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QUEST MEANS BUSINESS
Bezos Has Big Plans For "The Washington Post"; From Poverty To Potential In Africa; Sony Parts With Biggest Shareholder; Obama About To Outline Overhaul In U.S. Mortgage Market
Aired August 6, 2013 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: Read all about it. Jeff Bezos has big plans for "The Washington Post."
From poverty to potential, Bill Clinton tells us Africa's economies are ready for takeoff.
And Sony shakes off its biggest shareholder. Its share price is certainly shaken.
I'm Richard Quest. I mean business.
QUEST: Good evening and a warm welcome. Old media publishers, new media moguls and journalists the world over are being left scratching their heads, sharpening their pencils and everyone's trying to work out what that means, the Grahams to sell "The Washington Post".
Why has Jeff Bezos, the founder of Amazon, the man and the company who came up with the Kindle, why is it buying old-style newspapers for "The Post?" And crucially, of course, what is he going to do with it?
Join me over at the CNN superscreen and we'll make some sense of this particular deal.
So Bezos is to pay $250 million in cash for "The Washington Post." The important point about this is he's paying for it out of his own money. This isn't an Amazon deal. It's in his personal capacity. Now his online expertise is seen as being crucial to driving the paper forward. But of course, it's raised questions about its editorial direction and what exactly that will mean.
If we take a look at what it means, Bezos has said that he will follow the story no matter whatever it costs, that in an email to members of staff. So it's a sign that there will be no significant shift in policy, at least not in editorial policy.
As for the paper itself, well, the paper lost $53.7 million last year. Shouldn't be too much of a problem. That is just 0.2 of 1 percent of the $25 billion that Bezos is said to be believed worth. As for the Graham family itself, the end of an era, where it was Donald Graham or whether it was Katharine Graham, for more than 80 years, the Meyers and the Grahams, they ruled "The Washington Post."
And because of that, they also of course, in many ways, ruled Washington and, to some extent, not and perhaps to a large extent, set the agenda.
The paper broke the Watergate scandal -- Woodward and Bernstein, of course, famously -- Ben Bradlee doggedly sticking with the story and the Pentagon Papers, two major stories which redefined the relationship between the presidency and the executives and the so-called 4th estate, that of the media.
It's in this guise that people are wondering why Bezos and what's Bezos going to do with an old-style newspaper?
As for that old-style newspaper's Don Graham, he said he was quite sure it was in good hands.
(BEGIN VIDEO CLIP)
DONALD GRAHAM, CEO/CHAIRMAN, THE POST CO.: Jeff knows a lot about that. He knows how to reach people and he knows how to establish commercial relationships with advertisers and others. And that -- it's not that he's going to walk in with a prepackaged solution to the problems of the newspaper business. He is absolutely not.
But he didn't do this impulsively. He did this after thinking for a couple of months. And I believe he will do just what he says in his message to employees. Come in, experiment, and see what works.
(END VIDEO CLIP)
QUEST: The insight into someone who's benefited from Bezos' investments and knows him well, the founder and chief exec of "Business Insider," Henry Blodget, joins me now.
And of course in the -- Jeff Bezos is an investor of "Business Insider," whose personal investment company, Bezos Expeditions.
So to some extent, delighted to have you, Henry, because, yes, you may have a conflict of interest; he's one of your investors. But you know the man well. What is he going to do? Why does a New Ager want an old-styler?
HENRY BLODGET, FOUNDER & CEO, "BUSINESS INSIDER": I think stepping back from all this, I think he thought it would interesting, fun and cool to own "The Washington Post." And if that is all it ever ends up being, I think he'll be fine with that.
If you look at his other investments, he invests in rockets, in atomic clocks. He invests in what he's interested in, not just for financial returns.
And that said, I do think that there are several things that he could do with "The Washington Post" that would really revolutionize "The Post" and could also be very helpful to Amazon. So it'll be very interesting to see what he does.
QUEST: You see, this is the fascinating part about the man because although he's New Age, he's taken existing newspapers, magazines, through Kindle and even books. I mean, the book has never been as popular perhaps. But it's merely the different vehicle by which we are now reading them in these new -- in these new gadgets.
Does he do that with something like "The Post"?
BLODGET: I think it's certainly possible that he does that. If you look at the way Amazon is approaching its subscription business, they have a premium business where you can sign up and get all of your packages delivered in a couple of days.
If you do that, you get free movies; you get free TV with a Kindle subscription you get a lot of free stuff. Certainly makes sense that "The Washington Post" could be part of that.
QUEST: I guess what we're all wondering and you're wondering, I'm wondering, everybody who's heard this story, Henry, is wondering, is this a rich man's foible or is it a visionary move? Which is it?
BLODGET: I think it's a visionary move. I think that he's certainly, again, if it just ends up being fun and interesting, then that might be fine. But I don't -- he's not doing it for his ego; he doesn't need that. I think it's an experiment. I think he's actually very interested in the business.
"The Washington Post" digital business is fine. It's a question of transitioning from the paper to that. Journalism as a whole is fine. But there's still some things to be worked out in the former print journalism business, and I think he is excited to be at the forefront of that.
QUEST: I don't expect you're going to tell me anything confidential or private, but he is one of your investors. And therefore, you obviously have dealt with him.
Give me an idea: is he a meddler, even a well-meaning meddler? Does he -- ?
BLODGET: Absolutely not. And --
QUEST: -- come on. Come on. Does he like to get his hands dirty?
BLODGET: I think if you look at the way he's run Amazon, you get a picture of the way he is as an investor. He has confused and astonished and annoyed Wall Street for 20 years by taking such a long-term view with Amazon that you still have people who believe Amazon can never make any money.
Of course it can make money. But Jeff Bezos, he continues to see great opportunities to invest in; he reinvests everything. He's focused on the long term. I think he's going to do the same thing in the news business.
And I think if you're at "The Washington Post," you could not have asked for a better buyer, because the ship is sinking with our without him. I do think he will now bring a new energy and ideas that can get "The Washington Post" over this hurdle.
QUEST: Henry, good to see you as always. Thank you for guiding us through the thicket from the Bezos side of the story.
BLODGET: Thank you for having me.
QUEST: -- we were talking, though, of course -- good to see Henry as always. Digital is one of the areas where "The Post" has been doing well, did well under the Grahams. It's up 15 percent in the second quarter on a year ago. But newspapers and their ability to tap into digital is what this is all about.
To New York now and Katharine Zaleski, who's the former executive director of Digital News at "The Washington Post."
So what does the -- let -- we've looked at the Bezos side of it. But the truth is, from the newspaper's side, newspapers are still grappling, to a certain extent, as indeed is the broadcast media, let me hold up my hands and say we do not come to this table with clean hands, either.
But ways of making serious revenues from digital futures.
KATHARINE ZALESKI, FORMER EXECUTIVE DIRECTOR OF DIGITAL NEWS, "THE WASHINGTON POST": Right. Well, I mean, I think everybody there is very excited about the fact that they have a huge tech entrepreneur that is essentially going to be calling the shots. Warren Buffett, who is on the board of "The Washington Post" company for years said that he's the best CEO in America.
So there's going to be a tremendous amount of energy that'll be infused into the place and the fact that the guy runs an amazing logistics business is going to be incredible.
QUEST: But from the newspapers -- from newspapers generally, their point of view, very few newspapers have managed to crack either the subscription pay wall by people who are prepared to pay or their digital offerings independent profitable.
ZALESKI: No, that's very true. You're seeing good news coming out of "The New York Times," "The Post" obviously just put up a pay wall. It's hard because you have very small -- you have a small group of frequent users that come back and will pay for these kinds of products. So I think a lot of the goal moving forward will be to grow that engaged audience.
And he's very good at bringing people back to his other properties, like Amazon. So there could be a lot of expertise there that could translate over to the news business.
But the other problem that they face is that "The Post" is the originator of a lot of the content in Washington, D.C. It drives a lot of the major stories, the exclusives. But then they get picked up by a million little places.
And so the question that nobody wants to put a walled garden around it, but the question is how do you maximize on the 650 people in there that are doing original content who are then fighting against the hordes of thousands, tens of thousands, that are picking off of them? So that's going to be a huge challenge moving forward.
QUEST: Good to see you. Thank you for joining us and putting that into perspective on the digital side of the question.
Now the markets that are open and they are doing business, it is in New York, where the Dow Jones, it is absolutely taking a little tumble, down 103 points, off the best part of just over half of 1 percent. That's perhaps to be expected.
Shares in "The Washington Post" company are up more than 4 percent. The broader market is down. And largely, of course, after the gains that we saw last week, it is perhaps not at all surprising that a slight breather has been taken for the time being.
Last night we talked about Israel and their failure to be able to get a central banker. India, much bigger country, but India has turned to a former International Monetary Fund, IMF economist, Raghuram Rajan, who's been on this program several times.
He's now running the central bank. India's struggling with slowing growth, widening current account deficit and a very weak currency. Mr. Rajan says there's no magic wand so that the country's problems disappear. He's confident that they will be dealt with.
As for Australia, the central bank in Australia is looking to stimulate growth as the country's mining investment slows. The reserve bank cut interest rates to an all-time low of 2.5 percent. There have been great concerns about what's happening in Australia's economy, largely on the back of slowing China and questions, of course, of the domestic economy.
And remember, Australia goes to the polls in September.
When we come back, the former U.S. President Bill Clinton tells us African economies have all the right tools. They just need to be empowered. This is QUEST MEANS BUSINESS.
QUEST: Africa can be the engine that drives the world out of the financial crisis. That's the view of Bill Clinton, the former U.S. president is traveling across the nation, visiting projects funded by his Clinton Foundation, which include a consulting program for small business owners, a farming investment program, an anchor farm project and, of course, a clean water initiative.
Now these are the projects by the Clinton Foundation.
CNN's Nima Elbagir spoke with the former president in the Rwandan capital, Kigali.
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: My theory is that talent and hard work are evenly distributed throughout the world and that what people don't have in developing countries are systems that empower them to be rewarded for their own efforts. There's a role for outright charitable endeavors by corporations. They're sort of a social mission.
But also it needs to be integrated into the work they do. That's one of the reasons I wanted to visit the Procter & Gamble site yesterday, because they've handed out over 6 billion packets of these water purifiers.
But if you just think about it, if we could have clean water throughout rural Rwanda in this case, but in any poor country, it would lift the health and well-being indicators and there would be more consumers for Procter & Gamble products.
NIMA ELBAGIR, CNN INTERNATIONAL CORRESPONDENT: How does that tally for you with this conversation that's being had about the way that Africa is more attractive as a consumer market, the way that more businesses are seeking to engage in Africa?
CLINTON: I think it makes good business sense. But I think that if you look at the fact that nine of the 15 fastest growing economies in the world are in Africa, that the potential of many, many countries has just barely been tapped, it's clearer, it seems to me, that this approach that we take has the best chance of making Africa more prosperous, more productive and a better partner with the rest of the world.
It is possible that seven of the 10 fastest growing economies would be African. And it totally eviscerates the notion that it has to be -- the growth has to be top down, that you can't have a vibrant, small farmer economy; you can't have a vibrant small business economy. And you can't basically start a different course by -- through education and health care and development that's good for people.
So I like it. It's -- it is -- it would be altogether fitting if the place where humanity began led us away from economic self-destruction in the 21st century.
QUEST: Now the issues, of course, of poverty are not only in India -- in Africa. Indian lawmakers will soon begin talks on a plan that will provide cheap, subsidized food to more than two-thirds of the country.
It's the government's food security ordinance, and it's expected to be discussed in parliament on Wednesday, a scheme that would deliver much needed grain to poor families. The World Bank says 37 percent of people in India, around 410 million people, live below the poverty line. One-third of the world's poor, in fact, are in that country.
On principal, it may be hard to argue against the case for cheap food in India. What's worrying some is the possible cost of supplying it and whether it means farmers will lose out.
Mallika Kapur is our correspondent in Mumbai.
MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT (voice-over): Anil Rajbhar lives in a traditional Indian extended family. At mealtime, seven or eight people eat together. The food goes fast. Rajbhar earns around $125 a month working as an electrician. He says his monthly food bill is double that figure.
"It's tough to feed the family," he says. "I have to make compromises."
Recognizing that millions go hungry every day and nearly half of its children under the age of 5 are malnourished, India passed a food security ordinance in July, one of the most ambitious food aid programs ever attempted. It guarantees very cheap food grains to almost 70 percent of India's 1.2 billion people.
KAPUR: The food security bill has triggered a fierce debate in India. One side argues morally it's the right thing to do. Others say economically speaking, India can't afford it.
KAPUR (voice-over): The government says food subsidies will cost around $25 billion annually or around 0.8 percent of GDP. This economist says once you price in all the provisions of the bill, it will cost much more.
SAJJID CHINOY, JPMORGAN: The cost could easily go up to another half a percent of GDP. So you're looking at incremental costs about 0.5 percent, the total cost would then be 1.5 percent of GDP, which is very large by any standard.
KAPUR (voice-over): Particularly for an economy that slows to a 10-year low, is fighting high inflation and has a massive fiscal deficit. The food will reach the poor via India's current public distribution system, notorious for leaks and corruption. That's another drain on the economy. Given the troubling economics, this columnist says the timing of the food bill is politically motivated.
India holds its general elections next year.
K.G. SURESH, VIVEKANANDA INTERNATIONAL FOUNDATION: The congress government has realized that it needs something that would overwhelmingly tilt the rural woods in its favor and there cannot be a more landmark scheme or legislation or ordinance, what will you call it, than to provide cheap cereals at something like prices as petty as 1, 2 and 3.
KAPUR (voice-over): Rajbhar will be able to buy one kilogram of rice for less than a cent. At the moment, he pays 50 cents for it.
"It will become so cheap it will be really good for my family, he says. "I really hope it happens."
If it does happen, he tells us, the party that provides it will get his vote -- Mallika Kapur, CNN, Mumbai.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Now tonight's "Currency Conundrum," the coin has been minted that will mark the 10th anniversary of the last flight of Concorde, (inaudible) London, Paris, New York and Washington for 27 years. The coin features the Queen on one side and the Statue of Liberty on the other.
So is the coin a pound, a dollar or a euro? Whichever it may be, the dollar is sliding. It's fallen half a percent against the euro and the yen. Those are the rates. This is the break.
QUEST: Construction on China's tallest building hasn't been fully completed. Already, though, the country's working on a skyscraper they hope will be the world's tallest. Now once finished, Sky City Tower in Changsha will stand 10 meters taller -- 30 feet -- than Dubai's Burj Khalifa.
As David McKenzie explains, there could be a downside to breaking records.
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT (voice-over): In less than two decades the eastern shore of the Huangpu River went from farmland to financial center. And Shanghai's towering skyscrapers have a new standard bearer.
MCKENZIE: So we're heading up to the Shanghai Tower. It's not finished yet. But when it's done, it's going to be more than 600 meters, more than 2,000 feet. It's going to be the tallest building in China.
MCKENZIE (voice-over): And the second tallest in the world. From the start, the plan was to go super tall.
MCKENZIE: It's quite extraordinary how it just dwarfs these whole buildings next to it. You can see almost the whole of Shanghai. But they're already taller buildings in the works here in China and with the economy slowing down, it still seems to be that in China, bigger is better.
ART GENSLER, FOUNDER, GENSLER: Certainly we're not bashful about wanting the tallest building, (inaudible) the tallest building in China here in Shanghai. They wanted something that was a symbol. And I believe this building will be the symbol of China.
MCKENZIE (voice-over): It seems almost inevitable that China will push to the very top. But the dismal sides hits a downer: Andrew Lawrence's dreaded skyscraper index.
ANDREW LAWRENCE, MANAGING DIRECTOR, CIMB SECURITIES: I started the skyscraper index back in '99. And the basis of it was that what we found was a coincidence between the completion of the world's tallest building and a financial downturn.
MCKENZIE (voice-over): Some more infamous examples, the Empire State Building goes up and America falls into the Great Depression.
In Malaysia, the Petronas Towers rise and Asian tigers fall.
Dubai builds the Burj Khalifa and the emirate goes nearly bankrupt.
For 150 years, building the tallest building required inflated expectations, says Lawrence.
LAWRENCE: From (inaudible) economic point of view, you would have to anticipate that you would have a large run-up in credit for an extended period that would encouraging developers to go out and build and ultimately someone would want to build the world's tallest tower, which would typically mark the peak of the cycle.
MCKENZIE (voice-over): And China could soon reach that peak that mega Sky City project plan in Changsha. It'll be the world's tallest building. It's just waiting for approval. But if history is anything to go by, China may want to aim a little lower -- David McKenzie, CNN, Shanghai.
QUEST: Coming after the break, Barack Obama has Fannie Mae and Freddie Mac in his sights. The U.S. president is about to announce a mortgage industry overhaul coming live from Phoenix, Arizona, next -- QUEST MEANS BUSINESS.
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The United States is urging Americans to leave Yemen immediately. All non-emergency government personnel and staff at the British embassy have also been told to exit the country. New intelligence suggests Al Qaeda in the Arabian Peninsula may be planning a terror attack.
At least 11 people have been killed, 44 more wounded in a spate of bombings across the Iraqi capital. The blasts struck four neighborhoods in Baghdad just before people were about to break their daytime fast. It's the latest attack and the worst surge of violence in years.
In the United States, the court martial of an Army major accused of killing 13 people at a Texas military base opened with an admission: Nidal Hasan told the court, in his word, "I am the shooter." He's accused of opening fire at Ft. Hood in 2009. Prosecutors say Hasan, who is Muslim, had been slowly radicalized before the attacks. He is acting as his own lawyer.
A convicted pedophile who was released from prison in Morocco will now be held in a Spanish jail until a decision is made on his extradition back to Morocco. Daniel Galvan Vina was among 48 Spanish prisoners granted a royal pardon in the North African nation. After protests, the king said he wasn't aware of Galvan's specific crimes and he revoked the pardon.
And the former U.S. President George W. Bush is in a Texas hospital today after undergoing a routine heart procedure. Doctors found a blockage in an artery during a routine checkup. The hospital says the operation was successful. The 67-year-old former president is eager to go home tomorrow.
(END VIDEO CLIP)
QUEST: President Barack Obama is about to outline an overhaul of the U.S. mortgage market, giving a speech in Phoenix, Arizona, in just over an hour. He's expected to renew calls for Fannie Mae and Freddie Mac. They are the two organizations that basically buy out most of America's mortgages. They're going to be replaced for the most part by private lenders.
Our correspondent, our chief White House correspondent is Jessica Yellin. She is in Phoenix. She joins me now.
Jessica, it was the mortgage industry that led us into disrepair and rack and ruin. So how does he hope this is going to make things better?
JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, he's hoping that this will at least quiet some of the criticism that the administration hasn't done enough to address the housing problems in this nation and solve this question what should the nation do with Fannie Mae and Freddie Mac.
As you point out, they own about -- or they back, I should say, about 80 -- eight zero -- percent of the mortgages in the U.S. And they had to be bailed out with more than $180 billion in 2008.
Both Democrats and Republicans have been clamoring for a plan to sort of unwind their connection to the government, their too-big-to-fail guarantee. And finally the president will come here today and say here is my plan to do that. And it's sort of his way of getting ahead of a congressional debate on this issue.
He will say that he believes whatever future proposal Congress passes, as you say, giving it -- getting private investors to back it, ensures that there would still be 30-year mortgages for regular Americans, meaning most of Americans getting access. That's an important position (ph).
QUEST: Is this a political football? Or is this so deep in the weeds of mortgages and finance that it's frankly --
YELLIN: Political football.
QUEST: -- well, you've answered the point, I mean, whichever way this goes, somebody's going to go for the president on it.
YELLIN: This is -- it's both, to be honest. It is a political football because right now, whatever he does, whatever he says about the economy, whatever he says basically on any issue, for which Congress has the power to legislature, will -- becomes a political football. And this goes to that in spending and all those issues, the economy. And so he will be attacked one way or another.
But this -- beyond that, this is an issue that there -- of which there is both Democratic and Republican interest. The idea of unwinding Freddie Mac and Fannie Mae has bipartisan support. The question is whose idea will prevail.
And so the debate is really in those details. The big picture idea is something all sides can agree on. So likely something will come of it down the line with a lot of football between now and then.
QUEST: Jessica Yellin, who is in Phoenix, and will be listening to the president in the hours ahead, Jessica, thank you.
The gap between U.S. imports and exports is the smallest it's been in some 3.5 years. Zain Asher is at the New York Stock Exchange and joins me now.
So we look at these numbers and we see the Dow is down today. And yet the economy is doing better. The Dow is taking a breather. What do we make of it all? Pull the strands together.
ZAIN ASHER, CNN CORRESPONDENT: Right. So the Dow is down primarily because there isn't that much in terms of data to encourage investors to really made trades. There isn't that much in terms of earnings, either.
But going back to the U.S. trade deficit, yes, you're right. It did narrow sharply in June to just over $34 billion. It came pretty much as exports - - imports got -- excuse me -- and exports actually did hit a record high.
This is certainly good news because it does suggest that there probably will be, Richard, an upward revision to second quarter growth. We saw that second quarter GDP last week grew at 1.7 percent between April and June. But that could be revised higher given what we're learning about the deficit.
Also I do have some earnings out for you today from a drugstore chain, a beer giant and some retailers.
So CVS Caremark (ph) shares down about 2 percent, second quarter profit rose 16 percent. Certainly beating estimates but it did get a boost from generics, which do put a drag on sales because they're cheaper and it also narrowed its four-year outlook.
Also want to talk to you about Molson quarter shares jumping about 5.5 percent. The beer giant beat profit and sales expectations in the last quarter but it did warn that it could see weak demand up on the rest of the year.
And lastly, Richard, Michael Kors shares up 3.5 percent. The retailer reported another amazing quarter for sales and growth around the world and raised its outlook -- yes, Richard?
QUEST: Pull the strands together for me as we go through that quarter. You got a beer company, a drug company and an upmarket clothing company. And you factor it into the totality of the earnings season, and we do get this mixed picture, don't we?
ASHER: Yes, absolutely, it's a mixed picture. But I do want to also mention that 75 percent of the companies that have reported earnings so far have come in better than expected. So on the one hand, yes, there is a mixed picture, Richard.
But overall, if you sort of take a step back and you look at it, 75 percent, three-quarters of all the companies that are reporting earnings so far have come in better than expected or at least met expectations.
QUEST: I'm coming in here. So that begs the question, what the trend moves forward to the third quarter and the fourth quarter for the rest of the year, particularly when we've got the Fed.
ASHER: Particularly when we've got the Fed, but going back to earnings, you know, what analysts are looking at in the future, in terms of the next few months, is really back to school, back to school in terms of consumer spending. That's going to be really key.
And so some of these retailers that we're seeing earnings from haven't come in that great. And analysts are worried that this might not bode well for the back-to-school season, which has traditionally meant higher consumer spending.
QUEST: Good to see you, those earnings, three-quarters, all right. Keep a tally for me, please.
ASHER: I will.
QUEST: Keep a tally in the weeks ahead, because as we get -- move further on -- and by the end of the week, we want to -- I want to talk about not only how many have met, how many have failed. We want to get some statistics.
ASHER: I will.
QUEST: (Inaudible) more about this.
ASHER: Absolutely, Richard.
QUEST: When we come back, a fierce battle for the future of Sony. Now the company's board has rejected a plan from a major shareholder. The investors aren't pleased. We'll be in New York to find out more. QUEST MEANS BUSINESS.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The answer to tonight's "Currency Conundrum," a coin's been minted to mark the 10th anniversary of Concorde's last flight. It's got the Queen and the Statue of Liberty. So which one -- what currency is it?
Aha! Those of you that thought it was the pound sterling, you're wrong. It's the dollar. That's the official currency of the British Virgin Islands, which commissioned the coin.
(END VIDEO CLIP)
QUEST: Sony shares slipped more than 4.5 percent today after its board refused to let one of its biggest shareholders dictate the company's future. He's Daniel Loeb, who's on the left, and he has a billion dollar stake in the Japanese giant. He says Sony should sell off its entertainment division and use the cash to boost electronics arms.
Sony's chief executive, Kazuo Hirai, has rejected the plan, standing by the movie and the music business as its fundamental drivers of future growth. Even the Hollywood actor, George Clooney -- that's him -- has entered the fray, describing Loeb -- that's him -- as "a carpetbagger," a derogatory term used for an outside opportunist.
Felicia Taylor is in New York.
That's a very polite way to describe carpetbagger, an outside opportunist.
FELICIA TAYLOR, CNN CORRESPONDENT: That was very delicate, I have to admit, Richard.
Aside from what Mr. Clooney thinks, I just want to be specific because what Dan Loeb is looking to do is to, through a public offering, sell off about 20 percent of Sony's entertainment business. That includes a portion of the movie business and a portion of its music business in order to be able to raise cash.
What he believes, that those things are undervalued. And so he wanted to be able to bring in some of the cash.
What he also doesn't understand is why those entertainment businesses are not put to use in some of their very own products. They have an enormous archive and tremendous amount of content, yet they don't distribute it through their own products, such as, for instance, have you ever heard of something called Crackle?
QUEST: Only as in Crackle, Snap and Pop.
TAYLOR: Right. Not the same thing.
I'd never heard of it, either. So one analyst I spoke to earlier said this is very similar to what is like a Netflix or a Hulu. And they have this product out there that they're using. But wait, wait, wait, they don't even put their own movies and music on this product. And yet they're obviously trying to (inaudible).
QUEST: So he's accusing on basically either of misfeasance, malfeasance and incompetence.
TAYLOR: Well, I mean, OK. You're using those words. That's not what Dan Loeb said. He's just trying to think of what's better for the shareholder and for the company. Unfortunately, you've got the dynamic of what is the Japanese management team. They very rarely listen to outsiders. It's exactly what's happening here.
And shareholders of a Japanese company usually listen to management. This is huge, because if they did sell off 20 percent -- just 20 percent -- and they would still -- majority shareholders, they would raise $10 billion.
Hirai has said that he would be able to raise that kind of money elsewhere, but hasn't been specific yet. He does admit that there will be greater transparency going forward. But again, he hasn't done that.
QUEST: All right, all right, all right. Hey, behave.
What I need to know is how much mischief can Loeb actually cause. I mean, he can make noise. He's a shareholder. Sony's a big company. How much mischief -- I mean, (inaudible) can he take it all the way? (Inaudible) or is he just a noisemaker?
TAYLOR: Well at this point, it doesn't seem that he is going to be able to create any more mischief because with overwhelming vote against his plan, his proposal, it looks like he's going to have to sort of back down and kind of wait this out, what his next opportunity is within this company is unknown, frankly, because he's sort of put all of his cards on the table and made a suggestion that has been outrightly denied.
So you're absolutely right. I mean, making noise about this, it has been rejected, there isn't that much further than he can go. But as you can see, Wall Street isn't very happy about the idea that what -- this isn't what's best for the company.
Those shares, again, continue to be down, almost 5 percent on the day. Wall Street thinks this would have been a good idea. One analyst that I spoke to said that they don't believe that Sony's going to exist, and it's going to go the way of Nokia if they can't step up to the plate and stay relevant.
QUEST: Finally, quickly, Zain just talking about the second quarter, 75 percent of earnings are met or beaten.
QUEST: Oh, dear. Ms. Taylor is not happy.
TAYLOR: Well, I have to honestly say, though, but you got to remember the one caveat with these earnings that they are on reduced expectations and that's a significant problem. Obviously forward guidance is extremely important.
But even that forward guidance is on reduced expectations. So we're still not seeing these corporations meeting their original numbers. Seventy-five percent better? Yes, but not based on their original forecast.
QUEST: Felicia Taylor, making sense of the earnings and making sense as well, of course, of Dan Loeb as such it may be.
Good to see you.
Asian markets finished the sessions mixed; Hong Kong's HSB shares dragged Hang Seng low. The bank fell almost 5 percent after missing profit forecast. European markets also slipped back despite some encouraging economic figures. Italy's economy contracted by less than expected in the second quarter. Germany -- German factory orders rose the most in eight months in June. Industrial output rebounded in Britain.
There was an embarrassing moment for Credit Agricole, which released its quarterly earnings -- Q2 -- too early. The bank blamed a technical error for the premature release of its results, which turned out to be very strong.
Fortunately, it's not alone; Google accidentally announced Q3 results early last October. The report was clearly unfinished, including phrases like "pending Larry quote" (ph). Google blamed financial printer R.R. Donnelley.
Even the Federal Reserve has slipped up in the terms of announcing things early. Do remember emailing the minutes of its March meeting to people a day early, including employees at Goldman Sachs, JPMorgan, Citigroup. Not one person reported the breach to the Fed. The Fed said the mistake was entirely accidental, human error.
So to the weather forecast now.
Jenny Harrison is with at the World Weather Center. Morning -- afternoon.
JENNY HARRISON, CNN METEOROLOGIST: Afternoon -- you think? I don't know what time zone you're in. Hello, hello. I need to talk to you about Greece in particular, wildfires exceptionally critical. It's not enough for me to talk about wildfires across this particular portion of Europe.
Let me show you the setup really Richard. This is why we see it. It's very typical this time of year that we had very, very strong winds. They come from the north. They are known as the artesian winds.
And this is why we have these strong winds coming down from the north. And it's really because we have these systems out towards the west as well that we get these tightly packed -- these isobars. You can see across western regions, we've got these showers, these thunderstorms that come on through. But just have a look at this one particular picture. I mean, it shows it all too clearly.
Right now, Tuesday, there's actually as many as 49 wildfires burning across Greece. This is what it looks like of course. We've had some houses that have been lost. There's as many as 300 firefighters actually fighting one particular blaze, 10 airports, two helicopters.
And we've got some pictures to show you as well, some video of these particular fires. You can see of course they were taken at nighttime, the worst time for any of these fires. But as we go into Wednesday, this is when the fires will be particular critical time, especially because of the winds. They're going to be strong as 50 kph.
As I say, it's typical for this time of year, July and August, also very, very dry time of the year. Typically only about 6 mm of rain expected in Athens throughout July, the same in August. In fact, the last rain that was recorded was actually back in July actually over a month ago. So everything just conspiring really against everybody.
And I can just show you on this Google Earth where all the fires are across in Europe, in particular you can see here they are in Greece. And of course the worry is right now as they're so very close to Athens in particular, just to the north of the city, and this is why as I say extremely critical. The conditions are right for it and also very, very close to the city itself.
Now just moving on from there, certainly on Monday, there was some pretty ferocious storms across the west, a tornado reported in Belgium, 4 centimeters hail reported in Germany. More thunderstorms on the way across central and western area. They've pushing through France into Germany the last few hours.
This is the setup as we continue through the middle of the week, more scattered thunderstorms, more about hot to dry weather across central and southeastern areas, so more warnings in place as well. More severe winds, tornadoes, large, damaging hail, that will be on the cars over the next few days.
But look at these high temperatures, Vienna, 11 degrees above the average. The same in Warsaw, as we actually went through on Tuesday. And guess what, Richard, more of that on the cars. Look at these temperatures over the next few days, Belgrade 38, Thursday --
QUEST: And there's no -- there's no -- what?
QUEST: Break in -- thank you. There's no break in sight.
HARRISON: No, there's not. There's high pressure, it's just pushing all this heat up across the southeast with no rain. We've got the thunderstorms out towards the west --
QUEST: What's causing it? Come on. Is this global warming? That's what my mother wants to know.
HARRISON: It's the global warming. You know what we say about the climate change is that we're going to see more events like this when we get prolonged spells of hot, dry weather and the temperatures are likely to be higher. Everything's just going to get more enhanced. So we'll be likely to see more temperatures like this.
QUEST: Weather thoughts, any thoughts, @RichardQuest.
QUEST: @RichardQuest is where you can join us in our discussion and our debate here as we look at the temperatures and we continue.
When we come back, after the break, a hefty reward for anyone who can help French police recover more than $100 million in stolen jewelry. (Inaudible) me hands where I like, Ms. Patterson.
QUEST: Insurers are offering a $1.3 million reward in a bid to recover those stolen jewels from the brazen heist on the French Riviera. An armed robber stole $136 million worth of gems from a luxury hotel in Cannes.
Insurance market Lloyd's of London will pay the first person -- the first, so you got to be first -- second or third won't count -- the first person who provides information that will lead the authorities to the precious stones.
CNN's Jim Boulden reports.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): These are the first pictures of the jewelry valued at more than $100 million stolen from inside a luxury hotel in Cannes.
French police say a single armed raider pulled off the heist on July 28th in broad daylight. Now Lloyd's of London has organized a reward up to 1 million euros or $1.3 million. The gold-and-diamond encrusted necklaces, earrings and bracelets were part of a high-end jewelry display that was in the process of being set up when the jewel thief struck.
There have now been three heists in the region of Monaco in recent months, a big worry for authorities as the French Riviera is, of course, a playground for the rich.
MANUEL VALLS, FRENCH INTERIOR MINISTER (through translator): The safety of motions in Cannes, the inhabitants of this city, but also French and foreign tourists should be apriority. And for me, they are a priority.
BOULDEN (voice-over): Experts say these kinds of heists are usually pulled off by someone with inside information and many times jewelry is stolen to order. Even with big rewards, the vast majority of stolen jewelry and art is never recovered.
JOHN KENNEDY, JEWELERS' SECURITY ALLIANCE: These, however, these pieces are very unusual. They're very big, extraordinary pieces. I saw pictures and descriptions of some of the product and, I mean, we're talking about something -- I think it was 56 carats.
BOULDEN (voice-over): But one of those behind the reward in this case tells CNN this 1 million euro reward is a, quote, "comfortable retirement fund," but also stresses the reward is unlikely to go up, as that would only encourage amateur attempts to steal jewels -- Jim Boulden, CNN, London.
QUEST: (Inaudible) one of those, you know what to do. Remember, it's only the first person that gets that reward, $1.3 million dollars.
When we come back, a "Profitable Moment" on the question of newspapers. How many of us still read a newspaper, pay for it, and will do so online? (Inaudible).
QUEST: Tonight's "Profitable Moment": $250 million and Jeff Bezos has bought "The Washington Post" and everybody, old media, new media, journalists, we're all wondering what on Earth he's going to do with it. Why does he want a newspaper?
After all, the man who gave us the Kindle and then gave us Amazon -- the other way around -- but the man who revolutionized the way we buy so many everyday items, now takes on a newspaper, another everyday item.
Oh, the death of the newspaper has been forecast for decades. And yet Rupert Murdoch split his company into two and still remains chairman of the old school newspapers. And "The New York Times," of course, sells off the "Boston Globe," and it's bought by somebody who for next to nothing thinks that they can turn it into a going concern.
"Newsweek" magazine, "Newsweek" magazine itself sold for $1. No longer in print, now only digital, but another company believes it can make a go of it. People have experimented with pay wars, but the truth is very few of us will actually pay for online content, maybe only in that premium target category, "The Wall Street Journal," "Financial Times," "The Economist" and the like.
So perhaps the most interesting and indeed the most exciting part of what Jeff Bezos says is that he's prepared to experiment. He's going to try different things and that will be the future of the great Bezos newspaper experiment.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The headlines: it is the top of the hour.
The United States is urging Americans to leave Yemen immediately. All non- emergency government personnel and staff at the British embassy have also been told to depart. New intelligence suggests Al Qaeda in the Arabian Peninsula may be planning a terror attack.
At least 11 people have been killed and 44 more wounded in a spate of bombings across the Iraqi capital. The blasts struck four neighborhoods in Baghdad just before people were about to break their daytime fast. It's the latest attack and the worst surge of violence in years.
In the U.S., the court martial of the Army major accused of killing 13 people at a Texas military base opened with an admission, when Nidal Hasan told the court, "I am the shooter." He's accused of opening fire at Ft. Hood in 2009. Prosecutors say Hasan, who is Muslim, had been slowly radicalized before the attacks and is now acting as his own lawyer.
A convicted pedophile who was released from prison in Morocco will be held in jail in Spain until a decision is made on extradition back to Morocco. Daniel Galvan Vina was among 14 Spanish prisoners granted a royal pardon in the North African nation. The pardon was revoked by the king.
(END VIDEO CLIP)
QUEST: You are up to date. Those are the news headlines. Now to New York and "AMANPOUR."