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tv   Bloomberg Business Week  Bloomberg  May 21, 2016 7:00am-8:01am EDT

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welcome to "bloomberg businessweek." carol: the issue is now online. all that is just ahead. >> carol: i'm here with ellan pollack. >> you don't start, i have complaints of people on the set that you are not cool enough for
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the magazine. you need some work. now, the will do it tie has to go. >> i have something for you that will help. this already feels better to me. david: thank you. carol: there are a ton of cool stories. you guys have a story about the most famous indian political family. what is he doing? he is the head of the opposition party. is he going to carry the mantle?
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oddly, he disappeared for a few months and when on sabbatical. he came back refreshed and he is like he may be like members of his family. caro: does he have the support? >> it's not clear that he has the support. they have been in power mostly since independence but looking ahead, will he ultimately gain the power is the big question. david: you have a lot of companies want to get satellites up in space. >> elon musk is one example. most people think it's about what's going on in space that it's about with going on down here. for wi-fi,ed demand
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the increased demand for internet connections and especially for those of us who go on planes and have no connections. satellite can secure that. for satellite companies, most of the business goes beyond just launching satellites. carol: you ask about warren buffett. part, he has not wanted to get involved in tech companies. he finally did invest in ibm. mostly he stayed away from tech. this looks like it's an exception only we say it's not really because you can look at yahoo! in certain ways and it's really a media company. carol: and he likes media. >> he feels he understands media. david: he is teaming up with dan gilbert. a lot of bids for this company.
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how likely is it they will get this? >> they are up against verizon. warren buffett is an expert at getting in there and figuring out ways where he can profit because of the size of the capital he can muster. he has a lot of money to put to work. david: the cover story this week -- you look at charities and their co-pays and how pharmaceutical companies are working. >> drug prices have been going up for a while and there are charities that have been developed that will help people who cannot swing the cost of these drug prices with copilot -- co-pays. co-pay and pays the with a lot of these patients, if thee pays the rest drug companies give people the drugs, that's it.
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if they donate to these charities, they more than make up for it when medicare reimburses for the price of the drug. carol: we have more. >> they help patients who have insurance already. drug prices are getting so expensive that they are stepping in and the individual portion of they mightcosts, cost $15,000 per year so the charities help you with that particular payment. therefore, you can stay on the drug like a $100,000 cancer drug. it sounds great but what's interesting is these co-pay charities, where are they getting their money? >> that is something that struck us. it's almost entirely coming from the pharma industry. it's a circular flow of money. the firm a companies give huge contributions to these charities. , oneiggest one we saw company gave $170 million to one
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of these charities in 2014. the money just gets allocated back to patients who are on that company's drug. essentially the money circles around and go back to themselves. let's give them the benefit of the doubt and there are economic motivations? >> absolutely, what we have been seeing is just an astronomical rise in drug prices. this works for drug companies as long as it does not erode their patient base. the big chunk of their patients cannot afford this drug and want sign up to take it, they will start to lose revenue so they need to find a way where they can raise the prices of drugs but keep their customer base from eroding and this is one avenue. psi, patientofile services, and they are one of the big players. >> yes, we looked at them
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because they are the grandfather of this. they have been around for 27 years. most of these other charities have been around the last 10 years. we looked at it and the founding father of the industry is any koon and how he went about starting this and his back story, they are interesting in that they have been at this for so long and they have been a market mover. they were the first charity to say let's focus on medicare patients. not only the private insured patients but the patients on government-funded medicare which is a prickly area. these charities have found a way and gotten government permission to do this as long as the drug company donors don't have significant sway over their operations. pri a prickly area that
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spearheaded the way to this next area. david: charities like this one have grown in part because of legislation passed a decade ago? >> it really took off with the creation of the medicare part d benefit which is basically getting drug benefits for medicare patients. drug companies are legally allowed to directly subsidize patients. they can step in and help pay your co-pay, it's allowed but in the medic there payment market that is not allowed so you need a conduit which has turned about -- turned out to be these charities. d startedare part up and some of the charities were founded by the drug industry itself. creatore talked to robert vargas.
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>> we started to cover this before we got the story. david: is that common? big pharma was donating to charities and then getting the money back from the government and this is something kind of sketchy. we started out with a typographic cover. it was pretty bold and we were happy with that. this is pretty much done. the story came in and we realized they are not robbing anyone because they are not doing anything illegal. carol: and it is helping people. pivothad to have it -- and we start with a headline. somethinging to write to contradict that. a eventually changed into lower headline so it's one big headline but half of it is not
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that physical. carol: it is really colorful. how you figure out which catches peoples attention? >> in this case, the first part of the headline is big pharma is here to help. we wanted the image to play to that so we thought of the color and the brightness and the hearts would play at that effect. david: there is some silliness to this. >> it is extremely silly. this ari is not silly but in order to bring you in, it's a lot to explain especially on the cover. we had to boil it down to something eye-catching and draw you into the details later. up next, how to build your business without a sales force and what the best ma
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numbers at the end of the quarter. lassian hasething at never done. inspiring other people to take a look and see whether they can do this to some extent. this company is based in australia and they did not have the pressure from venture capitalists from the get go. >> i think that's part of the question. thinkenture capitalists is not possible for a company to replicate this to that extent. it is fairly religious of doubt in the sense that there are no exceptions. they don't have any salespeople. a customer we spoke to who reached out to them and wanted to purchase and wanted a salesperson but they said they don't do that. it's hard for other companies to
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do that. there are certain types of software where this will not a once every 10 year purchase will be hard. it's a different model. most of their business is global. they have a novice in san francisco but they were self funded off of the co-creators credit card. capitalists wanted them to grow faster but this allowed them to take this tack. the ceo told me it gives a more steady and predictable growth rate it is probably slower than what some venture capitalists would like. he likened the idea of a sales force to taking and adderall.
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it's a low-quality high in does not change things. it does not improve matters but it gets you through the quarter. that's not a model he has been interested in but it works well for them. arol: chinese companies are left with challenges.
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david: welcome back. carol: you can listen to bloomberg businessweek on sirius xm. david:
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>> they are going to do list in the u.s. market and try to sell shares back locally. david: you mention a lot of people do not know what these companies are. give us a sense of what they are in terms of how they operate. >> mostly our internet technology related chinese mo, anies so we have got mo --ing app like tender tinder -- tinder, and a lot of social
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networking. carol: officials have been worried about the capital flows, if you will, coming out of china . are they looking to stop this? >> i would say this is a secondary concern of chinese regulators. the first one is about the stock market stability, the influx of chinese companies that were previously listed overseas, all of a sudden they wanted to go back to china altogether. that would dilute share prices and that is a top concern of the chinese government and regulators. carol: so they want to rain this in question mark >> that -- they have been raising questions about wall street investors and questions about investors at home. david: with the government like to have chinese companies listing in china? >> i think they have different
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views about it, and a couple of years ago all of these technology-related chinese companies, they sort of have to go. more and more these chinese companies want to go back. david: up next, why china is getting the cold shoulder down under. carol: the national geographic channel is planning its next app. ♪
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david: welcome to bloomberg businessweek. carol: we are inside the magazine headquarters. david: martha backs life coaching industry. carol: the united states postal service looking for a lifeline. david: what is james murdoch have planned for just national geographic? carol: it is all ahead on bloomberg businessweek. ♪ david: we are here with alan politic, editor of bloomberg businessweek -- ellen politic. >> i just want to do a check on how you are doing. david: there is a story here in the global economic session -- section about australia being
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much less inviting. >> a lot of chinese people are trying to get their money out of china and they are buying real estate in the u.s. and also in australia. the housing market in australia is pretty tight, prices are going up. david: it is a hot market. not happyians are about that and they are putting in place all kinds of rules that makes it hard for them to buy. carol: the banks are pushing back. rolesy are changing their so they are not lending as much to the chinese, and so does the government. the government has a role chinese are not supposed to buy pre-existing homes, only new homes. it is a protectionist kind of attitude about chinese investors and homes. carol: you guys key in on the cloud and specifically take a look at many industries that have been exploiting technology. david: what is block chain
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technology? >> everybody knows. i think the way to think about it is as a digital ledger that involves lots of different computers. if you think about it too much it might make your head tennis swirl. digital ledger. ,arol: but it is not just financial industries are tapping into it but other industries. >> they are thinking it may replace in some cases regular web services and they are all experimenting with it. a lot of financial firms that real estate firms as well, and it is now a bigger business than the actual bitcoin industry itself. it is developing and you are going to hear more about it. you just have to pretend you understand what it is. carol: now we know. david: you look at how google is investing in 911 services.
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some of this has been thrown into a great deal of uncertainty as people move away from landmines. 911n perl areas, dialing not help you and what services are doing is going into rural areas and they are giving phones to volunteers. so when there is an emergency, they are contacted. they put in a code saying they're coming and because there are phones in those areas, it is much easier to get help to people who need it. carol: kind of brilliant. >> and things like something that needs to be done and google is investing in. carol: if you take a look at the national geographic channel, what is the future? >> it is changing. was always some tension between national geographic and the national geographic channel. they felt, the society felt the fox people were going a little
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too wild doing reality shows. making money, and the money was helping, but they thought there was a diversion in interest. suddenly, fox expressed interest in buying the whole thing, including the magazine. they were worried because rupert murdoch has questioned whether climate change exists, etc., and they found that his son who runs fox is an environmentalist. david: james murdoch. >> the main thing in the assets is the tv network which was started as a joint venture with then news corporation 26 -- 21st century fox. there is a whole lot of things in the whole national geographic diaspora, book publishing, licensing, arjun singh, travel business. >> i think what is fascinating
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is how rupert murdoch and 21st century fox came to own national geographic. talk to us about that. fall,tially, back in the there was an announcement made that national geographic was selling all of its media properties to this new for-profit called national geographic partners. 21st century fox was going to pay the society $725 million and become the majority owner, and basically take control of all of the media brands. said, you are and selling everything to rupert murdoch's business? these are odd bedfellows. of jokes goingt on about the national geographic was going to become sort of anti-scientific. there will be cover stories like the joy of coal. i think a lot of people did not know that there was this
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relationship between these two organizations that dated back almost 15 years when the two started the national geographic channel in 2001. were complaints before this arrangement about where the tv network in particular was be did not have the seriousness or scientific of the magazine. picture, the channel was a great success for .oth organizations since 2001 it made them a lot of money at a time when the magazine was losing readership and losing as the, replaced that economic engine keeping the national geographic society at large. it was also profitable for 21st century fox, but there were all of these issues, cultural clashes over the years in particular about the programming . there were a lot of people inside the society who felt,
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this is slightly off brand. we are getting into all of this reality tv. there is shows about people chasing ufos. what happened to our focus on science? >> where is shot cousteau when you need him? people that were running national geographic channel said, we are in the tv business. everybody is chasing after the shows, and if you look in the 2004 whenm 2001 to david lyle came over to national geographic, that was the most excess full period they have had with the national geographic channel. there were shows like wicked tuna, doomsday propers. never got as popular as discovery but it was doing pretty well. internally there were all these clashes in terms of, is this what we want. >> talked about the role of
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james murdoch. rupert murdoch i think you said calls him a -- >> tree hugger. >> james murdoch took over of 21st century fox and i think that made a big difference to a lot of people within the national geographic society because if you look at his ,olitics versus his father's there were certain people who had qualms about rupert murdoch, in particular his skepticism about global warming. james, and hen, is very environmentally progressive. him and his wife have a foundation that is dedicated to protecting national resources like fisheries and enhancing scientific education -- advancing scientific education. 2015,ly, in the spring of the new ceo of the national geographic society held this off-site retreat for the board
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of trustees in washington, d.c., and that was the first time that james murdoch got in the room with them. everybody met and all got along pretty well. >> from the national geographic society? >> yes, and a couple of weeks later, the deal was announced. carol: the software hillary clinton hopes will land her in the oval office. a pioneer that is making life coaching a mainstream profession. david: all of that ahead on bloomberg businessweek. ♪
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carol: welcomecarol: back to bloomberg businessweek, i am carol massar. david: i am david gura. carol: and the features section
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this week is a profile of martha beck. have you heard of her? david: she is the life coaches life coach. carol: she has written books, had seminars, that with opera. i have heard about loaf coaches but it feels like they are becoming a little bit more legitimate. -- life coaches but it feels like they are becoming a little bit more legitimate. david: it starts with her at a constant -- she makes millions of dollars a year. carol: there are about 41,000 around the world and they are bringing in about $2 billion in revenue. there is something about an integrity cleanse. integrity check. you kind of cheated yourself. storyiter who wrote the had a moment. david: one of the ways hillary
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clinton plans to get to the white house using big data. >> we saw the explosion during barack obama's campaign and in 2012, ways of motivating potential voters, finding them, and getting them to turn out. david: a big part was through e-mail. i was amazed at how flip some of the subject lines were, how some more personally directed at me seemingly. there is a lot of research and technique that goes into e-mailing like that for a political campaign. tim: it is not just a guy in the corner tapping out e-mails. there's testing and motivation behind each of the messages, and seeing what does do well and what doesn't. the amounts asked for play into the psychology of giving, that sort of thing. the way you respond may trigger another kind of response down the road and it is part of a bigger picture of how a campaign
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will try to essentially market itself to its supporters on potential supporters. >> speaking of a campaign doing just that, it is hillary clinton. what exactly are they doing? interesting because she is not really talking about all of the details. we are on the outside looking in so we are looking at some job ads were clearly she is trying to build the data army that barack obama had. went offose key people and started a startup a few years ago that found some funding from eric schmidt of google, and is essentially trying to provide the obama data machine to hillary clinton's campaign, and to nonprofits who want to get into this data engagement, digital engagement field. out, its you point
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occupies a special position, it is not a for-profit company. tim: they are a for-profit company, but they want to be in the place where they are helping nonprofits. they eventually see potential in the corporate world as well to essentially social impact space where tying into doing good, if you will. carol: the opening remarks facing the u.s. postal service. >> one of the amazing things is that if we think of it as sort of a big mess, kind of a basket case, it has not always been like that. people used to be amazed by the postal service and marvel. throughout the 19th century, there was no other big organization. ge's, soe no ibm's or it was one of the biggest things in america, the biggest employee -- employer in the federal government. i still marvel when i send a
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letter at how inexpensive it is. has that always been the case? >> in the very beginning, it was very expensive because the way they priced it, you had to pay by the sheet and also by the distance. also, you did not pay. if i sent you a letter, david, you would pay. david: credit on delivery. : you might have handed it back. it was not until the 1840's that they change the system all the , introduced stamps, people started using envelopes. about as thenk male have only been around for 160 years. a harvard business study of how to run a business, this would be how not to run a business. devin: they are still not in
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control and this is what i'm writing for this issue. on april 10, the postal service lowered the price for first-class stamps. david: bad news for everyone who is putting his retirement in forever stamps. thing, thewhole forever stamp was supposed to be a forever stamp and a matter what happened to the price, it would not go up. now if you bought forever stamps before april 10, you lost money. >> what is the future of the u.s. postal service? devin: i think it has to morph and if you look to europe, the postal services have changed. andsche post has privatized the actually own dhl. you have the postal services in scandinavia, they have closed the government run post offices for the most part and they provide postal services and stamps and convenience stores. there is a way ahead.
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at some point, these things are going to have to happen here are just like they have happened in other countries. it is just a question of when congress and the white house decides they want to do with this. carol: a lucrative market being overlooked by re-tile -- retailers. david: ebro guide to sandals. ♪
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david: welcome back to bloomberg businessweek. companies and industry section, a look to why retailers and not catering to plus size women. >> this is a big market. obesity rates are growing. as is something important and it
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fades away and comes back and yell euros, and i wanted to find out why that is the case. it is just seen as an ancillary business, it is not a core. whatever a company or retailer is not doing well they will push it aside. they will open it up again and push it aside. >> even though it makes money. shelly: but it is harder. david: i find that so fascinating that factories would say they are not equipped to make clothing that is plus size. what is the issue? shelly: some places actually charge you more for plus size is which i think is also interesting. even from the very beginning, when you are just designing the close -- clothing, you need multiple fit models because it is just if it is just a regular size two or size for, you keep writing it up. by the time you reach size 16,
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there are a whole different set of considerations that come into place so you have to have multiple cuts. you cannot just so together for pieces of fabric. factories,t to the just like u.s. retailers are not set up necessarily to sell to plus size women, factories are not meant to make these kind of close. if you only have demand for little bit of plus size you might not necessarily have the capabilities. >> we are talking a lot about brick-and-mortar, but what about the online world? youry: going back to earlier question on where r + shopper shopping, online has been a huge growth area. they do not have to deal with the stigma of going into the stores from an emotional standpoint. there is also just a lot more variety online. carol: a look at the growing
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feminine hygiene market. david: we spoke to reporter jennifer miller. jennifer: it is something like $15 billion globally and in the u.s. i think it is something like $4 billion, but it has not changed very much in the last 50 years. now we are seeing a lot of new companies. david: why are there so many new companies? jennifer: i think it has to do with women being fed up in which the way these products have been marketed to them historically. >> probably by men. jennifer: probably by men. we are talking about very large companies that are selling a utopia, that when women get their periods, it is great and wonderful and we are prancing around in fields of spandex and -- in a field of
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flowers, and wearing white spandex. carol: companies are also being kind of socially responsible and giving back. jennifer: all of these companies have made a social mission. they have woven it the fabric of their company and that is really how they are selling their products. the idea is that you are confronted with a company that, you are getting your period, here is this new product that you should know there are disadvantaged women all around the world who do not have access to the same products that you do, so buy from us because we are going to give something back. david: and perhaps pay premium to do that. jennifer: organic tampons are roughly three dollars to four dollars more a box. underwear run between $24 and $40. it is really first world women,
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affluent women who can afford to buy those things. david: a guide to picking out the perfect summer sandals. carol: here is editor brent beacon. of it as a summer sneaker substitute. try a pair of sandals. you would be surprised, they can go with outfits that are not just a t-shirt and shorts. carol: any rules? brett: make sure that your parents hit just before the top. you do not want it sagging. david: at the ankle. brett: also, take care of your toes. you want your toes to look professionally manicured. david: you have a number of these in the section and these are kind of chucky -- chunky. you: they are meant to get through the day, and they range from $50 through more than
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$1000. david: bloomberg businessweek is available on stands. carol: also are mine and on bloomberg tv. what story did you like the best? david: i really liked the story about national geographic. i had no idea about the tv arm and this wrinkle with fox getting involved, james murdoch. super fascinating. carol: i love the story about warren buffett because he is considering making a bed for yahoo!. david: join the club. carol: i feel like he is changing his tune. i thought it was interesting. david: thank you very much for walking -- watching. carol: we will see next week. ♪
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best,ing up on bloomberg the stories that shaped the week in business around the world. warren buffett dips a toe into tank. george soros goes for gold. the fed minutes say get ready for a rate hike. >> the keyword is jim. shery: we sorted through the highlights and highlights -- low lights and highlights. oil prices rally but is a slump really behind us? >> i'm shocked this market is


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