track when it comes to these types of mergers.
They tend to prefer structural remedies instead of behavior remedies. These sort of things like selling off parts of a company in order to appeal
any concerns over anti-trust violations. But this was a huge case for the Justice Department, it's really a defining case for them and for the
Antitrust Assistant Attorney General Makan Delrahim.
[16:35:00] So I'm not necessarily surprised that they are bringing it and they obviously think that by going in front of the D.C. Circuit Court of
Appeals where likely three judges will hear it, they might have a better chance at it. But I need that opinion from Judge Richard Leon eviscerated
the Justice Department's case in this trial and it was really stunning to read it.
And it was a very fact-based opinion and a lot of the experts that I've been speaking to in the week since that decision have said that they don't
think that a court of appeals would likely rule necessarily in the Justice Department's favor. And as you said, it's going to be difficult to
unscramble the eggs because by the time he would get a decision from a court of appeals, that's going to be at least a year down the line.
QUEST: But this isn't designed in a way to undo this transaction, is it? It just states --
GOLD: Yes --
QUEST: That the law as Judge Leon saw it is -- he misinterpreted the law or it's designed to tighten up the law. But I get -- I wonder -- I wonder
what's in the judgment that makes the Justice Department think they have a fighting chance here.
GOLD: It's -- based off of like I said before, how clear Judge Leon's decision was, it will be interesting to see what they bring up in this
appeal. But there's a hunger for some more clarity on antitrust law. I've heard from several experts in the field who have said that there's actually
a hunger for even the Supreme Court to take this up.
Because there hasn't been a case like this in so long and that there's a desire to see how higher court would rule on mergers and on antitrust. In
this new environment that we're living in --
QUEST: Yes --
GOLD: Because obviously, this industry are so different than what they were decades ago.
QUEST: Just talking exactly on that, Comcast has come back with a higher offer for "Sky" --
GOLD: Right --
QUEST: And quite another issue which they had, but it just put it a bit higher than the "21st Century Fox" bid. And it's getting really
complicated, this, because you've got the "Sky" transaction which has to complete before the overarching transaction of the "21st Century Fox"
asset. So who is likely to win this now?
GOLD: Well, our -- our colleague Dylan Byers actually has been reporting on this where he is starting to learn that Comcast may actually be leaning
more towards going after just "Sky", maybe leaving alone that "21st Century Fox", there are three for "Century Fox" assets that maybe focusing just on
"Sky".
Because clearly, the direct to consumer that "Sky" offers is more than 20 million customers that they have. With all the steel that they have, it's
very valuable to them, so perhaps if Comcast --
QUEST: Sure --
GOLD: Is going to put all its chips on "Sky", then maybe they'll be the victors --
QUEST: Oh, but hang on, hang on, hang on, hang on. If "Comcast" just goes for "Sky" and those "Sky" assets are removed from the "21st Century Fox"
Disney deal while obviously that deal has to be much -- to much lower price. And is that --
GOLD: Of course --
QUEST: Still a deal worth having for Disney getting Warner Brothers movies and getting the cable channels.
GOLD: That's a good question because Bob Iger did call "Sky" the crown jewel of --
QUEST: Right --
GOLD: The "21st Century Fox" assets and of course "Sky" is important to Disney as well based off how quickly we've seen these bids go back and
forth. Obviously, there's still value in what "21st Century Fox" can offer with or without "Sky". But I mean, it feels as though they're fighting
over kind of the last dregs of what's left in the old media barrel as they're coming up against the Amazons --
QUEST: Right --
GOLD: Of the Netflixes, right. I mean, these validations, they're just going up so high, I cannot believe how much bidding is going on right now,
it's very exciting.
QUEST: Good, thank you, Hadas Gold, that's a good merge, it's a good old fashion of -- the sort of things we used to have all the time, but we don't
get as many. Thank you Hadas and let me just --
GOLD: Thank you --
QUEST: Update you kindly that in post-market, after market trading, AT&T; parent company of this network is down more than 1 percent, the stock is
down more than 1 percent on the back of the news that the U.S. Justice Department is going to appeal against the decision that allowed AT&T to
take over Time Warner.
That deal is done and dusted, it's still in course, the shares are down. This is CNN, it's QUEST MEANS BUSINESS, back in a moment.
[16:40:00] (COMMERCIAL BREAK)
QUEST: Theresa May's government has finally produced its white paper on how it sees the future relationship between the U.K. and the European Union
post-Brexit. The documents are 104 pages longer, the core of it is the idea of creating a customs relationship or customs deal, a special customs
deal for the E.U. and the U.K.
And now it also involves Britain agreeing to a common rule book of this customs area with the E.U. A commitment to harmonization with the E.U.
However, the U.K. parliament would have the final say on which E.U. rules it would follow or not, so slightly different from it, just they'll take
it.
There's no details on financial services, the services deal will be put to one side, visa-free travel is proposed, but not of course the pillar of
freedom of movement of people. In other words, the U.K. wants to have one of the pillars, freedom of the movement of goods on services it wants to
wait and see, on capital, it wants to go its own way, and on movement of people, it doesn't want anything to do with it.
I asked Pascal Lamy, the former head of the World Trade Organization what he thinks of the U.K.'s new position.
(BEGIN VIDEO CLIP)
PASCAL LAMY, FORMER DIRECTOR GENERAL, WORLD TRADE ORGANIZATION: It's clearly a step in the direction of a softer Brexit than what was on the
table so far. Softer meaning, less damaging for the British economy. So that's the direction.
Now, whether this will float or not, I'm not sure, not it is because, you know, this technically and notably on customs arrangement, having one foot
out and one foot in is something which is complex to put together technically.
So the political directions seems to me to be rather clear, softer, nicer Brexit in some way, but whether this is -- and notably whether you can
avoid a hard border within Ireland, I think remains an open question.
QUEST: Now, the ball is in the European court, to some extent to determine how much flexibility there will be by the Union to move away from the
traditional arrangement or the existing Norway, Switzerland deals.
Is it your understanding that Europe or the E.U. is open to a third or a different way?
LAMY: No, I think -- I mean, E.U. is open to anything that finds the necessary compromise in London and for government, this is the problem.
For government, the problem has already been seen from the E.U. side, will they agree to something in London?
Now, they've agreed on this white paper, which is white paper with option suggestion, I think at the end of the day, the real issue for you and me
who may not be aware, whole technicality is given that there will be a border because exiting the E.U. means that there will be a border.
Is this border a fake one or a thin one?
QUEST: Do you see this white paper as progress?
[16:45:00] LAMY: I see this as a step in a direction of a softer Brexit which is what Theresa May is trying to do, and we've seen that some
Brexiters already find it too soft. So how further can she go in the direction that will be less damaging, less costly Brexit, it's something
that we will have to see in the coming months.
And I think the game will be going on at least until the end of this year where a bill will have to go to the U.K. parliament in London.
(END VIDEO CLIP)
QUEST: Pascal Lamy talking to me earlier as we continue tonight, the "Financial Times'" Gillian Tett tells us what it's like to be followed by
acquired airport robot. These mechanical devices, are they a menace or a trans of technology? Are they sweet or are they sour?
(COMMERCIAL BREAK)
QUEST: Invest in the security team of the future. That's the phrase from Knightscope. Now Knightscope makes the security robot as you see here, and
the security of every sudden shares is in a big two ways, $50 million.
These security robots, not dull as such, they are a range of robots that are patrolling airports, shopping malls, apartment complexes, even casinos.
They gather vast amounts of data through their eyes, they can be moved, they can be sent quickly to the scenes to monitor things.
They're smart enough to read things like license plates and of course that can give data information from -- by cross-checking, and they cost less
than a full time human security guard even though you have to rent them, it's cheaper than paying of course healthcare and pensions and all the
like.
Of course, they're not a 100 percent reliable. Now, this security camera carries -- enroll enforcement came to an abrupt end when it took a nasty
turn and it fell into a fountain. Steve, as the robot was known was apparently still trying to get lay on the land and instead ended up
downstairs in the water.
And a San Francisco-base animal rights group fired a robot -- and you can see what they did, it was accused of using it to keep homeless people away
from its offices, and what it did was, they sprayed over the sensors.
Gillian Tett had a close encounter with the robot patrolling LaGuardia Airport. And Gillian, it takes a lot to sort of get your attention in that
sense. But it really did when you saw this. What were you thinking? What were you thinking about?
GILLIAN TETT, JOURNALIST, FINANCIAL TIMES: Well, I arrived at terminal B on a Saturday afternoon, I was walking through the terminal and suddenly
what looked like a garlic, one of those robots from "Star Wars" -- I'm sorry from "Dr. Who" or one of the creatures from "Star Wars" suddenly came
litting up bright blue.
[16:50:00] I was really shocked and I tried to take a photograph and its eyes had fastened on me and it started following me. And my first reaction
was, well, is this kind -- some kind of you know, kids toys --
QUEST: Right --
TETT: And I realized it's actually there for security.
QUEST: Good idea, I mean, it is future, it's cheap, it's relatively effective, it's a prototype, we're at the early stages. But is it a good
idea?
TETT: Well, I wrote a column about this in the Financial Times --
QUEST: You did?
TETT: Up in line right now and I think that reactions very personally, I think it's pretty squeaky, but that made the initial reaction. Kids at
LaGuardia, kids love it, most adults are a bit concerted. The question really is what are they doing with that data they're collecting?
Is there going to be a human there, is there going to be any kind of privacy controls or is it just yet another set towards --
QUEST: But Gillian --
TETT: The society.
QUEST: Gillian, what is the difference between the robot that has mobility and a fixed camera watching you, gathering data anyway? What's -- but I
mean, what's the difference?
TETT: Well, in some ways, the good thing about robots is you're so shocked you notice it and it makes you think about what it's actually doing. We're
also used to these cameras up to everywhere, we don't even notice them --
QUEST: Right --
TETT: Anymore, so it's not one -- I think it's good. I guess the question really is whether robots go just further than just being surveilling and
actually saw trying to either organize people --
QUEST: Yes --
TETT: You know, do anything more aggressive. At the moment, that's not happening. But the fact we saw a robot falling into a pond, committing
robot suicide as some people on social media said show it seems can malfunction, and we need to be talking more about what happened if the
computer start getting a mind of their own.
QUEST: We're going to talk about that next, thank you. Gillian Tett --
TETT: Thank you --
QUEST: Of the "Financial Times". U.S. robotics is looking over its shoulder, Beijing is pumping money into AI technology, it's a long way
(INAUDIBLE), but eventually Chinese tech investments could be the next target and they climb down on trade by the president.
ROBO Global created the first index to track the global robotics automation artificial intelligence industries. Travis Briggs is the chief executive,
joins me from Dallas. It's fascinating how far ahead is the U.S. in the industry?
TRAVIS BRIGGS, CHIEF EXECUTIVE, ROBO GLOBAL: Well, I think if you look at it today, the U.S. is decade if not decades ahead. But as you noted, China
is rapidly spending more and more money in the space and really as of last year, probably spent just as much as the U.S.
QUEST: So China is spending more and it is obviously has a commitment to do so. Do you see China's robotics and AI as being a potential area for
the U.S. to attack in this latest trade disputes?
BRIGGS: Well, it's interesting you bring that up, you know, I would argue that this trade dispute, you know, at its core really is about who is going
to be the next global innovation leader.
And what you're seeing is China, not surprisingly right has a mandate where they're shifting from low value -- inexpensive low tech consumer products
and trying to elevate into the more high value added industries like robotics, automation, aerospace and electric vehicles.
QUEST: Now, as you allocate capital from the fund, is it your view that the command control nature of say a Chinese economy versus the free-
wheeling capitalism of the U.S. economy makes it more difficult for China to catch up.
In other words, merely doing the me too, copying what somebody else has done is relatively easy versus the much tricky bid of being the innovator.
BRIGGS: Well, I hope this ends up, is -- that it's more of a collaboration and not a binary outcome, one win to one loser. You know, the U.S. has a
long history of entrepreneur success and innovation. Certainly, China has the number of people and the same type of innovative spirit, it's you know,
started to pop up over there over the last ten years.
So I think -- go ahead.
QUEST: We talk about China versus the U.S., where's Europe in all of this? Where's Latin America? Australasia? Are there other players in this that
are giving the U.S. and China a run for their money?
BRIGGS: Well, so it depends on how you want to define advanced technology, particularly robotics, automation and artificial intelligence. Now, if
you're looking at just a very simple slice of it, industrial manufacturing robots, then the bulk is in Japan, in Europe and then, you know, beginning
to grow in China.
The U.S. has no industrial robotics. But the reality is when you look at the space, it's -- or say the ecosystem, it's much larger. You're looking
at the technology components --
[16:55:00] QUEST: Right --
BRIGGS: Like sensors, processing machine vision, and in an entire range of applications, you know, not for anyone you just talked about. Security,
healthcare, logistics, automation, industrial manufacturing. There's -- I think the recognition should be that this is really not a theme or a niche,
but --
QUEST: All right --
BRIGGS: This is now a technology, this being applied across the board.
QUEST: Good to see you sir, thank you for taking time to come and talk to us tonight from Dallas, we appreciate it.
BRIGGS: Thank you.
QUEST: We will have our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, so the U.S. Justice Department is going to appeal against the decision to allow AT&T to merge with "Time
Warner". I've got news for you, it's a bit late for that, it's a bit like locking the stable door after the horses have bolted.
I work for AT&T, this company is part of Warner Media which is part of AT&T. So you have to ask the question why are they doing it? What's the
point? You can't unscramble the eggs, the reason they're doing it is a matter of principle.
They want to prove that vertical mergers can be stopped. And yet, Judge Leon was quite clear that there were no competitive reasons that will allow
this merger to take place. So is this is a pyrrhic move by the Justice Department destined to fail?
We don't know, it's three appeal judges that will make that decision, but it's certainly interesting that the Donald Trump Justice Department simply
will not give up in a case that's seen as being so vital to across the media industry. And by the way, the shares in my parent company are down
about 1 percent.
And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable,
I'll see you tomorrow.
END
