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Quest Means Business

International Carriers Canceling Some Flights To U.S. Over 5G Concerns; Microsoft Buying Activision-Blizzard For $68.7 Billion; Wall Street Down As Earnings Season Ramps Up; War In Yemen; Goldman Sachs Predicts $100 Barrel Oil; Dash To The Bell. Aired 3-4p ET

Aired January 18, 2022 - 15:00   ET



RICHARD QUEST, CNN BUSINESS ANCHOR: Before the closing bell, it is a horrible day on Wall Street. Investors digesting major earnings news. It's

not going down well. Look at it. It's down 419, off the low of the day, down one percent.

The NASDAQ and the S&P on the triple stack are also hovering around two percent lower, so the markets overall are grumbling at best, but those are

the markets and these are the main events.

International airlines are suspending some flights to the United States as regulators fail to resolve safety concerns over the rollout of 5G


Microsoft's splurge big on gaming. The tech giant spends at least $70 billion in cash to buy Activision-Blizzard.

And it's not woke, it is capitalism says Larry Fink. The Blackrock CEO makes the financial case why businesses should care about the climate. We

are live in Dubai, continuing here. It is Tuesday. It is January the 18th, I am Richard Quest, and I mean business.

ANNOUNCER: This is CNN Breaking News.

QUEST: Good evening. Tonight, several international airlines are suspending some of their U.S. flights because of safety concerns concerning

the rollout of the 5G networks in the U.S., which they warn could interfere -- could interfere with key plane safety equipment.

Emirates from Dubai, which is where I am, a coincidence, is canceling flights to nine destinations that would have used the Boeing 777. Japan

Airlines and Air India also canceling flights or making aircraft changes from the 777s to other aircrafts like the 787s.

The cancellations are being made as Verizon and AT&T, parent company of ourselves, says they will delay activating the technology on some towers

around certain airports. As I say, AT&T is our owner of our parent company WarnerMedia.

Nearly a dozen U.S. airline executives claimed this week's planned rollout could be devastating and asked President Biden to intervene. They have

asked that the 5G signals or the 5G equipment if you will be kept at least three kilometers from major airport runways until the issue can be studied


CNN's aviation correspondent is Pete Muntean. He is in Washington with the latest.

Let's deal first of all with the -- we will do this backwards slightly. The AT&T and Verizon have said that they will suspend the deployment, but

Emirates and JAL and ANA say they're still not flying those aircraft to the United States.

I'm guessing this might just be a timing difference.

PETE MUNTEAN, CNN AVIATION CORRESPONDENT: Yes, I wonder when they'll catch up to that, Richard. You know, AT&T and Verizon that's the latest

development that both of them have said they would delay this rollout at certain airports with certain towers within about two miles of a runway.

Because this issue all centers on radar altimeters, really sensitive instruments, I've seen them at Embry-Riddle Aeronautical University in

Florida. They give a hypersensitive reading of an airplane's height above the ground and the concern is that this 5G network could interfere with

that signal from the radar altimeter being sent from the airplane to the ground and back to the airplane again.

It's a really critical problem for pilots because they rely on that instrument when the plane is coming in to land, typically at times when the

weather is poor, and they can't see the runway. So it's a really serious problem the airlines say.

QUEST: Right. But if we look at the letter from United Airlines, it was absolutely excoriating. It talked about calamities, it talked about -- I

mean, I know that airlines won't take any truck when it comes to safety, but this was -- this was almost panic.

MUNTEAN: I talked to United CEO, Scott Kirby, about this after a Senate hearing last month. He called this the number one issue for the airline and

now American Airlines has signaled in a new memo to its employees that this could really have ramifications, delaying and canceling a number of flights

that they could not even really comprehend. They couldn't give an exact number.

Airlines in this letter, 10 of them, to the Department of Transportation and the Biden administration says this could delay, cancel, or divert about

a thousand flights each day, so a really huge impact here in the United States, but it begs mentioning though that about 40 other countries have

done this according to the telecom industry, without really all that much of an issue. That is what they sort of brought out there as the argument.


QUEST: Right. Well, I was looking at that. Let's take Australia or the U.K. Now in both of those cases, the bandwidth is considerably below the

4.2 that is used by the altimeters, 4.2 to 4.4. It's in the U.S. that this entire range of 3.7 to 4.2 has been designated. So is the U.S. taking 5G

closer to altimeter's frequencies than other countries?

MUNTEAN: Yes, the concern is about this C-band, Richard, and it is really like this idea of bleed through if you're on an AM or an FM radio, and

you're on one frequency and you can hear it pretty close by another frequency. That's in essence, what's happening here. That's what we've seen

at this radio spectrum lab at Embry-Riddle Aeronautical University. You can actually see the spike, and they're pretty close together.

The concern is that could just really throw off these instrumentation readings and what happened back in 2018 is that the F.C.C. allowed the

telecom industry to use that band of the spectrum that it is much closer to these radar altimeters.

There is this other side of this, though, that the telecom industry says the aviation industry should spend a lot of money and equip their airplanes

with things that aren't as sensitive to this.

So there still needs to be more testing according to the aviation industry, still needs more testing according to the F.A.A. They've cleared certain

airplanes in certain airports, but not all. So we're just at the precipice of this.

This was already delayed once by two weeks. Now, they are delaying it again, Verizon and AT&T. So we'll see how long that delay takes place for

and if that really leads to a long term solution here that the airlines want.

QUEST: Pete Muntean, as always, grateful, sir.

A nonprofit Aviation Safety Group in the U.S. has been warning about this risk for some time -- more than a year. In October 2020, the Radio

Technical Committee for Aeronautics, R.T.C.A. put out a 200-page report that said in part of studies of the issue, quote, " ... reveal a major risk

that 5G telecommunications in the 3.7 to 3.98 gigahertz band will cause harmful interference to radar altimeters on all types of civil aircraft,

and has the potential for broad impacts to aviation operations in the United States, including the possibility of catastrophic failures, leading

to multiple fatalities, in the absence of appropriate mitigations."

Terry McVenes is the President and CEO of R.T.C.A.

I looked at the study, I didn't understand it, it is far too complicated for me, but I did read the executive summary and I got the gist of that. If

you were saying back then that it could be fatal, and it could be catastrophic. Why did nobody listen?

TERRY MCVENES, PRESIDENT AND CEO, R.T.C.A.: Well, I think a lot of people did listen. We've actually been working with some of our industry partners,

along with the regulators, especially the F.A.A. in some cases, trying to work a little bit with the Federal Communications Commission here in the

U.S., and others, really for over a year now to try to work out some form of mitigations.

QUEST: If we look at what's happened elsewhere in the world, we were talking about it, say the U.K. or Australia. Now France has come up with

this halfway house of limiting or mitigating through the position.

But the other countries don't seem to be as concerned as the U.S. aviation industry. Is that because the bandwidths are slightly further apart?

MCVENES: Now, that's true. They've used some of the lower or further away parts of the spectrum band that they're planning to use here in this

country. But also, there's some other issues regarding the power levels that are being utilized in some of the other countries, the antenna tilt

angles, and then as you've already mentioned, some of the buffer zones around airports.

So all of these things have been used as some mitigations in the other countries, which they haven't done here or planning to do here, so it's

really an apples to oranges comparison.

QUEST: Right. And when we look tonight, JAL, Air India, Emirates. Now, we don't know whether they've canceled their flights because they haven't

really factored in, or the flights have to leave here before they would have arrived over there because of the length of the flight, but do you

think they are being -- these airlines are being alarmist in canceling their services?

MCVENES: I don't really think so. You know, we identified the safety issue, as you mentioned, gosh, back almost a year and a half ago now and

while there are still a lot of work to be done in terms of looking towards solutions doing a good exchange of data between the aviation industry and

the telecommunications industry, there's still a lot of unknowns out there, and so it is those unknowns that are creating a safety risk.


QUEST: Terry, how do we get out of this mess in the U.S. now? You've got AT&T and Verizon both saying they will delay, but they delayed two weeks.

My guess is they are not going to delay much more. You've got the sort of apocalyptic letters coming from the airline industry, and you've got no

certainty that the traveling public can rely upon.

MCVENES: Yes, that's correct. I think, you know, we've had a lot of time to kind of work through this and we weren't real successful in getting that

good collaborative exchange of information between the two industries, and as has been has been pointed out, you know, putting new radar altimeters on

airplanes is not a short-term profit proposition.

We, as part of the work we do at R.T.C.A., we actually have a committee that's working on developing new standards for radar altimeters going

forward. But this is a two to three-year, four-year process, and in our standards that we develop, are really just used as a basis for

certification and so that has to then be taken to the regulators who then have to develop a rule in terms of how the altimeters are built, and then

they have to be built by the manufacturer, so it takes a while.

QUEST: That will take longer than a couple of weeks, and that's for certain. Terry, good to see you, sir.

I'll have another go at reading that report with a technical book next to me to understand it. Thank you, sir. I'm grateful.

As we continue, it is QUEST MEANS BUSINESS. Microsoft is leveling up its gaming portfolio. That's not a small bid, I can tell you. It has offered a

gigantic -- it is purchasing Activision-Blizzard, the maker of popular games like "Call of Duty" and "World of Warcraft." The price tag is $70


In a moment.


QUEST: Microsoft is expanding its Gaming Empire, it is buying the mega publishing, Activision-Blizzard for almost $69 billion. Let's call it 70 by

the time the fees are paid.

Activision is up strongly, you can see, up 26 percent. Microsoft down two percent, not too concerning about that. Activision is behind popular

franchises like "Call of Duty" with huge online multiplayer online components.


Another first person shooter game is "Overwatch." It is popular in eSports and indeed so much so it has its own league. Activision also owns our old

friend "Candy Crush," a perennial, mobile favorite,

Activision report to the Xbox chief Phil Spencer once the deal closes in 2023. Now, Phil Spencer, of course, was on this program a couple of months

ago, and he gave us very much an idea of the sort of thing he has now done about the future of gaming.


PHIL SPENCER, HEAD OF XBOX, MICROSOFT: The player is the one who is ultimately in control of what they play, why they play it, how much they

spend to play it and you have to respect the player. You have to listen to what the player says, what feedback they're giving you.

This industry has grown because the diversity of creators continues to grow. The diversity of stories, business models continue to evolve.


QUEST: Now with that in mind, Microsoft's latest target is the biggest in a string of media and software acquisitions.

The company behind Xbox has been gobbling up them like the proverbial Pac- Man character of the Arcadia when I was growing up. Now, Mojang Studios, that was a $2.5 billion in 2014, seems like chump change now, the hit game

"Minecraft." And then you've got ZeniMax Media, $8.1 billion. That was in 2020. The owners of award-winning Bethesda Game Studios.

And Activision-Blizzard, this is enormous, $68.7 billion, and it is an expansion into the metaverse pending shareholder and regulatory approval,

of course.

The Activision-Blizzard deal is the highest in the company's history. It is more than double the size of the LinkedIn purchase in 2016. It gives you an


Brian Stelter -- Brian, $70 billion for a video game company.

BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Well, for the video game company. As you laid it out, Richard, one of the preeminent video game

developers in the world, everything from "Candy Crush" to "Call of Duty." So Microsoft is buying its way into gaming in the biggest way possible.

It'll become the third biggest gaming company by revenue if this deal closes, and I think it is a statement about this industry. A decade ago,

Richard, we wouldn't have talked about video games as being part of Big Tech and about being part of the media world.

You know, in some ways, they were off to the side in their own league or their own category. Well, that is not true anymore, and this deal cements

that reality.

It's the biggest deal in the video game space in the history of the industry, and it speaks to how important gaming has become to the culture

all around the world.

You know, when you pick up your phone, and you decide what to do whether you're going to watch CNN, watch Netflix, or play a game, people are often

choosing that gaming option. That's why Netflix, for example, is getting into gaming, albeit in a very small way compared to this.

This is a huge move, and now that Microsoft is doing it, and not some established media player is notable. But as you said, it's got to achieve

regulatory review.

QUEST: Right.

STELTER: Just a few hours ago in Washington, the Biden administration announced a new way they're planning to review the way they review mergers.

They want to get tougher about mergers. So, we will see if Microsoft and Activision can win this through.

QUEST: Right. But what is interesting, of course, is Microsoft does now have a couple of decades' worth of experience with Xbox, not only

agnostically with other people's content, but also by creation of its own, and I guess this is a complete -- I mean, this sort of changes the


STELTER: I think it definitely does. I grew up playing "Halo" on Microsoft Xbox. Many, many others did as well. You know, the action has

moved more toward what Activision-Blizzard is developing. And remember, this is a company it is highly profitable, but it is also distressed in

some ways.

It has been through the wringer recently, allegations of sexual misconduct and discrimination within the workforce damning allegations against the CEO

Bobby Kotick.

Now, Microsoft says Kotick will be sticking around once the deal closes. There's a lot of reason, however to doubt that and there is already some

bitterness about him getting a soft landing or an easy landing out of this company.

Now, the pitch from Activision and Microsoft is, this is about the metaverse, it's about investing in the future. Okay, all right. It's also

consolidation in the video game space. It's also about fixing the leadership at Activision-Blizzard.

They'll talk a big game about the metaverse and maybe some of that will come true, but this is also a solution to a problem, Activision-Blizzard

shareholders and board members of that, which is this culture problem, which Microsoft says they will address.

QUEST: Brian Stelter in New York. Brian, thank you.

In the U.S. markets, it has a shortened trading week and they are deep in the red. The triple stack shows the story The Dow is off more than 600

points, but it has pulled back quite considerably -- well, in the 10 minutes since we started this program, it's now back down again.


The S&P and the NASDAQ are doing worse. It is the jitters of the earning season, as it ramps up and the Dow component, Goldman Sachs shows the


The bank reported earnings this morning and the CEO, David Solomon calls last year a record year, so the stock is off six and three quarters


Guru La Monica is with me. I don't think it matters what anybody does at the moment, Paul. I think this market is just in a bad temper and it is

worried about inflation and higher interest rates and this is the way it's going to salami slice. What do you say, sir?

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, there is a certain element of worry right now, Richard, because of inflation and David Solomon

acknowledged on the conference call that there are still obviously supply chain concerns that are leading to inflationary pressures because of the

omicron variant of COVID-19.

The good news is that that sort of pressure he expects to alleviate, however, wage growth is a very key part of the inflation puzzle and that is

not going away anytime soon, to the point where Goldman Sachs, which in the past few years has tried to keep compensation down in order to preserve

profits, they paid their total workforce 33 percent more last year than they did in 2020, and I think that is why the stock is down so sharp today.

Investors worry that Wall Street bonuses are coming back, and that's great if you're a bond trader, it's not great if you're a Goldman Sachs investor.

QUEST: I'm just looking at one of the IVV, which is the S&P 500 ETF for a moment, we are down about six or seven percent now on the market. So, we

are -- in terms of the Dow and the S&P. So we're not yet correctional -- formal correction.

But I'm wondering maybe my numbers might be off slightly. You'll correct me if I -- if they are, but I'm wondering if this is where we are headed? The

market is looking to find some concrete and it's not found it yet.

LA MONICA: Yes, we are close to correction status and it seems that every time we get into that level where we're nearing 10 percent, you do have

that buy the dip mentality investors come rushing back in.

We haven't seen it in the past couple of days with bank earnings and I think because of those inflation worries, now everyone is focused on what

is the Fed going to do? Are they going to raise rates four times this year? Maybe more than that?

Jamie Dimon last week started conjuring the ghost of Paul Volcker and talking about rate hikes potentially going up six or seven times. That

would be not the scenario that investors envision at the beginning of this year and not something they want to see.

QUEST: Paul La Monica, who was with me, thank you, sir. I appreciate it. As we continue now, the CEO of BlackRock has a message for Corporate

America. It's not -- not -- woke to think beyond profits.

In his annual letter to chief executives, Larry Fink is urging businesses to be more socially and environmentally conscious and he is pushing back

against accusations that he is using his influence as head of the world's largest money manager to support a politically correct agenda.

I spoke to the BlackRock CEO in October about the role of business when it comes to climate change.


LARRY FINK, CEO, BLACKROCK: The best public companies are companies that are focusing on the long term. They are navigating the short term issues,

we all have to do that.

But if you're going to have durable profitability over a long period of time, you're going to have to be focused on all the market movements, all

the issues, but it is about the durability of long-term profit is focusing on the long term.

The problem is not public companies, the problem is how are we moving society forward?


QUEST: Now the Annual Edelman Trust Barometer report was released today. It shows the trust has declined across all institutions. The majority of

respondents say capitalism as it exists today does more harm than good, and when it comes to issues such as climate change, economic equality, and

healthcare, businesses aren't doing enough.

Richard Edelman is the CEO of Edelman. He joins me now. We'd normally be at Davos talking about this freezing bit, but we're not. We are talking about

it in inside.

And Richard, let's do this in twofold. Let's do first of all, the Trust Barometer. Last year, it was sort of doing much better, this -- because

people liked the way there have been a response to COVID. This year, it is falling out of bed.


RICHARD EDELMAN, CEO, EDELMAN: Richard, I think that people have been very disappointed by the pandemic, and I think it's particularly affected

government. If you think about the reality that 18 months ago, government was the most trusted institution, and it's been supplanted by business, and

across an entire range of societal issues.

By a five to one margin, we found that people want more business involvement in sustainability, equality, also in reskilling, so just

basically a trust business to get stuff done, because it's 50 points more competent than government.

QUEST: And yet, I mean, how does that play out? Because it is government that ultimately, really -- I mean, it is government that rescued or the

Fed, whatever, its institutions that rescued say, for example, the economies. All right, it is companies that created the vaccine with money

from government.

So are they being fair in this barometer to government?

EDELMAN: I think that they actually see the reality that government in democracies is in a logjam, and that we need institutions to solve our


What are the problems? Well, 85 percent of people think that they're going to lose their job to automation. There's also deep concern about the

reality in democracies -- in no democracy does a majority of people think that they're going to be better off in five years, so they're concerned

about downward economic mobility.

So they see businesses actually able, and also they actually see the expectations of employees and of customers, and now of financial

institutions like BlackRock, who say, look, you know, you're a CEO, stand up, speak up and lead your team on some of these societal issues, make it

work as part of your business model.

QUEST: Okay, but this idea of what BlackRock said and what Larry Fink said, this idea that look, we're not suddenly becoming tree huggers, we're

doing it because it's not only the right thing to do, but we will make more money at it. That is classic capitalism, but it is also the capitalism that

doesn't have a heart.

EDELMAN: Well, I think the greatest concern is actually that maybe business overreaches and says we can do everything. In fact, in this study,

we found that for the first time, Republicans trust business less than the Democrats, because, you know, Republicans say we're too woke or, you know,

the businesses, you know, should be focused on shareholders.

But in fact, Richard, what we see at the moment is that government and media are in a death grip. And on the one side, there's division; on the

other side, disinformation and moving to the extremes, and we don't trust our leaders. Two-thirds of people told us that they don't think that the

leaders are telling them the truth. They don't trust the channels of information. We have an information crisis.

So in short, it's down to business as the last man standing.

QUEST: Give me your view. What do you think? Do you think that the trust deficit that we are now seeing is of such severity that it is irreparable?

EDELMAN: I don't think it's irreparable. I think that at the moment, 60 percent of people come into any situation distrusting. Two-thirds say that,

in fact, they can't have a debate, a civil debate about issues. We've got to stop that. We have to break this reliance on division and discord.

We have to make sure that people believe that the system can work again, that in fact, it can give fairness.

Richard, I've never seen such a mass class divide between the top 25 percent and the bottom 25 percent of income. It's not just U.K., U.S. and

France anymore. It's across countries as Thailand and Saudi Arabia. So I believe that if we're going to get out of this, we have to show that the

system works for everybody.

Focus on issues like rescaling, retraining, also sustainability, and show tangible progress on the pandemic. That's the most urgent thing for

government in the coming year.

QUEST: All right. Richard Edelman. Richard, I said this last year, we'll start the trust parameter, but hopefully next year, we'll be face-to-face

up a mountain, freezing, but at least we'll be in Davos. Please -- well and healthy.

Good to see you, Richard.

EDELMAN: Please. Thank you.

QUEST: As we continue, still ahead, oil prices have hit a seven-year high, and the upward trend is expected to last a while. The latest

predictions from Goldman Sachs.




QUEST: Welcome back, QUEST MEANS BUSINESS tonight in Dubai.

Houthi rebels in Yemen said retaliatory airstrikes for a Saudi led coalition have killed at least 12 people including women and children; 11

people also reportedly hurt when the strikes hit a neighborhood in Sanaa.

Saudi state media say the coalition launched the attack Monday after Houthi fighters claimed responsibility for a deadly drone strike here in the

United Arab Emirates in Abu Dhabi.

The unrest is stoking fears of an oil supply disruption, pushing prices even higher. Brent is approaching $90 a barrel, highest in more than seven

years and Goldman predicts the surge could continue, $100 not impossible this year. Matt Egan is with me.

So driving this, any form of potential instability to the supply causes great consternation in the price.

MATT EGAN, CNN BUSINESS SENIOR WRITER: Yes, Richard that is part of it, the latest, this attack in UAE by Iranian backed Houthi rebels may have not

caused that much damage to energy supply or the transit of oil.

But it is reminding investors of all these tensions in the Middle East and not just the Middle East. We also have the situation with Ukraine, an

energy transit hub, and Russia, one of the world's largest oil producers.

One analyst told me if Russia goes ahead and invades Ukraine, then all bets are off when it comes to oil prices. Richard.

QUEST: And if we take the OPEC+ agreement with countries like Russia, for sort of limitations, there is no obvious reason, other than, if you like,

an easing of tensions, which it doesn't appear too likely, for the price to fall.


EGAN: Right. You know, the Biden administration is in a difficult spot here, because the fact that oil prices are back at the highest levels that

we've seen since 2014 means that the energy market is completely recovered from that one-two punch last fall of President Biden announcing the

biggest-ever release of barrels from the U.S. strategic petroleum reserve and the Omicron variant.

So that is going to put a lot of pressure on the Biden administration to do something else here, because inflation is a big deal; the cost of living is

high and gas prices are the most obvious, the clearest manifestation of that.

So the question is what do they do?

They could go ahead and try to release more barrels from the SPR but I think the first attempt showed how that tool is pretty limited. They could

ban oil exports, which has been talked about, but that might feel good.

But a lot of experts think that would backfire because oil is this globally traded commodity. And to your point, energy diplomacy, maybe that's their

best bet, try to get OPEC and its allies to pump more oil. Mixed results so far. OPEC hasn't stopped production increases but haven't gone ahead and

pumped as much as the White House would like.

And we know the U.S. and Saudi Arabia have pretty tense relations right now and that is not helping.

So I don't know, does President Biden get on the phone and try to make nice with the crown prince of Saudi Arabia?

There's cost there as well, Richard. So this is not an easy spot for the administration.

QUEST: You're watching closely, Matt, thank you.

Gyms are feeling the impact of the Omicron variant. The virus fears, lockdowns and at-home fitness options are threatening the critical revenue

by those trying to fulfill their New Year's resolutions.

U.K. gyms in particular felt the impact. A gym industry associate in the U.K. estimates, in the country, 7,000 leisure facilities have caused

footfall to drop up to 70 percent and caused a revenue loss of over $230 million. Russell Barnes is the CEO of U.K. fitness club operator David

Lloyd Leisure.

Good to see you, sir. When Omicron came along, for you and others, it threw your plans under the bus but the people stayed. The clubs stayed open and

adapted in a way that we hadn't seen before.

RUSSELL BARNES, CEO, DAVID LLOYD LEISURE: Yes, I think the first and most important point was we weren't forced to close when the Omicron variant

arrived which was crucial for us. We lost 14 percent of our membership during the 8.5 months we were forced to close.

So that was critical, that we were able to remain open. Obviously, David Lloyd clubs, we operate across nine countries in Europe. We're large

facilities, typically 50,000 square feet. So there's enough space we can operate safety.

But being able to remain open was crucial. We'd seen, since we reopened in April, significant demand, record sales, new members flooding back in. And

in fact, by the end of the year, we were at 105 percent of our original membership count level.

So we'd seen really, really strong performance. But then Omicron arrives and we have to, again, adapt.

QUEST: So let's talk about living with COVID. And, yes, all the sanitation, all the various requirements of masks when necessary, et

cetera, et cetera.

But for somebody like yourself, who now has to put in place a business plan for next year, two, three, four years, knowing that it could be knocked off

course, what do you do?

BARNES: Well, we've got heightened cleaning regimes, of course, COVID protocols that are embedded in the operation. And we've sort of got to

accept that that will have an inherent cost to it, that we've got to absorb in the business.

But -- and this, I think is the crucial point -- I think that there's an understanding that wellness and fitness and well-being is important in a

COVID world and that is certainly what we're seeing.

Not only are we seeing a significant demand for membership across our state but we're also seeing an increase in usage, existing members using the

clubs more.

And that, on top of hybrid working, you know, we've got lots of data to tell us that members are going to not go into the office as much. We're a

suburban-based business, we've seen people come and use the clubs differently.


And that is all positive for us. So on the negative side, we've got increase in the cost base while, on the positive side, we've got a greater

demand for what we're offering.

QUEST: And, finally, from your studies, because I know you look at these things, how long does the average New Year's resolution last, to get back

in the gym and work out?

Because I'm thinking that, with January 18th, 19th, it must be just about, people are just sort of deciding, ah, can I keep it going on or not?

BARNES: Yes, well, look; it's a commitment to join us, you know. I think someone has to be absolutely committed to improving their mental and

physical well-being. But we will hold their hand every step of the way.

We will try and ensure that every visit is enjoyable and we're obsessed by encouraging every member to use the club as much as possible. Honestly, the

more you'll use it, the longer you'll stay. It's not difficult.

And of course, we're a full club offering, not just gyms; we're pools, kids and families, workspaces. So providing we're offering a good enough quality

product, I think that January good intention that individuals have will last throughout the year.

QUEST: Here's a QUEST MEANS BUSINESS promise coming up. When we're in Britain, as we will be over the next year, invited, we'd like to present

QUEST MEANS BUSINESS from one of your gyms, one of your places and have a chat with you there, if you're up for it.

BARNES: Perfect, that would be wonderful.

QUEST: And that's QUEST MEANS BUSINESS for the moment.

Thank you, sir.

I'll be back, top of the hour. It's going to be a horrible dash for the closing bell but, before then, "CONNECTING AFRICA."







QUEST: I'm Richard Quest, it is a very quick dash to the closing bell. You can see, we are just barely off the lows on what's been just a horrible day

on the market, the Dow is down 560; the triple stack is down, if you look at the S&P and the Nasdaq, they are down by more than that, up to 2

percent, each just rallying slightly, the Nasdaq the worst of the day.

Horrible day on the markets. We'll do it all again tomorrow. I'm Richard Quest in Dubai, whatever you're up to in the hours ahead, I hope it's