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CNN IN THE MONEY
Politicians Woo Young Voters; Hollywood Cracks Down On Pirates; Interview With Kenneth Allard
Aired January 25, 2004 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City, America's financial capitol, this is IN THE MONEY,
JACK CAFFERTY, HOST: Good afternoon. Welcome to the program, I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY: Turning whatever in to now or never. We're going to look at fight to move 20 million young voters from apathy to the voting booth.
Plus hot tickets: We'll look at how man and machine is teaming up to pirate first run Hollywood movies and its costing Tinseltown a bundle.
And, making cash by making war: Meet a former Army officer behind a new book about using battlefield tactics in the marketplace.
Joining me today, as always, a couple of our IN THE MONEY veterans, CNN correspondent, Susan Lisovicz, and "Fortune" magazine editor-at-large Andy Serwer.
And it's time. Ash Wednesday is the release date of Mel Gibson's highly anticipated...
ANDY SERWER, "FORTUNE": Perfect.
CAFFERTY: ...and very controversial movie "The Passion of the Christ."
CAFFERTY: There is a great debate going on about this thing, which I guess is a good way to sell a lot tickets.
Let me read you a couple of things.
CAFFERTY: American-Jewish Community sent people to two different screenings in Florida and Illinois, they said, "It's an unnecessary and destructive imagery of Jews and represents a disturbing setback to relations between Jews and Christians."
Abraham Foxman who's the national director of the Anti-Defamation League says that the film "unambiguously portrays Jews as being responsible for the death of Jesus."
There is a great fear that this will create some sort of a schism between the Jewish and Christian communities, but it's a movie.
SUSAN LISOVICZ, CNN CORRESPONDENT: But, you know what's interesting, is you're seeing it play out, of all places, at the Vatican, because there were reports the pope himself had seen it and liked the movie. And then you heard -- you know, more -- more of the Anti-Defamation League saying, "Well, maybe no, the pope really isn't that much of a supporter." Now the Vatican is mum and it's kind of a shame because -- you know, the pope actually has done a great deal to bring -- to elevate the dialogue between Jews and Christians, which had been strained.
SERWER: Well, it sounds like a good P.R. campaign, to me, for this movie, first of all. Second of all -- you know, Hollywood and religion, they don't really mix very well, and if you're going to do a religious movie, you better play it straight down the middle, like "The Ten Commandments."
CAFFERTY: Yeah, or "The Robe."
SERWER: Otherwise you're asking for all kinds of trouble. And I'm just wondering...
LISOVICZ: It's not a documentary.
SERWER: Yeah. I mean, I wonder what the great Texas social commentary Kinky Friedman would say about this movie? I'm not really sure, but I'm not sure I'm going to see this movie. I just -- it just -- you know. Who knows.
CAFFERTY: I know one thing Kinky Friedman said, he said "They don't make Jews like Jesus anymore." That's Kinky Friedman saying that.
SERWER: That would be, quote/unquote.
CAFFERTY: Anyway, "The Passion of the Christ" Mel Gibson's film, opening on Ash Wednesday and we've done our little part to sell a few more tickets.
As the democratic presidential candidates get ready for New Hampshire primary on Tuesday, John Kerry is turning it on, while former front-runner Howard Dean is busy toning it down. For a look at what's happened to the Dean campaign, in the last few days, we're joined now, from New Hampshire by CNN senior political analyst, Bill Schneider.
Bill, I like the hat. No question about it, it's you.
BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Thank you, Jack. CAFFERTY: Is there any way to tell -- is there any way to tell the degree to which Howard Dean's damage control machinery is having an affect? He really did do a kind of a 180 coming off that thing in Iowa.
SCHNEIDER: Yes, he did and that has been -- had a shock effect and we found that in the polling, his unfavorable image just climbed. A lot of people were shocked at the tone of that speech, it recon -- it confirmed an image that he was an angry guy. That his message was largely negative, and it really had an impact on his campaign, because his unfavorables climbed and she started hemorrhaging support. He is in serious danger now, of coming in third or even worse in New Hampshire and that could doom his campaign.
CAFFERTY: How well is General Clark doing up there? He didn't go to Iowa, but he's been in New Hampshire and had the state kind of to himself -- he and Senator Lieberman. What kind of response is he getting?
SCHNEIDER: Well, he was doing very well, here. He was bigger than John Kerry before the Iowa caucuses and then, he too, has been suffering. I mean, we're seeing the big woe for Howard Dean, his support has really disintegrated, and we're seeing a little woe for General Clark, because what's happening is, John Kerry is picking up support from both of them. How? Because Kerry is coming on strong on the security issue. He's surrounded by firefighters who are among his core constituency. He was a big advocate of firefighter's needs and interests in Massachusetts and they're there to support him. He also has the Vietnam War story, he has military experience, he has a strong national security policy. So, a lot of people who saw Wesley Clark as the answer to the democrat's dreams, their national security candidate, are now looking at John Kerry and saying he's even better on national security.
CAFFERTY: John Edwards did very well in Iowa, he's not polling as high in New Hampshire, but once we get past New Hampshire and the campaign swings to the south, that should be right in his wheelhouse. What kind of potential does Edwards have as this thing continues to roll along? Is he considered a serious factor? I would think he had to be coming out of Iowa, but much might depend on how he finishes there in New Hampshire?
SCHNEIDER: He is gaining support in New Hampshire; he's still running fourth in most polls, but watch Edwards. Edwards could be a big surprise. He has a very favorable image, second only to John Kerry's. His support has been growing slowly but stealthfully. If Kerry has the "big mo," Edwards has the "little mo." He's the only other candidate who's really gaining support, so you got to watch, he could do surprisingly well. As we say, better than expected in New Hampshire, which would put him in a very good position going south to South Carolina, the state he comes from.
CAFFERTY: Good stuff, and a long way to go, it should be a fascinating political primary season. Bill, thanks very much.
SCHNEIDER: Sure, Jack. CAFFERTY: CNN senior political correspondent, Bill Schneider, joining us from New Hampshire.
Election Day is the one chance that young people get to tell the rest of us how the world ought to be, and they actually have some chance of making us hear what their thoughts are, at the one particular time of the year. So you'd think there'd be a stampede to America's voting booths, but it's not the case. In recent U.S. elections, most 18 to 24-year-olds have sat out when it comes to voting. This time around the trend could be changing, MTV's "Choose or Lose" campaign is out to make sure of it. MTV news correspondent, Gideon Yago is here to tell us about that effort which aims to mobilize more than 20 million young adult voters.
Gideon, nice to have you with us.
GIDEON YAGO, MTV NEWS: Thanks a lot Jack, good to be here.
CAFFERTY: Elections ten months away, I mean, I don't even care yet. Are kids engaged on this issue yet?
YAGO: Actually, remarkably, they are. I think for a lot of first-time voters they see what's gone on in the country since 9/11, they feel as though they have a stake in national security or they know someone that's fighting overseas, they themselves might be fighting overseas, so every indication that we have, both in our polling and anecdotally when we get out and we talk to kids on the street, is that this is going to be a big issue for them in November.
Right now, in terms of engagement, where they're at, you do see a lot of kids who don't really have job now volunteering for campaigns, getting involved in campaigns because they've got nothing but time on their hands and it seems like something that they can do in a way to make a difference.
CAFFERTY: You know, I've four daughters and...
CAFFERTY: ...and, it just occurs to me that it's one thing to ask a teenager what they think, because they'll tell you.
YAGO: Oh yeah.
CAFFERTY: But, it's quite another to get them to act on that. You know, "I think my room ought to be blue." Then, get a paintbrush and a bucket of paint and go paint it. "Well, I don't think it ought to be blue to that degree." I mean, in other words, are they -- it's one thing for them to say I'm concerned about this or that or the other thing, but what are you going to do to get them up off the couch, and out the door, and down to the polling place? They got to register and then go vote?
YAGO: Well, I mean, on the one -- you know, what we can actually do is facilitate that, and we do that -- you know, by working with a lot of other groups out there that are mobilization groups in getting people to -- you know, getting people to vote, creating an internet space where -- you know, there's meet-ups, and there's a constant conversation that's taking place online about the issues, about the candidates, so kids feel -- you know, a part of it. But, I think the bigger thing is, exactly what you were talking about, it's making kids feel like they have something at stake. It's -- you know, "I want to paint 'my' room blue." OK? So, it's on the -- when it comes to politics, it's how do you get a candidate to talk to these kids where it's suddenly like, "I want 'my' issues to be represented in Washington, D.C." That, I think, is as much up to the candidates as that is up to us.
Our job is going to be to try and take the political issues that are at stake in the great debate this year, and dial them back into our audience, make our audience realize that things like the economy, things like healthcare, things like national security, all affect them, whether they choose to ignore it or not. However, that needs to be reciprocated on behalf of either the president or whoever gets the democratic nomination, as well as, all the local politicians out there, to keep all these young people involved in the fold.
And the thing is, there are so many of them out there, this really is the echo to the baby boom. Big corporations have realized you can get brand loyalty out of young people and it's important to get brand loyalty out of young people, parties haven't done that and if you vote the first time, chances are you're going to be a repeat voter down the line. So, hopefully the politicians this year will take the 20 (MISSING AUDIO) and bring them into the fold, generate a dialogue with them, and keep them informed and engaged.
SERWER: Gideon, let me jump in here. I noticed in your credentials, you're said, the only MTV correspondent to be referred to by Snoop Dogg as "nephew."
YAGO: Right, yeah.
SERWER: I don't know if he met Jack Cafferty, he might call him nephew, too, or maybe uncle. I don't know about that.
YAGO: It's good to have a nickname, especially when you get it from Snoop Dogg.
SERWER: Hey, let me ask you just a very basic question.
SERWER: Young people, are they liberal? Aren't young people liberal? Don't they vote liberal?
YAGO: No. They are, they're also conservative, but more than anything else, they're independence and it's a toss-up.
SERWER: Oh, come on. Really?
YAGO: No, absolutely. Absolutely. Absolutely. I think you -- it's -- you'd be hard-pressed to find young people, more young people out there that identify themselves on party lines, or on ideological lines, than a young person that comes out and says, "I'm an independent, I want to find a candidate that speaks to me, that speaks about the issues that I'm concerned about." Young people vote on issues, they don't necessarily vote on party line.
LISOVICZ: Gideon, can't the effort to reach the 18 to 34 vote, sometimes backfire? I mean, I did not know that Dennis Kucinich actually has a hip-hop outreach project, the "Representin' corps."
SERWER: Oh man, bring it on!
YAGO: Yeah, I mean...
LISOVICZ: I did not know that General Wesley Clark was getting into the debate about whether the group "Outkast" had really broken up.
YAGO: Yeah, but you know, I think...
LISOVICZ: I mean, doesn't that wash as a little insincere sometimes?
YAGO: Well, the thing is, I think you've go two different instances, right there, and --you know, in the case of Kucinich, if you can't pull it off right, it tries like you're -- you know, looks like your dad's trying desperately hard to hang out with your friends.
CAFFERTY: Hey, wait a minute!
YAGO: No disrespect intended, to anybody at all, but --you know, if you don't pull it off right, it definitely -- it is woefully uncool. But, the thing about Wes Clark and the "Outkast" ad that he debuted at the "Rock the Vote" -- the "Rock the Vote" debate was that it actually resonated hugely with the audience because here you had a candidate that was talking about his experience, where he stood on the issues, and it was -- it sounded like classic dry stump speak. And, then he identified with something that was going on and was major, a major debate in the audiences lives, just because someone gives a damn whether or not "Outkast" is breaking up, doesn't necessarily mean that they don't have an opinion on Iraq, and I actually thought that ad was a remarkable success.
CAFFERTY: Who's the democrat's Bill Clinton, out of the field that's out there right now?
YAGO: Wow. That's a good question.
CAFFERTY: I mean, he did it, he tapped into these kids...
YAGO: He did. He really did.
CAFFERTY: ...and got their attention and like -- actually very few politicians that I can remember seeing as I look back over the years, I've been paying attention to stuff, he figured it out.
YAGO: You know, he did, he really did figure it out and he really did have -- you know, and you saw that too, in the number of young people that went out and voted that year, but I think it's a little too soon to tell, which is, how you say, "I don't know" in politics, right now. I don't think any of these guys is doing a remarkably great job about energizing or connecting with young voters. But, I think Kerry's doing an admirable job, I think Clark is doing a great job, and the president is doing a very good job, as well. I'd say those probably are the three who are doing the best at connecting with young voters out there.
CAFFERTY: Gideon, I appreciate your appearing on the program.
YAGO: Thanks for having me on the show.
CAFFERTY: My guess is, there ain't one out there this year. Clinton really did it to a degree others have not.
YAGO: You never know. What we would like to see is them change that and down the line, both the president and whoever the democratic nomination is, reach out, talk to young voters, because they really could have a very, very big impact in this election.
CAFFERTY: All right, good luck.
SERWER: All right, Gideon.
YAGO: Thanks a lot.
SERWER: Gideon Yago, thanks a lot. MTV correspondent, keep on rockin' the vote, there, all right?
YAGO: Thank you very much.
SERWER: All right, just ahead on IN THE MONEY:
One take too many: Movie pirates are ripping off the film world with some high-tech help. Find out how it happens and how to stop it.
And later, negatives and positives: Kodak is retooling for the digital age, but that means job cuts. We'll see how the stock is taking the news.
Plus, share star: We'll hear from one Wall Street observer about his top stock picks for the year. Don't go away.
SERWER: Later tonight, the Golden Globe Awards will be handed out in Los Angeles, but much of Hollywood will be concerned, because some of the most nominated films like "Mystic River" and "The Last Samurai" can already be illegally downloaded from the internet or bought on the streets of Beijing or Bangkok for a couple of bucks. That's because movie piracy is kicking into high gear, copying hit films faster and cheaper than ever before.
Joining us today to talk about how the film industry is fighting back is Ken Jacobson; he is head of the anti-piracy department at the Motion Picture Association of America. Welcome, Ken.
KEN JACOBSON, SENIOR VP, ANTI-PIRACY DIRECTOR, MPAA: Thank you, it's good to be here.
SERWER: We've seen piracy as -- particularly online piracy, wreaking havoc in the music business, already. How far along is this in the movie business, right now?
JACOBSON: Well, unfortunately, it's beginning to take hold. We have been protected for a number of years, because of bandwidth limitations and obviously compression technology. A movie file is substantially larger than a music file, so it's much more difficult to download, but as bandwidth increases and as compression technology has increased we're beginning to experience the same problems the movie industry experiences.
LISOVICZ: You know, Ken, probably one the most disconcerted findings about the piracy, in the movie business, is that it's really coming from the inside. A lot of the evidence points to the fact that it's the first pirated versions of movies are done at actual screenings, that's a very, very select audience.
JACOBSON: Well, it can be a select audience, although in many instances there are public screenings, there are firms that are retained to bring people in to view a movie, and to give their feeling about the movie, so some of the camcorder actually has occurred there, and I it's hard to call that insider -- insider piracy.
CAFFERTY: What's the industry going about it? And how much money are you talking about? How big a bite are pirates taking out of the bottom line?
JACOBSON: Well, the MPA estimates that its member companies lose about $3.5 Billion per year on a worldwide basis, and that does not include losses from internet. We are struggling to create a model, which we think will be defensible to decide what our losses are on the internet. Until we have that model, it's hard to gauge, but we know we're losing money there. The problem it substantial, and our member are committed to using resources to fight that problem, and to try to contain it.
SERWER: Ken, going back again, to the music business. I mean, you can look there, that's paradigm for how not to do it. They stood around and watched their business get chewed up and eaten away on the internet, you talked about this. Isn't the future ultimately going to be downloading movies into your home from the internet on a pay basis? Can you explain how you guys are going to do that?
JACOBSON: Well, let me just say that the MPA is not involved in commercial decisions on behalf of its members, but I can tell you that all of our members are actively exploring methods of delivering movies over the internet. I mean, the same bandwidth problems that have saved us from a certain amount of piracy are also issues when you try to put together a commercial model to try to deliver over the internet and then the question how to secure the product when it's put out there. But, I agree with you and our members certainly agree, the internet is the future or one of the main ideas of the future to deliver our product to the people that want to receive it.
LISOVICZ: Ken, in the meantime, is the movie industry, in your view, really exploiting a valuable ally? And that is, governments all over the world that would really like to see piracy go away? Because they're losing valuable tax revenue from this illegal business.
JACOBSON: We are exploiting governments all over the world, or working with them to try to exploit their interests in stopping piracy. We are active in over 65 countries around the world, and one of the things we do is work closely with governments to try to get legislation in place which will assist us in fighting piracy. We work very closely with enforcement agencies around the world, and we have a lot of success. Unfortunately, there is a lot of money to be made in piracy. It is a fairly low-risk crime in that prosecutors and judges do not give heavy sentences, and a lot of money can be made. So it's a real problem for us.
CAFFERTY: To the degree that the recording industry, sort of, showed the movie industry what was coming, to what degree could the movie industry be accused of the horse already being out of the barn? The record industry's been dealing with this for some time, you mentioned at the start of the interview, you've had some built-in protection, because of things like bandwidth, but it's a matter of time until technology solve that and everybody probably knew that this day was coming?
JACOBSON: We did know it's coming, and our members have been working to try to come up with models for delivery of product. As you're aware, in our industry we are a little different than music, we have windows of release. And historically, we've had theatrical first and then various windows of release down through pay TV and home video, ultimately, free TV. So, as I said before, although MPA is not involved in commercial decisions with its member, I know that our members are looking at how the internet will fit into that picture and how they can deliver over the internet in an environment that makes sense to do so.
CAFFERTY: It's no doubt a big challenge that you're face. Ken, we're going to have to stop there. I appreciate join us, thank you.
JACOBSON: Thank you very much.
CAFFERTY: Ken Jacobson, the director of worldwide anti-piracy for the Motion Picture Association of America.
Comes up on IN THE MONEY, as we roll ahead: Moving houses. We'll look at whether the U.S. real estate market has gone south for the winter. Actually, it hasn't, it's doing pretty good.
Plus, bring in the noise: Find out why some California towns actually want the hassle of holding the Scott Peterson murder trial.
And, the middle manager with the upper hand: We'll learn about using combat thinking in the workplace. From a former military officer who's written a book all about it. Stick around.
LISOVICZ: Now let's check the week's top stories in our "Money Minute." Former Enron accounting chief, Richard Causey, has pleaded not guilty to six charges of fraud. Prosecutors say Causey and former Enron CFO, Andrew Fastow, worked together to craft phony numbers and hide massive amounts of debt.
Mixed news on the job front from "Big Blue." IBM announcing that strong earnings are making it possible to add 4,500 jobs here in the U.S., but that probably won't stem the job exporting tide at "Big Blue." Published reports showed IBM expects to save $168 million by shipping several thousand jobs overseas through 2006. One memo stated that hiring a programmer in China costs just $12.50 an hour compared to $56 an hour for a U.S. based programmer.
And the real estate market is starting the new year on a strong note. The Mortgage Bankers Association says a record number of people filed applications for new mortgages last week. Applications jumped to the highest level since the association began keeping track in 1990. Mortgage rates are currently at six-month lows.
SERWER: All right, Susan. The digital photography boom is bringing more changes to Eastman Kodak and that's bad news for a lot of people working at the company. Kodak plans to cut its workforce by up to 24 percent by the end of 2006, that's between 12 and 15,000 jobs. The company cites reduced demand for conventional film. No kidding.
Kodak shares are just about where they were a year ago, but off by more than 50 percent from where they were trading in 1999. That makes a struggling Kodak our stock of the week.
And you know guys, when we were growing up, the yellow boxes in the drugstore, I mean that was as close to a monopoly in this country as you could get. Every single camera had film, it grew with the economy, as more and more people go wealthy and went on trips, they bought cameras and the business just grew. Then came Fuji then came digital photography, and it's been tough.
LISOVICZ: Oh, it's a terrible story for a company that really pioneered the film business more than a century ago. I've been up to Rochester, that is a company town and those jobs were considered cradle to grave...
LISOVICZ: ...and so many things have changed.
CAFFERTY: Like the rubber industry in good -- in -- out in Ohio and the automobile industry up in Detroit. The sad commentary of the cruel irony is on the day they announced they're going to fire 15,000 people, the stock went up $3 a share. Wall Street, obviously, looking at the bottom line, 15,000 people are going to be looking for work. LISOVICZ: Well, steps -- Wall Street views it as steps that the company has to make. But, you know what was really interesting also after this; the "Wall Street Journal" had a front-page story about how, while Kodak is slowly trying to get into the digital camera movement, it is losing its base in what it has left of the film business. The biggest pharmacy chain -- I don't know if you read this story, Walgreen's, is actually in cahoots with Fuji now...
LISOVICZ: ...which would be considered slanderous just a few years ago.
SERWER: And, it's not like this company has tried things. They've tried those marking plans, and of course they got into chemicals, you remember Eastman Chemical going back, and also pharmaceuticals, as well. They've tried to get into the digital business, but it's just a shrinking business. And, you have to look forward, you guys. Will this stock remain on the Dow Jones industrials? Eastman Kodak, and I say, AT&T are the two most vulnerable to eventually being replaced by, say a FedEx or a UPS, because neither of them is in there.
CAFFERTY: Andy, what's the mistake though, in not recognizing digital imaging is here, it's part of the present, it's the wave of the future, digital camera, the fastest selling cameras in the country. It's like they're not in the game. How come?
SERWER: Yeah. Well, again -- you know, I don't. Good thing I'm not the CEO there...
LISOVICZ: Too slow. Too slow.
SERWER: ...because it's a huge problem. Huge.
CAFFERTY: Yeah. All right.
SERWER: It may be unsolvable.
CAFFERTY: All right.
Just ahead, 2003 a good year for most investors, we'll look at which stocks could be the biggest winners in 2004.
CAFFERTY: 2003 was a solid year in the stock market. Dow Jones up 25 percent on the year. Nasdaq Composite posting a very impressive 50 percent gain. But while tech stocks were the place to be last year, this year investors might want to think about good old-fashioned dividend paying stocks. Here to explain and talk more about it, "Time" magazine Dan Kadlec.
Dan, nice to see you as always.
These stocks have kind of lagged the rally, so to speak. And yet some of them pay a dividend which is far in excess of any kind of return you can earn if you put your money in a savings account or money market account.
Why aren't more people buying more dividend stocks and what all of a sudden is going to make them more possible?
DANIEL KADLEC, "TIME" MAGAZINE: That's the big mysteries. Dividend stocks rose on average about half what the tech stocks rose last year. Yet these things are starting to yield nicely, 3, 4, 5 percent in some cases. People have not gotten on to the concept yet. They are thinking in the old terms of the tech bubble. And bidding up the Lucents and...
CAFFERTY: Some of the same suspects.
KADLEC: The same of old suspect. I'm not here to say there's another bubble building because I don't believe that. But eventually they will rotate back to companies that make more sense. Big blue chips that pay a dividend that make real money and have proven themselves over years and years and years. And I think this year, for 2004, that's where you want to be.
LISOVICZ: You'd think investors would have learned a very painful lesson from two years ago.
LISOVICZ: Greed is something that is universal and it's certainly a force in the market. Let's talk about sectors.
Are there certain sectors that investors can easily tap into that pay nice dividends?
KADLEC: If you look at the top dividend payers, you're going to find a lot of financials out there. I'm not sure that's where you want to go too heavy now. If you get a bump in interest rates in the near-term, those are not going to perform all that well. I like dividends on a broad level. You will find classic defenses, you'll find some classic cyclicals. I think you want to own them all or at least a good cross section.
SERWER: One thing that happened last year you had the tax changes. There was some excitement about the dividend stocks, but as you mention, the techs sort of caught fire at the end of the year and ran ahead. Maybe (UNINTELLIGIBLE) will catch up. I think we should point out probably, you should be wary of stocks with dividend yields that are too high because that can indicate a problem like a Merck, which is surprising the dividends are high because that stock has been beaten down. Because it's had some trouble right?
LISOVICZ: Or an Altria. Altria which of course, the parent company of Philip Morris.
KADLEC: There are always the legal issues there but that company has never missed the dividend. The stocks, you maybe have a list -- 12 stocks we pointed out this week. 25 years consecutive of raising the dividends and they all have above-average yields. That's the kind of stability and safety you want to look for.
CAFFERTY: A lot of companies over the last year, year and a half, two years as the economy went through the recession were cutting dividends and reducing the amount of dividends. And I wonder if that does not make people gun shy.
KADLEC: Right, again, there's always an argument for diversification. We had Kodak, a blow-up with Kodak. And that is a risk, which as Andy points, a very high dividend yield is warning flag.
SERWER: Red flag.
KADLEC: I would say anything over 6 percent is a red flag.
CAFFERTY: Put up the top -- the first screen again, if you can. The top six on Dan's list. Look at the very top. Consolidated Edison. Pays a dividend of 5.2 percent what did our grandparents tell us, buy the public utility companies and hold on to them.
Five percent is not a great deal of money when you talk about the Nasdaq up 50 percent. 5 percent beats the pants off a lot more traditional kinds of investments.
KADLEC: And you will get some appreciation in the stocks as well as people come back to the dividend theme. You mentioned the tax thing, that's huge from the top rate of almost 40 percent now, dividends are being taxed at the capital gains rate of about 15 percent. We have got lots of closely held companies that are issuing dividends and raising dividends because the owners of the companies understand they can take a windfall by just raising the dividend. It's another way CEOs are paying themselves. They are raising the dividend because they own a lot of stock. And it's going to catch on.
LOSIVICZ: You are saying really that a investor would still diversify your portfolio but go more heavily -- ramp up on dividend- paying stocks?
KADLEC: Right. Without a doubt. I think income's going to be important this year. I don't know where the markets are going, but these stocks will outperform.
SERWER: And just quick last question. You are seeing holdouts in the tech sector. Microsoft went and paid the dividends. Cisco, Dell, Oracle, come on, guys, get with the program.
KADLEC: They are sitting on billions of dollars of cash.
SERWER: Not paying any dividends.
KADLEC: Not paying dividends, you know, maybe they're reinvesting in things they think will pay more, but investors want the dividends. LISOVICZ: Give me-give me. And you gave it to us. Dan Kadlec, some good advice -- good investment advice. Senior editor of "Time" magazine, good to see you.
LISOVICZ: We have to step out for a second. But when we return, fighting the enemy in combat and in commerce. We will look at how war plans can be applied to business plans.
And cashing in on the media circus. See how high-profile trials can boost a town's bottom line.
First though this weeks edition of money and family.
LISOVICZ: Tax season is right around the corner. For many families it will be business as usual. But if you are a parent who unexpectedly lost your job in 2003 doing your taxes will be a whole new ball game. Here are some tips to help you stay ahead of the game. First unemployment benefits are considered income, and are therefore taxable. Second there are a few ways you can reduce your tax burden. Your job search costs are tax deductible as long as they exceed 2 percent of your adjusted gross income that means the cost of producing a resume, job travels, even a job coach. And if you had a dramatic change in family income you may become eligible for the child tax credit. If you have kids under 17 and a family income less than $110,000 you can get a $1,000 per child tax credit. You can go to the IRS Web site for more details at irs.gov.
I am Susan Lisovicz, for money and family.
LISOVICZ: Tips about treating business like war are probably as old as business and war. But now there's a new book on the subject from a former dean at the National War College. Let's meet the author and find out if what works on the battlefield also works in the boardroom. We are joined by Kenneth Allard whose book is called "Business As War: Battling for Competitive Advantage."
KENNETH ALLARD, AUTHOR "BUSINESS AS WAR": Thank you.
LISOVICZ: It's a pleasure to meet you. The military is a form of violent economics. And it seems like certainly the business world is especially violent these days.
Is it all about exporting jobs? Is that why it got so much uglier?
ALLARD: I think what it's really about is the fact the competition out there, as you guys report all the time, is getting tougher and tougher. This world is increasingly globalized, information-based, also terribly unforgiving not only of incompetence but any degree of inattention. Today's executives have to be better than ever before. The good news is we won the cold war. The free market is dominant. The bad news is you got a whole bunch of competitors out there that want to come and eat your lunch.
LISOVICZ: And they are in some cases.
SERWER: I'm interested, in a lot of ways business and war are similar, in a lot of ways they're not. You can't get away with Lead, follow or get the hell out of my way in business. You got human resources department. You've got sensitivity training.
ALLARD: All that.
SERWER: You've got all this stuff.
So, how are they different?
Is it really a good fit to talk to them together like this?
ALLARD: Let me give you a good example. You were talking about Mel Gibson's latest movie. Let's talk about his last movie, OK, "We Were Soldiers Once and Young." That was the army I grew up in. We knew who General Hal Moore (ph) was, who was the character that Mel Gibson played. He said my boots will be the first ones on that battlefield, the last ones to leave. We are all going home together. Now, you contrast that with this world that we are seeing all the time of CEO prep walks, and suddenly you realize that's a different world than the one I grew up in. I'm used to a different form of leadership. It's not the arrogant, hey do it my way or take the highway approach. It's is hey, more than anything else you have to care about your people and mission, and put them first.
CAFFERTY: Surely things like greed and corruption were not born with Enron and WorldCom. I mean, they've been around since the days standard oil was formed, and the Robber Barons that go back before the income tax laws, when the great, great big business empires were built, the railroads, companies like that.
What's different about today's climate that makes the military parallel particularly applicable?
ALLARD: As Susan said, it's as old as war and business. But the thing is today we have gotten away from some of the emphases on values and character that were once part of that same business epic. There was another standard you were held accountable to. And what amazes me now is the fact that you don't have to get deeply into it. I quoted an eminent sociologist who said, you know, hey, your morals are not improved by business school, in fact, they are sabotaged by business school.
SERWER: Whoa. That's an indictment. ALLARD: Which is a terrible indictment. I taught at West Point, OK. Up there, the quickest way to leave is to commit an honor code violation. I'm not saying that we are perfect in the military any more than you are in business. The but we understand the importance of values, if you don't live up to the values in either business or war you are in trouble.
LISOVICZ: Ken, it's wonderful, reassuring to hear character, good character matters, that leadership matters, that standards matter. But how can you say that in a time and place when we have NAFTA, when we have China as a member of the WTO, when you've had maybe a dozen trade agreements over the last year. There are plenty of great characters, hard-working Americans and their jobs are going off-shore.
ALLARD: We deserve better leadership. And the thing that bothers me more than anything else, you know, we are exporting all these jobs, OK?
The reason why we are doing this is because we cannot get on top of the idea called strategy. Because you are making short-term decisions. A lot are driven by the market. If you are in a competition with a guy playing checkers, it's best if you don't -- a guy playing chess, it's best if you don't play checkers. You have to think long-term. And everything about the market, everything about the business world today, is against that. So, to the extent you are able to do that, that's the result of leadership, of efforts in a specific business processes that you have to install.
CAFFERTY: "Business as War" is the name of the book. Ken Allard is the author, he's the former dean of the national war college. He knows of what he writes. Nice to see. Thanks for being us.
ALLARD: Good to be with you.
CAFFERTY: All right. Coming up on "IN THE MONEY" as we continue big names means big bucks. Find out why towns get rich when a celebrity trial comes calling at the local courthouse.
And if something is on your mind please don't keep it to yourself. We are anxious to hear about your problems, your issues, your -- yes. Within limits. Show some restraint. But you can write to us about the stories we are covering, stuff you might like to see on the show. E-mail address firstname.lastname@example.org.
CAFFERTY: No big surprise here, most American cities not too wild about having suspected murderers in their midst. However, that changes when the suspected murderers become defendants in sensational trials that could bring in big bucks.
Are Web master Allen Wastler joins now with more on this trend.
ALLEN WASTLER, MONEY.COM: Yes, you know. A little -- earlier in the week, the judge in the Scott Peterson trial said I think we will have to move venues here to give him a fair trial. All of a sudden all the California counties are going, me! Me! Pick me! Pick me! And the reason is that they figure the whole hoard of reporters that will follow this trial all over the place will bring a lot of money with it.
SERWER: We are so cheap. You know, we are just going to be buying cheeseburgers and cokes. It's not like you know.
WASTLER: Actually San Mateo figures they will get $6 million, if not $16 millions if it's not long. Yes, CNN cheap news network, right. But thing is -- here's the add-on benefit, OK. Speaking as a CNN news manager I can see this, so you got your camera crew out there and reporters out there and stuff. And the trial takes a break. Guys, come on. Let's see something here. Go to a human interest story or go do something about some attraction here in San Mateo.
LISOVICZ: That's where the Chamber of Commerce comes in, I mean.
WASTLER: That's right. They are already checking off lists of possible stories people can do while they are out there.
This whole thing of macabre trends. I mean, if this is something you can do all the time. I like that. Macabre trends.
CAFFERTY: It sounds like our kind of regular feature here, doesn't?
Speaking of which, the fun site of the week has to do with the meltdown of Howard Dean. I got letters from a viewer on "AMERICAN MORNING." He said the Internet gives and the Internet takes away. And of course, Howard Dean got all his early support on the Internet. And the guy wrote the Internet was full of references to Howard Dean and his "I have a scream speech" he made out there in Des Moines. And that takes to your fun site of the week.
WASTLER: Opportunity for creativity.
WASTLER: A few tracks have come out where they have taken his exuberant and interposed it with various songs. I have brought a main site.
(BEGIN VIDEO CLIP)
HOWARD DEAN (D), PRESIDENTIAL CANDIDATE: Yes! Texas and New York! And we go South Dakota, and Oregon, and Washington and Michigan!
And then we will go to Washington, D.C. to take back the White House! Yes!
(END VIDEO CLIP)
LISOVICZ: I don't know what it is.
WASTLER: I think he was just, you know exuberant and getting them going.
LISOVICZ: I was not offended or (UNINTELLIGIBLE).
WASTLER: I see coaches do it all the time. Any ways they can go to our page and get that and go and find all the techno trash.
CAFFERTY: I bet we get you a little thank you note from the Dean campaign for that too, don't we? Don't you think in the next week.
WASTLER: Any publicity, good publicity.
CAFFERTY: Just as long as they spell the name right. Thanks, Allen.
Coming up, we will read some of your e-mails. That's fascinating stuff. You can always get in touch with us and share with us the issue that trouble you late at night. The address is email@example.com Back after this.
CAFFERTY: It's time to check your answer to our e-mail question of the week about whether you would turn in a co-worker if he broke the law in order to get ahead.
Rod in Colorado, wrote "I suspect I would turn in a law-breaking co-worker but I would talk to the co-worker personally first. It is better to handle these in house."
A viewer named Elvis, I didn't know he was still around, he wrote this "I would never snitch on a law breaking co-worker. Let the police figure it out. Snitchers are usually motivated by jealously and hate. Loose lips sink ships. No one likes snitch." And other cliches we didn't have time for.
But Jeremy took a different and more pragmatic approach. He said "Yes, I would turn in a cheating co-worker and then I would take his job."
LISOVICZ: More like it.
CAFFERTY: My kind of guy.
CAFFERTY: Time for this week's e-mail question which is this -- which of the current Democratic candidates has the best chance of defeating President Bush in November? Send your answer to firstname.lastname@example.org. Be sure check us out on the Web. Our show page address is money.com/inthemoney. You can find get information on up coming shows. Find the always high sought after fun site of the week and as well as recipes for various kinds of muffins. Thank you for joining this week's edition of IN THE MONEY.
SERWER: He's kidding.
CAFFERTY: Yes, their aint no muffins.
Thanks to the gang, CNN financial correspondent Susan Lisovicz, "Fortune" editor at large, Andy Serwer. Join us tomorrow, we will be here at 3:00 Eastern time. At which time we will look at movie piracy and whether Hollywood will get slammed as hard as the record companies did. That's tomorrow at 3:00. See you then.
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Pirates; Interview With Kenneth Allard>