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tv   Nightly Business Report  PBS  April 26, 2016 1:00am-1:31am PDT

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this is "nightly business report" with tyler mathisen and sue herera. let's make a deal. the justice department clears a cable mega merger. one newspaper company takes public its bid for another. but is deal-making the answer to overcome media industry challenges? fast lane. why the next big battle in the world's largest auto market will be over the biggest vehicles on the road. the business of pain. the alarming numbers that describe prescription drug abuse in america. the first of a three-part series. tonight on "nightly business report" for monday, april 25th. >> good evening and welcome. the media industry under going tremendous change. today is undergoing even more.
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we begin with a cable deal. charter communications won anti-trust approval for its $55 billion takeover of time warner cable. that combination would create the second-largest cable provider in the country. the head of the federal communications commission also reportedly supports the merger but there are conditions attached. all of which aim to increase the number of homes with high-speed internet and mitigate threats to online video competition. charter would have to build out broadband service to 2 million more homes. the combined company would have to move away from data capps and usage-based billing. and it cannot charge a fee to heavy traffic providers like netflix. shares at both charter and time warper cable rose more than 4% in today's trading. >> and that is not the only deal in the media industry to tell you about. begin net wants to buy the rival newspaper owner tribune publishing. but when its private offers were rebuffed by trib bun, ginnet
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went public. that sent shares of tribune up nearly 53% in today's trading alone. ginnet higher by about 6.5%. as julia boorstin reports, in the struggling newspaper business ginnet's offer may be one tribune just can't refuse. >> it's a proposed merger of old media giants. "usa today" parent ginnet offering $815 million, including the assumption of debt, to buy the tribune company, owner of the "l.a. times," "chicago tribune," and baltimore sun. a total of 11 daily titles and more than 60 digital properties. the offer more than 60% dream to tribune's closing price friday sending shares skyrocketing. it had been town 60% over the past year. >> that scale and cost consolidation on every level is the only way to make it through what is a deep winter chill in the newspaper industry that's just getting colder. >> industry analyst ken doctors talking about the massive
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challenges facing ought newspapers. declines in advertising and subscription revenue plus more competition than ever from a host of digital alternatives. ginnet's already been consolidating. less than a month ago it completed its $280 million acquisition of journal media group. it has 127 local media organizations statewide and 160 brands in the uk. but even more consolidation gives its papers a better chance at survival. still it may not be able to negotiate much better deals with the internet giant who profits from the traffic that news articles drive. >> content and news content changing all the time brings if audience. it's a great thing. it brings in audience. yet the people controlling the money-making, the montaization, is the pipes company. it's facebook and google that are taking in most of the money. >> the trend for newspapers isn't good. mobile internet advertising is poised to overtake newspaper advertising this year, making mobile internet the third
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largest ad media worldwide behind television and internet ads, putting more pressure to gain power from its scale. for "nightly business report," i'm julia boorstin in los angeles. on wall street it was the quiet before the storm. that's how some described today's action as investors prepare for the busiest week of earnings this season and a meeting of the federal reserve policymakers. by the close the dow jones industrial average fell 26 points to 17,977. the nasdaq dropped 10. the s&p 500 was off more than three. bob pisani has more on why today's quiet could fade quickly. >> reporter: this is the big week for earnings. almost one-third of the s&p 500 reports. everything from drug companies like pfizer and merck to auto companies like ford. two companies i most want to hear there are oil giants exxonmobil and chevron. they report later in the week. investors want to hear first reassurances that the dividends are safe, and second, what's the outlook for oil prices and oil
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demand in the second half of the year. these stocks have faced impressive coverage recently on expectations that global demand is again growing. there's also a fed meeting on wednesday and while no one is expecting them to raise rates, traders will be watching to see if the statement leans towards highlighting the strengths in the economy rather than the weaknesses. which might indicate whether they will raise rates at the next meeting in june. meantime, tech stocks have had a tough time on disappointing earnings but other sectors have stepped in to fill the gap. so energy and health care, materials and financials, they're up 4% to 6% this month. big technology names like microsoft skin tell are down. that rotation out of tech and into energy materials and financials is considered healthy by investors. the issue is whether earnings and the fed commentary will allow us to push to new highs. we're only 2% away. for "nightly business report," i'm bob pisani at the new york stock exchange. saudi arabia wants to break its economic reliance on oil.
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yes, you heard me right. the world's top oil exporter outlined an ambitious plan to remake and diversify its economy. the report tonight from riyadh. >> reporter: survival without oil, that is the goal according to the deputy crown prince of saudi arabia, the son of the king. earlier today we heard further details of the national transformation strategy planned to diversify this country away from oil revenues and he's basing this plan on about $30 per barrel. he says he doesn't expect the price will go much lower than that. he's also announced plans for the sovereign well fund that he says will be larger than any other in the world, between $2 trillion and $3 trillion. he says the ipo will be between 4% and 5% of the company, valuing that between $2.5 trillion to $3 trillion or more. we understand there are further plans in terms of trying to diversify away from oil revenues
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one of which is the defense sectorress. this country is the third largest importer of defense sector equipment in the world and what they want to do is make sure at least half of that going forward is locally purchased. also we heard a little bit more about the taxation plans. we talked about the value added tax they're planning. we talked about taxes on land as well. but one thing we didn't hear, lots of speculation over the last several days about whether or not women in this country are going to be allowed to drive. we know the saudi workforce is going to have to include more women coming in the future. but unfortunately no word on whether or not they'll be allowed to take the wheel in the kingdom any time soon. for "nightly business report" in riyadh, i'm hadley gamble. oil exporting countries in the middle east lost nearly $400 billion in revenue last year because of the low price of oil. according to the international monetary fund, those countries should brace for even deeper losses this year. possibly reaching $500 billion. the fund also said it's encouraged by the changes that saudi arabia is making to its economy. china already the world's
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largest auto market has thousand become the number one country for suv sales. that demand has helped the bottom line of general motors, ford and other automakers in that country. but now that success is being challenged. phil lebeau has more from the beijing auto s >> reporter: walk around the beijing auto show and it's clear china has fallen in love with suvs. last year chinese consumers bought more than 6 million of them. and sales remain red hot. >> you're only going to see it accelerate. and frankly, around the world, you're seeing a lot of the d and e car stuff suffer and either flatten out or decline. it's true here too. the suv market seems to be insatiable. we're going to be prepared to do that. and we don't see things slowing down on the suv side of it. >> reporter: for all the success gm and ford have had selling suvs in china they're struggling to compete with chinese brand suvs like this one.
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the cf-35. starts at about $10,000. well below the price point for suvs made by international competitors. when you look at what's driving suv sales, it's the low end of the market. suvs around $10,000 made by local automakers. that's the heart of the market right now. chinese automakers now sell more suvs in this country than foreign brands. their success with entry-level suvs is why jeep has started building its smallest model the renegade here in china. meanwhile gm is rolling out the new cadillac xt-5 as it continues to flex its strength in luxury suvs. >> we're going to differentiate ourselves on quality, connectivity, reliabilitreliabi durability. we'll be competitive in the price part of it too. >> china's auto market, where the next big battle is over the biggest vehicles on the road. phil lebeau, "nightly business report," beijing. still ahead, your home is
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likely your biggest asset. but is a shift under way in the housing market? what the latest data may be signaling. americans did not buy as many new homes in march. according to the commerce department, sales fell 1.5%, making this the third straight month of declines. much of that drop came from the west. one of the nation's priciest housing markets. which saw sales plummet nearly 24%. diana olick joins us now. good to have you here as always. sales of new homes are falling, the supply of existing homes for sale is falling to new lows. why the weakness? >> well, it's as you said. we're talking about price.
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you saw it in the west which is the priciest markets. we'd seen the most activity in newly built homes on the high end the last couple of years but that part of the market is starting to soften and the demand is really on the low end, on that entry-level buyer. unfortunately the builders don't tend to build for that buyer. but we did see a jump in march numbers in newly built homes priced between $200,000 and $300,000. they jumped to their highest level since 2007. so tyler, that's really where the demand is. the question is will builders put in that supply? >> why don't they want to build if the demand is there? >> unfortunately, it's all about the margins. we talk about that all the time. it costs a are the lot of money to put up a new home and those costs are increasing, for the land, labor, materials. for a home builder they're not able to make the kind of profit they want on those lower-priced homes. >> you're always talking to us about supply and the supply of new homes bumped up a bit. is that a good sign if you're in
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the market to buy a home? >> it absolutely is a good sign that we did see supply jump to a 5.8 month supply, far higher than we have on existing homes. right now we have a very stark shortage of supply on the existing side. to see that supply move up on new homes is better because it means the builders are going to have to soften up a little bit on the prices. but again, where is the price point of that house? you look at what they're building now, these are $2 million homes right here, that's the vast majority of what they're seeing. you need to see that entry level $100,000, $200,000 home. only one of the builders, d.r. horton, has an express brand that really centers on that entry-level market. we need to sew more of that. >> diana, thank you as always, from washington. a new study on ceo pay shows that top executives at the nation's largest companies got a raise last year, albeit a modest one, this despite lower revenue. mary thompson has more on the
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big bosses making the big bucks. >> reporter: at the top of the corporate ladder a pay increase for ceos despite a volatile year in the markets. >> i was wondering if we would see some drop year over year and we didn't, we saw it rise 3%. >> reporter: share price performance, one of the metrics considered in determining executive pay but a critical one as boards work to align ceo pay with shareholder interest. for the 100 largest companies by revenue finally in their proxies by april 1 the median total return was 2% in 2015. median ceo pay rose 3%, $fran.5 million. as dan marsec of the compensation research firm tells us this extends a trend in place since 2009. >> since then we've seen ceo pats rise every year. you'd expect a rebound the following year when markets standard to turn around a little bit. in each successive year we've seen it rise again. >> reporter: other firms show
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filing proxies. but on the first pass familiar names land at the top. the highest-paid ceos, oracle's co-ceos mike heard and sap ra katz, $53 million. they're followed by disney's bob egger and honeywell's david cotay. missing is viacom's felipe doman. viacom's revenue wasn't enough to put it in the top 100. ceos who took home even more as their shareholders lost ground include those at alcoa, emerson, and whirlpool. star bucks ceo howard schultz took a 6% pay cut even as the coffee chain's total return rose over 50%. and as he usually does berkshire's want buffett was last on the list, pay under half a million, small change for a billionaire. for "nightly business report" i'm mary thompson. xerox saw profits fall 85% this past quarter. that's where we begin tonight's
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"market focus." the cost of breaking the company into two was a big drag on earnings. along with a decline in printer and copier sales. the company also cited foreign currency head winds. shares of the company fell sharp he down more than 13% to $9.68. valiant pharmaceuticals has a new ceo, joseph papa, who until recently served as ceo of peridot, a company known for selling over-the-counter drugs, is shifting to valiant after helming peridot over a decade. valiant shares were initially higher but slipped to close at 35.16. shares of peridot fell more than 18% to 99.40. private equity firm kkr reported a loss of more than $300 million last quarter. this as the firm's biggest investment first data corps continues to struggle. kkr bought first data back in 2007 and maintained a large stake in the company after bringing it public last year. shares fell about 3% to 14.49.
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and restaurant operator bob evans farms says it is planning to close 27 locations and lay off 1,100 workers in a move designed to increase profitability. the company does say it hopes to relocate as many of its employees as possible and said it expects to take a charge of up to $8 million related to the restaurant closings. shares down a fraction for the day to 46.95. halliburton will delay the release of first quarter earnings until may 3 as it nears its april 30 deadline to get approvals to complete its merger with baker hughes. separately the company halliburton said it did lay off 6,000 workers in the past quarter. shares of the oil services company dropped nearly 2% to $40.04. a big buy-back to tell you about at honeywell. the company intends to buy back up to $5 billion worth of shares on top of $1 billion previously announced. shares of honeywell off slightly at 113.25.
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shares of the container store rallied initially in after-hours trading on a solid full-year earnings outlook, the small cap stock also reported a surprise increase in same-store sales. retailer now focusing on cost-cutting announcing a company-wide salary freeze and a 401(k) match freeze. the stock however did pop initially in after-hours trading. it closed the regular session at 5.83. a number of strategists are citing the presidential election as a wild card for the stock market. in part because markets don't like uncertainty, and as you know, this election cycle has been anything but predictionable. over the weekend gop candidates ted cruz and rival john kasich decided to form an alliance to take on donald trump, something trump calls collusion. and that's not all. one of the biggest financial donor in the republican party had somewhat kind words for democratic front-runner hillary
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clinton. john who are wood is in the center of it all, here to discuss the twists and turns on the campaign trail. this alliance between cruz and kasich of late, what do you realistically think they will be able to achieve? >> not much, sue. voters tend not to take instruction on how they're going to cast ballots. so the idea that ted cruz and john kasich are going to tell their supporters in these states, you go vote for this guy rather than me, i'm not sure that works. it's a practical move on their part, though, because they're running out of time to try to stop donald trump. he's on a path where he can get to 1237. it's not going to be easy. that's the number of delegates he needs to be nominated. but they are looking to do anything they can to take a couple delegates here or there, try to recent prevent that, get to an open convention. >> does this in any way confirm trump's charges that the system is rigged against him action number one, and number two, mightn't that energize his
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backers who say, see? he was right. >> i would say no, and yes. it will energize his backers. does it prove the system is rigged? no. it's a strategic choice made by these other candidates playing by the rules that all candidates can follow. it's like these other allegations that trump has made about delegate fights when he is losing on some grounds in a scrap for delegates. he'll say, it's rigged against me. when he's winning he doesn't say that. no, this is a tactic by cruz and kasich that is perfectly fine as a strategic choice, i just don't think it's likely to produce very much. like you say, it is going to produce a counter mobilization on the trump side. >> it is odd to hear one of the deep-pocket the koch brothers say a possible clinton presidency might not be that bad? >> yes. although i have to say, sue, i think that is more an expression of discontent with the republican field than anything positive about hillary clinton. in both cases he said their
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rhetoric is going to have to be a lot different from their actions or their actions will have to be a lot different from their rhetoric. i don't think anybody should hold their breath waiting for charles koch to embrace hillary clinton or put money behind her campaign. >> all right, thank you harwood, thank you very much. coming up, highly effective, hugely addictive. the business of pain medications. tonight we begin the first of a three-part series. tomorrow dow components apple, 3 m, procter & gamble report earnings. the federal reserve begins its two-day policy meeting. the s&p shiller home price index
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are out. that's tomorrow. as hospitals move to digitize records they face a new threat, hackers. attacks have forced some medical centers to pay ransom to regain access to their systems. while ransomware isn't new these attacks highlight hospital eventualer in bills. changes however are being made to prevent the next breach. >> reporter: doctors and nurses at cable bridge health alliance have a tough balancing act when it comes to technology. >> with the electronic medical record it's made things more difficult to interact with the patient. >> and security. >> right, exactly. so you have the patient interaction, you have the computer, you have security, and you're trying to actually think clinically about what to do next. >> reporter: by law they have to protect patient information. recent ransomware attacks that hobbled systems at hollywood presbyterian, med star health, and other hospitals have made
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them more aware they can be targeted. one way to keep the system safe is to get away from passwords says this security firm cofunder. >> using your fingerprint, taking your card and swiping it, eliminating those additional things that you have to mentally think gee, what password did i use for this application? and that habit and that trend to say, let me use the same pass word across all applications. >> reporter: at cambridge health they also try to make thinking about safety a habit. testing staff -- >> they get an e-mail that looks similar to this. >> reporter: with phishing e-mails to teach them to be alert for malware. now they put management to the test with surprise breach drills. >> we have an outside facilitator that comes in and says, here's your scenario, now go down through, utilizing your policy, your procedures, and everything else. it's a whole team that comes together that's already organized and already has a set process that we practice and test each year. >> reporter: according to an ibm study, in the u.s. health care
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became the most targeted industry for hackers in 2015. cyber security analysts say hospitals aren't the only ones who should be practicing and assessing their risk. >> we typically hear just about health care providers or hospitals because they have really strict regulatory requirements that require they report these incidents. other industries and other organizations don't have these same regulations. >> reporter: cambridge health chief information security officer says surprise breach drills have been inhave you been to help teach the staff how to respond quickly and effectively in the increasingly likely event of a breach of the hospital system. for "nightly business report," i'm bertha coombs in boston. a food and drug administration panel is meeting to discuss muscular dystrophy drugs we reported on late last year. patients and advocates are trying to persuade advisers to support approval of an experimental drug for the disease. last week the fda reiterated a
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negative earlier assessment of the drug which questioned the clinical trials. today's pain medications are highly effective. many are also hugely addictive. sales are high and rising. so are overdose deaths from prescription pain relievers now exceeding 20,000 a year. here's the first part of our series "the business of pain." >> it's killing the country. it's taking kids as young as 13. it's taking people that are 65 and 70 years old. they're getting addicted. they have no idea how to stop. >> reporter: recovering addict bobby long is one of the faces behind a shocking statistic. about 80% of all opiate medications, the most addictive of painkillers, is consumed by americans. >> opiate prescriptions have skyrocketed and we have currently nearly 250 million prescriptions for opiates written every year. that's enough for every adult in america to have a bottle of
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pills and then some. >> reporter: and those opoids are part of a $24 billion prescription painkiller market. the top five products based on 2015 sales were made by purdue pharma, johnson & johnson, myelin, and depo-med. new regulations can impact sales. 2014 the dea reclassified hydrocodone from schedule 3 to schedule 2 drug, there was a 27% decline in sales from 2013 to 2015. so drugs like vicodin, for example, can't be administered as easily as they were before. patients now have to bring a physical prescription to a farmly in order to get it feeled. it's yet to be seen if stricter guidelines will reduce the number of deaths caused by drug overdoses, a record 28,000 in 2014. >> we're just recognizing this as a huge problem. it affects all of us. when a problem is moving quickly, congress is always going to be a little bit behind in catching up. but i think there's a very, very
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clear awareness now of just how serious this is. >> our series continues tomorrow with one man's struggle with addiction and the overall economic cost of the epidemic nationwide. and that does it for "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> i'm tyler mathisen. have a great evening and we'll see you right back here tomorrow nigh
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