Transcripts For WHYY Nightly Business Report 20140609

The s p 500 and the dow transports to close at fresh alltime highs once again. Investors got a lift of another round of major mergers and the spin enough of a batch of some household magazine titles from one of the nations oldest and biggest media companies. Heres how stocks ended the day. The dow up sl points. Nasdaq added 14. And the s p ended one point higher. One of the biggest deals announced today was the drug giant merck. Agreeing to buy specialty drugmaker identix. Shares of dow component merck ended fractionally higher today. So what does identix have that made merck pay all that money for it . Reporter mercks purchase today for more than three times the friday Closing Price continues a frenzy of deal making around drugs for hepatitis c. There was a purchase to give it the drug now priced at 84,000 for a 12week course of treatment. Bristol mier with a deal that unwound due to safety issues with the drug. Bristol myers is still working on hype tis c. Competing for a market estimated more than 20 billion by 2018. I think gilleads First Quarter launch of their drug 2. 5 billion, maybe the fastest launch ever, verifies the fact this is a tremendous market. And so, that means a number of par tis papts want to get into it and that i think thats a reflection reflected in mercks paying for identix this more. Reporter in the u. S. , more than 3 Million People are estimated to have hepatitis c and only half of whom are diagnosed. With the new drugs, treatment is changing. Instead of injection, patients can take pills. Side effects are diminishing and cure rates are going way up. Merck chief executive operator is highlighting the program as one of the most important in development. It brings a new type of drug class thought to be an important part of the regimen. Merck and others join Johnson Johnson with the drugs on the market. Gill yads stock in the opposite direction today. Analysts said they have patent challenges to gilead and combination may give them more leverage. The merck deal was big but there was an even bigger takeover offer today. Tyson foods won to acquire hill shire brands. The winning bid, 8. 5 billion. Nearly a billion more than the top bid from rival pill brims pride and withdraw the offer for hillshire. Its subject to the release of buying out pinnacle foods. Heres how the stocks did. Shares of tyson foods, fell 6. 5 . Hillshire brands rallied 5 . Pinnacle rose more than 1 and pilgrims tumbles almost 7 . Another acquisition. Chipmaker Analog Devices to buy hitite microwave. Adi shares up 5 on the news. Hitite sharts up almost 29 . Family Dollar Stores is trying to fight off a possible acquisition. It adopted a socalled poison pill strategy for next year in order to buy time to consider its next move after activist investor icahn revealed friday he owns more than 9 in the company. And also said he would push the chain to merge with rival dollar general. Shares of Family Dollar were the biggest gainer in the s p today, surging more than 13 . More now on the big news about apple shares which began the day trading at 92 each after the Company Completed a seven for one stock split making more shares available and making them more affordable to more investors and those investors seemingly liked what they saw sending apple shares up 2 today. Apple still the most valuable company on the planet is just the latest Public Company to split its stock but how do companies and shareholders fare after stocks are split . And what about apple . If you woke up this morning and didnt know about the apple stock split, you might have wondered whether every iphone, ipad and mac book stopped working. Of course, thats not what happened. If you owned one share of apple stock last friday, it was worth more than 645. Today, apple opened at 92. But your one share now guided into seven. The value of your investment hadnt changed, not one bit, but the number of shares you own did. One famous study back in the 1990s found stocks rise almost 8 in the year after a split and more than 12 in 3 years. There are no guarantees, of course, and most investment pros will tell you a split is no reason to buy a stock. Perhaps especially for a company like apple. The stock split, i think, maybe in and of itself may not drive the stock higher but new product news and theres a lot of it coming from apple i think will drive the stock higher. A new operating system announced last week and iphone with a bigger screen, possibly on the way. Talk of a more capable apple tv. Its all out there. Plus, a big stock buyback that just got 30 billion bigger. Apples had mixed results with three previous splits, all two for one, a far cry from todays very rare seven for one split. Apple hopes to broaden the shareholder base. In 1987, the apple split proceeded a 2 share rise in the following year. After a 2000 split, share price dropped 57 . So is apple a trailblazer . Will more highpriced Companies Split this year . Howard silverblatt names the usual subject. Over a thousand, chipotle 500. Amazon is in the range. Auto zone 400. Google just did a split. Still over 500. Thes a lot of Companies Considered higher priced traditionally and trading out there. One Company Whose shares didnt make the potential split list is Warren Buffett Berkshire Hathaway selling for 192,000 and buffett likes it that way for a Stable Shareholder base. He did, however, once split his limited rights bshares 50 for 1 to create more currency for the acquisition of burlington northern. Timing, meanwhile, the magazine unit home to people, supreme courts illustrated and Time Magazine was spun off from time warner today. Time shares made the debut on new york stock exchange. The chief executive sounded upbeat about the companys prospects despite an industry stung by declining circulation and advertising revenue. Ive got some of the most trusted brands in the United States. Nine of the brands around over 40 years. One of the brands is oldest living continuously Living Magazine in the field called the field. I have strong cash flows and to write off a company like that, i think its incredible. We have great assets. Investors didnt have the same level of enthusiasm. Shares fell nearly 1 on the first day of trading. Can they go it alone as a separate company . Porter bib thinks so from media tech capital partners. Welcome. Good to have you with us. I should point out both susie and i spent time at tim incorporated. We have fond feelings for it. Are you enthusiastic . I am. I think joe rip is the right guy to steer that ship because what time, inc. Is, is content content. Not a magazine company. Its got as mr. Rip mentioned, its got some of the 90 magazines that are some of the most iconic brands in the communications and entertainment business, finance, home furni furnishings and self help. You mentioned the field magazine. Thats part of their uk ipc media group. That magazine started in 1799. So theyve got a little bit of history and actually not a bad survivor. Well, as tyler said, we have fond feelings for them but advertising is down. Circulation is down. The magazine business we know is an industry in decline. How exposed is time . Well, first of all, susie, i think that im confused as to why jeff and time warner decided to spin time, inc. Off as a Public Company because they had an option. They tried to sell it to meredith and put it on the market for about three or four years and there were no takers but one of the things that they could have done that would have, i think, really put time, inc. On a high plain was an Employee Stock Owner Company because right now the people who are running time, inc. And all of the magazines are suffering from the fact that theyve had to for decades had to give all their profits back to time warner. They have never had any real capital to grow or to develop. They havent really made a Successful Transition to the digital media. And theyve still got these great brands. One thing i dont agree with joe rip about is hes meeting every day with the editors and saying that they have got to cut back 25 of their editorial staff. Right. Well, thats the guts of this business. Its a content creation business. Porter, are those brands as valuable as they once were . You have a brand like People Magazine and competitors nibbling at a way its not happened before, tmz or sports illustrated. Not as valuable or dominant in the space as it was in this digital era. Youre absolutely right. The whole Media Business has fragmented beyond imagination. But the brands, what people are looking for, is, a, something they recognize. B, something that brings value or pleasure or some entertainment to them. And c, they want to see something thats accessible. Time, inc. s titles are not accessible in the digital domain. The time app is good. Very quickly, would you buy the stock at this price . I think its a steal. Eight times pe. Okay. Its a same market cap as the New York Times. The New York Times makes a quarter of the profit that time, inc. There you go. All right. I think if youre patient and wait, you will see a real i mean, i think its going to be taken over. Thanks very much with media tech capital partners. Still ahead on the program, playing to win. Why billions are at stake for microsoft and sony as the two Companies Face off at the biggest annual gathering of the video game industry. Thats coming up. President obama taking action today to help millions of American College graduates pay down Student Loan Debt signing an executive order to allow borrowers to cap their payments. We believe in america no hard working young person should be priced out of a higher education. This country has always made a commitment to put a good education within the reach of young people willing to work for it. The president said todays order could help additional 5 million borrowers lower Monthly Payments on federal loans. John harwood joins us from washington with more on todays relief plan. John, you know, so many people burdened by the Student Loans. What exactly is the president promising to do and who really benefits . What hes doing, susie, telling people who borrowed before 2007, who previously were not eligible, that they can cap the repayment of Student Loans 10 of the monthly income and paying for 20 years at that rate and they havent paid it off, the loan is forgiven. This is agreed to do Going Forward in 2010. In 2012, the president said the 1. 7 Million People who had borrowed between 2007 and 2012, that is to say, people who were in college during the process of the law changing, that they were also eligible. Now hes gone before that to people who borrowed before 2007. Lets talk a little bit of how much it saves borrowers and cost taxpayers and likely of political blowback about sort of ab solving people of commitments they took on. We dont know, tyler, how much this is going to cost the government. The administration didnt provide under repeated questioning today, didnt provide an estimate for this and characterized the cost modest but for students theres a big benefit in certain cases. The president spoke next to a young man who had both mba loans and undergraduate loans and previously paying 800 a month. Under the new system capping his repayment at 10 of the income, only 200 so big benefit for some people. John, thanks a lot, in washington. A settlement has been reached with the group that runs bigtime college sports. Over the use of student athletes in video games. The ncaa agreed to pay 20 million to division i College Football and basketball players who filed a Class Action Lawsuit over the unauthorized use of their names, images and likenesses in video games made by Electronic Arts. Now, the deal still needs to be approved by a judge. It was a big day in los angeles. The kickoff of the electronic entertainment expo e3, biggest annual gathering for the industry where big names unveil the next big titles and consoles. Reporter with the new game consoles, microsoft, xbox 1 and sony off to a strong start, the mood here is upbeat and the focus is on the new game announcements that will get consumers to keep buying games and the new consoles and as Xbox Press Conference kicked off this week, the focus not on the console as an entertainment hub, but rather, as a service to its hard core gamer fans. You have to start with the core customer of the box which i think is that gamer and architected the box for all forms of entertainment is a strong part of the vision and we know that day one customer every year is the gamer. You expand from the gaming audience out. Second biggest event is el t Electronic Arts press conference. The big titles and various ways gamers play with digital addones and mobile access, the hottest game, battlefield hard line, the first time ea released a game in the franchise two years in a row. Great game bring in a lot of players and focus is put the player first, build Amazing Games and they will live together in the marketplace. Reporter all the other gamemakers try to run up ea with better and bigger titles and flashier graphics. Mcdonalds sales in the u. S. Are still slipping and sos the stock. And thats where we begin tonights market focus. The Worlds Largest burger chain with a small rise in global sales but here in the u. S. Sales continue to decline. Mcdonalds blamed, quote, ongoing broad based challenges for that slump. Shares off a fraction to a 101. 38. Shareholders of netflix voted down a proposal today to split the companys chairman and ceo roles. Reed hastings, the founder, holds both of those titles. Shares of the Video Streaming Service sell 1. 5 to 423 and change. Amazon launched a service of amazon payments that lets consumers use the amazon accounts to send and receive money and shop on other sites other than amazon. Com. The company will charge a fee to the other merchants for each transacti transaction. Shares off a bit to 325. 5. Kraft foods hiking coffee prices because of rising costs. The move will affect its Maxwell House and uband brands. Kraft is the second major roaster to up prices. Last week smucker increased by 9 . Shares of kraft up more than 1 today to 60. 42. Following fridays solid jobs report, we continue our series on where the jobs are. Tonight, we look at the nuclear option, the Nuclear Energy institute says 20,000 retiring workers will need to be replaced by the year 2018 but we found a utility hiring hundreds of new workers to man the First Nuclear reactors to be built in the u. S. In decades. Mary thompson has more from south carolina. Reporter at the Vc Summer Nuclear station a massive derrick splits the summer skies part of the project to build the first two Nuclear Reactors in the United States in 30 years. At the peak, the project will employ 3,500 construction workers but theyre looking to hire a permanent workforce for another big job. Were going to bring on about 800 total work earls to support the staffing for our operating plants. Reporter its three or four years before the reactors come online but the chief Nuclear Officer says hiring started five years ago. We wanted to make sure we did was we brought in the right people at the right time. So, initially, we are going to be doing a lot of training and a lot of instruction so we hired instructors first. Reporter those instructors now train Nuclear Operators at a simulator built on the 240acre site. The start of training to receive throughout their careers. They have hired more than half of the 800 workers but still needs engineers, mechanics, technicians and chemists. The Nuclear Energy institute says starting salaries about 52,000. They wouldnt say what it pays, only that its competitive with a full benefits package. Now, the company is finding workers from the industry, military and fouryear colleges. While partnering with local schools for a pipeline of trained workers. One is columbia, south carolina, based mid labds technical college. Five years ago the president said it codeveloped a program with the utility training workers to work here and abroad. They can go to work anywhere in the world where the Nuclear Regulatory commission has oversight. Reporter the majority of students are adults with many looking to change careers. Like 37yearold kimberly hall. The chemist left a job in the drug industry, lured by her fascination with Nuclear Energys potential. Since im a scientist by nature, its just a process that you can take uranium and power an entire city. Reporter the hope of a steady job brought 25yearold wesley mclean. Once a temporary worker for the state, he graduated last year and now works as a nuclear mechanic. Im not sure how far up the ladder ill climb. I definitely plan on spending 30, 35 years with the company. Reporter mcqueen recharging the career by taking the nuclear option. For nightly Business Report, im mary thompson, south carolina. Coming up, is the promise of a brazil economic boom fueled by the world cup going bust . If youre a soccer fan or what the rest of the world calls football, you know that the world cup starts thursday in brazil. But what was supposed to be a crowning moment for south americas largest economy is turning out to be a very costly embarrassment. Adding to the troubles, allegations of bribery at fifa, the International Body that governs the world cup. Despite the stumbles, some investors think it could be a good time to invest in brazil. Reporter riot Police Use Teargas against striking metro workers today in brazils largest city, sao paulo. The unionized work earls dema demanded higher pair and blasted the billions spent by the country on the world cup. Just the latest headache for the brazilian government as the games get started this week and some stadiums unfinished and nearly untested. Many Infrastructure Projects promise to improve transportation never got built and those that did may have been built in haste. Late last month, heavy rain led to the roof collapse at a new airport constructed in the northern part of the country. The games supposed to provide an economic boost and create jobs. Estimates of how much is spent range to 15 billion. Ceos tell us concerns of protests and blorwhether or not country can pull it off is hurting. Its adding to the weakness now. Reporter the ceo of a huge brazilian travel company said theyll get the expected number of visitors and got gangbusters. People think gnat airports will be a mess and on the end of the day they will be empty. Reporter the brazilian economy is slowing and inflation is slowing. Consumer confidence at a fiveyear low. Ditto for industrial confidence. And yet, it is precisely these problems leading some wall street firms to recommend investing in brazil. Research firm trusted sources tells clients the more the country weakens, the more likely the president will lose her bid for reelection in october. The candidates running against her support economic policies much better for business. Trusted sources think the market could, quote, fuel a hope rally not unlike the rally in india. Last month, india elected a new leader and that led to a massive rally in the indian stock market. Add to all of this, news of a bribery scandal of the governing body of soccer phone as fifa. Journalists uncovered documents alleging the country of qatar bribed for the world cup in 2022. For nightly Business Report. Did detroit big three giving back to the struggling city and the residents who helped make them great. The charitable arms of ford and General Motors and chrysler have committed a total of 26 million to help ease pension cuts and support the Detroit Institute of arts. The donations are designed to preserve the citys Cultural Heritage and help retirees seeing the pension benefits slashed since the city declared bankruptcy last year. Every bit helps. Will you watch the world cup . Absolutely. It is an interesting warmup to the olympics coming there in 2016. Well see how it starts off starting thursday. Too bad the economy part didnt work out at least so far. Well find out. Thats nightly Business Report for us. Im susie gharib. Thank you for joining us. Im tyler mathisen. We hope to see you back here tomorrow night. Er this is bbc world news. Funding of this presentation is made possible by the freeman foundation, newmans own foundation, giving all profits to charity and pursuing the common good for over 30 years, kovler foundation, charles schwab, union bank, and United Health care. At union bank our relationship managers use their expertise in Global Finance to business through strategies of international commerce. We put our extended Global Network to work for a wide range of companies. What can we do for you . Whenas