aren't, to have toyota begin to take a look at that. >> we reached out to toyota for a comment regarding questions about the electronics. after many years of exhaustive testing by us and other outside agencies, we have found no evidence of a problem with our electrical throttle control system that could have caused unwanted acceleration. toyota has been denyinging electronics were a problem ever since the controversy broke. >> go back to january 19th and the stock was at $92 a share and it has fallen since january 19th for more than $20. a story for which we're getting headlines in almost every hour. >> gm and ford up big. toyota down big. is this related to that? absolutely. >> you stop selling the top eight models the last week of the month and that certainly weighed on sales from toyota, but this controversy clearly has had some kind of an impact and that started toward the beginning of the month. melissa? >> the story gets bigger and

bigger. thanks so much. stocks are lower pressured from the likes of pfizer and health care and financials are among the losers on the flipside. ahead of the unemployment report coming up better than expected. take a look at how the s&p 500 is trading so far this morning. it is down about five points and you can see as well off the lows of the session and it's down a half a percentage point the dow is trading by a quarter of a percentage point and the nasdaq also traded to the down side by a third of a percentage point and almost 7 points. >> trish, what's happening on the floor? >> we're seeing the down side despite the positive economic news. the i, is m number coming in above 50. anything above 50 is signaling growth. the other key points and i know we'll talk about this more coming up in the show is the adp number 22,000 jobs were lost that month. not that bad. in other words, we're seeing that number of jobs that are being lost each month decrease. so that's a very good trend as well. i want to bring in bob pisani

because when you have this positive check news how is it that we're still in a market that's moving lower? is it all coming down to the earnings and disappointments? >> yesterday i put up all of these favorable comments from the conference calls and today we just didn't have it and maybe it was a calendar, but there were a number of companies that were disappointing. i was surprised at ryder's numbers. ryder, for those who don't know, they're big into truck leasing and that's really their core business and they've been lagging. there's overcapacity in the truck leasing business and i would have thought they would have picked up more, but it hasn't. that's been the problem at ryder. >> pfizer which acquired wyeth took that into account and they still were shy and the 2010 guidance was shy. they gave guidance for 2012 and they were essentially lowering the guidance that they had given for 2012 already and 2012 is important because it posed lipitor, the biggest-selling drug of all time likely and that's a bit of a disappointment

here. so i think that's questioning on the market. we want to talk about those dividends. i'm making a big thing because dividends matter in this difficult environment and we want to see signs that companies are doing better by raising dividends. time warner did it today and news corp did it. they raised their dividend 25% expect that's very important. tiffany, carnival, praxair and those are the ones that came to my memory all raising their dividends and in february, that's traditionally the month where most companies have raise dividends. i know you will see more dividend increases and it's a very good sign overall. >> really quick because we have to go. retail tomorrow being a biggie. >> good news and bad news on retail. it's very simple. the good news here is we'll have the fifth consecutive month of uncrease in same-store sales. that's good news. they have the lean inventories out there and the high end has been showing signs of life. look what's been going with tiffany and other companies like nordstrom. the sales have been pretty good

and the big problem is the unemployment numbers and that's the big question going forward. january may have seen an uptick from the gift card sales, but as things move forward and we get into february, the stocks are richly priced and they haven't dropped a lot. estee lauder is at a new high essentially. that could be a problem unless we get the unemployment numbers down. >> bob pisani, thank you so much. melissa, back over to you. the monthly adp survey was 22,000 jobs were lost and less than expected and december's was revised downward and most analysts are expecting the job report to show january sticking at 10%. so are we heading into a jobless recovery? joining me now is michelle girard and james shrug, senior economist at west pack institutional bank and cnbc's very own steve liesman. there are people that are worried that some of the policy decisions that are going on right now aren't helping the employment picture. for example, was there a great editorial in "the wall street

journal" that tax on multinationals and $122 billion could actually hurt employment because there are workers here, harvard studies show that support the workers you have overseas. you think about walmart and open a walmart overseas and you have people working at walmart head quarters to support them. do you think the policy environment could hurt the employment picture? >> i think it is hurting the employment picture. i think just the sheer uncertainty associated with what's coming out of washington. one plan one day, another plan announced the next. potential for taxes and increased cost in terms of workers when you look at health care reform. is that going to happen? is it not? what's that going to mean? i do think that that has kept firms cautious about adding to the workforce. >> good point. >> because of the uncertainty associated with what's going to come down the road next. that said, we are in the optimistic camp. we don't think this will be a jobless recovery and we're looking for a jobs being of 60,000 on friday and it is boosted by 30,000 census

workers. >> 50? 50? 50 is a big number. >> we have 60 on the headline, 30,000 of which are census workers, so we do have a gain in private employment which would be the best we've seen so far this cycle. >> okay, thank you. james shrug, after melissa francis' blistering policy analysis i do want to get back to today's statistics. what do you read into the ism non-manufacturing report especially jobs and the adp report? >> certainly on the ism non-manufacturing, although it was the strongest reading in a year and a half, the contrast between that survey and the ism factory survey which is running at around 58 which we saw a couple of days ago, it's certainly stock and it just goes on show how inventory rebuilding and the fiscal stimulus that is supporting the howing sector and therefore the construction of home building materials, that's really helping the factory sector in the u.s. at the moment. and the bulk of the economy which is non-manufacturing, i.e., construction and services

is still, frankly, struggling and for us, that poses real concerns for the u.s. economy later in 2010 when we think fiscal stimulus and inventory rebuilding will be contributing much less to the economy and leaving off -- leaving what is coming through. >> steve, do you agree with that? >> i think we'll settle down here and we had a huge pop. in the fourth quarter and you go back 30 years, it looks like this, it goes straight a ross and it goes up. it's a one-time spike, when you went declining inventories to minus 30 and you won't see it again and it would be almost impossible which gets to the question, leaving what? it leaves consumer spending at about 2%. would the outlier here, melissa, be business spending? if anything will drive growth at a 2% clip, it's got to be business stepping to the fore putting some of the cash that we talked so much about to work in the economy. >> michelle, i think coming back to melissa's and your blistering

critique of policy, and i agree, let me just add. taxing the top end people and the capital, these are the most likely to invest and the most likely to start new companies and the most likely to create jobs. why would anyone tax it and it's cooperated by melissa on the taxing of foreign earnings, but you know, michelle, i want to come back to this point. what i call the scott brown revolution, i don't know that any of these tax hikes are going get through, nor do i think cap and trade, nor do i think health care. there's a whole new ball game in washington and thera a tea party revolt against big government, taxing and spending and therefore, are there not signs of v-shaped economic recovery including the isms and other data points. v-shaped. >> there's absolutely signs of v-shaped recovery as evidenced by the fourth quarter gdp numbers which were boosted by inventories, but had some pretty

good news underneath in the sense that consumers are spending and how important business investment is. wye we had a much stronger than expected 13% pop in business investment in the fourth quarter. so the signs are there and just the uncertainty out of washington and i'm not as optimistic about you that the administration has solely taken away the message that i would like to see them taken away. they no longer have the votes and the democrats are running for the hills. that's my only point. which i think lends a positive tone to the stock market. your tea party populist that kills the $100 billion jobs build. that's a transfer in spending and it has nothing to do -- >> it is not a tax cut. >> you're against jobs. >> i'm for lower tax rates. >> and you're against lending to small business.

>> excuse me. >> the broader tax cuts for more businesses -- >> the only way it will help is to permanently lower the tax cost of creating jobs. >> who told you that policy? >> it is the temporary stuff has nothing to do with creating jobs. >> poor james is trying to get in a final comment. let's have james, he has something to say. >> hang on. >> hang on, james! james! >> there's so much more, the small business sector is so much more important than what the government is doing and small businesses do credit constrains in the u.s., and the banking system is still impaired and two-thirds of all jobs growth comes from all business and the latest small business survey shows small businesses are intending to fire and not to hire. >> so, james, do you think there will be an increase in payroll? >> we're on minus 40. the seasonal adjustments are huge and we get the revisions

that have been tracking revisions and james has to be in favor of the $30 billion from obama. >> you're the only one in favor of it. >> credit constraints. >> thank you, steve liesman. thank you, melissa francis. that was a blistering attack you made. up next here on "the call," the one big sector you should buy into, president obama's $3.8 trillion budget, the one big sector you should stay away from. i don't know, we'll figure that out. >> in a cnbc exclusive we'll talk live with time warner ceo tim bewkes and he'll talk about earnings and his company's outlook. you do not want to miss it. it is you coming up only on "the call." we will be right back.

polo ralph lauren reporting lower than expected quarterly revenue and forecasting a hit to earnings in the fourth quarter and that's sending the stock lower, currently trading right now at $78.99. it's down almost 7 bucks and 8% on the day. >> the $3.8 trillion fiscal 2011 budget proposal generating a great def discussion as you well know. which sector, we want to know is a clear winner here. which sector is the clear loser. joining us to discuss, we have dan fitzpatrick and equity strategist at miller tabak. great to see you guys. >> thanks for having us. >> okay. so, peter, i'll kick it off with you. what's your take and who will

actually come out of this ahead? >> the renewable energy sector and possibly even nuclear. every speech that obama gives, trying to cheers up and weaning us from foreign oil and going through environmental type strategy. that will be in every budget that he'll be presiding over. >> dan, i know you agree with that. you said nuclear would actually benefit from this. let's talk about something that struck me as interesting. you said one of the clear losers will be retail. this is ahead of tomorrow's retail numbers and retail is in jeopardy going forward because of higher taxes. >> right. >> it's more of a theme, frankly because when you think about it, this is still a budget proposal so the impact from that will be far down the road, but yeah, with taxes going up, ultimately the middle class, even though they say there is not a tax on a

middle class, everybody knows that ultimately middle class is going to pay for this, so i think middle, retail -- >> i know larry is probably chomping at the bit at this one, too, but you say middle class will ultimately pay for it and he's talk pg about middle classes that are in the highest income stratosphere. >> that argument is so devoid of critical thought it's almost embarrassing. >> banks are being -- will have their fees increased by 90 billion over the next ten years and ultimately they are going to pass that on. >> you tax capital, dan, if you tax capital allegedly, rich people or wall street, you're taxing main street businesses and main street jobs. you can't run the economy without capital investment. >> you and i are singing the same song. i know it's easy to hate rich people, rich people are the most likely to employ people. that's just a fact. >> just a factoid. >> you can't legislate behavior

and ultimately this, is going to impact those who are trying to make more money. >> all right. already i've given dan fitzpatrick the nobel prize for economics. peter is always hanging in there. i have one for you, i did not see it in the notes, health care. government takeover of health care, obama whatever we're going to call it care is dead in the water. will that help health care stocks? >> well, i agree with you, but the government is still hugely involved with medicare and medicaid, and as more people shift into those programs the government will be more involved. my only concern with health generally is because of their influence the economics are all messed up. every day there's a new reimbursement rate. the rules constantly change while i agree a full government takeover of the system is not going to happen. the economics relative to every other industry in our country are still much different in health care than anywhere else and makes the investing climate much more bumpy. >> dan, can you give me actual

names here? >> for who's going to benefit and who's going to lose? i think on the nuclear front, uscc group is speculative because of the debt. they build, you know, enrichment plants and that's going to be big. camco which is a uranium producer and you have to look at shaw group or urs which are construction management companies and on the clean side a123 works. probably fuel cell. i'm less enthusiastic of those than the nuclear story because that's the one that works and that's the industry that generates revenue right now. clean energy doesn't. i'm looking also at retailers and the ones that are going to lose. you said say ones most effective will be anntaylor, jones new york and the middle class retailers and not so much tiffany. you were saying if rich people get hurt, middle class suffers, but the higher end retailers

know? well, actually, what i'm saying is that rich people, i hate to even use that term and so pejorative. ultimately successful people, they will ultimately pass the costs that they're incurring on to someone else because that's what they do. i don't think the wealthy, the successful people are really going curtail their spending. they just don't do that. instead the folks in the middle are going to be the ones that are really going to feel it. >> but if they don't curtail their spending then why is the middle class going to get so hurt? >> no, no, no -- >> the successful people are want going to curtail their spending. >> what did you say, peter? >> -- they will save money in other ways. >> the upper end will curtail, not next year, but the latter part of this year. >> i thank makes sense, peter. >> i don't know what the exact income bracket is, but the top 5% or 10% of the income earners

in this country pay just about 40 -- they purchase 45% of discretionary spending and isn't that something? wa not only are we taxing capital investment and we're discouraging consumption along the way. that's why i don't think it will pass. the scott brown revolution. i don't know. >> it may be wishful thinking. we shall seay see. you're an optimist. >> there's a lot of wishful thinking. >> you get this morning's nobel prize. >> you've won it in the past. don't be discouraged. >> when we come back. aig giving out big bonuses despite heavy fire from washington. we'll have the number, the fallout and the argument. here pwe go again. time warner, jeff bewkes joins us with his outlook for the media giant in this tough climate. you're watching cnbc, first in business worldwide.

the ai dpshgs bonus controversy continues. the administration's pay czar predicting hefty bonuses for employees would end in march and deny claims by republicans that the move outmaneuvered the obama

administration. mary thompson joans us with the story. >> the latest comes as aig is set to pay out roughly $100 million if bonuses for 2009 for most employees through the financial -- what the lower figure due to fewer employees there and the 97% who stayed agreeing to lower payouts. still coming on top of the $165 million in bonuses paid last year and the $180 billion government bailout necessitated pie risky bets taken by the financial products unit. aig's bonuses remain a sore spot for government officials. tim geithner saying this to congress earlier today. >> those contracts were outrageous. they should never have been permitted. >> permitted through contracts signed in december 2007 before the government bailout. a fact that failed to sway republican senator charles grassley who has been an outspoken critic of aig's pay. in a statement he says aig has taxpayers over a barrel.

the obama administration has been outmaneuvered and closed-door negotiations just add to the skepticism that the taxpayer will ever get the upper hand. as for one of the five firms receiving government assistance, aig's czar asked those bonuses would be reduced. they covered 35 million of 45 that employees pledged to return. feinberg told cnbc that the top 25 at aig will not be receiving bonuses, only salaries of no more than 500,000 unless a hardship exception is made and salaried stock three through years. why pay them bonuses at all? aig did so to make sure they stayed on to unwind the near-fatal bets, the notion of which has been cut to $940 billion in december from over $2 trillion in september of 2008. still kind of a tough explanation for main street to swallow. larry, back to you. or melissa, i'm sorry. >> larry's already squawking.

you got it right. mary thompson, thanks so much. let's go over to larry and listen in on the conversation. >> i just think in the profit motive of free market capitalism and aig is now a government entity and they should not get any bonuses. period. that was all screwed up and they shouldn't get bonuses. it's wrong. it's just wrong. i'm sorry. time warner and comcast are out with their earnings this morning and i am joined now by michelle caruso-cabrera here at earnings central and she can talk about any subject under the sun. let's bring up comcast which reported earnings this morning, they're our future patient company, trading lower by $16 cents are you looking forward to having that in your 401(k) larry? only one good answer. say yes. earnings of 33 cents versus estimates of 27 cents is better than expected. revenues coming in 9.07 billion and that was better than expected as well. profit more than double from a year ago and when you factor out ads from last year's political ad season, ad revenue was up 10%

and they had 701,000 subscribers and digital video subscribers were in 710,000 and i borrowed this from david faber, of comcast, free cash flow has been drawing steadily. i did have it in my 401(k). i could figure that out. let's move on to time warner which is lower by nearly 1%, down 26 cents and they reported earnings of 55 cents better than estimates of 52. revenues coming in slightly better than expected and 7.1 billion and they expect 2010 earnings to grow in the mid teens percentage wise. that's the headline that i was pointing out, and film entertainment of 61%. sherlock holmes helping out time warner. >> because he was looking for profits. >> want not to dilute the story have something itto it.

>> the senator dodd insertion of the last minute in the stimulus bill that if you want to pay the money back you can and blah, blah, blah, remember? >> it is an outrage. this is not free market capitalism. >> no. no, no, no. everything is solved if we allow things to fail. >> trish, i think it's over to you. >> i'll take it from here. still ahead, we'll get the pulse of the american consumer. we will speak with denny's ceo. this is real americana here about the health of the restaurant business and their super bowl grand slam giveaway. but first, oil refineries are shutting down in the fastest pace in three decades and that's because of weak demand. is oil on the verge of collapse? you're watching "the call" here on cnbc and we're first in business worldwide.

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welcome back to "the call." i'm sharon epperson. we're looking at oil prices right now above $77 a barrel. we continue to climb here thanks to what's happening to the gasoline market and yes, we're seeing a number of refineries cutting back on production and shuts down and that leaves folks to wonder what will happen to demand and what will happen to gas prices. they're factoring in higher prices in the gasoline market and that is impacting the oil market as well. we have a preview of what the inventory data from the energy department which showed last night with the api data and we saw a build in food supplies and in gasoline and distillate fuel

supplies. we're looking at demand being low and it's about what happens when demand starts to pick up and what happens when you have momentum trading coming on. that is helping to propel prices higher. melissa, back to you. >> thanks, sharon, so much. sharon compelling argument, but there are some who think oil may be on the verge of collapse. i can barely say it. it's a contrarian point of view. bruce launny is portfolio strategist and stephen shock is from the shock report. you do want say it's on the verge of collapse, but you are very much in the bear camp and right now you're kind of alone there over the long term. lay out your case. i think it's pretty sichl fell you take a look at the supply/demand fundamentals today and that's opec's capacity, inventories and also just the current state of the global economy, there's no way we can see oil prices really move above the range we have which is 65 to $85 because it will create

demand destruction. now you can argue, or you can go back a couple of years ago when oil peaked at $140, that it was such a short-lived event that we could rpt get a good gauge of how the consumer adjusted to that. >> the flip side of that are these refinery runs that we continue to see slowdown. refinery runs at 77% of capacity and there's a lot of capacity coming off the market because gas has been so cheap and the crack spreads and there's no way to make money there. doesn't that mean down the road we'll see the price of oil and gasoline go inas this supply gets sucked off the market. what do you think about that, steven? >> think that's partly right, melissa. effectively, we cannot make any money. if you look at the earnings of exxon and chevron of the largest consuming country in the world. they lost in the refinery section $7 million a day because they couldn't take $70 oil and refine it and sell it to the

consumer. so what i think we have now, melissa, is a template for lower oil prices, but much higher gasoline prices because, as you said, we are shutting down and we are mothballing refineries because these guys can't make any money. so one of two things have to happen. either we need to see significant correction lower in crude oil prices or we need to see significant increase in gasoline prices. either way, the consumer is going to lose this summer. >> bruce, let me ask you a little bit about the president's budget proposal and how that might affect some of these major oil companies and therefore, how does that affect an investor putting their money into them. >> well, i think you have to attack it from a couple of angles and if you don't mind, i would like to address the refinery issue because i somewhat disagree. if you take a look in the u.s., we're operating at 78% in capacity, globally, there's so much more new refining capacity

going on in saudi arabia, and china that there's plenty of supply to come to the u.s., so that's why i believe you'll see gasoline prices stay down. >> what about the issue of removing some of the subsidies that many of these oil companies were getting. how does that affect these oil companies' stock prices and how does that affect an investor? >> well, on the margin, i don't think it will have a big effect on the super natures and the integrated oil and gas companies. however, it will cut into return somewhat, but you have to keep in mind that these companies are very diverse and while they lost money in the downstream this year, it could reverse at some point in time into positive profits to offset what goes on in the u.s. and internationally in their upstream. >> stephen -- >> i'm sorry. >> finish your thought and we're going to run. you don't see it? >> i just don't see it being a

material impact on the oil companies especially because of their diversification. >> okay rgs bruce, stephen, thank you so much. coming up next on "the call," are americans still feeling frugal or are they beginning to open their wallets? >> the ceo of denny's joins us for a first on cnbc and he's going to tell us about his grand slam plan. plus time warner's jeffrey bewkes joins us in a cnbc exclusive with latest earnings and his outlook for profits and you're watching cnbc first in business worldwide.

welcome back to "the call," everyone. take a lack at mcdonald's. you have the stock on the rise after goldman sachs added it to its conviction weigh list. aye $1.29. >> sports fans nationwide are gearing up to the super bowl game and big advertisements. this year denny's restaurants will have three separate commercials and they'll air it during the matchup. three new ones. the stock is up 33% year to year. today it's trading up 1.5%. okay. joining us now first on cnbc interview we have denny's

president and ceo, nelson marcioli. welcome back to the program, sir. let's start with the three ads, because i think you had one ad last year and you're upping it to three. >> exactly right. and we thought buying three commercials in the super bowl and the back half would be a great way to do that. >> hey, nelson, can you tell us there's been debate in the newspaper about whether ads were more or less expensive in the super bowl. can you reveal whether they've been more or less? >> about the same. >> okay. >> how about the free food? let's go. i love the free food story. by the way, you have a lot of takers here on the set so we probably want to know where to sign up. tell me about the motive behind the free food? is it marketing? you just want to do good because we're in difficult times. how do you see it? >> last year it was pure market and capitalism at work, but we got so much credit we're giving

back to america when america needed a hug that it's a combination of the two. it's a way to keep denny's top of mind in our customers' mind as well as thanking our customers and keeping denny's in that top of mind position. >> nelson, you have your finger on the pulse of americans and consumers. what's going on out there? are things getting better and seeing more traffic? less traffic? what does it tell us about the overall economy. >> we serve more blue collar workers than any one of my competitors in our sector. my customers, over 40% make $45,000 or less household income. my belief is we are still suffering. my customer is still suffering in this economy. they're the ones that have lost the jobs. they're the ones that have lost their homes. wall street may be in recovery, main street is not, from my perspective. >> nelson, how far will you go? >> these are great thoughts and i appreciate these thoughts very

much. as i understand it, you're talking about 2 million free dinners, free lunches, free food. how far would you go. >> i don't understand the question. >> would you expand that as the year progresses. melissa asked you how you saw business. you don't think main street is recovering yet. would you expand your free program? ? absolutely. what we've already done, the offer actually is from 6:00 a.m. to 2:00 p.m. on february 9th, the tuesday that follows the super bowl a free grand slam and we're also offering a free grand slam on your birthday. that's 306 million possibilities throughout the year. so if you come in to denny's on your birthday, we'll buy you a free grand slam and that will be our third commercial just before the two-minute warning on the super bowl. >> we look forward to it. nelson, thanks for joining us. trish, over to you. >> a quick break and then time warner beats the street and

boosts its dividends. ceo jeff bewkes joins us in a cnbc exclusive interview to talk about the media giant's profit picture. >> plus the market call heading into this afternoon's trading session. you are watching cnbc, first in business worldwide. whwhwhwhwhwhh

>> welcome back to "the call" with your daily realty check, i'm diana olick in washington. mortgage applications soared to their highest level in over a month, driven by rates hovering around 9%. purchase apps up 12%. homebuyers paid 2.7% in december, a bigger price cut than november and not quite as much as the 4.5% cut a year ago. zilo reports 20% of their listings had price reductions versus 32% aiary ago. more and more borrowers are paying their credit card debt before their mortgages. that according to trans union. the percentage of those crept on their credit cards rose to 6.3% up from 4.3% when the trend earning merged in 208. check back with the realty check. until then go to the blog, realtycheck.cnbc.com. >> thank you very much, diana olick. tonight the season preeem of

"american greed" follows sam israel and the collapse of his hedge fund. the bizarre story of greed has an even more bizarre nationwide man hunt. take a listen. >> june 2008, three years after bayou hedge fund group collapses and more than $300 million of investors' money disappears, the story shifts to a bridge spanning the dark waters of the hudson river. sam israel iii, bayou's fund manager has apparently jumped to his death rather than face a 20-year prison sentence, but when divers fail to find a body, investigators doubt that he really killed himself. >> you can see the whole story on tonight's season premiere of "american greed" at 9:00 p.m. eastern and it's happening only here on cnbc. time warner is swinging to a profit thanks to the cable and film divisions. the media giant is boostingst dividend and stock buyback. take a look at where shares are. down down 1.5%, and 28.07, the

latest trade. our julia boorstin is joining us with a company first on cnbc. take it away, julia. >> thanks, trish. we are joined by jeff bewkes, ceo of time warner. jeff, thank you so much for joining us. >> good to be here, julia. >> time warner posted earnings of 55 cents a share on $7.3 billion in revenue, narrowly ahead of expectations and you're projecting a mid-teens percentage growth in 2010. how will you get there? >> yes. we're having a good year both this year and last year. we're going to continue the things that brought us a unique earnings growth last year. i think we were the only media company that had growth in earnings last year, basically led by our networks and very strong performance in the film company and we think this is teed up basically to do it again in 2010. we're pretty excited about the strength of our programming, acquired programming and our

film slate, things like harry potter coming this next year and many more. >> you mentioned sub cryption revenues drew 11% last quarter. with so many programs out there can you sustain that kind of growth? >> yes. it's been very steady over a number of years and what's very exciting in the network business is that essentially the entire tv network world, the dial in your house is migrating to the internet. so you're going to see hbo on broadband. you're going to see tnt and cnn on broadband and even today, cnn is the number one place on the planet to go and get news at your funninger tips interactively. so as these big brands get more coverage all over the world, it's simply going to strengthen the appeal and the loyalty of audiences to tnt, tbs, hbo, et cetera. >> now, advertising declines and

dvd sales continue to drag on results. do you expect either of those sectors to recover in 2010? >> yes, we're already seeing advertising starting to pick up. dvds are a little more complicated. for the average person, standard dvds are a little softer because of the recession. people are renting more and buying a little less, but in the new categories like high definition, 3d, there is a big pickup in usage and the newest and biggest-growing sector is video on demand. so you're in your home and you push the button and the next thing you know you're watching one of your favorite tights on your wide screen tv. >> so is the dvd as we know it, as a big piece of your profits declining? is that a dying business? >> no. it is actually increasing. >> interesting. interesting. you do say people will pay for content online, what progress

have you made for establishing these paid digital models? >> it's important to distinguish that if you're a subscriber to, say, cnn, mtv, hbo and you have it in your home, you won't have to pay for it online. what will happen is if you're a paying subscriber you will get it on broadband because you're a subscriber. the same thing will happen for your newspaper and for your magazine subscription. so what you really are seeing is harnessing the abilities of the internet and the convenience of being able to walk around and use whichever device you want to access the programming that you've already paid for or the magazine subscription that you've already paid for and it's really taking off. >> if you take a look at the magazines, "time" and "fortune" they're about as skinny as you can get. are you counting on tablet and

e-readers for the business? >> you have a current recession that has taken the advertiser support. think of the auto companies, the finance companies that normally advertise in news magazines and they've obviously been taking a bit of a break during this downturn, but the readership of these magazines have stayed strong, and as you take the depth of journalism that's available for time inc., fortune, people and "sports illustrated" and make it available on tablets and if they want to read deeper into the magazine and read back issues and look at it more closely, all of this is made possible by electronic distribution of the magazines and it really doesn't cost us anything extra because we've already gotten the journalism. we've gone out and collected the stories and written the articles. >> essentially --

>> just one final question because we're running out of time, but now that aol is no longer a part of the company, what is your strategy? do you have acquisitions in mind for this year? >> well, we never -- we're not mostly focused on acquisitions. we've got -- time warner has the biggest movie company in warner. we make the most tv series at warner tv. we have the biggest network division between hbo and turner and we've got the largest magazine company, so we don't need to buy any other company to continue to take these strong products and get all the advantages of growth in the economy and the promise of digital. if we find things that would strengthen or be improved by our operating them, then we would look at them, but the real emphasis of media is not on acquisition ask it's on building for the future. >> unfortunately, we have to wrap it up now. jeff bewkes, thank you very much for joining us.

melissa, over to you. so. >> great interview. a quick break and we're back with the market action and a loss of stocks to watch as we head into afternoon trading. you're watching cnbc, first in business worldwide. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here. ♪ well, look who's here. it's ellen. hey, mayor white. how you doing? great. come on in. would you like to see our new police department?

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>> okay. you are looking at the bottom of the screen at the house appropriations committee. ray la hood just finished testifying there and we're expecting him to come out and speak in front of a podium and talk to reporters after this meeting, of course. he's talking about the major problems going on at toyota and he had pretty strong words earlier today for toyota and for people out there driving tote as. >> certainly a bold statement. ? trish, is he piling o i've got to ask that. >> is he piling on? >> you, the taxpayer owns general motors s there some finagling going on here? >> i don't know about that. i mean, i do think the statement was incredibly bold. i know if i were someone who owned a toyota i would certainly

be rattled by what he was saying. i think it does sort of ratchet this situation up. >> yeah. but, i mean, the suspicions that you raised, of course, there are a lot of people who would think that. it's certainly a very serious problem. it's something to watch. that will do it for us. >> i would think that. >> here on "the call." i'm melissa francis. >> i'm trish regan. >> i'm larry kudlow. see you on "the kudlow report" at 7:00 p.m. eastern and now the big story is "power lunch" is up next. and welcome to "power lunch", everybody. i'm sue herera. our partner tyler matheson continues on assignment. the february winning streak may number jeopardy. the dow jones industrial average is on the down side right now. health care and financials leading stocks lower. >> i'm michelle caruso-cabrera. taxpayer-owned aig shelling out $100 million in bonuses. a whole lot of people are outraged.

should a contract take precedence over populism? a debate minutes from now. >> i'm dennis kneale. a new kind of stock swap. one restaurant has a message for wall street. swap your stock bonuses for sizzling steak. we'll talk with the founder of smith and wollensky. >> transportation secretary ray la hood on capitol hill with harsh words for toyota whose shares are getting crushed right now. phil lebeau from the breaking news deck. >> it was one statement that investors heard and immediately started selling shares of toyota. take a look at how much pressure the stock has been under in the last hour since secretary secretary lahood made comments about whether or not people should continue to drive recalled tote as. the stock is down more than 7%. the question was put to mr. la hood. what advice would you give to toyota owners and here's what he said today on capitol hill. >> my advice is if anybody owns one of these vehicles, stop driving it. take it to the toyota dealer because they believe they have the fix for it. >> since issuing that statement the departmentf