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Billionaires Buying Up Newspapers; Technology Companies Promote Immigration Reform; Car Computers Hacked
Aired August 10, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN BERMAN, CNN HOST: So you heard that newspapers are dying. So why are billionaires buying? I'm John Berman in for Christine Romans, and this is YOUR MONEY.
So remember these? This is a newspaper. Maybe you've never flipped through one. Maybe your kids have never seen them, but newspaper readership, as we said, is falling. Print ad dollars drying up and digital ads can't fill the hole fast enough. Pew Research finds that for every $15 newspapers lose in print revenue they gain just $1 in online revenue. The business model clearly struggling and price tags plummeting.
So enter the billionaire buyer. And $70 million bucks is how much Boston Red Sox owner John Henry paid for "The Boston Globe" which is seven percent for what it sold for 20 years ago. And $334 million is how much Warren Buffett's Berkshire Hathaway spent on 28 daily newspapers according to the company's 2012 annual report. Buffett has bought more papers this year.
And then there's Jeff Bezos. The Amazon founder is shelling out $250 million for "The Washington Post," a paltry one percent of his personal fortune. As our Jim Acosta reports, billionaires have gone shopping in America's newsrooms.
JIM ACOSTA, CNN CORRESPONDENT: Watergate brought down a president.
UNIDENTIFIED MALE: I have to get something on paper.
ACOSTA: But it made a newspaper. A triumph not just for reporters, Bob Woodward and Carl Bernstein, but also for the family that owned "The Washington Post" led by its publisher Katherien Graham. Now the legacy in the future of one of the most important newspapers rest in the hands of one billionaire, Amazon founder Jeff Bezos, a stunning $250 million deal that gives new meaning to the term --
UNIDENTIFIED MALE: Just follow the money.
ACOSTA: The "Post" now follows other major newspapers. "The Wall Street Journal" bought by conservative media titan Rupert Murdoch and "The Boston Globe" purchased by Red Sox owner John Henry due to be snatched up by the super wealthy. And perhaps the "Chicago Tribune" and "L.A. Times," which had lain in the portfolio of libertarian billionaires Charles and David Koch. LUCY DALGLISH, DEAN, UNIVERSITY OF MARYLAND: I think what people are forgetting when we're talking about billionaires taking over the media, that's not exactly new.
ACOSTA: William Randolph Hearst came from a family that made its fortune in mining. The classic film "Citizen Kane" loosely based on Hearst's life story noted how wealth affords the luxury of failure.
UNIDENTIFIED MALE: I did lose $1 million last year and I expect to lose $1 million next year. You know, at the rate of $1 million a year I'll have to close this place in 60 years.
ACOSTA: Something Bezos has in common. He revolutionized retail shopping online. Remaking the selling of news is next.
DALGLISH: Bezos can spend an enormous amount of money on "The Washington Post" without really taking too much of a dent in his own private fortune. So he has the leeway to make major experiments.
DONALD GRAHAM, CHAIRMAN, "WASHINGTON POST": Everybody knows that newspapers have to change.
ACOSTA: "Post" chairman Donald Graham insists the paper's commitment to journalism won't change.
GRAHAM: We will become a place that does its traditional job and maintains its traditional values but tries things, and I hope a lot of them will succeed.
ACOSTA: A sentiment echoed by Bezos to employees that reads "The values of "The Post" do not need changing. The paper's duty will be to readers and not to private interest of owners. We'll continue to follow the truth wherever it leads."
DAVID GERGEN, CNN POLITICAL CONTRIBUTOR: Most newspapers today are terribly undernourished in terms of funding. There's been an unwillingness to invest in investigative reporters, for example, or foreign bureaus have been closed down and they need to be reopened. And a private owner with the kind of wealth that Jeff Bezos has can really make a difference.
ACOSTA: CNN political contributor David Gergen who once worked for the Nixon White House and came to know Katherine Graham and legendary executive editor Ben Bradley says Bezos can afford to make mistakes, but the stakes are still high.
GERGEN: Had it not been for Ben and for Kay, there would have been no Woodward and Bernstein and maybe the Watergate story would have turned out very differently. Who knows for sure?
ACOSTA: After the downfall of a president, it's just not Washington without "The Post."
"The Washington Post" newspaper will no longer be a publicly traded company. It is now a privately held firm controlled by Bezos. "Post" management will remain in place but for how long depends on Jeff Bezos.
Jim Acosta, CNN, Washington.
BERMAN: So billionaires buying up newspapers. Should we be worried? Should we be optimistic? Richard Quest is the host of "Quest Means Business" on CNN international, and he does mean business. Let me start with you. You wrote a great piece talking about why you are so optimistic that Jeff Bezos is buying "The Washington Post." you think it's a terrific match. Other people are not so optimistic. One critic wrote great journalism has been hijacked by the powerful to spread their personal ideology. Explain to me your case, why is this a match made in heaven?
RANA FOROOHAR, ASSISTING MANAGING EDITOR, TIME: As you have just seen, great powers hijacking newspapers or owning them and pushing their own agenda is nothing new. The people I have spoken to at the "Post" say the paper needs a technological revolution and has to make the leap into the digital age. It's been behind the curve. Their business model is broken.
And if there is a guy out there that can transform digital businesses, it's Jeff Bezos. People speak about him next to Steve jobs as the most transformational business leader of our time. If he can take this paper and we know this guy loves long form content, right, the Kindle was ahead of Apple and the iPad in terms of getting people excited about reading in the digital format. If he can transform this paper, it's not just great for the "Post" but the news business in general.
BERMAN: Richard, you're stroking that paper.
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Old school. Give me that.
FOROOHAR: Love it. Get your fingers dirty.
QUEST: The smell of news print. We are from that generation, you know, just revels in the idea of delving into the papers. And what we hope is that somehow they will unlock the potential for the digital revolution and marry it with the traditional. Murdoch has not managed to do it, clearly. All he's done is split his company old and new.
BERMAN: Rupert Murdoch owns "The Wall Street Journal" among many other things.
QUEST: He's trying to unlock that. The visionary -- he loves newspapers. He loves the industry.
FOROOHAR: Too much. That's why he hasn't unlocked it.
QUEST: Absolutely. And also there's a sort of an old school nature to it. But with Bezos, the hope is that he will somehow not put a rocket up it but he will unlock the potential.
BERMAN: Let me talk about this. Jeff Bezos, John Henry, Warren Buffett, they are good businessmen. If they are such bad deals, why do good businessmen want them so badly?
FOROOHAR: Canny self-interest in some cases. Vanity plays in others. Bezos is other. Warren Buffett loves newspapers. He's not looking to change the newspaper business, ditto for John henry. But Jeff Bezos wants to experiment. He wants to shift this medium and help it into the new age.
QUEST: And then you have this.
FOROOHAR: I'm going to have post-traumatic stress. I was at "Newsweek" for a decade.
QUEST: This went under the hammer for next to nothing. Having no longer been in print, now it's online and hardly there at all. They have to deny they are up for sale.
BERMAN: You are holding "The New York Times." They had to announce they're not for sale.
QUEST: This is how these papers are changing. Just this week I subscribed to the home edition of "The New York Times" because I moved to New York. I did it at 7:00 in the evening on Wednesday, 7:00 in the evening on Wednesday. On Thursday morning at 6:00 a.m. it was outside the front gate.
BERMAN: I am happy for you that you have this time to spend with your newspaper. Thank you so much for being with us. You get to leave with these special parting gifts.
QUEST: Have you seen this interesting article?
BERMAN: Coming up, Facebook founder Mark Zuckerberg has mostly shied away from politics until now.
(BEGIN VIDEO CLIP)
MARK ZUCKERBERG, FACEBOOK FOUNDER: This is something that we believe is really important for the future of our country and for us to do what's right.
(END VIDEO CLIP)
BERMAN: Why he and other titans of technology are pushing for immigration reform. That's coming up next.
BERMAN: Facebook, Google, Microsoft, cut throat competitors in the business world, but on immigration reform they stand united. Whether it's Mark Zuckerberg or Eric Schmidt or Bill Gates, they are technology visionaries who helped shape our present, and now they are pushing for immigration overhaul that could shape the future. This week Zuckerberg spoke publicly about immigration reform for the first time.
(BEGIN VIDEO CLIP)
ZUCKERBERG: The students who no matter where they were born coming into this country are going to be tomorrow's entrepreneurs and the people creating jobs. This is something that we believe is really important for the future of our country and for us to do what's right.
(END VIDEO CLIP)
BERMAN: He has a vested interest. Technology companies say they have jobs and not enough skilled workers to fill them. They holler that U.S. universities educate some of the most educated students in the world who then get sent them home to create jobs in other countries. It's something that Google's Eric Schmidt and Microsoft's Bill Gates have both complained about on this show when speaking recently with Christine Romans.
ERIC SCHMIDT, EXECUTIVE CHAIRMAN, GOOGLE: It particularly stupid for the American government to require us to fully educate people with Ph.D.'s and ship them out of the country to take American jobs away.
BILL GATES, CHAIRMAN, MICROSOFT: If we want to bring a person here to be educated, you should never then make them go away. There are some categories of jobs where you know other jobs are created around them. So forcing those back to Asia doesn't make sense.
(END VIDEO CLIP)
BERMAN: So the tech industry is making its case loudly. The question is, is Washington listening? Dana Bash is CNN's chief congressional correspondent, a reporter in the worldwide reporting hall of fame. Dana, the Senate passed a comprehensive immigration reform bill. It stalled in the House right now. But here's what Senator Chuck Schumer said on CNN's "NEW DAY."
(BEGIN VIDEO CLIP)
SEN. CHARLES SCHUMER, (D) NEW YORK: We would much prefer a big, comprehensive bill, but any way that the house can get there is OK by us. I actually am optimistic that we will get this done.
(END VIDEO CLIP)
BERMAN: He's now talking about the possibility of supporting a piecemeal approach. That seemed like a marker of sorts. How do you see this shaking out?
DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: It was a marker. Certainly that's the way it's being perceived by house Republican sources that I have spoken to about that. The only catch is that he is putting out an olive branch saying if Republicans want to pass immigration in the process of splitting it up in smaller bills, that's fine. He's moving away from his idea of comprehensive immigration reform.
Here's the "but," what they are not going to go for in the Senate, these people who support comprehensive reform, is saying, OK, we'll pass border security Bill now and in a year or two years we'll get to the issue of legal status or citizenship. That is something they will not go for. There's an important gray area here. The fact he put that out is certainly telling.
I will tell you very quickly. The whole fear going into this month- long recess where we are right now is among supporters of immigration reform was that Republicans in the house would get blasted by conservative constituents. The base, they're saying don't you dare touch this. What we have seen so far is actually the opposite. We've seen Republican leaders come out and be much more open to the idea even of legal status. We're talking about the house majority whip and even the house judiciary chairman. That has been surprising and maybe a sign that this whole idea is not dead after all which a lot of people thought.
BERMAN: Dana Bash, thank you so much. This summer recess key in the immigration rebate. Thanks, Dana.
This is a scary scenario. You slam on the brakes and nothing happens. It's not a malfunction. It's the work of two hackers. We will show you what they did next.
BERMAN: You have anti-virus protection on your computer, but what about your car? Automakers adding all kinds of technology to new cars, but where you see new features, hackers see opportunity. CNN Money's Laurie Segall spent the day finding out how to hack a car. Laurie, I have to say, this scares the heck out of me.
LAURIE SEGALL, CNN MONEY TECHNOLOGY CORRESPONDENT: Very eye opening. I spent time at a hackers' convention in Las Vegas. It's as crazy as it sounds. They were showing us how to hack all types of devices. But when they decided to show us how to hack a car, that's when it got a little bit crazy. Check it out.
(BEGIN VIDEO CLIP)
CHARLIE MILLER, SECURITY ENGINEER: There's lots of computers in your car and they all have to talk to each other. So there might be a computer in charge of your brakes or steering or engine. And what we did was we figured out how they talked to each other and then we pretended we were various pieces of the car and told other pieces to do things.
SEGALL: Can you just show me some examples of how you guys did that?
MILLER: Sure. So here is one where we make the brakes not work. This only works if you're driving rather slow like five or 10 miles an hour or something. I tell the car I'm a mechanic and I want to bleed the brakes. During that process, you can't actually use them, and so in the video Chris goes to pull into a parking spot. Not working. We drive over the curb into the grass and he never would have stopped if I didn't tell him.
SEGALL: Take us through some more examples.
MILLER: This is one that was most terrifying for me because I was driving, I guess. I'm driving along here, 40 miles an hour or something. Chris can make the steering wheel yank out of my hand and turn to the left. We had to basically trick the car. So it was designed not to allow you to turn the steering wheel at speed only allowed you to steer the wheel when parking.
SEGALL: You had a lot of fun with this. How can this be used maliciously?
MILLER: Sure, we had fun, but it's a serious issue. We want to get issues out there now and get them fixed before it's a problem.
SEGALL: In a statement from Toyota, the company said "It's important to note that a recently publicized demonstration required a physical presence inside the vehicle, partial disassembly of the instrument panel, and a hard wire connection. All of this would be obvious to the driver." Our focus and that of the entire auto industry is to prevent hacking into a vehicle's bi-wire control system from a remote or wireless device outside of the vehicle." Ford did not immediately respond to CNN's request for comment.
MILLER: What responsibility do companies have to take a step back and talk to folks like you about security? We love these gadgets. We think they need to make sure they do it in a secure way.
SEGALL: You see these guys are having fun with it. The steering wheel jerking out of control and these guys are laughing, but it's a serious issue. Cars are getting smarter. This will become a problem and major companies need to take notice.
BERMAN: I can't believe the steering wheel jerking out of that guy's hands. Laurie Segall, thank you for scaring the heck out of me every time I step into a car.
So much for the sale adage that all real estate is local.
(BEGIN VIDEO CLIP)
ANDREW CHAN, CHINESE INVESTOR: Location, location, location.
(END VIDEO CLIP)
BERMAN: Are Chinese home buyers half a world away driving up prices in your city? That's next.
BERMAN: It is a hot summer and I don't mean the temperatures. Home prices are up about 20 percent in San Francisco, Las Vegas, Phoenix, Atlanta, and Los Angeles. And as Christine Romans reports, you may be competing with buyers you wouldn't expect at the next open house.
CHRISTINE ROMANS, CNN ANCHOR: It's a Saturday afternoon in this Hong Kong hotel and Chinese investors are enjoying a catered lunch while bidding on properties half a world away.
CHAN: Location, location, location.
ROMANS: Spending hundreds of thousands of dollars on properties they may never set foot in. The Chinese are second only to the Canadians when it comes to buying real estate in the United States. But when they buy, they buy big, spending on average $425,000 per property. And most of the time they pay all cash, all cash, preferring big cities like New York and their suburbs. So what's the draw?
CHAN: Upside potential. We have friends and folks who live there so it's keeping up with the Jones.
ROMANS: For Andrew Chan a U.S. home is place to stay on vacation and quite simply a deal. Real estate prices in China are sky high so its citizens are cutting checks without stepping foot inside a property on the other side of the planet. Expeditions like this one for development in Florida have become a normal event, this exposition hosted by the O'Neil Group.
ANTHONY MANN, HEAD OF OVERSEAS PROPERTY SERVICES, NOBLE APEX HOMES: We expect that the U.S. economy can continue to grow. One way or another the prices will still go up.
ROMANS: In the United States anyone with cash can buy real estate regardless of citizenship. A very simple contract is all it takes, something new for Chinese citizens.
RICHARD GREEN, DIRECTOR, USC LUSK CENTER FOR REAL ESTATE: There is a security to owning property in the U.S. that doesn't exist in China. It's only recently that the Chinese government brokered property regularly. I think that means people who have means are nervous about their ability to hang onto those means if they invest in China.
ROMANS: And 53 percent of reported purchases by Chinese buyers were in California. Why? Because it's closer. As a result, the market has changed. Seasoned L.A. broker Sally Forster Jones has had to change with it.
SALLY FORSTER JONES, BROKER, COLDWELL BANKER PREVIEWS INTERNATIONAL: I spent time in China just meeting a lot of the potential Chinese buyers to get an understanding of what types of property they like. They are buying anywhere from the lower end in Los Angeles marketplace, which is somewhere around a million to the high end $20 million.
ROMANS: Andrew Chan has his eyes on a few homes across the U.S.
CHAN: A lot of information that is provided, very informative. ROMANS: But he's not ready to buy just yet. When he is, experts say China's restrictions on transferring money out of the country will be relatively easy to navigate.
Christine Romans, CNN, New York.
BERMAN: And coming up on YOUR MONEY tomorrow at 3:00 p.m. Eastern, putting the "bust" in Blockbuster. Movies like "The Lone Ranger" and "RIPD" falling tens of millions of dollars short in their box office debut. So why aren't we packing movie theaters this summer? We'll take a look.
Plus, we'll talk to filmmaker Spike Lee. He's returning to his roots to fund his next big film. We'll tell you why he's catching so much flak for it. That's tomorrow at 3:00 p.m. eastern. We'll see you then.