SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Media mess. Disney (NYSE:DIS)
dives, Comcast (NASDAQ:CMCSA) (NYSE:CCS) caves and the entire sector sinks
on renewed concerns about the traditional TV business model.
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: High-tech fraud. Keeping
your money safe when you swipe, so thieves don`t swipe your cash.
HERERA: Check point. Security is big business, especially at the nation`s
second busiest airport. We`ll show you security measures never seen before
in the first part of our series.
Those stories and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
MATHISEN: Good evening, everyone, and welcome.
It started as surprise profit warning from Disney (NYSE:DIS). The Dow
component CEO told investors that earnings would be about the same as last
year. Not something Wall Street wanted to hear. They were expecting quite
the opposite, solid growth in profits. After that one disappointment came
another, this one from Comcast (NASDAQ:CMCSA) (NYSE:CCS), which said
competition is stiff and warned subscriptions would be down.
It is no secret, of course, that media companies have been struggling as
cherry-picking viewers stream more of their entertainment and step back
from those traditional beefy bundles of cable TV channels.
Today, those concerns played out in the stock market and how. Disney
(NYSE:DIS), which you likely own in a mutual fund, retirement account or
individually, was the worst we are forming Dow stock today. Comcast
(NASDAQ:CMCSA) (NYSE:CCS) meantime, the parent company of CNBC which
produces this program, was off more than 6 percent. And the selling spread
to other parts of the media sector.
Julia Boorstin takes a look at an industry under pressure.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Red flags raised
about the current quarter from Disney (NYSE:DIS) and Comcast (NASDAQ:CMCSA)
(NYSE:CCS), making headlines out of Bank of America (NYSE:BAC) Merrill
Lynch`s media conference today.
BARTON CROCKETT, FBR CAPITAL MARKETS: I think what investors are worried
about though is the pressure broadly on this group. So, again, in an
environment where people are shooting first and asking questions later, a
little bit of weakness, a little bit of crack in the foundation gets
people, you know, really scared and rushing for the exits quickly.
BOORSTIN: Disney (NYSE:DIS) shares falling after CEO Bob Iger warning that
earnings in the fiscal year ending in September would be in line with last
year, short of analysts` expectations. Iger attributed the shortfall to a
number of reasons, growth and costs for NBA rights for ESPN, some costs
related to buying more of BAM Tech as well as some impact from Hurricane
Irma, cancellations at the park, the cancellations at three cruises and
shortenings of some other cruises.
Then, Comcast (NASDAQ:CMCSA) (NYSE:CCS) shares plummeted on concerns about
the health of its cable business, on warnings about the third quarter from
Comcast (NASDAQ:CMCSA) (NYSE:CCS) executive Mathews Strauss, saying that
due to competition, as well as Hurricane Harvey, the company expects to
lose between 100,000 and 150,000 video subscribers in the third quarter.
Though, he said the company expects to hit its financial numbers this
quarter, they called it the most competitive in recent history, with
traditional rivals slashing prices, as well as new digital entrance, Hulu
and YouTube streaming TV bundles.
CROCKETT: Investors are wrestling with the question of the viability of
the traditional pay TV model and I think there`s no doubt that
generationally, people are going to be subscribing more and more to these
new over-the-top services, and I think that that`s likely to put some
pressure on — you know, continuing pressure, probably accelerating
pressure on the traditional pay TV bundle.
BOORSTIN: CBS (NYSE:CBS) and Viacom (NYSE:VIA) dropped not on any major
news of their own, but those big questions raised by Disney (NYSE:DIS) and
Comcast (NASDAQ:CMCSA) (NYSE:CCS) about how traditional media giants will
transition into the digital media landscape, and what kind of impact new
digital streaming bundles will have.
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.
HERERA: So, let`s turn now to Tuna Amobi for more on Disney (NYSE:DIS) and
Comcast (NASDAQ:CMCSA) (NYSE:CCS), and what today`s media meltdown is
telling us about the industry. He is senior media and entertainment equity
analyst at CFRA Research.
Welcome back, Tuna. Nice to have you here.
TUNA AMOBI, SENIOR MEDIA & ENTERTAINMENT ANALYST, CFRA RESEARCH: Thank
HERERA: You have buy ratings on both of these stocks. Does today`s
announcements by either one of these companies change your opinion of them
and why not?
AMOBI: No, it doesn`t actually. But I will agree with some of the
sentiment that was expressed earlier, the secular challenges that are
facing the media sector remain. You know, the headwinds from subscriber
losses, pressure on traditional, you know, ratings and shift from, you
know, traditional pay TV to online video platforms.
However, we find it comforting that some of the factors that were cited as
Julia alluded to, whether is a hurricane disruption for both Disney
(NYSE:DIS) and Comcast (NASDAQ:CMCSA) (NYSE:CCS), or the costs related to
the BAM Tech integration by Disney (NYSE:DIS), or even the one time, you
know, comparisons to “Star Wars” for Disney (NYSE:DIS), some of these we
expect to reverse.
So, to your question, Sue, we expect that next year for Disney (NYSE:DIS)
is going to be significantly better than the expectations for this year,
which ends this month.
MATHISEN: These are two very, very interesting companies. Disney
(NYSE:DIS) obviously does not have the sort of line into the home the way
Comcast (NASDAQ:CMCSA) (NYSE:CCS) does. What — take them one at a time —
what does Disney (NYSE:DIS) need to do? What does Comcast (NASDAQ:CMCSA)
(NYSE:CCS) need to do to make sure they keep profits growing and their
stocks moving higher?
AMOBI: So, in the case of Disney (NYSE:DIS), I think they`re really moving
to respond to the shifts in the landscape this direct-to-consumer launch is
going to be a potential game changer. As a pure content company, I think
the company understands that getting this content in the most efficient way
to consumers and responding to the changes resulting from technology
disruption, whether it`s in the mobile or the online arena, I think all of
those things Bob Iger have spoken about. And also monetizing their content
in other areas. Theme parks remains very viable.
AMOBI: In the case of Comcast (NASDAQ:CMCSA) (NYSE:CCS), obviously, having
NBCUniversal, which is firing on all cylinders, we were a little bit you
know disturbed by the video losses again potentially at one time. But we
expect Comcast (NASDAQ:CMCSA) (NYSE:CCS) to continue to execute. They`ve
been very innovative on the video platform. X1 has been a game changer for
So, the challenge for them now is really transitioning from, you know, core
video provider to a holistic in a bundle that relies on high-speed Internet
and being able to offer customers that integrated experience. The customer
relationships are growing much as the video subscribers are dropping. So,
I think the challenge is going to be to really provide that seamless
HERERA: Tuna, we have to leave it there. It`s always great to talk with
you. Thank you. Tuna Amobi —
AMOBI: Thank you for having me.
HERERA: — with CFRA Research.
MATHISEN: And on Wall Street, Disney`s warning weighed on the Dow blue
chip index. Financials also fell as yields declined. The Dow Jones
Industrial Average fell 22 points to 21784, NASDAQ rose 4-1/2 and the S&P
500 kind of right in the middle there, almost flat, down a half a point.
HERERA: Now to Hurricane Irma, and as she churns towards Florida, a major
port plans to shut down. Port Everglades houses about a dozen fuel
terminals. The Coast Guard limited the movement of ships in and out and
tomorrow night, the port is expected to suspend operations. This is gas
stations around that state struggle to keep up with demand.
Jackie DeAngelis has more.
JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): As
Hurricane Irma barrels towards Florida, major cities like Fort Lauderdale
are making preparations for what could be the state`s worst storm in over
50 years. As residents leave, officials are preparing the city and part of
that means protecting Port Everglades.
GLENN WILTSHIRE, DEPUTY DIRECTOR, PORT EVERGLADES: On a typical day, we
probably have 10 to 15 ships arriving with whether their cargo ships or
petroleum ships or cruise ships that we have scheduled for this weekend.
We`re working with all of our operators, whether they`re container terminal
operators or petroleum terminal operators, to ensure that they`re ready and
can orderly shutdown and facilities as opposed to a rush shutdown.
DEANGELIS (on camera): This port is Florida`s largest port by revenue,
representing $163 million last year. It`s also the state`s second largest
MAYOR JACK SEILER (D), FT. LAUDERDALE: What people don`t realize is that
port supplies to petroleum for about 18 southern counties. So, initially,
you`re going to see a further shortage of petroleum because of what`s going
to come through that port.
DEANGELIS (voice-over): Gas will be crucial as residents evacuate.
GOV. RICK SCOTT (R), FLORIDA: The state is monitoring fuel of assistance
requests and has contacted emergency fuel equipment providers for status of
emergency fuel supply and equipment. Removing as much fuel through the
system as fast as possible while the state is working as quickly as
possible bring fuel to communities. Again, be considerate of your
neighbors, take what you need to evacuate, don`t take extra.
DEANGELIS: Meantime, 10 major cruise operators also come in and out of
Port Everglades with 40 different ships. Some of those trips now being
canceled or delayed. Right now, the storm is still a while away but
precautions are being taken as the majority view is it`s better to be safe
For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis, in Fort Lauderdale,
MATHISEN: Today, the Senate approved legislation doubling the amount of
hurricane disaster aid approved yesterday by the House, for a total of more
than $15 billion. The Senate bill also extends a federal flood insurance
program to early December. The legislation also averts a debt crisis by
lifting the government`s borrowing limit and it skirts a government
shutdown by passing temporary funding into December.
HERERA: “The Washington Post (NYSE:WPO)” is reporting that President Trump
and Senate Minority Leader Charles Schumer have agreed to pursue a deal
that would permanently remove the requirement that Congress repeatedly
raised the debt limit the debt ceiling as it`s known. The president said
he discussed the possibility with congressional leaders.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: For many years, people have
been talking about getting rid of debt ceiling altogether and there are a
lot of good reasons to do that. So, certainly, that`s something that will
be discussed. We even discussed it at the meeting that we had yesterday.
It complicates things. It`s really not necessary because you`re talking
about budget. So, it`s really not necessary, but it`s certainly something
we could discuss. But as long as it`s there, it will never be violated.
(END VIDEO CLIP)
HERERA: Any measure would still have to pass both the House and the
MATHISEN: Meantime, a Senate committee has advanced the president`s
nomination of Randall Quarles to the Federal Reserve board. Quarles, a
prominent investment banker, former Treasury official, was confirmed as
vice-chairman for supervision, a position dubbed as the nation`s top bank
cop. He`s expected to take a more conciliatory approach with Wall Street
The nomination next goes to the vote of the full Senate. If approved,
there will still be three vacancies at the Central Bank.
As we told you yesterday, Vice Chair Stanley Fischer will step down next
HERERA: Meantime, the European Central Bank could be ready soon, as soon
as next month, to finally start scaling back its stimulus. President Mario
Draghi raised economic growth forecast for the region, ratcheting up
expectations, said it will soon start to phase out its bond-buying program.
An end to the stimulus would in theory raise long-term interest rates,
potentially impacting the markets, companies, governments and consumers.
HERERA: President Trump today said a military strike against North Korea
would be a very sad day for that country. The president has also
threatened to sanction countries that do business with North Korea and that
Eunice Yoon takes a look at their economic ties.
EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: No country comes close
to China when it comes to the amount of business that it does with
Pyongyang. Experts calculate that 90 percent of North Korean merchandise
trade is with Beijing. Last year, total trade reached $5.6 billion, a
slight increase from the previous year. Analysts feel the official numbers
don`t accurately reflect the full story because of smuggled goods and
unclear fuel data.
China says it`s been curtailing trade and lying with U.N. resolutions and
that`s reflected in the most recent government data. Top imports are no
longer coal, but textiles fish and steel. Top exports are machines car and
China says it will cut back on trade even further to abide by the new
tougher sanctions, but there seems to be a limit to just how far Beijing is
willing to go. The U.S. is pushing for an oil embargo and China is a major
fuel supplier for North Korea.
But today, at a regular briefing, the commerce minister responded to a
question asking if China would consider taking part in an embargo, saying:
We will continue to deal with North Korea trade issues in a manner that
benefits the denuclearization of the Korean peninsula and is beneficial to
peace and stability. Showing that Beijing`s policy hasn`t changed and it`s
still reluctant to cut off oil to North Korea.
For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.
HERERA: Still ahead, do you use an ATM? Well, you probably do and there
are some things that you should know to keep your money safe.
HERERA: The FDA is warning of serious manufacturing violations at an
EpiPen manufacturing facility. Mylan`s allergy treatment is manufactured
by a unit of Pfizer (NYSE:PFE). In a letter, the agency said that unit
failed to investigate multiple product failures, including those associated
with patient deaths and severe illness. The company has 15 days to submit
a plan to address the safety risks. Shares of Mylan (NASDAQ:MYL) fell
about 1 percent. Pfizer (NYSE:PFE) was flat.
MATHISEN: Amazon (NASDAQ:AMZN) is shopping for a second home. The company
wants to spend about get this billion to spill another headquarters in
North America. It`ll house roughly 20,000 employees. The new space is
expected to be equal to its current home in Seattle. It covers blocks,
highlighting how fast the company is expanding. The company will pick a
location next year, but it wants to be near a metro area with more than a
million people, within 45 minutes of an international airport and have
direct access to mass transit.
HERERA: There are reports tonight that Amazon (NASDAQ:AMZN) and Apple
(NASDAQ:AAPL) are among the companies bidding for rights to the James Bond
franchise. According to “The Hollywood Reporter”, Warner Brothers remains
in the lead, but Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) are willing
to spend about the same amount or more on the rights apple has been ramping
up its focus on original video. The James Bond franchise is said to be
worth anywhere from $2 billion to $5 billion.
MATHISEN: Eli Lilly (NYSE:LLY) plans to cut more than 3,000 jobs and that
is where we begin tonight`s “Market Focus”.
The drug maker said it would lay off about 8 percent of its global
workforce to cut costs and invest in research and new medicines. Lilly
said the majority of the job cuts are expected to happen in the U.S., but
through a voluntary early retirement program. Shares rose more than 1
percent to $81.54.
GoPro said it expects to turn an adjusted profit this quarter. The
optimism comes from the camera maker`s belief that its upcoming product
launches will excite customers. Company also sees revenue for the quarter
at the high end of its guidance. GoPro up 12 percent on the day to $10 on
Meantime, Barnes and Noble (NYSE:NE) said lower ecommerce sales and weaker
demand for its e-readers caused revenue to fall. The bookstore chain
reported an unexpected loss and said it still expects same store sales to
fall in the low single digits. Shares though down more than 9 percent on
the news to $7.10.
HERERA: Bass Pro Shop spending $4 billion deal to buy rival Cabela`s
(NYSE:CAB), just cleared a regulatory hurdle. The Federal Reserve has
approved the sale of Cabela`s (NYSE:CAB) credit card business to a Georgia
bank. The merger is expected to close this October. Shares of Cabela`s
(NYSE:CAB) soared 14 percent to $61.06. Bass Pro Shop is privately owned.
Verizon (NYSE:VZ) hiked its quarterly dividend 2 percent to 59 cents a
share. It`s the 11th consecutive year the company has approved a quarterly
dividend increase. Verizon (NYSE:VZ) shares were off 1-1/2 percent to
And the wearable device maker Fitbit has entered into a partnership with
glucose monitoring device maker Dexcom to help diabetics better manage
their disease. Fitbit said starting next year, its watches will be able to
sync up with Dexcom sensors so users can track their blood sugar levels
just by looking at their watch. Fitbit shares rose nearly 10 percent to
And after the bell, gun maker American Outdoor Brands, formerly Smith and
Wesson, posted a loss and a drop in sales. The company said the week
results were due to fewer orders. Shares initially plunged in after-hours
trading, but they finished the regular trading day unchanged at $16.94.
MATHISEN: Equifax (NYSE:EFX) says it was the target of a massive breach.
The credit reporting agency says the incident potentially impacted 143
million U.S. customers, including some Social Security and driver`s license
numbers. The company discovered the unauthorized access at the end of July
and said it acted immediately to remedy it.
HERERA: Is the ATM or gas pump you`re using safe? ATM skimming is on the
rise as criminals try to steal your money before banks switch over to new
CHIP technology. In the past week, officials have found skimmers on gas
pumps in Ohio and at banks in Florida. Criminals have new high-tech ways
to collect your debit and credit card information and get your cash.
Andrea Day has that story.
MARTIN BALLY, DIEBOLD NIXDORF VP & CHIEF SECURITY OFFICER: ATM skimming is
over $2 billion problem globally.
ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): That cash
swiped by high-tech thieves when you swipe at the ATM or gas pump. They
use skimmers or card readers to grab the info. But these aren`t any
DAVID TENTE, U.S. EXECUTIVE DIRECTOR, ATM INDUSTRY ASSOCIATION: Things are
definitely getting more sophisticated.
DAY: And if you think you can spot them, think again. The latest gadgets
are stashed deep inside.
CHRIS HADNAGY, CEO, SOCIAL ENGINEER: It`s unbelievable easy.
DAY: Security expert Chris Hadnagy found this for sale on the Dark Web.
It`s as thin as a credit card.
HADNAGY: And it slides into the slot and down. It`s not even detectable.
DAY: This one uses Bluetooth so criminals just —
HADGANY: Connect to the Bluetooth, wireless, download all the cards, act
like you`re pumping some gas and leave.
DAY: Another has a cellphone chip, so thieves don`t even have to go back
to the scene to collect your data.
HADGANY: And it calls to a server and downloads all the numbers to a file
for them to obtain.
DAY: Almost impossible to detect but sometimes the bad guys leave clues.
HADGANY: If the security tape is at all altered, that`s a huge thing to
walk away. Turn on your Bluetooth when you`re next to an ATM or a gas
pump, and see if you see any weird networks that are popping up.
DAY: But if you wind up getting skimmed —
(on camera): Is it up to you as the consumer to make sure everything is
DYAN FINGUERRA-DUCHARME, PRYOR CASHMAN PARTNER: It`s absolutely up to you.
DAY (voice-over): Attorney Dyan Finguerra-Ducharme.
FINGUERRA-DUCHARME: When you notice an unauthorized transaction if you
report it within two days of that unauthorized activity, then the bank will
reimburse you for anything over $50. But if you wait and if you wait your
statement to come, then the law gives you 60 days in which to report. But
because you`ve delayed and waited, you are responsible for the first $500
of the withdrawal.
DAY: The ATM industry now on alert.
TENTE: The ATM operators are doing as much as they can to try to fight
this. That`s an ongoing battle.
DAY: And ATM makers are working on ways to stop it, like inserting your
BALLY: And that simple change has been able to defeat all static skimming
DAY (on camera): But he admits that nothing is 100 percent and criminals
are always out there trying to defeat the latest technology. The best
advice is to look for any clues thieves may left behind, like jiggling the
card slot to see if it`s loose. If you can move it, don`t use it, and
always check your bank statements.
For NIGHTLY BUSINESS REPORT, I`m Andrea Day.
MATHISEN: Coming up, an exclusive never-before-seen look at the big
business of keeping you safe before you get on your next flight.
MATHISEN: In the 16 years in September 11th, U.S. airports have spent
billions to ramp up security with stricter screening in a host of state-of-
the-art equipment. The TSA alone spends more than seven and a half billion
a year, but airports of course also have their own security details from
private guards to their own police forces.
In a NIGHTLY BUSINESS REPORT exclusive, the country`s second busiest
airport, Los Angeles International, allowed our Morgan Brennan behind
security into parts of the airport where cameras have never been allowed,
to show you how keeping you safe is serious business.
MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): This
elite airport SWAT team storms a bus reportedly filled with hostages.
They move in, quickly clear and secure the scene. It looks all too real,
but it`s really all intense training to prepare for the worst, scenes like
these played out every day around Los Angeles International Airport better
known as LAX. It`s the country`s second busiest and a prime target for
Police Chief David Maggard oversees some 1,100 officers and staff, the
largest aviation police force in America, with a budget of more than $200
(on camera): Most if not perhaps all major airports would never let us in
a room like this. Why is it so important to show the public?
DAVID MAGGARD JR., LOS ANGELES AIRPORT POLICE CHIEF: We want to make sure
that people know that we work hard every day in a variety of different ways
to make sure that we keep this airport safe and all of the people that
travel through here each and every day at LAX.
BRENNAN: Is there anything that keeps you up at night?
MAGGARD: Well, I`m a warrior. I think about everything. I think about
BRENNAN (voice-over): LAX security has been targeted in a number of high-
profile incidents, including the shooting at an El Al ticket counter and
another in 2013, when an active shooter killed a TSA officer and wounded
That attack resulted in a commissioned report that made a series of
recommendations to improve security procedures through better coordination
MAGGARD: There`s where you can really see the clarity.
BRENNAN: We`re in what`s call the Airport Response Coordination Center or
ARCC. Various agencies monitor cameras, social media and intelligence
leads for possible threats.
MAGGARD: This is a 24-hour center that really controls the ground
movements and all it takes to make an airport like LAX work.
BRENNAN (on camera): What does all this stands for?
MAGGARD: It represent threats, significant issues that are going on all
over the country right now.
MAGGARD: They may or may not be fully actualized at the end, but these are
what people are responding to, kind of in real time.
BRENNAN: What`s the exclamation point?
MAGGARD: There you go.
BRENNAN: I see. Protest.
MAGGARD: That was perfectly timed. Thank you.
BRENNAN (voice-over): The more than 3,500 cameras mostly Sony (NYSE:SNE)
HD or 4k are monitored around the clock from this room, the pan tilt zoom
cameras are remarkably clear and close-up. Plans are in the works to
double that amount as the airport undergoes a massive expansion in the run-
up to the 2028 Summer Olympics, which the city will now host. An enhanced
checkpoint program called Operations Safe Entry is a daily random screening
of vehicles going into LAX, which means anyone driving in through one of
the airport`s five entrances could have their car examined. There`s even
more periodic screenings using radiation detection devices with its truck
So far in the eight years since the program began, nothing harmful has been
(on camera): How real is the threat of a dirty bomb?
MAGGARD: We have to make sure that we`re addressing every threat that`s
imaginable. We have analysts here that are connected virtually around the
world to evaluate threats, to evaluate what we can do, to intervene in
those threats, to protect on from those threats.
So, we are looking at virtually every type of threat that you can imagine,
including a dirty bomb.
BRENNAN (voice-over): Chief Maggard says the small inconvenience to the
public is worth it. What`s the balance between the necessity of that
versus what some of those folks that are going through, those checkpoints
would consider an intrusion?
MAGGARD: If they want to turn around and leave the airport, they have the
ability to do that? But if they want to come into the airport, there are
some limited legal abilities for us to do some searches. We`re looking for
anything that might be harmful to the airport environment.
BRENNAN: For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.
MATHISEN: And in part two of our special report tomorrow night, we go on
an operation with airport police who are targeting what they call the
insider threat. It`s the security issue experts told us is their biggest
concern. And for more, go to our Website, NBR.com.
HERERA: I can`t wait to see it.
MATHISEN: Yes, fascinating stuff.
HERERA: All right. That does it for us tonight. I`m Sue Herera. Thanks
for joining us.
MATHISEN: And thanks for me as well. I`m Tyler Mathisen. Have a great
evening, everybody. We`ll see you back here tomorrow night.
Nightly Business Report transcripts and video are available on-line post
broadcast at http://nbr.com. The program is transcribed by ASC Services II
Media, LLC. Updates may be posted at a later date. The views of our guests
and commentators are their own and do not necessarily represent the views
of Nightly Business Report, or CNBC, Inc. Information presented on Nightly
Business Report is not and should not be considered as investment advice.
(c) 2017 CNBC, Inc.