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NEWS STREAM

New New York Times Report Questions Legality of Trump's Taxes; Iraqi Troops Close in on Mosul Proper; Sony's VR Strategy; Trump Capitalizing on Latest FBI Email Probe. Aired 8-9a ET

Aired November 1, 2016 - 08:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[08:00:11] KRISTI LU STOUT, HOST: I'm Kristie Lu Stout in Hong Kong and welcome to News Stream.

One week until the U.S. presidential election and one poll suggests the renewed FBI probe could be having an impact on Hillary Clinton.

Now, rival Donald Trump is facing renewed scrutiny over his taxes after a report from The New

York Times alleges he avoided paying taxes on millions of dollars in income.

And fierce fighting around the city of Mosul, as Iraqi forces edge ever closer to the ISIS stronghold.

Election day in the U.S. is just a week away, and a new ABC News/Washington Post tracking poll is out. It shows Donald Trump leading Hillary Clinton

by 1 percent, 46 percent to 45 percent. Never shy to comment on good news, Donald Trump tweeted just minutes ago, quote, "wow, now leading. Gone up

12 points in two weeks."

Now, a new CNN poll of polls, which averages the results of five recent national polls shows Trump is four percentage points behind Clinton, 42

percent to her 46 percent.

Now, the issue that could explain the ever tightening numbers here, the FBI review of emails belonging to Hillary Clinton's longtime aide Huma Abedin.

Now, the Clinton campaign insists that investigators don't have a case, but at this point we don't have a lot to go on, and it appears unlikely the FBI

review will be finished before the election. So for now, Clinton is tackling the issue head-on.

Here's CNN's Phil Mattingly.

(BEGIN VIDEOTAPE)

HILLARY CLINTON, DEMOCRATIC PRESIDENTIAL CANDIDATE: There is no case here.

PHIL MATTINGLY, CNN CORRESPONDENT (voice-over): Hillary Clinton and her campaign firing back at FBI Director James Comey, slamming his decision to

notify Congress of a new investigation into thousands of e-mails found on a computer belonging to the estranged husband of a top Clinton aide, Huma

Abedin. Clinton's campaign turning the tables on Comey.

ROBBY MOOK, CLINTON CAMPAIGN MANAGER: It's impossible to view this as anything less than a blatant double standard.

MATTINGLY: Seizing on reports that Comey refused to publicly comment on potential ties between Donald Trump's campaign and Russia.

On Sunday, Senate Minority Leader Harry Reid accused Comey of sitting on, quote, "explosive information," Trump's Russia connections, without

offering proof. CNN cannot corroborate any of these reports. But U.S. officials do tell CNN that Russia is behind hacks that could potentially

influence the U.S. election.

Meanwhile, Trump is capitalizing on Comey's new email probe.

TRUMP: It took guts for Director Comey to make the move that he made in light of the kind of opposition he had.

MATTINGLY: Comey has only said the e-mails found on disgraced Congressman Anthony Weiner's computer, quote, "appear to be pertinent to the now-closed

Clinton private server investigation."

TRUMP: We can be sure that what is in those e-mails is absolutely devastating. And I think we're going to find out, by the way. For the first

time. Thank you, Huma. Thank you, Anthony Weiner.

MATTINGLY: Abedin's attorney responding, saying in a statement, quote, "from the beginning Ms. Abedin has complied fully and voluntarily with

State Department and law enforcement requests" and reiterated Abedin only learned of the e-mails on Weiner's computer on Friday from the press.

Clinton continuing to apologize for her private e-mail server but issuing a challenge to investigators.

CLINTON: I'm not making excuses. I've said it was a mistake, and I regret it. By all means, they should look at them. And I am sure they will reach

the same conclusion they did when they looked at my e- mails for the last year.

MATTINGLY: All of this as "The New York Times" obtains documents that they say show Trump potentially escaped tens of millions of dollars in federal

personal income taxes in the 1990s by using a tax avoidance maneuver later outlawed by Congress.

Trump's campaign responding to the report in a statement saying, quote, "Any tax experts that you have consulted are engaged in pure speculation.

There is no news here."

(END VIDEOTAPE)

LU STOUT: OK, let's get more on that tax controversy from our Christine Romans. She joins us live from New York.

Christine, how did he do it? How did Donald Trump avoid paying taxes and gain a personal

advantage here?

CHRISTINE ROMANS, CNN CORRESPONDENT: Well, here's what The New York Times is detailing this morning on this aggressive tax strategy that Donald Trump

may have used to avoid paying taxes on billions, nearly a billion in income in the late 1990s.

The New York Times, Kristie, says it has documents suggesting Trump used losses from his Atlantic City casinos to offset taxes on other business

income. At the same time, his creditors forgave much of his debt on bankrupt properties.

Here's an example the Times gives of how this would work. Suppose Trump has a $100 million loan. His property goes bankrupt. He can only pay

back, say, $60 million to his creditors. His creditors then forgive $40 million. They don't really have another choice, which normally that would

be treated as income, that $40 million would be treated as income and, therefore, taxed.

But the move The Times claims Trump made was converting that $40 million you see on your screen, converting it into equity in his own real estate

partnerships and dodging a huge tax bill. It's a move The Times describes as stretching the tax law beyond recognition.

Now, this tactic is now illegal. It's unclear if Trump used it properly or was investigated by the IRS for it. The Times quotes John Buckley, the

former chief of staff for congressman's joint tax committee on taxation, Buckley saying, quote, he deducted somebody else's losses. He is double

dipping big time, end quote.

Buckley tells The Times that since the bondholders were likely declaring losses for tax purposes, Trump shouldn't be able to, as well. Though to be

clear, it is impossible to confirm if Trump actually used this tactic, Kristie, because he refuses to release his

tax returns and you heard there in that piece from Phil, what the spokesperson said, Trump

spokesperson said -- tells The Times that their story is all speculation and they are misunderstanding or

misreading tax laws, Kristie.

LU STOUT: So in the time being, we have to rely on these leaks coming and reported to by The New York Times. And Donald Trump has famously said that

not paying taxes makes him smart.

How smart is this move? Does it pass muster with the IRS?

ROMANS: Well, the interesting thing here is that the tax folks that we've been talking to and the tax folks quoted in The New York Times say it is

really an elaborate stretching of the tax rules and tax laws, no question there.

I mean, taking a loss twice is just something that's not allowed.

What we don't know is if he did this and to what extent. What The Times is looking at here are the pages of tax documents that were leaked to them,

which the Trump campaign has not denied, are his tax returns from the '90s and also looking at some casino filings. They've been really digging into his casino filings. There are various

levels of scrutiny that state casino bodies look at casino filings. And these are casinos that we're talking about. So they are putting the pieces

together that way.

LU STOUT: Yeah. And there's still, as you point out, so much that we don't know, because Donald Trump still refuses to release his tax returns.

Do we know the reason why?

ROMANS: He says because he's under audit and his attorneys say that he should not release those tax returns to the public while under audit.

We've talked to the IRS. The IRS says there's nothing legally that precludes Donald Trump from releasing his taxes to the public. No

question, or even a summary of the tax system they've asked for.

Here's what's sort of interesting, since 1976, I think, every presidential candidate has released tax returns to the public. This is the most

important job in the country, the highest, you know, job interview in the land, if you will, with the American people, and the custom in the United

States is that information is available for them to see, so they can see the personal

business of the person who wants to run the nation's business, Kristie.

LU STOUT: All right, Christine Romans reporting live from New York, thank you.

ROMANS: You're welcome.

LU STOUT: Now, Donald Trump's campaign has received a healthy cash injection from one of Silicon Valley's biggest names. Now, Peter Thiel has

reportedly put some one and a quarter million dollars into the Republican's race for the White House.

And earlier, Laurie Segall told Nina dos Santos why Thiel believes there's good reason for his

political investment.

(BEGIN VIDEOTAPE)

LAURIE SEGALL, CNN MONEY: No matter how crazy this election seems, it's less crazy

than the condition of our country. Nina, these words coming from Peter thiel, who made the case for Donald Trump on Monday in Washington.

You remember, Peter Thiel is the co-founder of PayPal. He sits on the board of Facebook. And he's also become Silicon Valley's most vocal

supporter of Trump, recently donating more than a million to the campaign. And he's faced a lot of criticism for it, particularly in Silicon Valley.

This speech was really meant to defend his support for Trump. He called the United States a

broken system, and he argued that it needs a political outsider to fix it.

PETER THIEL CO-FOUNDER PAYPAL: It's not a lack of judgment that leads Americans to vote for Trump. We're voting for Trump because we judge the

leadership of our country to have failed.

SEGALL: Now, Thiel claims many of Trump's supporters chose him because he's better than the alternative, calling both candidates imperfect people,

to say the least.

He also used this as an opportunity to distance himself from Trump's controversial comments about women, calling them offensive and

inappropriate.

Now, a lot of folks are paying attention to what Thiel is saying, Nina, because he's this increasingly controversial figure, he's famous for having

extreme views. He once invested money in trying to make people immortal. You also might remember him as the secret backer of Hulk Hogan's lawsuit

against Gawker who published Hulk Hogan's sex tape years ago. Obviously, Hogan wasn't happy about this, brought a lawsuit against Gawker. Peter

Thiel funded it.

Now, this was actually the lawsuit that forced Gawker into bankruptcy.

THIEL: This is not about the first amendment, it is about the most egregious violation of privacy.

SEGALL: Now, Thiel said he was surprised by Silicon Valley's visceral reaction to his support of Trump, and really watching this, you know, you

get the feeling that this speech was him trying to make the case to the American public, but also maybe him trying to make the case to his peers in

Silicon Valley -- Nina.

(END VIDEO CLIP)

[08:10:52] LU STOUT: All right, Laurie Segall speaking with Nina Dos Santos a little while ago. And we will have more of the election and those

tightening polls in about 20 minutes from now right here on News Stream.

Now, we turn to the unfolding battle for Mosul. Iraqi-led forces are closing in on the city, and that is expected to trigger the fiercest

fighting scene in the offensive. The two week fight is now in its next phase with the Iraqi army pressing on ISIS from multiple fronts.

Witnesses inside Mosul tell CNN that the family of dozens of ISIS fighters have left the city headed for Syria.

Now, let's bring in CNN's Michael Holmes. He has been following the assault. He joins us now live from Irbil right now, the unfolding battle

for Mosul. Iraqi-led forces are closing in on the city.

And Michael, Iraqi forces, they have been making very steady progress. They are near the city limits. What happens next?

MICHAEL HOLMES, CNN INTERNATIONAL CORRESPONDENT: Yeah, they pretty much are knocking on the door of Mosul right on the outskirts there, clearing a

district called Garjali (ph).

Now, this is an area, they are about 20 percent of the way into. Next stop is the outer limits of

Mosul, the city limits, if you like. So Garjali (ph) is proving a bit of a problem. As you might imagine, there is resistance there. A lot of sniper

activity. Iraqi counterterrorism forces also encountering car bombs that are being set off as they go by, remotely detonated.

They are also having to deal with an awful lot of mines and IEDs and booby traps, so it's having to be a very methodical process through this area.

There are also civilians to be considered. There are thousands of civilians in this particular area. And so that makes the process of

clearing through this Garjali (ph) area even more problematic, but they say they are making progress. They are making progress every hour, and they

hope to have a real foothold in that area by sunset today.

So other units moving out towards Mosul, as well, trying to get a more uniform front line, if you like, around the city. And as you mentioned

there, we did have reports, too, of families, bus loads, in fact, of ISIS families, leaving Mosul to the west and heading towards Syria.

So there is a lot more fighting to be done once these troops actually get inside Mosul itself -- Kristie?

LU STOUT: Without a doubt.

And Michael, please stand by, because Arwa Damon is on the eastern outskirts of Mosul, joins us now with the latest. And Arwa, what are you

seeing there from the front line?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, the battle for (inaudible) has been going on, as Michael was reporting there. With the

commander of the counterterrorism forces telling us that the reason why they are going through so slowly and so methodically is because there are

about 25,000 civilians believed to still be inside, but we've also just had a sandstorm that has kicked up in the last hour or so, and if you take a

look, visibility is very low.

Just an hour ago you could see a few streets back, now you can barely see the next row of houses. And there have been throughout the course of the

day some sporadic, but fairly intense gun battles. We're still hearing fighter jets overhead, but what we're also seeing is something that ISIS has done in the past, and that is going and

sending what seems small groups of fighters to try to then go around and counterattack fixed positions.

So, in one instance, the troops then went out, they responded to it, they called in rocket fire to

then take out the presumed target, but they have been telling us that the key in this and this is an indication what they are facing once they

actually do reach Mosul, has been trying to go through and clear this area without causing civilian causalities, and that is why, one of the reasons

why, it has proven to be so difficult.

And, Kristie, once they are able to fully secure this area, they are then going to have to go through and try and screen the civilian population.

[08:15:04] LU STOUT: Yeah, I mean, so many challenges ahead for Iraqi forces. ISIS really digging in inside the city, the use of human shields,

avoiding civilian causalities, the poor visibility because of that sandstorm behind you. We've heard from the Iraqi prime minister. He says

he is confident that the liberation of Mosul is imminent, but when you talk to Iraqi forces, how confident do they feel right now?

DAMON: Very, Kristie. They know that they will eventually at some point in time liberate Mosul and ISIS will be eliminated from Iraq. There's very

little doubt in anyone's mind to that reality. And, in fact, on many of these fronts they have advanced quicker than expected, and they've learned

along the way, too. They have come across what are now these regular ISIS tactics, the waves of suicide bombers, the surprise attacks out of tunnels

that have been dug underground, the various different ways that ISIS tries to obscure visibility by burning tires and oil.

But they also acknowledge that they don't know exactly what ISIS has in store for them when

it comes to Mosul, and they are preparing for the worst.

The other thing that a lot of people, not just the security forces, but the civilian population we've been speaking to will bring up, as well, is that

it's not just about the fight for ISIS in Mosul. If Iraq is to be a secure country where an entity like ISIS cannot emerge, what happens the day after

Mosul is liberated is just as, if not more important, than the liberation of the city itself.

LU STOUT: That's right. They have their eyes on a far bigger prize, just the security of the country itself. Arwa Damon reporting for us at the

frontline near Mosul. Thank you, Arwa.

Let's bring back Michael Holmes in Irbil in northern Iraq. And Michael, just then we heard from Arwa saying that Iraqi forces as they make this

move prepare to enter the city of Mosul. They are confident. And they have reason to be. I mean, they have advanced so much. A number of

villages near Mosul have been liberated on the road to Mosul. Villages have been retaken from ISIS.

Among the villagers, what is the sense, is there relief, is there still fear?

HOLMES: There's a bit of both. And I think, Kristie, too, you know, we were in one village yesterday, where it was bustling in a way. There was a

lot of smiling going on, but I think the word normalcy is going to be a relative term for some time to come after two

years of ISIS rule. Have a listen.

(BEGIN VIDEOTAPE)

HOLMES (voice-over): The Peshmerga front line, 12 kilometers from Mosul, and within eyesight, the ISIS-held town of Alsam Akiyah (ph).

And at the end of a dusty track, five kilometers in the other direction, al Fazuliyah (ph), four days ago, under the iron fist of ISIS rule. Today,

free.

"We're so glad this nightmare is over," this man tells us. "These past days, we live in celebration."

Today, he's the busiest man in town, more than 50 customers a day, old and young, since ISIS left.

Across the street, with another barber, savoring his first shave since ISIS came more than two years ago.

"Under ISIS, we could do nothing without their permission," he says. "The first hour after they left, we felt normal again."

(on camera): One of the most visual aspects of life under ISIS, the men were not allowed to shave. Barber shops had virtually no business. Check

this out. Even the faces of the people on the signs outside were taped over so that you couldn't see their faces, their hair cuts, their beards. The

tape has now come off and business is booming.

(voice-over): A few shops down, bad habits renewed.

Smoking a crime under ISIS, but today a breath of freedom for olive farmer, Mahmoud, who told us it's like a black cloud has lifted.

(voice-over): I just asked him how he felt compared to a week ago, and you saw his face. We don't really need to translate it. A happy man.

UNIDENTIFIED FEMALE: (SPEAKING FOREIGN LANGUAGE)

HOLMES: Down the street, joy at liberation. Anguish, though, too, for this lady.

(on camera): This lady is telling us when is came into Mosul, her son, who was a major in the Peshmerga, was arrested and taken away. This is his

wife, these are his children. He has four kids. They have not seen him since. And obviously, they fear the worst.

(voice-over): The of al Fazuliyah (ph) story a repeated across the battlefield. Towns freed, people relieved, happy, but scarred as well. Much

damage has been done to bricks and mortar, but also to societies and psyches, neighbors and friends.

For today, though, here, now, the relief is palpable.

(END VIDEOTAPE)

[08:20:13] HOLMES: Yeah, it's going to be a lot of recovery time required. It was interesting to get to that particular village. We went through

another one, which was pretty much completely deserted, and the reason for that is that as Arwa was eluding to before, when civilians are liberated,

security forces go through a pretty thorough screening, because it is an ISIS tactic to shave the beard, and if you're a local, try to blend in with

the local population.

So in a lot of cases, entire villages are taken to IDP camps and screened one by one before they

are allowed back home, Kristie.

LU STOUT: Now, Michael Holmes live on location in northern Iraq. As always, thank you for your reporting.

Now, thousands of outraged protesters are calling for the South Korean president to resign. Now meanwhile, prosecutors turn their attention to

her shadowy adviser. We have more on South Korea's political scandal next.

(COMMERCIAL BREAK)

LU STOUT: Coming to you live from Hong Kong, you're back watching News Stream. Now, You're back watching News Stream.

Now, Choi Soon-sil, the -- as she's called the Resputin-like figure in South Korea's political scandal is now under emergency detention.

Prosecutors say that they are worried she may destroy evidence or even flee the country.

She's accused of using her friendship with president Park Geun-hye to access confidential material. She reportedly admitted she committed a

deadly sin. Prosecutors say she has denied all charges.

Meanwhile, the president has tried to soothe an outraged nation by sacking several of her aides, but thousands of protesters say they want her to

resign.

Now, we are learning more about the late North Korean leader Kim Jong-il and what he really

thought about his country's movies and propaganda campaign. Secret audiotapes are now providing a window into his thinking.

Brian Todd has more on these incredible revelations.

(BEGIN VIDEOTAPE)

(CHEERING)

BRIAN TODD, CNN CORRESPONDENT (voice-over): A dangerous, uneven young dictator, with his hands on nuclear weapons. As the U.S. and its allies

scramble for more intelligence on Kim Jong-Un's ambitions, new insights into the roots of the North Korean leader's paranoia. Newly released audio

tapes recorded of Kim's reclusive late father, Kim Jong-Il. The older Kim's high-pitched voice never heard widely before.

KIM JONG-IL, FORMER NORTH KOREAN LEADER (through translation): People here are so close-minded.

TODD: The recordings are in a new documentary, "The Lovers and the Despot." It features a South Korean actress and her husband, a famous South Korean

director. They were kidnapped by Kim Jong-Il's regime in 1978, held for eight years, and forced to make 17 films for the movie- obsessed dictator.

(MUSIC)

TODD: The filmmakers tell us they secretly taped some of their meetings with Kim with a hidden audio recorder. The dictator complains about North

Korean movies.

JONG-IL (through translation): Why are there so many crying scenes? All of our films have crying scenes. This isn't a funeral, is it?

TODD: He's insecure about how sophisticated South Korean movies are compared to his films.

JONG-IL (through translation): Why do all of our films have the same ideological plots? There's nothing new about them. We don't have any films

that get into film festivals. In South Korea, they have better technology. They are like college students and we are just in nursery schools.

TODD: Kim Jong-Il was said to wear platform shoes to appear taller. The actress says Kim even made fun of his own height, using a crude phrase

suggesting he was smaller than a midget.

The filmmakers say the actress and director smuggled the tapes out during a trip to Europe. They landed at the desk of David Straub at the State

Department.

[08:26:01] DAVID STRAUB, FORMER U.S. STATE DEPARTMENT OFFICIAL: My jaw dropped. This is 1985 and, up until then, the only recording of Kim Jong-

Il's voice at all in the West was once at a rally.

(SHOUTING)

STRAUB: So the fact that there were hours and hours of recordings of him talking intimately was a real bombshell, a stunning development.

TODD: The actress and the director snuck away from their North Korean minders on a trip to Europe in 1986 and defected to the U.S. The director

died in 2006.

Analysts say their daring recordings can shed light on the current North Korean strong man.

GREG STARLOTTO (ph): Just like his father before, Kim Jong-Un is insecure, has many vices. Actually, he has many of his father's vices. He's a heavy

drinker. He's a heavy smoker. Just like his father, Kim Jong-Un also has his joy brigades, young women whose mission is to entertain the supreme

leader.

TODD (on camera): Greg Starlotto (ph) and the former State Department official, David Straub, say the recordings also help Western intelligence

get a better read on how isolated the North Korean regime is, how Kim Jong- Un and his inner circle are not challenged by people when they come up with bizarre ideas. And because of that, they're more apt to make dangerous

miscalculations.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

LU STOUT: Malaysia's prime minister is on the second day of his trip to China and already there's controversy. Malaysia's opposition has

criticized the Prime Minister Najib Razak's decision to bring his stepson along.

Now, the U.S. named the stepson in a lawsuit alleging a multi-billion embezzlement scam. It is now the subject of investigations in several

countries. Mr. Razak is Beijing to strengthen ties with China, a move that seems to be a trend in the region. Now, last week we saw Filipino

President Rodrigo Duterte in China, also to strengthen relations. And while he had praise for Beijing, he heaped on criticism of the U.S, the

Philippines longtime ally.

You can learn more about China's growing influence in the region by heading to our website, CNN.com. And there you will find an article about these

latest diplomatic moves and the impact they could have.

You're watching News Stream. And still to come, the U.S. election now as close as ever. We will break down the latest polls released amid Hillary

Clinton's fresh email saga.

(COMMERCIAL BREAK)

(HEADLINES)

[08:32:06] LU STOUT: Let's get back to that new national poll and the new CNN, the new one -- CNN poll of polls, which showed the race for the White

House is getting tighter.

Now, CNN's Phil Mattingly joins us now live. Let's first talk about the ABC News poll, because it now shows that Trump has a one-point lead. We

know that Hillary Clinton once had a sizable multi-multi-point lead. What happened to that? Is it all about the emails?

MATTINGLY: It's reflective of a couple different things. And I think it's important to kind of look at polls as a snapshot of time. So, if you look

at this Washington Post poll, Donald Trump has closed the gap over the course of the last couple weeks when you go from 13

points down to up one point.

You look at the CNN poll of polls, you get kind of a better sense of what the national picture looks like right now. Clearly, a tightening race, but

the reason why when you talk both Republican and Democratic strategists, Kristie, is that Republicans are coming home. If

you watched over the last debate when Donald Trump was really facing a sizable disadvantage,

Republicans were only going to vote for him in about 76, 77, 78 percent clip. That is very, very low,

particularly when Democrats are supporting Clinton up to 90, 91, 92 percent.

You're starting to see Republicans come home, that is tightening the gap. The big question, though, with just seven days left, does he have enough

time to close it entirely? It's an open question right now. That said, Trump's campaign and his top advisers think the FBI

issue is certainly going to help -- Kristie.

LU STOUT: Yeah, and with the election day coming so soon, it's just one week away, we have the GOP, the party uniting and coming together.

Now, she is being hurt by the latest email controversy, and Clinton is fighting. She is fighting to stay on course. What is her campaign doing

to try to surge ahead in the polls?

MATTINGLY: Go on offense. Go on the attack. You've seen it over the course of the last four days how this all developed. Initially, there was

shock when they found out about this. They had no heads-up, no warning. It was a big problem. They understood that.

Then over the course of the last three days, Kristie, you've seen an escalation of their attacks on both the FBI and FBI director Jim Comey.

They are not going to stop doing that, and here's why. One, they want to delegitimize any Republican talking points that this is some new

investigation. There's been some explosive findings. There haven't been, yet at least.

But the other thing is this, they believe this invigorates their supporters, that the idea that Hillary Clinton is being wrongly attacked or

wrongly prosecuted, wrongly investigated, that this will help their supporters on the ground. They need their coalition to

turn out. They need their coalition to be motivated and energized. They think that this, attacking the FBI, trying to paint it like

Hillary Clinton is being attacked for no reason, is the exact way to do it with just seven days left, Kristie.

LU STOUT: Yeah, and meanwhile, Donald Trump is really mobilizing his base of support. He's firing off those tweets this morning. How much does he

have to gain by the momentum from the latest polls and capitalizing on Hillary Clinton's email controversy?

MATTINGLY: Look, I think the biggest thing is in the polling that we've seen over the course of the last couple days is the fact that Republicans

are finally, again, I think it's on some level, consolidating behind him. That will close the gap.

But there's no question Donald Trump has a lot of work to do if he wants to get to the 270 electoral votes it will take to win the White House. He's

at a natural disadvantage before he has some of his other disadvantages built in, but that's why you're seeing him today. He's going to

Pennsylvania. He's going to Wisconsin.

Kristie, these are states Hillary Clinton has a clear advantage, Democrats repeatedly win these states. But these are states that Donald Trump has to

win, has to kind of get an upset in if he wants to win on election day.

They believe this FBI controversy has given him an opening. They believe it's given him an opportunity. It's a long shot, yes, in states like

Pennsylvania and Wisconsin, but if he wants to win, he has to figure out a way, Kristie, to turn those reds.

LU STOUT: Both camps fighting hard in this final stretch. Phil Mattingly reporting for us live. Thank you, Phil, take care.

You're watching News Stream. And still to come, virtual reality games are still a relatively new

market. How Sony plans to get a headstart in drawing early VR gamers. We have got that story next.

(COMMERCIAL BREAK)

LU STOUT: Welcome back.

Now, Sony says its second quarter operating profits plunged to nearly half of what it made last year, it only made around $430 million, partly due to

the earthquake damage to its factories and also losses from selling its battery business,

But Sony is looking for a boost from its gaming unit. Next week an upgraded version of the Playstation 4 will go on sale. And in October it

released a virtual reality headset for the PS4.

Will Ripley spoke to Playstation chief Andrew House and began by asking him who Sony is targeting with PSVR.

(BEGIN VIDEO CLIP)

ANDREW HOUSE, EXECUTIVE VICE PRESIDENT, SONY: I think in these early stages

that VR is very much going to be about an early adopter enthusiast audience, folks that pretty much know gaming very, very well and are

looking for that next big leap or that next big thing.

I think it's a market we will grow carefully over time. And as I said, I think these are very early days.

WILL RIPLEY, CNN CORRESPONDENT: Are the VR games that are available now attractive enough, though, to those advanced gamers? Are they

sophisticated enough. Do they have enough levels? Because some might say these are bite-sized demos compared to some of the other bigger games are

not yet available in VR.

HOUSE: I think you have to really, you know, create a balance. These experiences, as you may

have experienced yourself, and I certainly have, a very intense, and I think that lends itself in the first form to a kind of short form content.

I kind of lighten it to theme park rides. Do I really want to spend an hour on the roller coaster? I'm not so sure about that. But a ten, 15-

minute rush is fantastic.

So, yes, a lot of the content that we're seeing is in this kind of short form. However, the balance of that is that because VR is such a new

medium, even very, very simple game forms actually become very different and very magical.

RIPLEY: And somebody like me who hasn't really touched a video game in probably more than 20 years, are you aiming towards people like that to

bring them back into the fold and to try gaming again with this new virtual technology?

HOUSE: I think we look not just with virtual technology, but with all of our platforms to try and build the broadest appeal that we can.

Yes, the entry point may well be gaming, but the second biggest use of time on Playstation 4 is

watching streaming video, whether it's Netflix or Amazon. High quality video experiences in the living room on a big screen.

So, I think that VR is one way in which we do that, but I think already the fact that our consoles have become now with the launch of Playstation View,

we are now a television content provider with a TV service for the first time, that's another great way in which, you know, we can look to bring

more people into gaming via other routes of entertainment.

RIPLEY: Let's talk about PS4 Pro. First time that anybody's really upgraded a console in the middle of its life span. So why?

HOUSE: I think it was a combination of a couple of factors. One, that, you know, we're seeing a couple of brand new display technologies coming

along that we thought were a really good opportunity to once again improve the graphics experience of what games could deliver, namely, 4k televisions

and also combined with high dynamic resolution.

So, that was one factor.

The other was, in talking as we always do with our content creation community, they had

said to us, well, maybe the last game lifecycle was a little bit too long. If you look at mobile, is innovation that's coming on a very different

cadence, that's coming on a year, 18 months sort of pitch, does innovation in consoles just have to be on a five, six, seven-year cadence, and we

thought about that, combined that with the idea of display technologies and said, you know what, we think there's something interesting we can do here

to heighten the experience. But will, and I stress this, not damage the sort of integrated community of players that we have right now.

RIPLEY: Is that a difficult thing for a company to market? Hey, we have this new and improved version of a console that 40 million people have, but

don't feel bad those of you who have our other product, because it's great, too. I mean, how do you market a product like that without alienating

those attached to the other one?

HOUSE: What we're saying around the two products is the -- make no mistake, whether using it with VR or whether it's the games that you

already have, every game will be a great experience, whatever Playstation 4 that you have.

If you buy a Pro, it will be somewhat more graphically enhanced. Those games will look prettier, and we're also saying is if you're in the market

for one of those higher end televisions, then this might be the unit for you.

And that was Andrew House, executive vice president of Sony talking to our Will Ripley.

Now, the PS4 Pro is to hit the stores on November 10. It is the first time a game console will receive a major upgrade in the middle of its life span.

Now, rival Microsoft is to release its own upgraded version of the Xbox One, it's code name Project Scorpio and Microsoft says it is more powerful

than the PS4 Pro and it's to go on sale next year.

And that is News Stream. I'm Kristie Lu Stout, but don't go anywhere, World Sport with Amanda Davies is next.

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