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QUEST MEANS BUSINESS
US Prepares Ukraine Support; Claims of Evidence of Russian Organized Activity in Eastern Ukraine; Ukraine Economic Pressure; Underwhelming Day on Wall Street; Netflix Results Announced; Search for Flight 370; Moyes Faces the Sack; YouTube Top Earners
Aired April 21, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
PAULA NEWTON, HOST: I guess we can give it a round of applause even though it was a bit of an underwhelming day. Slim gains to the start of a big earnings week on the markets. It's Monday, April 21st.
Emergency talks in Kiev as Ukraine tilts on a mountain of debt.
Banking on the binge watchers. Netflix earnings are out this hour.
And hitching a ride on the outside of a jet plane. The miraculous survival of a teenage stowaway.
I'm Paula Newton, and this is QUEST MEANS BUSINESS.
Good evening. And once again tonight we turn to Ukraine. New support and fresh concerns there. As the United States prepares more economic aid, there are new claims from Kiev that Russia is operating inside the country.
The US vice president Joe Biden has landed in Ukraine for talks with its leaders. He's going to announce more help for the country's crippled economy. Meantime, monitors from the OSCE, the Organization for Security and Cooperation in Europe, have met with pro-Russian leaders in eastern Ukraine.
According to documents obtained by CNN, the Ukrainian and US governments both believe there is photo evidence of Russian organized activity in the region. Now, you can see the photos here for yourself, but CNN hasn't been able to independently verify them. Our Frederik Pleitgen is now live with us from Kiev.
Fred, another busy day there in the capital in Kiev. If we deal with Joe Biden there, just fresh off that airplane, you knew he was going to have something in his back pocket. Are the Ukrainians saying that, look, this is what we expect and this is what we want?
FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Well, it certainly is a very difficult diplomatic environment that the vice president is going into, especially with that Geneva agreement that was, of course, signed last week. And it seems to be interpreted very differently if you ask around in Moscow or in the Western world.
The Russians for there part, of course, are saying that they believe that Ukrainian militias need to disarm as well as the ones in those buildings holed up in the east of the country. Of course, it's a very different view than what the government in Kiev here has.
Look, the government here, the interim government, is saying they believe that the US is doing what it can in the current situation. However, they also say that any additional help would be greatly appreciated.
Now, what we did today is we went around and we asked people here on the street how they feel about the situation and what they feel the US should do. Here's what they had to say.
PLEITGEN (voice-over): It's called "Pouring Monday." An ancient Ukrainian tradition where on Easter Monday, men throw water on women to make them theirs. But even in this jovial setting, Ukraine's unstable situation is on people's minds.
UNIDENTIFIED FEMALE: Of course we worry -- are worrying about this, because we want to live in a free country, we want to have -- we want to speak our language, we want to be independent. We didn't want to fight with anyone.
PLEITGEN: Vice President Biden landed in Kiev in a country seeking America's help. He's expected to announce a new assistance package and talk about ways going forward to put additional pressure on Russia to deescalate the situation.
On the capital's streets, most people said they're aware there is only so much the United States can do at this point.
UNIDENTIFIED FEMALE: Maybe advice, not army. Not army. Military could help our army.
PLEITGEN (on camera): To help the army, you think? With weapons or with soldiers? You want American soldiers or American weapons?
UNIDENTIFIED FEMALE: Maybe soldiers, too.
PLEITGEN (voice-over): With pro-Russian forces occupying government buildings in the east and tens of thousands of Russian troops at Ukraine's border, seemingly poised to invade, Ukraine's prime minister told me Ukraine needs assistance, but knows the US wants to keep diplomatic ties with Moscow open.
PLEITGEN (on camera): Do you think the US is owning up to its role as the biggest power in the world and doing enough to confront Russia on this issue?
ARSENIY YATSENYUK, PRIME MINISTER OF UKRAINE: We would be grateful to everyone, starting with the US and ending with the EU, for doing more to stabilize the situation.
PLEITGEN (voice-over): Many question whether Ukraine's army is capable of conducting military operations against pro-Russian protesters in the east, but there are other pressing problems that also need to be addressed, analysts say.
First and foremost, the country's dire financial problems. As it faces a pro-Russian insurgency in the east and the threat of an invasion, Ukraine's leaders are looking to the United States for support.
While the people here celebrate their tradition, smiling, but worried with concerns about what the future might hold.
PLEITGEN: And Paula, tomorrow, the vice president is going to meet with the interim president of Ukraine Turchynov, as well as the prime minister. And as you can see, this visit is very important to the government here in Kiev, but the expectations certainly are not unrealistic. Paula?
NEWTON: Yes, especially with a lot of discussion about how the help could be more than economic. Our Fred Pleitgen tonight in Kiev, thanks for that.
Now, with massive bills mounting, Ukraine is in desperate need of that economic help Fred was talking about. Now, the country must repay around $9 billion this year. With reserves of just $15 billion, it's not hard to do the math here, is it? That puts the country under extreme pressure to find more cash.
If you combine, though, the money owned by Ukraine's state-owned energy company, Naftogaz, with the country's budget deficit, it equals more than 10 percent of Ukraine's total GDP. That's according to data from the IMF.
Now, US Congressman Ed Royce and Tom (sic) Engel are leading a delegation to Ukraine. They say elections next month hold the key to securing the country's economic future. Now, they spoke earlier to CNN's Becky Anderson.
(BEGIN VIDEO CLIP)
REP. ED ROYCE (R), CALIFORNIA: The first point I would make is there's an election here on May 25th. It's very important that election go off as planned. But with that election and with those reforms that are coming down, it will be possible for Ukraine to get better on its feet.
In the meantime, we're also pushing an initiative which will help get gas into Ukraine. The United States will be helping on developing shale gas here. We're also working on trying to encourage changes in our laws so that gas can be shipped here.
BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: Congressman Engel, when we're talking about gas, and it would be gas that Ukraine were to need, but it lacks an LNG port, so quite frankly, in the short term, it's not likely it's going to get its gas anytime soon, certainly not from the States, which at the moment has an oil and gas embargo on its exports, of course.
Your colleague, Chairman Royce, has talked about lifting that self- imposed embargo. Would you support that?
REP. ELIOT ENGEL (D), NEW YORK: Well, I think the gas and energy need is really one part of the picture. I think Ukraine, again, wants to know that the West is standing behind it.
I think the best answer that the Ukrainians can have to what Mr. Putin is doing is to go vote in their election in May and to have an outpouring of democracy where the will of the Ukrainian people is worked in this election. And I think that will be the biggest blow to Putin.
(END VIDEO CLIP)
NEWTON: Turning to Wall Street, stocks finished slightly higher as traders got back to work after the Easter break. Now, the Dow was in positive territory for the entire session as they get ready for a host of big earnings this week. Zain Asher was watching all the action, or shall we say lack thereof?
NEWTON: Bit of an underwhelming day. But still, that bull just keeps on running, even if he was a bit slower today.
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Yes. So, basically, we're up about -- we closed the day up about 40 points, Paula, but we did lack in terms of volume. So obviously, as you know, European markets were closed today. That contributed to the lack of volume.
Only about 400 million shares traded here at the stock exchange. It certainly sounds like a huge number, but it really isn't that much. You add to that the fact that Boston was closed, and Boston is pretty much one of the largest cities here in the US in terms of asset management, that was closed because it was Patriot's Day.
All of that contributed to the lack of volume, lack of momentum. So, one trader actually referred to what we're experiencing right now as a market of stocks, as opposed to a stock market, because investors are really focused on earnings.
Speaking of which, we are just getting numbers from Netflix. Their shares actually jumping 3 percent after the close, profit coming in at 86 cents per share, better than the 83 cents we expected, while sales came in at $1.2 billion, a little bit in line with estimates. The stock was the best performer on the S&P 500 last year, adding about 270 percent, but it's actually down for 2014. Paula?
NEWTON: Yes, the shine coming off tech stocks in a little bit. We'll have more on the Netflix results shortly, and they're just one of the big companies out there reporting earnings. There seems to be this debate, Zain, this week going forward, do we concentrate on the big earnings numbers or their guidance going forward for the rest of the year?
ASHER: Well, investors certainly focused on the earnings this week. So, a couple of companies that people are watching out for right now, Paula, is Apple, certainly, Facebook as well. They're coming out on Wednesday.
On top of that, we've got Amazon coming out on Thursday, and people are really focused on the tech sector because the tech sector has certainly shown signs of volatility. You saw last week Google shares certainly disappointed last week, and that certainly did affect the stock price.
Also, we're getting GM on Thursday, and this is actually going to be the first earnings report we've had since GM has been all over the news with their ignition switch recall. No word yet exactly on what the loss might appear to be, given the 2.6 million vehicles that were recalled, but investors certainly going to be looking at those numbers closely.
But people do seem to be taking first quarter earnings with a grain of salt, partly because of all that cold weather we've seen in the first few months of the year, so people are certainly cautious, especially retail earnings.
We're expecting retail earnings over the next few weeks only about 20 percent through this earnings seasons, retail earnings coming out in a bout a couple of weeks, so that's going to be the telltale sign of whether or not the bad weather did have an impact on this particular earnings season. Paula?
NETWON: Yes, the jury on that seems to be out, depending on who you talk to. Zain, thanks for the update. Appreciate it.
ASHER: Of course.
NEWTON: Now, there have been numerous leads, but they have all turned out to be false. Richard Quest joins us now from Kuala Lumpur on the search for the missing Malaysia Airlines jet. Richard?
RICHARD QUEST, CNN INTERNATIONAL: And good morning from KL. When we come back after the break, we will update you on how the Blue Fin 21 is searching up the west coast of Australia, how the families are now showing anger in Beijing and Malaysia, and how President Obama will be visiting the region this week. QUEST MEANS BUSINESS is back in a moment.
NEWTON: The search for missing Malaysia Airlines Flight 370 continues below the ocean's surface. Now, the Blue Fin 21 underwater drone is on its ninth mission now. It has now covered two-thirds of the search area without finding any trace of the missing airliner.
Now, 45 days after the disappearance of Flight 370, families of the missing passengers and crew are still waiting for answers. Richard Quest is also in Kuala Lumpur looking for those answers. Richard, it's great to have you join us from Kuala Lumpur.
Many developments -- you and I have discussed, if we go first to the search for that Blue Fin in the water, two-thirds of that search already finished, Richard?
QUEST: Yes, and that's because, Paula, we're not talking about two- thirds of the entire search area of all four pings. This is a very focused search area that primarily is around the second ping, the one that lasted some 30 minutes, because that's the strongest.
So, when originally Angus Houston and Tony Abbott suggested that it was going to take up to two to three months to do it, they were referring to a much larger area. Instead, just by controlling that area down to a tightly-focused area around the second ping, so to speak, they've got it down to just a couple of weeks.
Two-thirds of the way through, once they complete it, if nothing found, Paula, then they are -- and they have agreed, and they're going to have to decide what to do next.
NEWTON: Yes, Richard. You and I -- and you especially have been parsing every detail of this investigation, and yet, what we pore over in terms of details and scale and search numbers, the families have that agonizing wait that has now gone on so long.
I take it it seems to just add every day to their agony in terms of the mistakes they believe are being made to the search, the mistakes made by the Malaysian government.
QUEST: The families are really -- their questions are now coming thick and fast to the investigators and to the Malaysians. And the questions really focus down on several areas. Firstly, highly technical questions concerning the emergency locator beacons, concerning the frequencies, concerning the nature of the Inmarsat research.
And that, of course, is all destined to the core question, why does Malaysia and the Australians and the organizers, why do they believe with such ferocity that that is the search area? What is the credibility of the evidence which they are putting forward?
But the second part, now, which we're starting to see coming through, Paula, is questions about the rights of the next of kin, the NOKs, as they put them in questions. And the NOKs are basically saying are we being given all the information to which we are entitled?
Under ICAO rules, Paula, next of kin are entitled to a greater degree of information, timely, verified, all this sort of information the next of kin are entitled to under the treaties. And what they are now saying is we are not sure we are getting what we are entitled to.
From the authorities' point of view, they basically say we are telling you everything we can when it is verified. And that is the point of conflict between the two sides.
I have to tell you, an extremely bad-tempered, downright unpleasant meeting took place in Beijing. Here in Malaysia, the families are certainly getting more resentful at the way they are being treated. And ultimately, now the Malaysians are sending to Beijing some more technical experts.
Finally, Paula, one thing does keep coming back again and again and again. The families say they are asking technical questions and the Malaysians and the other organizers are simply not answering technical issues.
NEWTON: Yes, and if you pore over those questions, the amount of detail that they're looking for is extraordinary, and as you said, they're not getting those answers that they want. Richard, in the middle of all this, a visit by Barack Obama later in the week to Malaysia. At this point in time, how do you think his visit will be received, especially with the Malaysian government under such pressure?
QUEST: For the Malaysian government, this visit is exceptionally important. First time in 50 years, I think, first sitting president who's visited Malaysia some 50-odd years. A visit that was postponed once before.
He's going, of course, to a variety of -- he's going to Japan, the Philippines, South Korea, where he will have, obviously, issues with President Park to discuss whether her country is in the midst of its own crisis over the sunken ferry, and here in Malaysia.
It will be economics, it will be trade, and it will be a reaffirmation of the shift that Malaysia has made to a more pro-Western, if you like, view of the world from the previous long-standing prime minister, Mahathir, to the current administration, and the current prime minister will be very keen to solidify that direction in foreign policy with this visit by President Obama. We'll talk more about this, you and I, as the week moves on.
NEWTON: We absolutely will, and we should point out that this visit's been on the books for many, many months before, of course, the plane went in the sea. Richard, so happy to see you there, and we will hear more from you throughout the week. Appreciate it, Richard.
Now, it was quite a shocker. It could be quite a shocker. Even the rumors are shocking. He's been touted as the chosen one, but now, his days may be numbered. David Moyes could soon be out as Manchester United manager. We'll have more in a moment.
NEWTON: Manchester United's manager, David Moyes, is reportedly facing the sack. According to several media reports from British media specifically, Man U are planning to fire Moyes before the end of the season.
Now, defeat by Everton on Sunday confirmed that United will miss out on next year's Champions League, the first time they won't have qualified since 1995. Now, CNN asked the club about the reports that Moyes is about to be fired. Its director of communication replied, quote, "Nothing has happened at all. I don't know where the suggestion has come from."
Now, any announcement about Moyes' future is likely to come when US markets are closed, so right about now, potentially, that's because the company is publicly traded on the New York Stock Exchange.
Shares dropped at the open this morning, eventually ending down around, let's say, 1 percent, very close to 1 percent, actually. However, the stock is up more than 13 percent so far this year.
Now, "World Sport's" Lara Baldesarra joins us now from CNN Center, and I'd imagine that you have some indication about where these rumors are coming from. It's been an extraordinary season, an extraordinarily bad season.
This was supposed to be, though, another moniker of slow, steady, stable management taking over from Sir Alex Ferguson. Our sports fans here reminded me, Alex Ferguson had some bad seasons over there at Man U when he started.
LARA BALDESARRA, CNN SPORTS CORRESPONDENT: Yes, he certainly did, Paula. But this is something that -- 26 years is what Alex Ferguson spent with Manchester United, and he hand-picked David Moyes to come in and be his successor. Really, all the pieces were in place there.
Now, surely there was some turnover with the squad, aging players and whatnot, and it wasn't a very good summer transfer window leading into this season. But at the end of the day, we knew it wasn't going to be a great season for Manchester United, we just didn't think it was going to be this horrific.
And I say "horrific" because it really, really is that horrific. Now, you mentioned that it's been 1995 was the last time that Manchester United missed out on the Champions League. Well, that is a really, really big deal. There's a lot of money involved in going to the Champions League.
And just to take a look at it this way, United made almost $50 million for making it to the round of 16 in the Champions League last year. That's just what UEFA pays you out based on their prize money allocations and what not. Just to get into the group stage, the first stage of when the Champions League truly begins, that's $12 million.
Now, sure, it's a little bit insignificant for clubs that pull in hundreds of millions of dollars and billions of dollars, but at the end of the day, that's a sizable loss, and that's what's really, really concerning.
And just like, also what you mentioned, that stock price that did take a bit of a drop as well. This is the first time that we've seen this kind of uncertainty with the club since it's become publicly traded on the New York Stock Exchange, and obviously, investors, they don't really like uncertainty whatsoever.
So, we did, fortunately for he club and the company, we saw that that stock rebounded by the end of the day at market close today, but nonetheless, this is not a good time, Paula.
NEWTON: Yes, and Lara, you remind us that yes, it's a bad sports story for those Man U fans right now, but it's also a significant business story, and we'll stay on top of it. Thanks so much, I appreciate it.
Now, advertising revenue is not just about names on shirts or "likes" on Facebook. There is big money to be made on YouTube. Now, the most- watched YouTube channel is PewDiePie. It's run by a young Swedish video gamer who uploads his game play.
The Internet data firm Social Blade estimates his channel earns as much as $1.4 million monthly. Now, that figure varies, depending on how many views each video gets and how many they make in a month.
Now, DisneyCollector is also a major money spinner. Estimates put its monthly earnings at about $915,000. Now, that channel shows videos of playtime with the latest toys for children.
Now, SkyDoesMinecraft, meanwhile, rakes in as much as $437,000 every month, that's according to Social Blade. It features videos of animations, comedy skits, and parodies about the wildly popular Minecraft game.
Who knew you could make all this of this money? Apparently Paul Wallace knew. Paul Wallace is a 23-year-old who turned filming fast cars - - yes, filming fast cars -- into a way to make fast money. Jim Boulden looks at how he's in high gear in the lucrative YouTube economy.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Fast cars on cramped streets. It may be hard for these rare super cars to get a head of steam on London's streets, but they still grab the attention. As a teenager, Paul Wallace decided to post videos of these cars.
PAUL WALLACE, DIRECTOR, SUPERCAR SCENE LIMITED: At the age of 15, I literally -- I just uploaded it to YouTube and showed my friends, and so it's really sort of gone on from there. And people are obviously searching to find that sort of stuff.
BOULDEN: There are now some 700 videos and more than 58,000 subscribers to his YouTube channel, Supercars of London.
WALLACE: I think from day one, there was an instant sort of attraction to seeing these cars on the road, because normally, they'd seen them in magazines and on TV shows, like "Top Gear." So, it was sort of -- I was bringing them to life sort of thing. And within sort of a few months, there was 1,000 views on one video.
BOULDEN: Through Google AdSense, Paul now gets a cut of every ad that runs ahead of his videos. He says he's now making $2500 a month.
WALLACE: I think it was when I really put a business plan to Google, when I applied for the Google AdSense partnership, me and my friend at the time, we wrote a business plan and sort of told them how much money and time we were going to be investing.
BOULDEN: Paul still goes into central London most weekends seeking out a rare auto, leaving behind his own Audi R8 sports car, recently bought with his YouTube earnings.
WALLACE: A lot of people would think now that I've got a Supercar, that's it. I still go to London by train and film these Supercars with all of my friends that I've met over the past five years. I'd like to think that I'm sort of a mini business entrepreneur.
BOULDEN: These cars normally ply the streets of the Gulf states.
WALLACE: As the summer comes in and I'm there more, you do meet a lot of Arabs and they're all very friendly and very polite, and some of them even study at university now and become good friends.
ROBBIE METTA, PROPERTY DEVELOPER: They love it, so taking them up and down here --
WALLACE: They're quite excited by being in a Ferrari.
METTA: They like to video it and put it on Instagram, start following, and everyone kind of just meets up for the weekend. I think it's quite good.
BOULDEN: Paul also handles the social media for a high-end auto repair company in Watford outside London, mixing his passion with business sense.
WALLACE: I found something very early on, and I was lucky enough to find something that I enjoy doing very early on, and it just so happens that it earns money. I always had an ambition, I wanted to own a Lamborghini by 25. So, an Audi R8 at 23 is a step there.
BOULDEN: So, he's got two years and lot more uploading to reach his goal of perhaps filming his own Lamborghini on the streets of London.
Jim Boulden, CNN, Watford, England.
NEWTON: A teenage boy is said to be lucky to have survived after apparently stowing away on a plane in a very dangerous place. We're live in San Jose, California, with the details.
NEWTON: Welcome back, I'm Paula Newton and these are the top news headlines we're following this hour. The death toll in the South Korean ferry disaster continues to rise. Divers have been recovering bodies from the submerged vessel. Eighty-seven are confirmed dead, most of them teenagers. Two hundred fifteen passengers are still missing.
Ukraine says it has evidence of organized Russian involvement in separatist activity in the volatile east of the country. Leaders provided photos to the U.S. showing what they say are undercover Russian troops. Now, Moscow denies any involvement in the rebellions.
Presidential elections will take place in war-torn Syria on June third. Incumbent Bashar al-Assad seen here at the weekend is widely expected to run for another term, that's despite three years of conflict in which the U.N. says more than 100,000 people have died. Now, this year's Boston Marathon is still underway and has so far passed without incident. Meb Keflezighi became the first American man to win the race in 31 years, and Kenya's Rita Jeptoo won the prize for the second straight year in a row.
Now, after the deadliest avalanche in Mt. Everest's history, some people are calling on Sherpas to boycott the climbing season. Thirteen Sherpas were killed in the avalanche on Friday, three others are still missing and feared dead. Now, you're going to give your head a shake after this story. It's an incredible stowaway story if it turns out to be true. Now, a 16-year-old boy claims he smuggled himself into the wheel well of a jetliner that then flew halfway across the Pacific Ocean. I want to show you how extraordinary this actually is. Now, he started off, he says, in San Jose, California, and as we said, flew all the way to Maui in Hawaii almost five hours. How he got through security in San Jose and then all the way to Maui we already don't know, but then take a look at this. He says that he in fact did the entire trip in what is the inside of the landing gear. Now, for more on this extraordinary story, we turned to Dan Simon's who's at the San Jose International Airport. You know, Dan, in the first instance, how did he survive this? It's supposed to be freezing cold, you're not supposed to have a heck of a lot of oxygen there, it's clearly not meant for a human. How did he survive?
DAN SIMON, CORRESPONDENT FOR CNN'S SILICON VALLEY BUREAU: It's really a medical mystery at this point. All we can do is sort of rely on the experts and they tell us that in this particular situation, it's a little scientific but that when the temperature gets that low, your body metabolizes oxygen differently. I know that's sort of a complicated explanation, but because of that, his body could use whatever limited oxygen was there more efficiently, If that makes senses. Now, Paula, they're really two simultaneous stories in one. You have the security issue which you talked about, and the survivability issue. Let's first talk about security. What authorities are telling us is that this young man got over a fence that surrounds the perimeter of the airport. He did it at night which apparently made things easier for him to do so. The FBI says they actually have surveillance video of him doing this and then getting on the tarmac, making his way towards that Hawaiian airliner and then somehow getting into the wheel well of that airplane.
Now in terms of the survivability, you're talking about as you mentioned temperatures -- and the experts are saying that it could be somewhere around 80 below zero if you can believe that. Thirty-eight thousand feet in the air, and obviously with limited oxygen, he passed out. He was rendered unconscious as a result of this, and matter of fact, when the plane landed, he was till unconscious. It took about an hour after the plane landed for him to sort of come to and climb out of the wheel well of the plane. In terms of why he did this, he told authorities that he got into a fight with his family and there was some sort of argument and then he came over here to the airport and you know as for what happened here raises a whole host of security issues of course. You know, the fact that somebody could just hop over this fence apparently with ease raises a whole host of security issues. Paula.
NEWTON: And what answers have you been given about those security issues? How does a kid who's angry with his family end up over a fence and then into the landing gear of a jet?
SIMON: Yes, you know I haven't heard a good explanation yet to be perfectly honest, but in terms of the way it works here at the airport, the airport administration is in charge of the perimeter and then once you get into the tarmac area, that's more of a TSA issue. So, it's kind of a sort of a collaboration in terms of various agencies guarding the airport. But I think you really sort of asked the question that a lot of people are having, is how could this happen, and I think that's something that the authorities are really going to have to look at closely because one of the unspoken things here is if a boy could do this so easily, then a terrorist could as well. And that of course is what's really scary here.
NEWTON: Sure, absolutely. So many questions and not the least of which is what about that medical miracle? I mean, -80, and you're saying the kid, you know, basically is still alive. Dan, thanks for this update and I'm sure it's something we're going to continue talking about in the next few days. Appreciate it. Now, Heineken says its brewing innovation. Our interview with the Dutch firm head of marketing about bringing something new to a very traditional industry.
NEWTON: Heineken on average sells more than 13 million pints of premium beer worldwide every single day -- 13 million pints. We're going to have you try and visualize that. That's one for every single person in a city the size of Tokyo. Now, in this week's "Executive Innovators," we meet Alexis Nasard. He is the man in charge of marketing at Heineken, and he says there's plenty of innovation, so he claimed, brewing in the beer business. And our Jonathan Mann finds out.
ALEXIS NASARD, CHIEF MARKETING OFFICER, HEINEKEN: It's creating exciting experiences for consumers.
JONATHAN MANN, ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: Coming from Procter & Gamble, a company known more for everyday consumer goods, Alexis Nasard has let his definition of innovation evolve.
NASARD: When my laundry is not clean enough, my skin is not young enough, so there are very scientific problem-oriented solution. What is different in a category like beer, it is not about solving a problem, it is about aspirations, dreams and lifestyle.
MANN: But in a 150-year-old beer business, innovation isn't always an easy sell.
NASARD: One of the thing that shocked me when I started working at Heineken and I was talking about innovation. They said, "But what innovation? Beer is beer." Can you imagine that statement? Why doesn't anybody say a phone is a phone? Or a computer is a computer or a car is a car? Because they innovate.
MANN: In 2010 Nasard decided to prove innovation can work in any industry and set a goal that innovation -- new beverages, new drinking devices would make up 6 percent of Heineken's sales revenue by 2020. By 2013 they hit 5.9 percent, led in large part by a beer and lemonade mix. But Nasard believes that failure is essential to the innovation process.
NASARD: We have the draft keg which was a four or five-liter metal keg that you could use it to actually pump your own beer when you are at home or in picnic or somewhere else. It had some success but not nearly in line with what we had envisaged, and we learned a lot from it. We learned that consumers that it's heavy, that it requires a long time to cool it -- you need like six, seven hours in the fridge. So we've learned a lot along the way. That is why we're not too fussed up about failures in innovation. It's a little bit costly but if we haven't tried the draft keg we would never have reached what we've reached here, and that in a three-year space of time is quite a difference between what -- the first thing offered and what the sub (ph) is offering today. And failing is part of serendipity.
MANN: Out of that failure came their latest innovation -- a more refined at-home refrigerated beer dispenser.
NASARD: Often listening to consumer is right, but you can listen to their needs. If Steve Jobs went and asked the consumer whether they wanted an iPad, he would never have launched it. So what we do sometimes -- we believe in something, we study the market, we study consumers and we sometimes act on an act of faith.
NEWTON: Now if you can stand it, we have yet more innovation in the drinks industry -- get ready, I'm not sure this is a good idea -- for powdered cocktails. All right, it's actually called Palcohol. Simply add water to the packet and you have an alcoholic drink. Now, the U.S. government surprised a lot of critics by approving it for sale in the United States. The Arizona company that makes the powdered beverage has touted its portability among other things. Parents may not be so happy about it -- tell me about it. It's a first in the U.S. although powdered alcohol is sold in Japan and in the Netherlands. And, yes, I can tell you as a parent definitely not a good idea. As a former university student also not a good idea. Tom Sater, what is a very good idea is beer garden weather. That's at least happening here in New York. It's splendid out there.
TOM SATER, METEOROLOGIST FOR CNN INTERNATIONAL: Yes, yes. It's 76 degrees Fahrenheit or 24 Celsius. Absolutely beautiful there in New York. Although you do have rain coming in, you've had a little kind of post- Easter warm up and it looks like it's going to fall in the next couple of days.
Eleven degrees in Paris, London 13 -- very nice for Lent too. We've had some widely-scattered rainfall and I think our temperatures are going to get well into the 20s, but then they'll drop a little bit by Thursday. If there's any problems out there for any of you business travelers, they're going to be hard to find really. Munich a little bit of rain -- what's 15 minutes, we can handle that? Budapest same thing. So no major delays based on our weather computers, but if you look at the satellite, we've got a lot going on. We've had some tremendous rainfall and flooding in Romania. I'll show you some totals although a plume of moisture heading across Greece into Turkey. But I want to point out this little circulation that is getting ready to move now in toward areas of southeast England. You're going to see that in the days ahead. But look, 44 millimeters at Bucharest, about your monthly average, and with that we've had water levels up over the wheel wells of automobiles in several communities there. Just a little too much of the unsettled weather. Here comes this area of low pressure. Notice the green and the scattered showers -- a large precipitation shield although there are some dry slots in here obviously. But I want to point out the circulation. Typically, we find the weather pattern actually a little bit more of a west to east motion here. But we're also seeing a kind of a reverse. Watch the 48-hour prognosis here, and it spins as it moves upward. So it's a little bit of a backdoor cold front in a way the system kind of moves up from the south, but with that comes some southerly winds. You'll see it on the temperature change here, and the trend for the next 48 hours a little spike of warmth although as mentioned, it'll fall, I think, by the wayside come Thursday.
But the 20s are going to be nice for Tuesday. I mean, here you go -- Kiev 21, Bucharest 23, Istanbul 19, Athens 24. The three-day forecast shows those numbers drop as promised. As we get into Thursday, Warsaw, Berlin as well as Bucharest.
All right, in the U.S., we had a storm system plaguing areas of the southern southeastern states over the weekend, and that's the system here. It's quite vigorous and strong, really creating some dangerous rip currents on our coastal period here. This is the nice weather in New York that Paula was talking about -- 24 degrees Celsius. That cool -- that weather that is nice will start to cool down back behind this front. So with that, some inclement weather that moves in along with this frontal system. The big story for spring storms is down in the state of Texas. A severe thunderstorm watch will be found here as most of the rain stays north. So, across the U.S., no major problems in the West. San Francisco 17 degrees for a high on Monday, Miami 28, Atlanta 23. All hubs really should be noticing some nice weather as far as getting in and out. Departing flights no problems as well.
Now, as we do look across into areas of Asia, Taipei showers could become a thunderstorm or two. Jakarta, Singapore, Kuala Lumpur we're all looking at those isolated thunderstorms, but as we keep our eyes as well as for the search and rescue crews that are working of course in South Korea, there's a little bit of rainfall that is on the radar. But high pressure should be moving in to really kind of create more of a quiet weather pattern for the next 24 hours for them.
That's very important, although on the other end of the globe -- here we go -- we've got Jack as a cyclone heading into our search area for the crews working for finding the Malaysia flight 370. Again, they've been waiting to put on the brakes for any air flights going into this area, look for debris. This cyclone may shut the door for them, Paula, although we're still watching areas with the winds could kick up a little bit. And unfortunately, that may halt the progress of the crew on Ocean Shield to deploy the Blue Fin-21. But we'll be watching the cyclone. Most of those stronger winds should stay out of the search area. Back to you.
NEWTON: Yes, depending on how it expands and contracts over the next few days -
NEWTON: -- as well. Keep an eye on it. Tim -- Tom -- thanks for that, appreciate it.
NEWTON: Now, Netflix rivals move in. Can the company that pioneered streaming television continue its explosive growth? I can tell you it's not going to do it with this. Results are in and we'll reveal what's in them next.
NEWTON: I'm so sorry to be the one to break the news. Netflix is raising prices. CEO Reid Hastings says the company will increase prices for new subscribers by a $1 or $2 depending on the country. Does that mean that the old subscribers get it at the cheaper price? I need that explained. Anyway, Hastings says that the hike will help the company buy more content. Original content is key and that's what analysts were looking for when the company released earnings for the first quarter. And the envelope, please. Does anyone remember these? These may start to become obsolete. This is what the DVDs came into the house and I'm told some people get the DVDs to the door. This will be a relic very soon. It will all be streamed and this is part of the reason why -- Netflix added 2.25 million new subscribers in the U.S. for streaming services with -- that was basically in line with expectations. Now, it made more than a $1 billion in revenue from those streaming services and that was also in line with estimates.
Now, earnings per share came in at 86 cent, and that was slightly ahead of expectations, and you might have guessed, but already the stock is up about 6 percent in after-hours trading. Now, streaming services like Netflix are reshaping the way we watch television. Tell me about it. Now, they make it easy to watch one episode and, yes, then another, and another and another. Don't lie. You've all done it. I know seniors that even do it now. Samuel Burke reports on the growing trend of binge-watching.
SAMUEL BURKE, BUSINESS CORRESPONDENT: Whether it's Game of Thrones, - -
Male: The madman sees what he sees.
BURKE: -- House of Cards, --
Male: I'm sorry, Mr. President, but I will not do that, --
BURKE: -- or Orange is the New Black, --
Female: You will leave in a body bag.
BURKE: Something dramatic is taking place on screens both large and small. Many call it a new golden age of entertainment.
MARC BERMAN, TV MEDIA INSIGHTS: The quality of the programming has dramatically improved over the years. There are so many good shows out there.
BURKE: And like all good things, some of us can't get enough.
Female: I binge-watch Scandal.
Male: I've binge-watched CSI Miami.
Female 2: I am binge-watching right now on Shameless. It is a total addiction for me.
BURKE: Oh, sure, you could've binge-watched TV shows in the good old days on DVDs or something called VHS tapes, but technology is taking marathon viewing to new levels, and Netflix is leading the way.
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: Netflix is almost synonymous with binge-watching. Even though there's other ways to do it, Netflix is in some ways the easiest way to do it. Netflix is like walking into a library and having every book in a series all lined up on the shelf ready for you to read. It does that for television.
BURKE: It's not just Netflix helping us gorge on our favorite shows. Hulu, Amazon and other services also feature unlimited hours of programming for viewing on TVs, tablets, laptops and smart phones. Streaming gadgets like Google's Chromecast, Apple TV, the Roku Stick and now Amazon Fire TV, all stream net content effortlessly to your set.
Male: I don't trust anyone.
BURKE: And more Silicon Valley heavyweights are getting in on the content business. Yahoo is reportedly planning four new series.
Female: My name is Piper Chapman.
BURKE: This powerful combination of original series and streaming devices means that once we get going, we don't have to stop. Netflix has added more than 2 and a 1/2 million subscribers so far this year, thanks in part to binging.
STELTER: When people pay for Netflix every month, they're paying for access to this giant library of shows. They may only binge on one of those shows a month or one of those shows a quarter, but they like having access to all of it.
BURKE: But for many, there is a downside.
Male: I feel like I've wasted a lot of time. When I get through that eight hours, I just feel like drained and I'm like I cannot waste another hour of my life doing this.
Male: You and I could partner up.
BURKE: That could become a bigger problem. Fourteen percent of all American households own streaming devices and sales are expected to double by 2017. The line between Silicon Valley and Hollywood is blurring, and both are reaping the benefits. Samuel Burke, CNN New York.
NEWTON: So, why can't we step away from the television? That's probably a simple yet very complicated answer at the end of the day. Netflix sent cultural anthropologist Grant McCracken into the homes of TV streamers to find out how and why we're doing this. He joins me now from Stamford, Connecticut. You know, Mr. McCracken, I confess to being both fascinated and completely terrified as to the answer you're going to give me. Why are we so glued? Why do we binge? It's episode after episode, and like you said in Samuel's piece, at the end of it, you don't feel so good about yourself.
GRANT MCCRACKEN, ANTHROPOLOGIST: Well certainly people use that metaphor, binging, don't they? But in point of fact, they're not watching bad TV and they're not waking up covered in junk food and -- and in shame. They're not watching the Dukes of Hazzard, they're watching great TV, and that's probably the best news here. The technology is kind of the necessary condition here, but the sufficient condition is a culture that got better. And Newton Minnow in 1961 as Kennedy's chair of the FCC, said listen, TV is a vase -- a vast -- wasteland. Nothing good can ever come of it. And in point of fact it's got steadily better, not least because of the FCC got out of the way and we had a cable revolution and now we have a streaming revolution and those things in conjunction all give us fantastically good TV. So my argument is that we're not binging, we're feasting.
NEWTON: Feasting. So you're saying the sheer quality of this is better and you'll helping us all to feel a little bit better --
NEWTON: -- when we're doing it. You're saying that the very nature of what we're watching has changed for the better.
MCCRACKEN: Absolutely, and we've know this -- we've watched this happen over the last couple of years. TV's gotten more complex, it's become more nuanced. You know, there's a subtlety at work there. We're breaking some of the old contracts that said you have to keep TV simple and stupid. TV now -- in fact we see a kind of perfect storm happening in the world of television. It's drawing in better writers and show runners and actors. You know, a great migration of people coming from Hollywood to get into TV, and that's because TV is getting better. And as it gets better, I think it rewards show runners and writers and actors, and so you've got kind of a virtuous cycle. Like what the Street used to call a fleet -- a flight-to-quality.
NEWTON: And, you know, you make the argument -- you tell me why in your estimation we need to have chief culture officers, and this is very related to what this new phenomenon is about. It taps us into what? What are we doing by going after these shows that there's a lot of buzz in terms of what's going on in these shows, we talk to our friends about it, it's great water cooler discussion. But how has it changed the cultural conversation?
MCCRACKEN: I think it's enriched that conversation. It's made it more -- I think this will have vast implications across the world of branding and marketing. You know, some branders and marketers still assuming that the person they're talking to out there is a couch potato, not very bright to begin with and not really paying attention at the moment that they see the ad or the brand. And what's happened is I think all boats are rising with this tide, and that's a huge trend that nobody saw coming. I mean, truly, it's something that's put itself on the radar just maybe four or five years ago and it sends a signal to everybody in the -- every cultural creative has to take account of that trend. You know, if companies had had a chief cultural officer, it would've been possible to see this coming ten years out. And five years is nice advance notice these days.
NEWTON: Yes, tell me about it. They'd give anything for that kind of a cycle. Dr. McCracken, I want to thank you for giving us your insights into this and making millions feel so much better.
NEWTON: Guilt free watching, that's what we want right now. Thanks so much, appreciate your time.
MCCRACKEN: My pleasure, Paula. Thank you.
NEWTON: Now, an unlikely hit -- a 700 -- when's the last time you read a 700-page book? On economics -- not -- I didn't say book, I didn't mean fiction, I meant economics is at the top of Amazon's best seller list. How it got there. Next.
NEWTON: Seven hundred pages, bar graphs, bar charts, footnotes, and yet it is the best seller this moment on Amazon. Christine Romans talked to the author to give some insight as to why.
THOMAS PIKETTY, AUTHOR, "CAPITAL IN THE TWENTY-FIRST CENTURY": The purpose of this book is to put a lot of history college dancing (ph) into this debate and to, you know, and to understand that this inequality debate that we're having right now, you know, did not start a few years ago. People have been fighting about inequality forever and the purpose of the book is to -- not to end this fight. You know this will continue but that piece (ph) a bit more of what we are fighting about.
NEWTON: More economic debate there, and that is "Quest Means Business" for day. I'm Paula Newton in New York. Thanks for watching.