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LOU DOBBS MONEYLINE
Dow Adds 262.73, Closes at 10,368.86; Nasdaq Up 71.25, Finishes at 1,802.74
Aired March 1, 2002 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Manufacturing expands, sparking a powerful rally on Wall Street. The Dow Jones Industrials gained more than 250 points. The possibility of a catastrophic attack on the nation's capital prompts the president to call for a secret civilian government.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My administration has an obligation to the American people to provide measures in place that should somebody be successful in attacking Washington, D.C., there is an ongoing government.
(END VIDEO CLIP)
DOBBS: Yemen was the site on one of the worst terrorist attacks on the U.S. military. Now, U.S. forces are preparing to go there to wipe out terrorist cells. We'll have a report from the Pentagon, and former CIA Director James Woolsey joins us.
A successful launch for the Space Shuttle Columbia, on its way into space to repair the Hubble telescope.
Late night funnyman David Letterman considers jumping networks again. We'll talk about the ABCs of late night television with "Variety's" editor in chief Peter Bart.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Friday, March 1. Here now, Lou Dobbs.
DOBBS: Good evening. We begin with breaking news about the Space Shuttle Columbia's mission to refurbish the Hubble space telescope, as we reported at the outset. A successful launch at 6:22 a.m. this morning for Columbia and its seven crew members, on their way to a rendezvous with Hubble Sunday. NASA now, however, is reporting there are problems with the shuttle's cooling system, problems that could force the space agency to abandon Columbia's mission.
For more on the story, I'm joined now by CNN space correspondent Miles O'Brien -- Miles.
MILES O'BRIEN, CNN SPACE CORRESPONDENT: Hello, Lou. I just got off the phone with a senior NASA manager who is now on his -- participating in a management meeting to discuss this problem. In a nutshell what happened, when Columbia arrived on orbit and the crew fired up the cooling system, which is a radiator system which snakes its way to the radiators inside the payload bay doors and back through the aft section of the space shuttle, one of those systems was not flowing like it normally would.
It turns out it appears there was some kind of contamination that got into the plumbing, which carries that freon around in that cooling system. The cooling system is significantly degraded, that's NASA's term, meaning the flow is constrained, but it is still technically an operative system. They have not declared it failed.
That's a critical point, Lou, because if they declare it failed, NASA flight rules, which are very strict, require the space shuttle to return to Earth at the earliest possibility. What they will be discussing right now is exactly what the problem might be. As it turns out, the Space Shuttle Columbia just got back from a 2.5 year refurbishment in California. A lot of work was done on this cooling system. There might have been some contamination that got inside the system, which is causing this problem.
NASA managers will go to the possibilities and decide whether to come back right away, or perhaps take this mission on a day-to-day basis. There are five space walks planned, and what they might intend to do is button up the payload, if you will, the Hubble space telescope after each space walk, so that if they have to come back quickly, they can jettison the Hubble and leave it in good working order.
That will change the way they do some of their space walks, and will require them to operate a little bit differently. It may change the mission drastically. We should know in the next couple of hours what their decision is. As I say, that meeting just got started, and we will report back to you as soon as we hear.
DOBBS: Miles, the critical nature of this -- even know NASA has not termed it yet a failure, this cooling system, these radiators within the interiors of the two bay doors that open for the payload that is carried by Columbia, the critical part of this radiator, this cooling system is that it's required for all of the sophisticated electronics, avionics, if we may use the word, and the re-entry of the craft. That's why it's critical, is it not?
O'BRIEN: Well, you hit on the most important point, re-entry. While the system is perfectly adequate for an on-orbit situation, cooling the avionics and just removing heat from the cabin to keep the crew comfortable, the most important time, of course, is re-entry, when the shuttle encounters in excess of 2,000 degree heat. That cooling system needs to operate.
Now, the shuttle can come safely back with one cooling system operating. Let's make that very clear. But because they would be only one failure away from serious trouble, the rules state, if one of those systems failed, if it's declared dead, they will come home. DOBBS: And can you clarify this for me, Miles, as well, and for all of us, it's my understanding that on a test of these doors, that in point of fact today, now that this problem was discovered by NASA about 90 minutes into the mission, we now learn, but after opening the bay doors, actually the problem corrected so they're still trying to assess whether it can be remedied?
O'BRIEN: This is the thing. You know, if you can imagine a clogged oil filter here, you know, and there's still flow going through it, there is the sense that maybe it could improve or work itself out to some degree, and that's one of the things they will be considering. What's also interesting about this, Lou, as you well know, the situation in one g, that is to say with gravity present, and what happens in weightlessness can be entirely different. Sludge that might have settled in some place that was out of harm's way, once it's in weightlessness, can find its way and cause all kinds of mischief.
DOBBS: And with the extraordinary risks taking place, so many of us have become accustomed to space flight being all but routine, the dangers are so great that NASA always, always tries to work very carefully on the side of complete and utter caution.
Miles O'Brien, thank you very much. We'll be following this story throughout the evening here on CNN.
On Wall Street today, we can tell you some good news. A powerful rally in the markets on this first day of March, a stronger than expected manufacturing report the catalyst. A number of bulls now feel vindicated after calling this rally for the past few weeks here on this broadcast.
(BEGIN VIDEO CLIP)
HARVEY EISEN, BEDFORD OAKS ADVISORS: The economy has bottomed. It will take the experts six months to realize -- I mean, last time I was on the show, we had some economists saying we're in a recession. That's the good news. Bad news is, hey, pal, we knew that a year ago. Now the recession's over. So that's the good news about the market.
MIKE HOLLAND, HOLLAND & CO.: We're in the middle of a turn. The recession is over. Cash flow's starting to get a little bit better. We've got a huge amount of money supply in the system. Demand hasn't started. It will start. It always does, as the night follows the day.
UNIDENTIFIED MALE: We believe the economy's improving, we believe earnings are rising sharply. We believe multiples will not increase, but there's less risk in the system because of these dynamics of earnings. Very powerful increases.
(END VIDEO CLIP)
DOBBS: Very powerful increase today indeed. The Dow tonight at its highest level in six months, up 262 points today, a gain of more than 2.5 percent for the session. The Nasdaq shot up 4 percent, breaking through 1,800. The broader market also participating in the rally, the S&P 500 up more than 2 percent today. We'll have of course a lot more on Wall Street later here in the broadcast.
Tonight, the Pentagon is preparing to open a new front in the war against terrorism. President Bush has given the go-ahead to send Special Forces into Yemen to help eradicate al Qaeda terrorist cells. The operation would be similar to one being proposed for the Republic of Georgia, and another already under way in the Philippines.
Military affairs correspondent Jamie McIntyre joins me now from the Pentagon with more -- Jamie.
JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, while these operations are somewhat similar, the Pentagon makes the point that they're all slightly different, each one tailored to the country involved and all part of the U.S. effort to expand the pressure against terrorism wherever it is around the world.
Let's look briefly at how U.S. forces are deployed around the world in this growing fight against terrorism. Currently, the U.S. has forces, of course, in Afghanistan, in nearby Pakistan, Turkey, in the Persian Gulf region, including Oman and Qatar, Saudi Arabia and also Tajikistan, Uzbekistan and, as you mentioned, the Philippines. Pentagon sources tell CNN that orders will be cut soon to send small numbers of troops to those two additional countries, both the Republic of Georgia and Yemen. Both countries have requested U.S. assistance as they battle terrorists, and are going to be getting a small number of trainers and some military equipment. In both cases, they will be staying out of the line of fire, according to U.S. officials.
And Pentagon sources say that there are under consideration additional missions for other countries, although those are some ways off. Another possibility, Indonesia -- Lou.
DOBBS: Jamie, the president and, of course, Secretary of Defense Donald Rumsfeld told us all that this would be a very long world and it would be global. But as you reported there in that illustrative graphic, this is a far-flung engagement already. This has to be an immense logistical drain on the resources of the Pentagon.
MCINTYRE: Well, it's not really yet, because the numbers of troops that we're talking about in these special operations missions are relatively small. Mostly, the United States is going to try to work through countries that already have some ability to move against terrorists and simply increase their capabilities. But the U.S. does have plans for bigger operations, including contingency plans for going into Iraq if President Bush makes that decision.
DOBBS: Jamie McIntyre, as always, thank you very much for that excellent report. Jamie McIntyre from the Pentagon.
A decades-old plan that would keep the U.S. government operating in the event of a devastating attack on the nation's capital is now public knowledge. That plan requires civilian leaders to live and to work at a secret location outside Washington D.C. For more on this story, we're joined now by senior White House correspondent John King -- John. JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Lou, the reasons for this extraordinary decision by the president not at all unrelated to what you were just discussing with Jamie McIntyre, the military campaign continuing around the world. Why? Pursuing al Qaeda cells in other countries outside of Afghanistan.
Mr. Bush today, as you noted, publicly talking about for the first time his plans to deal with what he believes to be a very persistent continued threat here at home. Anywhere from 70 to 150 senior government officials at any moment in these days and months since September 11 in two secure bunkers here outside of Washington, in the eastern United States. Their job to keep the government running, keep the financial markets open, keep the Social Security checks in the mail, keep the roads and bridges open if Washington faces a catastrophic attack.
Mr. Bush was traveling in Iowa today. This was published in "The Washington Post" this morning. The president was asked about it. He said he feels he has no choice.
(BEGIN VIDEO CLIP)
BUSH: We take the continuity of government issue very seriously, because our nation was under attack. And I still take the threats that we received from al Qaeda killers and terrorists very seriously. I have an obligation as the president, and my administration has an obligation to the American people to provide, to put measures in place that should somebody be successful in an attack in Washington D.C., there's an ongoing government.
(END VIDEO CLIP)
KING: Now, the initial decision to do this, to take senior government officials and put them outside of Washington just in case was made by the president and the vice president in the minutes and hours immediately following the terrorist strikes. That plan remains in place now, nearly six months later, because of continuing intelligence reports suggesting the possibility of an attack on Washington.
Earlier today, the White House communications director Dan Bartlett saying if you look at the intelligence matrix, the president sees every day there remains a substantial threat.
(BEGIN VIDEO CLIP)
DAN BARTLETT, WHITE HOUSE COMM. DIR.: They are seeking weapons of mass destruction. They are seeking nuclear weapons, they are seeking chemical weapons and biological weapons. These are the types of weapons that can afflict harm on an entire nation and an entire city and destroy a city. And unfortunately, we have to have a plan in place that takes that into account. So what this team does and what this apparatus provides the American people is the reassurance that its government can respond in the wake of such an attack.
(END VIDEO CLIP) KING: Some complaints from Democrats in Congress today. They say they have been told nothing about these contingency plans under way, this stand-by government operating outside of Washington, and some lessons learned from the Bush administration standpoint. These plans date back to the Cold War. As senior officials left Washington, went into these bunkers in the days and hours after September 11, they found computers that could no longer connect with government databases, too few telephone lines, other problems. As the administration keeps this stand-by government on hold, just in case, we're told they are rushing to upgrade the technological capabilities of these bunkers -- Lou.
DOBBS: And John, I presume with the full support of the U.S. Congress in doing so.
KING: Some questions about the public knowledge of this. No questions at all about providing the money necessary. There is a whole separate set of bunkers for the leadership of Congress, the leadership of the judiciary, and the military has its own set as well, Lou.
DOBBS: John, thank you very much. Senior White House correspondent John king. Thank you.
Well, as we reported earlier in the broadcast, there are significant moves tonight to open a new front in the war against terrorism. U.S. troops are preparing to go to Yemen, Special Forces are soon to be in the former Soviet Republic of Georgia. Six hundred U.S. military are already in the Philippines.
Joining us now to talk about this strategy in the war against terrorism, former CIA Director James Woolsey. Good to have you here.
JAMES WOOLSEY, FORMER CIA DIRECTOR: Good to be with you, Lou.
DOBBS: As Jamie McIntyre, our military affairs correspondent just reported, we are committing, as he points out, relatively small numbers of troops in a broad, far-flung set of regions in the world. Are we to expect to see that number increase and the distances expand?
WOOLSEY: The number of countries may increase, but it looks like the way this is being done in Yemen and Georgia and the Philippines, and maybe other countries, is what we're doing is sending trainers and advisers to work with friendly governments. Now, Yemen was not so friendly on this issue before 9/11. But the quick victory, I think, in Afghanistan has convinced a number of countries that we know what we're doing, and that we're decisive. And so, some are asking or accepting help, but I don't think in any of these, as far as I can tell from the public reports, is the United States actually principally going to be involved in fighting. I'm sure our Special Forces advisers will be able to defend themselves if attacked, but I think they're mainly along as trainers and advisers.
DOBBS: And in that role, it's a protracted process, they're working as trainers and advisers, and relying upon the success of those national troops in those locations. Do you see a role for a more active engagement on the part of particularly U.S. Special Forces?
WOOLSEY: I'd be a little surprised to see that in most of these countries, unless the government troops run into substantial difficulties, in an emergency. It looks to me as if the U.S. government's being quite careful to send these forces to places where they are welcome and accepted.
Now, there's controversy in the Philippines, but the president of the Philippines I think easily dealt with that. And I'm sure there will be controversy in each of these places, but we're there to help and assist, and I don't -- I don't see this type of undertaking changing in these locations or in most places where there are friendly governments. Now, where there's an unfriendly government, it could be quite something else again.
DOBBS: An unfriendly government would describe I think safely Iraq.
WOOLSEY: To put it mildly.
DOBBS: The fact of the matter is, that the -- the British -- Tony Blair, the prime minister, has said that he is now looking toward Iraq and suggesting that action there would be appropriate. Is the drum beat building here?
WOOLSEY: Well, I hope so. I would like to see the U.S. government remove Saddam Hussein's regime and move Iraq toward a far more reasonable and responsive and ultimately a democratic government. But I don't know that it's clear that a decision has been made to do that with U.S. forces yet by the United States. All these sort of indirect indicators seem to point that way, but I certainly don't think if a decision is about to be made that it's clear what the timing would be, whether it would be this spring, presumably would not be within the Iraqi desert summer, or could conceivably be next fall.
DOBBS: Senate Majority Leader Tom Daschle, as you know, saying that the success of this war against terrorism depends upon either capturing or killing Osama bin Laden or Mullah Mohammed Omar. A remarkable departure from the views of the administration. What is your reaction?
WOOLSEY: Well, I suppose you could say total or complete success might hinge on either that or ascertaining that there's a very high probability that one or both or several of these leaders in al Qaeda are dead, buried in a cave somewhere. But I think the administration's done extremely well so far, even without having been able to point to the corpses of or the alive bodies of bin Laden and Omar and the others.
DOBBS: And what is your best judgment? Will they be captured? Will they be killed?
WOOLSEY: It could go on for a long time. If -- if bin Laden is succeeded or his Egyptian lieutenant or Mullah Omar in getting out to some other country where there's at least a strong faction, such as in Iran, that might be willing to shelter them or hide them, because they don't want the United States to have a major success, they could conceivably be somewhere for a long time. Ultimately, I think if they are alive, they will surface and we will be on their trail. But this could go on like this for some time.
DOBBS: And finally, your assessment of the appropriateness and the necessity of a shadow government as put together by the Bush administration.
WOOLSEY: Well, seeing what the president and spokesmen have said on this, we had something like this back during the Cold War. It lapsed, I think, a bit during the 1990s. And I'm glad to see the government resuscitating it. It obviously is a requirement not only for the executive branch, but for the Congress and the judiciary as well. We can't blink at the fact that we could conceivably have terrorism involving a weapon of mass destruction in Washington. And we just have to make provision that the government can continue even if that should occur.
DOBBS: James Woolsey, thank you very much for being with us.
WOOLSEY: Good to be with you.
DOBBS: British police tonight say packages containing what are described as toxic substances were sent to several political targets in Britain, including the home of Prime Minister Tony Blair. Police say that these parcels contained what they're calling caustic substances. No further description. One of those packages sent to Mr. Blair's residence, another sent to a Scottish legislator. Blair, of course, is in Australia, where he is attending a commonwealth leaders meeting. Fourteen other suspicious packages are still believed to be in the British mail system.
Still ahead here, the nation's factories bounce back from the deepest slump in a decade, pushing the Dow to a six-month high. We'll tell you why Wall Street rallied and what you should consider doing with your investments.
The debate over hard liquor advertising on television. NBC is the first network to carry those ads. Now it faces opposition from the American Medical Association.
And David Letterman is said to be weighing an offer to join ABC. What it could mean for Ted Koppel's news program, "Night Line," and the economics of late night television.
(COMMERCIAL BREAK)
DOBBS: Today's manufacturing reports show that for the first time in a year and a half manufacturing picked up. New orders for raw materials also the strongest in eight years. This is the latest in a series of reports showing the economy pulling out of recession. Kathleen Hays has the report.
KATHLEEN HAYS, CNN FINANCIAL NEWS CORRESPONDENT: Thanks, Lou. You know, the nation's purchasing managers reported growth in their high profile survey for the first time in a year and a half. That's the good news. But manufacturing is only 70 percent of the economy, only 13 percent of jobs. How can it lead us out of the recession?
Well, some economists say because, unlike other recessions, it led us in. Manufacturing started falling in September of 2000, six months before the recession officially started. It was down 3 percent by March of 2001. That's the first time since 1990 it ever fell that severely ahead of a recession.
Since then, it lost another 4 percent. That's 7.5 percent decline in output. Very severe. Consumer spending can't lead us out, because it never really pulled back. Spending on houses and cars, big-ticket items, has been healthy. So what can manufacturing do for us?
Well, let's look at the positives. The Fed cut rates, severely, that's good for the cost of capital, very important to small and medium size manufacturing firms. Energy prices, which rose sharply from June '99 to June of 2000, some 70 percent, are down 40 percent from those levels. Remember, manufacturers are very heavy energy users. That's important.
Now, there are some negatives. The dollar at 16-month highs. Overseas economies weak. Economists say that's going to hurt exports, and manufacturers make up two-thirds of U.S. exports.
Economists say the recovery is coming, but it might not fell all that great at first.
(BEGIN VIDEO CLIP)
BRUCE KASMAN, MERRILL LYNCH: The growth is going to come as firms shift from being enormously pessimistic, cutting back on production, cutting back on capital spending plans, bringing them to a more normal level. That will get you a lift on growth, which may not feel like it's a major movement up in terms of final demand.
(END VIDEO CLIP)
HAYS: The National Association of Manufacturers is looking for 2 percent growth in output this year, half of '91 when manufacturing grew 4 percent, and past recessions, when it grew 6 percent. Very important sector, Lou. Manufacturing is less than 15 percent of the labor force, but 80 percent of the job losses came from there, 1.6 million jobs. As this turns, this is going to be so important, the economists are hoping, in terms of getting the jobs going again and get the recovery rolling.
DOBBS: We need good news across the board.
HAYS: Well, you know, this was very surprising to people to see it not just turn up, but turn up as much as it did. It really feels to a lot of people like something's starting to happen.
DOBBS: Good. Good. Kathleen Hays, as always, thank you.
Well, my next guest says that rebound in manufacturing helped to set a positive tone for the markets. And for some insight, we're joined now by Hugh Johnson, the chief investment officer at First Albany. Hugh, good to have you here.
HUGH JOHNSON, FIRST ALBANY: Nice to be with you, Lou.
DOBBS: That rally felt pretty good, didn't it?
JOHNSON: This was a great rally. It's not just the stock market went up, but the bond market went down, which is what happens when investors start to get more confident. And also, you know, you saw investors migrating to the so-called bull market sectors. They were buying technology, telecommunications, consumer cyclicals and sort of staying away from the bear market sectors like utilities, health care and consumer staples. So there were real strong messages from this market today that the bull market has resumed.
DOBBS: And this bull market has resumed, and what will it look like in quantitative terms? How much can we expect the Dow Jones Industrials and the Nasdaq then in this bull market this year to rise in percentage terms?
JOHNSON: Well, I think, you know, overall, whether we're looking at this year or the next couple of years, we're talking about very modest returns from the markets, say, maybe in 8 percent to 10 percent. And that's true whether we're looking at the broader market, the S&P or even at Nasdaq.
But if you're pretty good on your timing, that is if the market becomes as undervalued as I believe it did, say, at the beginning of this week or last week, you actually can enhance your return. So you've got to make a lot of good decisions, one of them being entry points. When the market gets undervalued, you have to take advantage of it, and I think it's still a little bit on the undervalued side.
DOBBS: So you would recommend investors to go in now and buy, overall talking broadly about the market. What specifically would you recommend they buy?
JOHNSON: Well, I think you buy the bull market sectors. You start with consumer cyclicals, companies like Target, Harley Davidson and Home Depot. The industrial sector is one that does well in the initial stages of a bull market, companies like United Technologies. And technology itself is always a leader in a bull market. You worry a little bit about the priciness of that sector, but companies like IBM and Microsoft, make sure you diversify, but buy those bull market sectors. They're likely to do well.
DOBBS: Hugh, thank you very much for being with us. Hugh Johnson, First Albany.
JOHNSON: My pleasure.
DOBBS: Well, tonight, we continue our special series of reports for investors, "Who Can You Trust?" After Enron, many have a pretty low opinion of corporate bosses. Some think a company's failure means corporate officers run off with the cash, leaving little or nothing for investors. And in a few instances, that's exactly what happened. Kitty Pilgrim, however, takes a look inside the board room to see how it tries to protect investors.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): The inner sanctum, corporate boards. The worry is back-slapping cronyism is no way to govern a corporation.
UNIDENTIFIED FEMALE: Enron is the worst case, but I think there are many bad cases like that.
PILGRIM: The focus now is to make corporate boards more independent, outside directors who do not work for the company or benefit from other relationships, such as consulting. The trend was already in place before the Enron debacle.
NELL MINOW, THE CORPORATE LIBRARY: I think we've made some progress since the days when the CEO would go into the locker room after the golf game and see who was available, but it's still very cozy, there's still a lot of cronyism.
PILGRIM: Boards are increasingly using written guidelines for corporate governance, covering everything from corporate succession to compensation. Sixty-five percent of them had them in 1999; 69 percent in 2001, and 75 percent last year. Formal committees overseeing boards have also taken route. Sixty-five percent of companies now have them, a gain in the last two years.
Federal Reserve Chairman Alan Greenspan remarked in congressional testimony Enron could actually turn out to be a plus for corporate governance.
ALAN GREENSPAN, CHAIRMAN, FEDERAL RESERVE: I think Enron, as I indicated to the Senate Budget Committee the other day, is not a significantly negative event to the economy, and in fact, in the longer run, its emergence may alter the way we govern corporations.
PILGRIM: Kathryn Harrigan currently serves on three boards and teaches at Columbia business school. She says boards should be aggressive in protecting shareholders.
PROF. KATHRYN HARRIGAN, COLUMBIA BUSINESS SCHOOL: They should be questioning the CEO, because ultimately the board hires and fires the CEO. And they should be barbecuing that CEO regularly. And if the CEO doesn't have enough answers to give them comfort, then they should be saying there's something rotten in Denmark, and perhaps we need a fresh piece of cheese.
PILGRIM: New suggestions by corporate governance gurus include a system of self-regulation, similar to the way some financial markets self-regulate. More controversial proposals allowing shareholders to directly nominate board members. Shareholders should pick the state of incorporation.
Delaware has the best laws for protecting directors and managers, and many corporations are registered there. Institutional investors should make their votes public. (END VIDEOTAPE)
(on camera): Now, boards are already seeing intense public scrutiny in the post-Enron climate. Not so diligent board members have been given fair warning and conscientious board members are likely to react also, scrutinizing their peers. The climate may not be quite as cozy at the next corporate meeting -- Lou.
DOBBS: Kitty, thank you very much. Kitty Pilgrim.
Well, just ahead tonight, accidental product placement. We'll be telling you all about that. We'll be taking a look at some of the publicity for products that some companies probably wish they never had.
And ABC television looking for talent they wish they did have. The battle for late night television viewers and the millions of dollars at stake. Stay tuned.
(COMMERCIAL BREAK)
DOBBS: ABC television is on a star search. The network reportedly trying to poach late night television star David Letterman from CBS. At about $60,000 a 30-second commercial on a late show, millions of dollars are obviously at stake. Joining us now on this latest battle in late night television and what's at stake for both sides and all sides, in point of fact, Peter Bart, the editor-in-chief of "Variety." Peter, good to have you here.
PETER BART, "VARIETY": Hi, Lou.
DOBBS: What's going on with CBS? Why would they even -- before we turn to ABC, why would they even think of letting Letterman go?
BART: Well, we're talking about high price talent here. I mean, Letterman probably gets somewhere between $16 million and $20 million a year. I mean, that's Lou Dobbs kind of money.
DOBBS: Almost.
BART: And CBS -- right. CBS obviously wants to keep him. They had an exclusive negotiating period, and then ABC chimed in because they couldn't close the deal.
DOBBS: And ABC, how important is this to them? Obviously, they are prepared to spend a lot of money here to go after Letterman. What makes it so important for them?
BART: Well, it would seem that "Nightline" and "Politically Incorrect", which now occupy that late night slot at ABC, lose roughly 10 million bucks a year. The Letterman show, like the Leno show spews off about $200 million a year. I mean, these night shows are second only to the early morning shows in terms of revenue producers. And, as you know, revenue is really lusted after these days by the networks, especially by Disney-owned ABC.
DOBBS: And Disney-owned ABC, if its commitment to news is pretty seriously in question here in letting go Ted Koppel and "Nightline"...
BART: That's right.
DOBBS: What's your reaction there?
BART: See, the danger, Lou, I think is that by blowing off Ted Koppel, (UNINTELLIGIBLE), ABC could end up with a black hole at that late nighttime period. And some argue that they ideally should have gone after say Conan or after a new talent like Jon Stewart instead of trying to emulate the CBS and NBC track.
DOBBS: Conan O'Brien, of course, just recently resigned with NBC for a substantial amount of money. Bob Iger personally handling this deal. What are we to make of that?
BART: Yes. I think we have the big guys doing the manipulating here. And, of course, CAA, Creative Artists, represents Letterman. So there's a lot of in terms of ego and money at stake in this situation.
DOBBS: And make a call for us, Peter. Does Letterman go to ABC?
BART: I wouldn't be surprised if Letterman stayed at CBS and that ABC found itself with some problems on its hand.
DOBBS: You're not suggesting this is just big-time negotiating, are you?
BART: I think everybody's putting out spin. You know, one thing I love about page-one articles in the "New York Times" is you know that some sort of interesting contractual manipulation is at work here.
DOBBS: Peter Bart, you're so cynical. Good to have you with us. Peter Bart, editor-in-chief of "Variety."
Well, NBC today told us that it's sticking to its decision to carry commercials for hard liquor. That is despite the American Medical Association blasting NBC this week on a full-page ad in the "New York Times" The AMA says the network has let down America's children and their parents. Susan Lisovicz has the story.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Jack Daniels old time, old number-7 brand.
SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): Eighty-six proof with a 100 percent possibility of increasing brand awareness. The maker of Jack Daniels is one of many liquor companies wetting its whistle over the prospect of advertising on NBC, which is about to end a half century voluntary network ban on such commercials.
But in a full page ad in the "New York Times" this week, the American Medical Association says the combination of hard liquor and TV is a dangerous cocktail for America's youth. DR. RON DAVIS, AMERICAN MEDICAL ASSOCIATION: If you have a massive amount of advertising for this product that portrays it in a positive light, I think it's only inevitable that that's going to increase overall consumption and certainly change children's attitudes about the product.
UNIDENTIFIED MALE: These frogs, do they really taste like chicken?
LISOVICZ: Beer and wine commercials have been running on network TV for years and are such big spenders, that some campaigns have become part of the American lexicon.
UNIDENTIFIED MALE: What's up?
UNIDENTIFIED MALE: What's up?
LISOVICZ: Liquor companies say their research shows no correlation between advertising and abusive alcohol and want a level playing field.
PHIL LYNCH, BROWN-FORMAN: Alcohol is alcohol is alcohol. A standard serving of a distilled spirit, a standard serving of wine and a standard serving of beer all contain the same amount of alcohol. There is no beverage of moderation. There's only the practice of moderation.
LISOVICZ: NBC says it remains committed to ensuring its advertising doesn't target young people. It's 19-point protocol on liquor commercials includes restrictions against on-camera consumption, athletes or celebrities as well as products for hangover remedies. And liquor ads may be the ultimate hangover remedy for NBC, which like all other media companies, has been hard hit by one of the worst ad recessions in decades.
SCOTT DONATON, EDITOR, "ADVERTISING AGE": NBC, while it's alone right now, it may be a little bit of slow build at first, but this could quickly turn into 20, 50, $100 million category for them within a year.
(END VIDEOTAPE)
LISOVICZ (on camera): It should be said that liquor ads have been running on a number of cable networks and independent broadcast stations for several years. And while ABC says it has no plans to change its policy, CBS said in a statement today that it continues to evaluate the issue -- Lou.
DOBBS: Susan, thank you very much. Terrific.
Well, product placement is usually a welcome addition to companies advertising packages and they pay lots of money for it. But some companies are receiving less than ideal publicity which they did not pay for. For example, if you watch former Enron CEO Jeff Skilling testify before Congress, you may have noticed that he didn't hide behind the Fifth Amendment. He did, however, place himself squarely behind a can of Diet Coke. Peter Viles has the report.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): You can spend millions carefully shaping the image of your brand, making sure it's all warm and fuzzy, but then comes the day when your brand is front and center on live television and you have lost all control.
This was Jeff Skilling letting the world know that his beverage of choice is Diet Coke. But is the exposure good or bad for the brand? Coca-Cola didn't dare to say, telling MONEYLINE the hearings were -- quote -- "a serious matter, and it would be inappropriate to comment." Brand experts say the old adage still holds almost any publicity is good publicity.
BARBARA LIPPERT, "ADWEEK": All in all, I think they don't really mind the placement. It's in the halls of Congress. It's powerful. And it's on TV all day.
Reporter: Now Diet Coke has been on the hot seat in Washington before. Of course, the former president had many favorite brands, including Canada Dry. He was famous for jogging into McDonalds. And if you look closely, he also wore a Timex Iron Man Triathalon Watch. The watch some believe Osama bin Laden was wearing in this video.
So good or bad for Timex. Well, the company tells MONEYLINE -- quote -- "we've examined the pictures as closely as possible and we are convinced it is not a Timex." Every big story seems to touch a few brands. O.J. Simpson put the Ford Bronco on the map, also the Italian shoe maker, Bruno Mali (ph). For Monica Lewinsky, it was the infamous blue dress from the Gap.
VILES: (on camera): Now it may not be ideal, but these are ultimately signs of a successful brand, like the Timex watch. A reminder that real people, even reporters use them in real life.
Peter Viles, CNN Financial News, New York.
(END VIDEOTAPE)
DOBBS: I suspect that Pete put away his Rolex just for that stand up.
Coming up next, the Dow finishes off the week with a big rally. We'll bring you the highlights and we'll take a look at the week ahead. Our weekly market round table will give us their views. And we'll tell you about some problems aboard the Space Shuttle Columbia. Those problems may force the shuttle to return to earth ahead of schedule, possibly as early as tomorrow. We'll be updating you on that breaking story.
And I'll be talking next with Bernard Goldberg, the author of the best-selling book that's causing quite a stir in the news business. Stay with us.
(COMMERCIAL BREAK) DOBBS: Critics of the media often blame news organizations for reporting stories with a seemingly liberal bias. The claim has gained attention as the result of a newly published book with an industry insider's point of view. Bernard Goldberg, Emmy award winning broadcast journalist, author of the controversial top selling book "Bias" joins us tonight from Miami. And best-seller it is. Congratulations on your success, Bernie.
BERNARD GOLDBERG, AUTHOR, "BIAS": Thanks, Lou. Appreciate it.
DOBBS: The idea of bias. I have seen as much discussion about your book on this industry. People not too happy in the craft about the way you portray some of your colleagues at CBS and the television news industry itself. How does it make you feel?
GOLDBERG: Well, there's a total disconnect between regular people out there in America...
DOBBS: Right.
GOLDBERG: ... and people in the media. The people out there in America, they say thank you for writing the book. They write letters, they see you at the airport, and they say gee, I really appreciate it.
People in the media are split. Many of them, and I mean many of them at all three networks have said to me privately that they agree with a lot that's in the book, but not one of them will go public with that, because that's a potential death sentence. The others, the others, the ones you're referring to, Lou, not only don't like it, but they -- they also say, they say they don't like it, and they say I haven't read it. And I'm amused -- I'm amused at the terms, they say I'm a traitor. I wonder if I work for Enron or I work for a cigarette company or an oil company or any kind of big business company that isn't especially popular with the media, they wouldn't be calling me a traitor, they be calling me a hero.
DOBBS: A whistle-blower.
GOLDBERG: Yes. At CBS News, as a matter of fact, exposed America to the concept of whistle-blowers. And when you blow a whistle on any other industry, that's a good thing. When you blow it on journalists, the one group that's seemingly is above it all, then that's a very bad thing.
DOBBS: Right. Well, and there is an axiom in our business, as you well know, never be above the news or another way of putting it is don't think yourself above it in any form. But the economics of what you wrote, also fascinated me as you might expect. And the economics of this business, particularly in terms of the social issue of working mothers and the way in which you saw CBS news report it. Tell us about that.
GOLDBERG: On the working mothers part, it's all the networks. We get plenty of stories about why we need better day care. And I think that's a good thing. That we get stories on that, I don't have a problem in the world with that. But we get very, very few stories about what we can do, what our legislators can do, what the government can do so that parents who want to stay home with their children, whether it's a mother or a father, probably a mother in most cases, what they can do so that they can afford to do that. I haven't seen any stories about how we could restructure the tax code so that people who stay home with their kids get a break. But I've seen a lot of stories about what we could do with our tax money to pay for better day care. I don't have a problem with one.
I have a problem with the fact that we don't report the other. And one of the reasons, Lou, that we don't report the other is we will do anything, anything rather than look like we're offending women and feminists in general.
DOBBS: Political correctness and obviously it's political correctness with, if you will, a liberal definition. But one of the fascinating things to me, and I've worked in this craft a while, and I will acknowledge there is a liberal bias on the part of this craft. It's never been particularly mettlesome to me, because I've always been able to deal with it, I think effectively. But the fascinating issue for me in terms of the economics, you have conservative ownership, and you have in most cases a very liberal staff, set of employees at each of the networks working for typically conservative ownership. How does that work in your judgment?
GOLDBERG: Yes, that's a fascinating thing, because the people who have criticized me -- I mean -- I've gotten criticism on a number of fronts. But one of the criticisms has been, well if all these conservative money people at the top, how in the world can you have a liberal bias with them? Well, they don't get involved. They really don't get involved. They don't come into the news room and say have you to do this or that.
Now what I've found fascinating is that the networks, the three major networks, ABC, CBS and NBC on the evening newscasts, they are hemorrhaging viewers, they are losing them by the truck load. If they were selling shoes instead of news, they'd be out of business by now. That's how many customers they've lost over the past 20 years. And yet, the people in the conglomerates that run the companies of which the news divisions are a very, very small part don't seem to get involved.
Although, I think the Letterman-Nightline thing today is a good example of how money does come into it. Because once news was special, today, it's a commodity like anything else. It's a show. And if the -- if the Letterman thing doesn't happen at ABC that's going to be because David Letterman said it's not going to happen, not because ABC said it's not going to happen. ABC simply, and maybe understandably, wants to maximize profits. And if it happens, if it does happen, I think something very interesting may happen in the next few years. And that is one of the three evening news casts, on ABC, NBC and CBS may not be there anymore because if "Nightline" goes down, which is an excellent show, which is a show everybody associated with it could be proud of, if that show goes down, you don't know what's next.
DOBBS: Well, Bernie, two thoughts as we conclude here. I want to say, first of all, thanks for being with us. I'm sort of pulling for ABC to remove Ted Koppel so that our bosses here at CNN can pick him up. And news is still special in some places, and we appreciate you being...
GOLDBERG: Absolutely.
DOBBS: ... and we appreciate you being it one of them. Thanks very much, Bernard Goldberg.
GOLDBERG: Thank you.
DOBBS: Thank you. And, again, congratulations on your best- selling book.
Still ahead here, stocks hit a six-month high today. A roundtable will tell us whether the upbeat tone set at the end of this week and the first day of March will continue through. Stay with us.
(COMMERCIAL BREAK)
DOBBS: As we've reported, a solid rally took Wall Street by storm today. The Dow at its highest levels since August. Here now, Jan Hopkins, Christine Romans.
And let me ask you first, Jan, this rally expected by the bulls, totally catching a lot of other folks by surprise.
(CROSSTALK)
JAN HOPKINS, CNN FINANCIAL NEWS CORRESPONDENT: It was the -- the clear sign that the manufacturing part of the economy has turned and so it looks like the economy has turned. So all of the cyclical, you know, economically sensitive stocks took off.
DOBBS: Wait, wait, wait. Kathleen Hays was here, our colleague, Kathleen Hays earlier. It's 15 percent of this economy. And, yes, it has been depressed for year.
HOPKINS: (UNINTELLIGIBLE).
DOBBS: No question about it. It is 15 percent of this economy. We knew that it's bottoming. We've been reporting it. Alan Greenspan has said we're emerging from recession. What is so special about today?
HOPKINS: I think investors were agnostic about it. I don't think they believed it because certainly they're getting the message from corporate leaders that...
DOBBS: Well, Christine agrees with me. That's why she's been quiet here.
HOPKINS: But corporate leaders have been very negative about what's going on. And so I think stock investors have been paying attention to the corporate leaders rather than the economists. CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: You got GM and Ford coming out also saying they're going to up their production schedules. That helped. You've got GDP number this week that was very nice. So the Dow rallies...
DOBBS: Very nice? 1.4 percent. Everything we're talking about are lagging indicators here, but we have known that this is a tepid recession, if indeed it turns out to be a recession, in the classic definition, at all. I'm just surprised that on a Friday, that report would be a catalyst.
ROMANS: Well, look at the volume. You're hitting on something because the volume is only 1.4 billion shares. When you look at other rallies of this magnitude over the past year or two, they've all been 1.5, 1.7, 2 billion type rallies. So, the rally -- the momentum behind the rally wasn't as good as you would have liked, if you were really bullish on this.
HOPKINS: But one of the things that happened today was that the Dow went over its 200-day moving average. And for technicians, they think that's very significant. And...
DOBBS: When the technicians get excited, I get excited.
(LAUGHTER)
HOPKINS: If you look at the charts, it looks good.
DOBBS: Terrific. Christine Romans, Jan Hopkins, thanks very much. And your forecast that the market will be up how much over the next year?
ROMANS: Oh, wow.
(CROSSTALK)
DOBBS: How much.
HOPKINS: Eight percent.
DOBBS: Eight percent.
ROMANS: I don't think that much.
DOBBS: We'll continue the bidding next week. Thanks very much.
"WOLF BLITZER REPORTS" begins in just a few minutes. Let's go to Wolf now in Washington -- Wolf.
WOLF BLITZER, CNN ANCHOR: Thank you very much, Lou. We're following two developing stories. Scotland Yard has intercepted packages containing toxic substances sent to British politicians, including the British prime minister, Tony Blair. We'll have the details. Also, there's a glitch aboard the space shuttle Columbia. Our Miles O'Brien will join us live. And we'll also have the latest on the stand-by government outside Washington ready to take charge during a catastrophe. All that and more right at the top of the hour. Lou, have a great weekend.
DOBBS: Wolf, you too. Thank you very much and we're going to continue here, just getting ready for the beginning of "WOLF BLITZER REPORTS." Stay with us.
(COMMERCIAL BREAK)
DOBBS: We want to quickly update you on the problems on board the space shuttle Columbia, with the latest. NASA now says that it might have to bring Columbia home early, possibly as soon as tomorrow, because of a faulty cooling system. Columbia blasted off successfully (AUDIO GAP) just before dawn today, 6:22 a.m. And it will be in space to -- if these problems are resolved, to repair the Hubble Observatory. NASA engineers are meeting the management team and the Kennedy Space Center are meeting and in Houston to determine whether or not Columbia will have to be recalled. NASA flight rules require that those two fueling systems be operable. They are, at this hour, not.
And, of course, here on CNN, we'll be continuing to update you on that. And Wolf Blitzer will have a lot more on that in the next few minutes.
That is MONEYLINE for this Friday evening. We thank you for being with us. Have a very pleasant weekend. Good night from New York. "WOLF BLITZER REPORTS" begins right now.
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