Transcripts For KQED Nightly Business Report 20150204 : vima

Failed to see january shadows. For the second day running, a major springlike move higher than the Dow Jones Industrial average. Meanwhile and contributing to stocks gains, oil prices extended their rally, up about 7 . More on that in a moment. But first, disney. The house of the mouse which has seen its shares soar more than 30 over the past year out with earnings late today and they were anything but mini. Company earned 1. 27 a share, 20 cents better than wall street expected. Revenue of 9 to more than 13 billion and as a result shares popped. After hours, and that was on top of a more than 2 gain in the regular session. Julia boorstin spoke with ceo bob iger and has one big takeaway on disneys results. Reporter the key takeaway from disneys earnings is that igers strategy is working. All the companys divisions showing growth. Great great quarter for the company across the board. Clearly, i think it is a great testament to focus on franchises and our great brands. Parks and resorts, obviously, benefit from that but Operational Excellence and clear demand around the holiday period. Just about any way you look at it the company had a great quarter and i think, again, it a lot about the properties the assets that this company now has. Reporter iger sounds confident that this kind of across the board will continue with the disney franchises as well as other factors. Bullish Consumer Confidence and said measles had no impact on attendance at disneyland and in fact attendance and reservations are up at the parks so far this quarter. As for espn a huge growth driver for disney iver said hes not concerned about core cutting. For nightly Business Report, im Julia Boorstin in los angeles. Bill smid is a long time shareholder of disney and joining us now to give his outlook for the company. Hes ceo and chief Investment Company of smid capital management. Welcome. Its a pleasure to have bill. Thanks for having me. Youve held disney for some time now, 7. 5 years. Would you still purchase more or do you think given the runup its had its pretty fairly valued here . Well it is fairly valued but between the comments of mr. Iger whos done a fantastic job and then being reminded of saving mr. Banks, the movie a year ago, theyre constantly making investments in either creation of or buying new brands that they can manage and leverage better than other people can. So now, star wars going to come to the party. Marvel has been a fantastic addition so yeah. The answer is for a Long Duration investor like us ten years from now, this will be worth a lot more than it is today and its worth sitting through the ups and downs of lives and bulls and bears and market to get to that. For an investor thats never owned the shares were very comfortable buying it for them through Capital Appreciation strategy. And we wouldnt up our position right now because getting a lot of popularity the last 12 months. One issue i think many Media Companies like disney are concerned about is the amount of rights fees they have to pay for some sports programming. In the case of disney and espn it would be the National Football league the College Football championship and other things. Are you concerned about that impacting their ability to make a nice margin . Well its a great question. Right now, theres a lot of single males between 20 and 35 and within five to ten years, there wont be there will probably be 65 fewer of those same people. And what theyll do is theyll go from being primarily a customer of disney through espn to being married, having two children and being primarily a customer of the wholesome family entertainment. I was going to ask you what happened to 65 of guys. Whew. Thats what happens, is you get married and you basically move through different sectors of the disney corporation. We like to say theyre the most successful babysitting organization in the world. Obviously, they babysit children but they babysit adult males between the ages of 18 and 100 through espn and the sports program. Well what you have to do is if youre that 65 is marry a woman who loves disney and football. Then youre all right. The super bowl that we saw a lot of women that do love football. And im one of them. Bill how much of your confidence in disney stems from bob iger being with the company . Do you think the Succession Plan thats been put in place will allow the company to continue to perform on so many different of their platforms . Thats a great question because we all remember that in 1984 that Michael Eisner became the ceo with a Second Lieutenant by the name of frank wells and did a great job of moving disney forward. Unfortunately, frank walls died in 1984 in a plane crash and Michael Eisner was lost without his good cop there, right . What happened in the next ten years was a lot of talented people like meg whitman and steve bulenbock and were set adrift from disney. I think bob iger is a great cultivator of people behind him and a very humble guy in that respect. So yeah you know, Warren Buffett and peter lynch like to say to own a business even a 2yearold could run. The beauty of this business is its a business that has a lot of his own legs but hes been an outstanding ceo. Hell be hard to replace. Im sure he will be. Bill thank you very much. Bill smid with smid capital management. Ty . Back to the stock rally. Rise with a number of factors added to investor opttism. Oil prices up. January car sales better than expected and greece revealed to end standoff with creditors out of the euro zone. The close of the day, dow up 305 points to finish at 17,666. The sixth straight session of triple digit moves one way or the other. Nasdaq up 51. S p 500 higher by 29. Oil prices climb to their highs of the year. West texas crude spiking 7 to settle at 63. 05 a barrel, increase of 19 in three days, a move that, by the way, has lifted Energy Shares very sharply. Brent crude also rally. Two Federal Reserve officials out today with two different take ons when to raise Interest Rates. First, theres the president of the minneapolis Federal Reserve, the ronya who said should keep Interest Rates near zero this year raising rates too soon he said could slow job growth. On the other side is james buller the president of the st. Louis fed who said hed like to see the Federal Reserve drop the word patient from policy statement to give the central bank more flexibility on when to start hiking another reason for todays rally on wall street was news the Auto Industrys winning streak continued into 2015. January auto sales up 15 compared with just last year. The annualized rate of sale now more than 16 million vooeks the highest in nine years according to auto data. General motors saw sales jump 18 , ford up 15 . Below some estimates. Chrysler sales up 14 . Shares of all three Companies Higher by more than two percent with chrysler up the most as you see there. Philip lebeau with more on what drove sales last month. Reporter a big january for the Auto Industry driven largely by demand for big vehicles. Across the board, almost all of the auto makers reported an increase in january sales of between 11 and 18 and for the most part those sales were better than many were expecting. Subaru Mercedes Nissan hyundai and jooep all reported their best january sales ever. And speaking of jeep it continued to be a roll. January sales up for that brand 23 . The best january ever. It was driven by cherokee sales up 44 . And for the big threes all about the demand for pickup trucks and suvs. Take general motors. Its truck sales last month jumped 42 and the average transaction price, the estimate is that its just over 36,000 in increased eweyear over year of 7. 7 . Bottom line cheap gas and high Consumer Confidence. Thats what is fueling demand for new vehicles right now and especially demand for large suvs and pickup trucks. Philip lebeau nightly Business Report, chicago. And now to greece where that country unveiled a new plan to deal with its debt. But the showdown with its International Lenders shifts into high gear tomorrow. The greek finance minister will meet with the head of the European Central Bank Mario Draghi and hes expected to ask that greece be given easier repayment terms on its loans. More time as well and lower Interest Rates. Michelle carusocabrera reports. Reporter greeces finance minister ya niece, has been on a tour of capitals meeting many finance ministers in countries that lent greece nearly 200 billion euros. Been to france the united kingdom, today, italy in whats been his signature style. No tie, a blue open collared shirt and often a Leather Jacket when hes outside. Tomorrow he heads to the country that has loaned greece the most money. Germany. The relationship between the two countries extremely tense as a result of the bailout. Yanis is going to meet with the head of the European Central Bank Mario Draghi. Greece owes additional 23 Million Euros and expected to ask for easier repayment terms and much lower Interest Rates. Close to zero is what hes hoping. The ecb wouldnt comment on the report of the expected proposal saying they cant comment on what hasnt been proposed to them yet. However, they did point me to an interview that a member of the ecb gave in italy last week. That interview, he said theres no extension or maturities and greece must continue to abide by rules. The markets move sharply higher yesterday and today when greece announced it was backing down on another demand. The other governments forgive their debt. Investors will be watching to see how this meeting with the European Central bank goes and if greece backs down yet again, it could lead to another relief rally in the market. For nightly Business Report, michelle carusocabrera. Still ahead there may be big changes coming to the way the internet is run, but should it be considered a utility and regulated like one . Its official. The Justice Department has reached a record settlement with standard and poors. Agreed to settle to inflated ratings on more goods securities in the leadup to the financial crisis. Turned deal the fine will be distributed among the Justice Department, 19 states, and washington, d. C. The company declined to downgrade underperforming assets because it was worried that doing so would hurt the companys business. Now, while the strategy may have helped s p avoid disappointing clients, it did major harm major harm to the larger economy contributing to the worst financial crisis sense the great depression. As part of that agreement, s p did not admit wrongdoing and we told you the Justice Department is in talks with moodys over similar conduct. The Net Neutrality debate back in the spotlight as zek is set to unveil a proposal to change the way it oversees high Speed Internet service. Two guests tonight with opposing views on this very important topic. Todd oboyle with common cause and he favors regulating the internet as a utility while scott cle land a broadband consultant and president of his own firm disagrees saying this move could in fact break the internet. We should point out before we begin that cnbc that produces nightly Business Report is owned by the broadband provider comcast. Let me begin with you, mr. Oboyle. This is a very nuanced topic. It can be eye glazingly complex, frankly. But at its heart, it goes to the question of whether broadband providers, as i understand it, ought to be able to charge different prices for differe speeds. Why shouldnt a broadband provider be able to charge a, quote, data hog for using so bandwidth . Broadband providers should be in the business of delivering to consumers the content that theyre already paying for. Theyre paying subscribers and should be able to get to the web sites and services of their choice. Thats the core of common carrier or socalled Net Neutrality protections and its actually core to the way the internet functions. This has nothing to do with the socalled utility star regulation and everything to do with consumer protection. And scott, i know you disagree with some of that. Take the other side. Well Net Neutrality is something people enjoy today. Businesses do not have an interest in blocking or throttling. What the problem is applying utility regulation to something thats not a utility. This is a utility is like electricity, gas, or water. And broadband can be delivered electrically over water, not a utility that needs regulation. Im not sure mr. Oboyle would say this but ive seen people on the other side of the debate from you say that the ability of the large carriers to block small and entrepreneurial carriers or disadvantage them with speeds is the reason we need this equal treatment for all. Why isnt that a strong argument here . Or is it . The reason it isnt is because we have over a thousand broadband providers over the last ten years with quintillions of transmissions and transactions. Less than a handful of identified problems. This is li taking a beach and we found two grains of sand that are a problem and need to hypo hyperregulate the whole beach. Theyre willing to abide by the sec rules. Utility regulation would provide the most obsolete regulati modern part of the economy. It would slow down to government speed. Its unnecessary and unwarranted. Would it do that todd . Would it basically slow everything down to government speed, which in some cases is extremely slow is it overkill . Absolutely not. In fact strong Net Neutrality encourage innovation and encourage investment. They ensure innovators with sorts of regulatory certainty they need to make multimillion dollar or billion dollar bets. Thats why we know so many Small Businesses startups, dot coms are eager for full title reclassification reel the neutrality strong neutrality. Thats one thing i have to take exception. We do know Internet Service providers are interfering with their consumers. The consumers access online we saw comcast interfered with netflix the month after the old Net Neutrality were thrown out. I want to get more clelands response but your reaction to what i thought i heard scott say is that the broadband providers, quote, favor Net Neutrality dont want to throttle dont want to do anything like that. Is that how you see it how do you react to that . Devil is in the details of course. They say they support Net Neutrality in the same way we all support motherhood and apple pie but what matters is the rules are written in a way thats enforceable and when the court recently or last year threw out the old rules, they did so because they were written in a way that was effectively unenforceable. The reason these providers like the idea just not the implementations because if its written the wrong way, it will get turn out. Scotty final thought. Title two is the most onerous regulation available to regulate any industry. This is the most modern industry. Everybodys gone from smartphones. No one had one seven years. Over 200 Million People have them today. This is an industry thats not broken and the sec should be careful not to break it with the most obsolete available. Thank you, common cause. Cleland with precursor. Shares of office depot and staples surge on merger reports and thats where we begin tonights market focus. The Office Suppliers in advance merger talks according to the reports. Together the firms have about 4,000 stores and about 35 million in annual sales. This comes as activist star board value publicly called on both chains to merge. Shares of office depot surge to 9. 28 and staples to 19. 01. Macy macys out with strong guidance. Hiked the 2014 outlook with plans for the Beauty Products maker, blue mercury with more than 200 million. Shares popped initially after the close and then fell back a little bit. Before the bell the stock up about 3 to 66. 07. Ups also out with a down bate forecast. The Package Delivery Company Provided disappointing earnings forecast for 2015 because of a drop in Fourth Quarter profits caused by extra expenses during the holiday season. The company said it will control the cost and raise prices this year. Still, shares finished higher to 157. Etna matched. Hiked the full profit outlook but still below the streets forecast as its seen up 2 to 94. 18. Investors were pleased with the New York Times quarterly. The gray lady beat on the top and bottom lines and digital growth offset continued weakness in print. Overall, ad revenue for the year fell by the smallest amount, 7 10 of 1 . 13. 73. Gilead with high