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CNN IN THE MONEY

Cafferty Discusses Economic Climate; Universities to Digitize Classes; TiVo, DVR Putting Pressure on Television Broadcasters

Aired September 23, 2006 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


FREDRICKA WHITFIELD, CNN ANCHOR: Here are the top stories. French and U.S. officials can't confirm it, but a French intelligence document claims that Osama Bin Laden is dead. However a Saudi source tells our Nic Robertson that Bin Laden is still alive, but he is sick.
Severe weather rips across the Midwest and into south killing five people. High winds and heavy rain and tornado are being reported. Here is a tornado, Murphysboro, Illinois.

More than two dozen dead, the toll in Baghdad after a car bomb sets off a fuel tanker at a gas station. The business was crowded with Iraqis stocking up for the holy month of Ramadan, which starts this weekend.

And fresh spinach could be back in grocery stores near you. Investigators have traced an e-coli outbreak in fresh spinach to a California's Salinas Valley. Officials say spinach grown outside that region is safe to eat. But read the labels.

We will update the top stories at the bottom of the hour. IN THE MONEY begins right now.

ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.

JACK CAFFERTY, CNN ANCHOR: Welcome to the program. I'm Jack Cafferty and coming up on today's edition of IN THE MONEY how to tame the greenback, the Fed using a light hand on the leash for now. We are going to look ahead at what may lie in store for the economy, which is slowing down.

And the huddled masses yearning to crunch your numbers find out about the surge in white-collar immigration to the United States.

Plus, thinking outside of the box. Technology changing the way we watch television, we will tell you what the networks are up against besides IN THE MONEY which airs twice every weekend here on CNN.

Joining me today are Andy Serwer and Jennifer Rogers. And what better way to start than that fat little bozo from Venezuela stumbling around New York City calling our president names. What is up with that?

ANDY SERWER, EDITOR AT LARGE, "FORTUNE" MAGAZINE: You know you are in bad stead when Charlie Rangel congressman defends President Bush and says get this lunatic out of our country and get him to stop calling our president the devil. You got him and Iranian President Mahmoud Ahmadinejad both of them mouthing off here in the United States, and I guess we got a free society, so they can do it.

JENNIFER ROGERS, CNN CORRESPONDENT: It feels a little bit like fourth grade, a little bit like the name calling that went on, but you have to hand it to him, that he did make it exciting, which sometimes the U.N.

CAFFERTY: Well, the other thing is that we buy 50 percent of Chavez' oil, right? So I mean we are sort of a customer. I mean, if you had a shoe store and the guy who buys half of your inventory in shoes every week, you wouldn't call him names when he comes by.

SERWER: You know -- he is right. He is a tiger right and if the price of oil goes to $30 bucks is becomes a paper tiger very, very quickly. And these two guys though, we have to remember they get tremendous currency around the globe. Oh he stood up to President Bush. That is what they are looking for, the other thing is they have problems internally, so you blame the outside and you rally your people. That is what is going on, isn't it?

CAFFERTY: All right. We'll keep an eye on it as they say.

The Fed meet this week, talked about tweaking interest rates and didn't do a thing for the second time in a row. They hiked rates 17 times in the last two or three years. We are just getting used to having Ben Bernanke at the controls and they have decided now, at least for the last couple of months to leave well enough alone and in the last two meetings they have not raised the rates at all.

In fact, there are people out there that are now beginning to say that because the economy is slowing the Fed is likely to cut raise rates before they raise them again. We will see where that goes. We are going to get a big picture look at where the economy is headed now, the November elections figure into all this. We are joined by a buddy of ours John Rutledge, the chairman of Rutledge Capital.

Who the last time we talked didn't give a rat's patoot if you will pardon me, about the Fed's fund rate, you said it doesn't matter, what does matter though John, nice to have you with us. The economy is showing some signs of slowing down maybe a little more than we had anticipated.

JOHN RUTLEDGE, RUTLEDGE CAPITAL: Well, the Fed driving the clown car has finally decided to stop and pull over, Jack.

CAFFERTY: The clown car.

RUTLEDGE: Absolutely. The Fed's fun rate as we said before doesn't control the economy, but bank loan availability, does, and fortunately they stopped hiking the rates before the bank loans shut off. There were some signs of it, but not a lot.

And actually I think the economy is probably growing better than a lot of people think because the tax revenues are growing, tax revenues means some business, mom and pop stores and self-employed people are working and that is a good sign. But clearly the inflation is off and the long bond below 5 percent again and the companies still are making profits and it could be worse.

ROGERS: So if you don't hear about the Fed's fund rate, do you care about the gas prices that have gone down about 15 percent in the last months, is that a big deal and what kind of impact is that having right now?

RUTLEDGE: It is going to be a big help to the retailers like Wal-Mart and Kmart and especially the lower-priced retailers, because their customers are less pinched, but that is the key to this. Because the Fed forgot the bottom line, which is that they don't print oil.

And when oil prices went up the Fed took it upon themselves to try and control inflation. This is a snake swallowing an egg of commodity price. Let it go through and get it over with and we're on the backside now and prices are coming off a little bit, inflation numbers will improve. I think that the Fed will lower the Fed funds rate below the long bond rate some time in the next six months.

SERWER: John, this is a big question on Wall Street of course, I want to follow up on this, is this whole commodity's play, oil prices and prices of things like aluminum and steel and everything else, is that over? You see this as not a blip; you see this as the end of the cycle as they say on Wall Street?

RUTLEDGE: Well, Andy, there is probably $20/barrel of oil and 20 percent price swings on the main, on the principle commodities, the metals. That is hedge fund buying, you know I am from Greenwich; I'm down the street from those guys who just blew up last week.

But hedge funds are important here, but the fundamental is that China is growing still very strong, I am only two days back from Beijing where I was in a bunch of meetings with government officials, their economy is still steaming along which means that economy demand is still pretty strong so they won't go down and cause a big bust in the markets, but clearly from here on, you don't want to be owning commodities or real estate, you want to be owning stocks.

CAFFERTY: And what kind of a rally are we looking for here? We have had a tremendous rally in the bond market as you alluded to a couple of minutes ago. The last two or three weeks the bond market has been on fire, what is it that trying to tell us?

RUTLEDGE: It is trying to tell us that in the future, dollar income streams are going to be scarce which means that the companies won't be able to raise their prices and still enormous excess manufacturing capacity in Asia and China in particular, and inflation numbers are down below 2 percent in another six months and at that point long bond can stable.

But the thing is profits are still rising 15, 20 percent annual rate and with that profit growth and a 4 3/4 ten-year bond, you are looking at a pretty sharp increase in stock prices and a lot of that cash on the sidelines could come in and buy the stocks. ROGERS: You said you don't want to own real estate, how worried are you right now about the cooling housing market? And can that have an impact on the global economy as well?

RUTLEDGE: Well, it can have an impact, but the impact is smaller than the impact of these declining commodity prices. Some parts of the country on the coast, especially, had such huge run ups that they are looking at price declines that could be meaningful, but those are mostly top-end houses.

I don't think that you will see big drops for the whole country, and remember, we are in that buyer of oil so as oil prices come off, even though that helps to make the real estate problem a little bit worse, it lightens up the cost burden on the airlines and the railroads and our cars, and for our economy in general.

SERWER: John, let's talk about one of Jack's favorite subjects and one of mine as well which is politics. How is this all going to impact the elections coming up in November? What is happening on that front?

RUTLEDGE: I'm in Washington today visiting the place where they grind your money up in little bits and distribute it around the country.

CAFFERTY: Is that Congress?

RUTLEDGE: Yes, it is Congress.

CAFFERTY: Well put.

RUTLEDGE: I think that the Republicans are going to have big damage in these elections. I don't think because of the economy, on tax policy I like what they have done, but spending is out of control, and people are not very happy about foreign policy, and so those two together are going to cost the Republicans some seats.

In a sense, that could give us of the best of all worlds which is a Congress controlled by the Democrats and a White House controlled by the Republicans, neither one of them can decide what to do and nothing happens in government policy, private sector runs the economy for two years.

CAFFERTY: Which is nice as opposed to when all of the parties control everything down in Washington and then nothing that matters happen.

RUTLEDGE: Absolutely. It is like being mugged by an incompetent mugger.

CAFFERTY: Let me get you to stick your neck out a little. You said that stocks look real good in here and you think that the DOW might make new highs by the end of the year, and we have been waiting five or six years for the comeback off of that tech bubble burst back there. RUTLEDGE: I do and you know Jack, the approximate cause of that is the private equity world has discovered that you can do leverage buyouts for tech companies. Tech companies have gotten very cheap, but we may get a new telecom law passed this week or next here in Washington which will make a lot of capital spending in fiber optic networks and the rest of the world is doing it already and tech companies make that stuff, so I think that you could see new highs on the DOW, and really where you want to be right now is in the larger caps, because they are also playing in the growth in China, India and other places.

CAFFERTY: There you go. John it is good to see you as always. Thanks for being with us.

RUTLEDGE: Great to be here.

CAFFERTY: I appreciate it. John Rutledge chairman of Rutledge Capital.

When we come back on IN THE MONEY, instant talent. White-collar immigrants are joining our rank and we will find out if it is weakening America or making us stronger.

Also ahead, spaced out. As Washington wrestles with the shuttle program, private money is moving into space. See what that could mean for the future.

And giving college students an earful, get at look at how schools are using the music players like the iPod to boost learning. Hey, whatever it takes.

(COMMERCIAL BREAK)

SERWER: Every 31 seconds a foreign-born person is added to the U.S. population. Undocumented workers crossing the Mexican borders get the headlines, but our next guest says that 25 percent of immigrants are well educated, that is they've earned at least a master's degree. Joining us now with more on this trend is Michael Fix, vice president and director of studies at the Migration Policy Institute. Michael welcome to the program.

MICHAEL FIX, MIGRATION POLICY INSTITUTE: I'm pleased to be here. Thank you.

SERWER: Tell us about these immigrants, who are well educated. I guess obviously they're helping our economy?

FIX: Well, we tend to focus on the immigration debates, we are tending to focus on the low-skill and the undocumented immigrants who are coming across our borders, but in fact, you know, a quarter of immigrants who come into the United States are highly educated. They have a B.A. or higher, and they are good for the economy.

They are primarily in the areas of science and engineering where we see a lot of productivity coming forward and they are, you know, if you think back to 1990, the foreign-born have won half of the Nobel Prizes that have been won by the United States in science and engineering, they contribute to patents, and they are very much in fields that generate new learning and new technology.

ROGERS: I don't know about all of you, but I love to chatting up cab driver, so I swear not a week goes by that I am talking to one of them and they say well, where I come from I was an accountant or I was a teacher, and they have these advanced degrees, but it doesn't seem they are getting matched up with high-skilled jobs here, is that a problem, is that a real trend?

FIX: You know we don't know exactly how much of a problem that is. We did a little study of that and we found that the share of the foreign-born with a college degree or more that was low income was twice of the share of the native born that was low income that had a college degree.

This is a question of credentials, and we haven't done a perfect job, and we as a country haven't thought about translating the credentials that people come in with and their educational backgrounds that they come in with into U.S. market terms. It is an area that Australia invests in heavily, it is an area that Canada invests in heavily, it is not, has not historically been a focus of our policies and it should be a focus of our policies we would argue.

CAFFERTY: Address the conventional wisdom for a minute that suggests that a lot of foreign-born people come here for their education, study at some of the greatest schools in all the world, our colleges and universities and take their degree and their education to go home and use it to compete against the United States in the world marketplace. Is that a fallacy or is there some truth to that?

FIX: Well, there is some truth to that, but I think the point that I would make is that, if you look at these high-skilled immigrants, almost all of them come to the United States after they are 21 years old. In other words, the United States is taking advantage of the education that these people have received abroad; we are leveraging that education now.

To be sure, a lot goes, a fair number go home, but our policies have also in the recent years pushed people out of the country after they have received their education to go home. So for fairly good reasons and we don't want undue competition with native workers, but I think it is time to rethink these policies and to rethink them hard. If you have looked to the future, a recent study that we have issued, predicts that 90 percent of scientists in the year 2010 will live in Asia.

SERWER: So, Michael, are you saying that our immigration policies need to be addressed? Are these people hindered then and how are they connected in any way to unskilled workers, and they are all looking at the same type of rules, aren't they?

FIX: No, I think that we are looking at rather different rules. Our policies in the United States have historically underemphasized employment-based immigration. We actually don't make that many slots available for high skilled immigrants in the economy. There we give out about 140,000 green cards and admit a million immigrants a year, but 140,000 green cards for high-skilled immigrants, but only half of those go to the engineers and the scientists themselves, the other half goes to the family members, and the other thing we do is we admit a lot of our scientists and engineers on temporary which assumes that they will go back eventually and we admit them on a temporary basis but the jobs they come for are permanent and it is time I think to link the admission to the reality of the permanent jobs that people are coming in for.

CAFFERTY: Interesting stuff. Michael, we have to leave it there. I thanks you for joining us today on IN THE MONEY.

FIX: Thank you so much.

CAFFERTY: Michael Fix, vice president and director of studies, Migration Policy Institute.

Time now for this weeks look ahead. Two important housing numbers due out this coming week. On Monday, we will get a look at existing home sales and on Wednesday, new home sales figures will be out and another big economic report comes on Thursday. When we get the final gross domestic product reading for the second quarter.

Coming up on IN THE MONEY right after the break low energy. See how a hedge funds bet on natural gas could shakeup Wall Street.

Plus how to stop time, TiVo and DVRs let you watch what you want when you want, we will look at how that is changing things for the big networks.

And maybe you can take it with you after all; Cablevision is admitting it granted stock options to a dead guy. MONEY.com's Allen Wastler is all steamed up about that and he will be here to vent a little later.

(COMMERCIAL BREAK)

SERWER: Those hedge fund guys are supposed to be so smart and so diversified, but Amrynth (ph) Investors made a huge bet on natural gas earlier this month and well lost huge. Natural gas prices plunged 12 percent in one week and the fund ended up losing nearly $6 billion, but the guys at that company are not the only ones who have to pay, bigger players like Goldman Sacs and Morgan Stanley had investments in the hedge fund and they will feel the bite a little bit too, that is our street talk for the week. You know, what happened here is pretty simple. I mean they just placed a huge bet right here on the wrong side.

CAFFERTY: On the wrong side.

SERWER: And they put too much money there. They are not supposed to do that and you know hedge fund means hedge your bets, and you know, and they didn't do it. And they are losing $6 billion in six weeks or whatever it was, just an amazing feat. ROGERS: I might be insensitive; I find it hard to get to distraught about rich people losing all that money. Am I terrible? I don't know.

CAFFERTY: Hedge funds are the greedy man's way to play the stock market, and once in awhile these things happen.

SERWER: Snake eyes.

There are more and more of these hedge funds. I mean see what is going on, I think is every time you see something in the markets move radically either the upside or the downside say over a six-week period, one of these guys up in Greenwich, Connecticut, which is where all the hedge funds are is going to lose his shirt or her shirt.

And they are going to get killed. Because you have got a hedge fund for every flavor of ice cream out there now, and you know some of them are involved in one area and some are involved in another area. So they blow up. It is a natural thing, one thing I think that is a positive here is there is not a lot of collateral damage, and the overall market has handled it as opposed to long term capital which was a blowup a few years ago which was a dicey situation.

ROGERS: Somebody must have won, right? They thought that prices were going up, but other people must have been shorting them, thinking they were going down, so who didn't lose their shirt?

SERWER: Well, there are some traders in Houston supposedly, this one guy in particular who use to work for Enron supposedly made a bundle of money, there are also people who bought the positions from Amateurish so another words, this trade got .50 value, they are saying we will give you .25 because you can't get out of the trade, so they will make out as well. But you are right, Jen, there are going to be big losers, then there are going to be big winners, and the real big winners may be the American public, I mean after all the price of natural gas has gone down.

CAFFERTY: A lot.

SERWER: So we will be following that one as it continues.

Coming up IN THE MONEY don't send Uncle Sam to do a CEO's job. We will hear from a guy who thinks business can trump government when it comes to space.

Plus if you can't come to class, let class come to you. Find out how more schools are using mp3 players like iPods to keep the students learning.

And we want to know what you think about the show. You can send us an e-mail right; the address is INTHEMONEY@CNN.com.

(COMMERCIAL BREAK)

WHITFIELD: Now in the news, is Osama Bin Laden dead or alive? A French newspaper is sparking that question. It quotes a source as saying that Saudi authorities are trying to confirm reports that Bin Laden died in Pakistan last month, but a source tells CNN that reports in the last few weeks indicated that Bin Laden was ill with a water- borne disease, but was not dead.

In Baghdad today, more than two dozen dead that is the toll after a car bomb sets off a fuel tanker at a gas station. The business was crowded with Iraqis stocking up for the holy month of Ramadan, which starts this weekend.

Severe weather rips across the Midwest and into the south killing at least five people. High winds, heavy rain and tornado are being reported. This is a scene in Louisville, Kentucky where the streets were flooded and prompting evacuations there.

It is a race against time in southern California where firefighters are struggling to surround a massive wildfire. The concern, their rival of the hot dry Santa Ana winds. Forecasters are predicting wind gusts at 70 miles an hour.

Coming up in the next hour, Aaron Neville, is he going back to New Orleans? And if so, is it there to stay? The soul great tells us about his first post-Katrina CD and his hopes for his hometown. We will have that in the 2:00 Eastern hour.

Now, back to more of IN THE MONEY.

CAFFERTY: All right. Let's look at the list here. Last time I checked the country is at war and we have 46 million people with no health insurance and little to nothing being done to secure our borders or clean up the Gulf coast more than a year after hurricane Katrina and so in other words, I suppose you could suggest that this is not the best time for the government to go to launch another shuttle into space which costs about $1 billion a pop every time they do it assuming it goes well.

We are light years ahead of most of the world and barring the occasion problem of heat tiles and once in awhile a disaster, over the last 30 or 40 years hasn't NASA done a pretty good job?

EDWARD HUDGINS, AUTHOR, "TIME TO PRIVATIZE NASA:" Well no they have done a horrible job if the goal is to commercialize space, that is to bring the costs down, the quality up, so that more people, more businesses, more educational foundations, etc., can have access to space. If that is your model or your goal, they have done a terrible job. Look, think about it. Only the private sector can commercialize goods and services whether you are talking about automobiles or airline flights or the Internet, iPods or whatever.

Just the fact that it costs almost $1 billion to put a couple of people into orbit is a pretty sad statement after we have been in space for 40 years. The International Space Station started out as an $8 billion station in the middle 1980s and a crew of 12 and the real price tag could end up being something like $100 billion and this is the government for you. I mean, seriously folks.

ROGERS: I just don't understand, because if it were such a good business to be in and there was a ton of money to be made, wouldn't companies be trying to do this already and get into it and why do we need privatize it right now?

HUDGINS: Well, two things. Number one, it has been a struggle over the last couple of decades to get out from under a lot of the regulations that keep the private sector back. The second thing and the good news is that in fact, the private sector is getting involved. In fact, a woman named an Ensorry (ph) put $10 million a year or so ago for the first private ship that could go into space twice in a two-week period carrying a human being.

Well, this Ensorry (ph) an Iranian came over here became a multimillionaire, great role model and she is in space right now, she is the first woman who has paid her way into space. What is also interesting is that Burger Tan (ph), who whose spaceship won the prize is working with Richard Branson of Virgin Atlantic to get a fleet to put private people in orbit.

And just this week, a guy named Robert Bigalow (ph) who in July put up a 1/3 mock up of a private space station and is planning to put up a real private space station in a couple of years signed a deal with Lockheed Martin for hopefully as many as 14 launches of private people into space. The private sector is actually doing a lot of stuff now and I think it is getting to the point of takeoff, what happens in the future hopefully is that the price will come down into going into space.

SERWER: Let me jump in here, because of all of the projects you are talking about they had one common denominator, it is space tourism. There is nothing up there, so what is up in space besides sending rich people up there and they talk about experiments and you can do those experiments right here, and if rich people want to go into space, I guess I am agreeing with you if rich people want to play in space, you are right lets let Lockheed and Boeing and others send them up there.

HUDGINS: I will tell you there is a science thing in space, my other hat is that I am the executive director of the Objectivist Center and we believe in human progress, we believe in the future of humanity and what reasoning can do, the thing is that if the private sector brings down the launch cost for example, then lots of people can go into space to do science, to explore, to do all of these other things. I am an amateurs astronomer, I would love to instead of having to drive two hours out to a dark area with my telescopes, I would love to make a flight to a orbiting platform so I can do my astronomy there.

But point is that when the private sector brings the costs down as with personal computers and the Internet, all sorts of other industries and all sorts of uses follow. People, two or three decades ago, a lot of people said, look, why would anybody want to have a computer in their home? Computers are for big businesses and for big scientists and all, and of course, now everyone has them now. I think it is the same thing with space exploration.

CAFFERTY: What about the other part of this story, which is the militarization of space? It has been suggested that he who gets up there and figures out the laser beams and the antimissile systems is the one who is in charge of what goes on down here?

HUDGINS: Well, I will tell you they don't want to militarization of a lot of aspects of space, I want to it to be a big market zone. My book is called "Space, the Free Market Frontier" so go get the book. But the thing it is important for national security to keep us on the technological edge, and being able to do remote sensing from space, things like that which right now is a big multibillion dollar private sector industry, and it is going to be important for the defenses in the future and we do have to in fact keep ahead. The thing is the private sector for example, the government was working, the Pentagon was working on a flight simulator some years ago and they put $1 million into producing the flight simulator, by the time they had completed it, Bill Gates has produced a flight simulator that was better and that you could go to get less than $100 at the local Best Buy. OK. That is the thing.

When the private sector brings the price down whether it is software, hardware, whatever it is, it means that we can do a better job of defending ourselves. We can do a better job of making sure that terrorists don't attack us.

ROGERS: Ed, thank you very much, we will look for the latest and greatest at a store near you instead of at NASA.

There is lots more to come here on IN THE MONEY, up next tech games, find out how in tech innovation is changing the TV business or networks and advertisers.

Plus leisure class, see how technology of taking college education outside of the classroom.

(COMMERCIAL BREAK)

ROGERS: The rise of device like Tivo and DVR could have been the nail in the coffin for networks TV, a business that relies so heavily on advertising, but the ability to skip through commercials is nothing new. VCR's have been around for three decades. Our next guest says that the new technology could give the networks new life. Robert Thompson is the director of the Center for the Study of Popular TV at Syracuse University and joins us now.

Let me make sure that I get this straight the fact that I fast forward through every commercial on my television is not a problem for the networks?

ROBERT THOMPSON, DIRECTOR, CENTER FOR THE STUDY OF POPULAR TV: Well, it is an enormous problem for the network, because it is an enormous problem for the advertisers, but there are ways that people are cleverly figuring out how to do this. Lets remember when you are fast forwarding on your DVR, you are paying more attention to the commercials than you ever were in the old days when you got up to go to the bathroom or whatever, they have to make commercials that make sense while you are going through them at three times the speed. You know how you when you go through your DVR, you want to stop it at the right time, so you don't have to go back again, your actually staring at the commercials, they are just going ten times faster than they used to.

CAFFERTY: So you sell a lot of product that way if the Bud Lite commercial is going by at warp speed?

THOMPSON: Well, a clever advertiser would say, here we have got people's attentions; but obviously, all kinds of things are up for grabs now. Not only advertisers, but imagine if you are a local station who plays network programming and now that the networks are having the programs on the Internet the next day, and on demand and all of the rest of it, what is the future of those kinds of stations? In the end, this year is a big one for the new technology, but the one thing that is secure is that people still like to watching the big professional shows.

Nielsen just came out yesterday with a new set of numbers which says that not only last year when all of these new technologies really hit it big, not only are we not watching less TV, we are in fact watching more. Three minutes more television last year per day than the year before. So go figure that.

SERWER: Well, Robert, we here at CNN think that is a wonderful trend. And now --

THOMPSON: Absolutely.

SERWER: And now let me talk to you about another trend, because I have noticed something very curious going on in my household, which has to do with my 12-year-old daughter. I noticed over the past six months or so, she is not watching any TV at all. She is on her computer and going to have a laptop with wi-fi and doing iTunes, and so my daughter can do all of that on the Internet and the question of which would you rather have the Internet or the TV is a moot point because of course you would like the Internet, because I watch TV on the Internet and I ask where she gets these shows from, and she says from that site. I hope it is all legal and I am sure it is. But isn't this bad?

THOMPSON: I met with a group of freshman, just a couple of days ago and there must have been 25 of them and I couldn't get one thing that they all shared, not one song that they all listened to and not one TV show that they all watched. But the one thing however was face book. Every single one of those 25 freshman were not only had face book accounts, but they visited it on the computer for usually more than an hour a day. So, yes, I think that if that freshman had to give up TV or give up the computer, they wouldn't have to think for a second, because now they can watch TV on a computer.

ROGERS: I find it so frightening, I feel really out of touch, because I still watch television, and I don't have a face book thing. I guess this is what we are going to be dealing with in the coming years, and I want to know, I mean, television is so expensive to produce, how are they going to continue to produce excellent content and have really good storytelling and stars on television if they aren't going to be able to pay them the big bucks because they don't have big advertisers, how is that going to work?

THOMPSON: Well, because I think in the end, people are still going the come to these shows, which means advertisers will figure out how through product placement or sponsorship or however, how to make it work. And there is two revolutions. On the one side you have this mobile television that is coming to your cell phone and the you tube and at the same time you got another revolution where TV screens are getting bigger and better.

Nobody wants to waste an episode of "24" when they go to the cell phone, they want to go to their big 50 inch high definition television and watch that. And you tube is a lot of fun, but it is different then television. You tube is like a garage sale. Little treasures here and there but most of it is junk, a lot of cats playing pianos on it.

CAFFERTY: Sure. And talk about what NBC did with a couple of the new fall shows to try and take advantage of the fragmenting of the media; they actually released a couple of their super-secret potential big hit shows before they released them.

THOMPSON: Right. And that is becoming more and more common. You put your pilots on before they actually air on the Internet. Of course, trying to attract all of those people who have defected from television who wouldn't have watched them a week later on television anyway. There is other shows that are going to have actually elements or scenes that don't play on the weekly episode that you can go on to the internet and watch. CBS has got intertube.com which actually does original programming. Series that don't even air on CBS.

So what is happening is that we are seeing a new medium emerging, this new technology portable video which is not going the make traditional television go away anymore than television made radio go away. But it may make some massive changes down the road like television made in radio.

SERWER: All right. We are going to have to leave it at that. Robert Thompson is the director for the Center of Study of Popular TV at Syracuse. Thanks for coming back on the program. We appreciate that.

THOMPSON: Thank you.

SERWER: As students at colleges and universities across the country crack their textbooks this fall semester you may be surprised to see a popular recreational device doubling as a study aide.

(BEGIN VIDEO CLIP)

SERWER (voice over): Well, you might guess college students strolling across campuses with iPods are listening to the latest chart toppers; there is a good chance they are actually listening to this.

That is right. They may be actually studying. A technology called pod casting allows audio information to be transmitted over the Internet and downloaded to a computer. Professors all over the country are incorporating audio pod cast into the curricula as study aids for students. Recorded class lectures and answers to frequently asked questions and extra course materials can be distributed to students with a click of a mouse.

KENNETH GREEN, CAMPUS COMPUTING PROJECT: Pod casting is growing at universities the same way it is growing in the consumer market. It is a technology that is very attractive, it is inexpensive and a great resource for college students.

SERWER: And Corporate America is getting involved, too. Apple Computer launched iTunes U earlier this year for the Universities of Missouri, Michigan and Wisconsin as well as Stanford, Brown and Duke. And the free program enables the students to get class material the same way they download music on iTunes. Once a pod cast is downloaded, it can play from a desktop computer or laptop, but many students on the go transfer the audio material to portable devices so they can turn downtime into study time.

RICHARD LUCIC, DUKE UNIVERSITY: They like the ability to be able to listen to the material when they want, where they want and how they want. So they are not really just constrained to the class lecture time.

SERWER: As a result, students are even putting in extra hours.

UNIDENTIFIED FEMALE: It is almost a way of getting in more work and think about the classes further outside of the classroom and not just in it.

SERWER: Critics say that giving the students recorded class material could result in fewer students showing up for class.

UNIDENTIFIED MALE: Due by the 17th.

SERWER: But Professor Lucic has not had this problem and says that pod casting enriches course content.

LUCIC: One of things that I have done is to find materials of the leaders and certain fields and make that audio material available to my students. So, it is giving them an opportunity to have a once in a lifetime experience to hear somebody like Bill Gates or Steve Jobs or somebody who we could never get to come here and be in the classroom, they can hear them just as if they were in the classroom.

SERWER: Pod cast can bring you into the lecture hall, too. Some universities like Stanford and UC-Berkeley allow anyone to access some class materials, not just registered students. If schools decide to share their pod casts on a large scale the broadcasts could spread top of the line information far beyond the gates of elite universities.

UNIDENTIFIED MALE: If I am a student at a college that is not very affluent college, it might have a small library or small faculty, now, all of a sudden, if you will, I can be in the lecture hall of a distinguished scientist or distinguished writer or noble laurite whose material is available from a pod cast from his or her university.

(END VIDEO CLIP) SERWER: Yale University has taken this trend of sharing class materials one step further. Yale announced this week it will offer digital videos of some courses on the web free of charge in an effort to make the elite school more accessible.

Coming up next on IN THE MONEY, a tangled web Cablevision is in the hot seat with the SEC for back dating stock options. For an executive who died years ago. Money.com's Allen Wastler will be here to explain.

And now it is time to hear from you as we read some of your emails from the past week. You can send us an e-mail right now too; we are at INTHEMONEY@CNN.com.

(COMMERCIAL BREAK)

CAFFERTY: Some executives have good timing when it comes to getting big stock options, no doubt about that. But others are so lucky that they get to keep the good times rolling even after they are dead. CNNMONEY.com managing editor Allen Wastler is here to explain what that means in this week's edition of "The Number."

ALLEN WASTLER, MANAGING EDITOR, CNNMONEY.COM: And the number this week is 83, 83 is the number of companies that are formally under investigation by the government for doing a little sanangains called backdating the options. It is technical, but it is basically they are giving more money to the CEOs, just disguising it. It is like giving you a lottery ticket with the dates blank on it, choose which day you want the lottery ticket to be good.

CAFFERTY: Why would you give it to a dead guy?

WASTLER: This is Cablevision, and tip of the hat to the "Wall Street Journal" for breaking the story, but apparently, they had a guy who died in 1999 and a vice chairman, I'm sure he was a lovely guy, but apparently, in 2002 and 2003 and thereabouts, they gave him options to buy the stock at a good price pre-dating his demise. I mean, so --

SERWER: They are trying to help his estate out. They trying to be nice no the family, but come on.

WASTLER: If you are trying to give options to a dead man, this is the tipping point, folks. This is when the outrage should come out, but the public has not been outraged about this, and we have been reporting on it for several months, but I have two theories why the public is not outraged. Backdated options doesn't even -- most people, you say options to them, and their eyes glaze and they are like, ah, and it is tricky to understand. So that is it.

CAFFERTY: Especially here where the stock is $16/share. Been there forever.

ROGERS: Yes. And how far back?

WASTLER: I have some options that are 40/60 I can give you. CAFFERTY: And that is one reason, but the second?

WASTLER: No pictures. In Enron, we had people coming out with the boxes, Worldcome, we had Bernie Evers with his cowboy boots and his attitude and Tyco, we had Dennis Kozloski's little thing over there in Sardeania (ph), but it is hard to take a picture of a backdated option.

SERWER: And a dead guy rest in peace that is not going to work either.

WASTLER: That is right. And so this is my theory why this is not taking off. But hopefully soon we will get some nice high profile prosecutions and CEO in handcuffs.

CAFFERTY: Get those jumpsuits going.

SERWER: All right Allen Wastler Webmaster with "The Number." Thank you Allen.

And now for our "Life after Work" segment. Vietnam veteran Peter Le Beau worked in commercial banking for 30 years specializing in the aviation business when the airline industry suffered after September 11 the company he was working for went under so to make ends meets he got back in uniform.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This is going to be the drill.

SERWER (voice over): At age 60, Peter Le Beau's life never had so much direction. As a captain in the New York Guard an executive director for a military nonprofit, his mission is serving his country. .

PETER LE BEAU: Having been in the military, having been in the war, I had a first hand appreciation of what our service men and women go through.

SERWER: Le Beau served in Vietnam before a thirty year career in banking, he lost his job in 2002 when the soldiers, sailors, marines and airman's' club came calling. They provide low cost an accommodations in New York City to active and retired military.

LE BEAU: I took about a 75 percent cut in pay to take this job, but the rewards have been priceless. When those kids come here, for two or three days, and it is a feeling of warmth, and it is still a home away from home.

And how is the rest of the building?

SERWER: Le Beau's work at the club inspired him to join the state guard.

LE BEAU: I couldn't go into active duty, because I was far too old, and in the guard we do a lot of things, including anti-terrorism, and being part of a team of people who are dedicated to this great way of life is the reward.

(END VIDEO CLIP)

SERWER: We will be right back with more IN THE MONEY.

(COMMERCIAL BREAK)

CAFFERTY: Time now to read your answers to our question of the week about what the lower gas prices are changing your mind about who to vote for in the midterm elections and by the way and I am comforted to know this, not a single emailer said yes. That is very good.

Dan in Santa Barber, California, "No, If you're going to give credit to politicians for gas prices coming down, you have to blame them for letting them go up in the first place. I don't think you can have one without the other."

Bronson in Greenbay, Wisconson wrote, "No. I'm voting for big permanent changes in Iraq, on immigration and heath care reform. Gas prices are always temporary, that's why the service stations use those adjustable signs."

Fran in Hawaii wrote this, "No way! Before I vote for or against any candidate, I want to see how they react to the tough questions asked in a blunt way. So in other words, I want Jack to interview all the big political candidates live on CNN. You should try it."

Time for next weeks email question of the week, which is this, "Do you think private businesses should take over the U.S. space program? Weigh in on that, send your answers to INTHEMONEY@CNN.com. You should also visit our show page, which is at CNN.com/inthemoney.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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