The Globe and Mail - 06.11.2019

WEDNESDAY,NOVEMBER6,2019 | THE GLOBE AND MAILO REPORT ON BUSINESS| B5

A trade war between the world’s
top two economies cut U.S. im-
ports of Chinese goods by more
than a quarter, or US$35-billion,
in the first half of this year and
drove up prices for American
consumers, a United Nations
study showed on Tuesday.
Beijing and Washington have
been locked in a trade feud for the
past 16 months, although there
are hopes that an initial deal of-
fering some relief may be signed
this month.
If that fails, nearly all Chinese
goods imports into the United
States – worth more than US$500-
billion – could be affected.
U.S. imports from China sub-
ject to tariffs fell to US$95-billion
between January and June from
US$130-billion during the same
period of 2018, the study released
by the UN Conference on Trade
and Development (UNCTAD)
showed.
“Over all, the results indicate
that the United States tariffs on
China are economically hurting
both countries,” the report said.
“United States losses are largely
related to the higher prices for
consumers, while China’s losses
are related to significant export
losses.”
Over time, Chinese companies
began absorbing some of the ex-
tra costs of the tariffs through an
8-per-cent dip in export prices in
the second quarter of 2019, but

that still left 17 per cent “on the

shoulders of U.S. consumers,”

said the report’s author Alessan-

dro Nicita, an economist at UNC-

TA D.

The sector hit hardest by the

U.S. tariffs are U.S. imports of Chi-

nese office machinery and com-

munication equipment, which

fell by US$15-billion. Over time,

the scale of Chinese export losses

increased alongside mounting

tariffs, the study said.

Other countries stepped up to

fill most of the gap left by China,

the study found. It named Taiwan

as the largest beneficiary of

“trade diversion,” with US$4.2-

billion in additional exports to

the United States in the first half

of 2019. They were mostly office

and communication equipment.

Mexico increased exports to

the United States by US$3.5-bil-

lion, mostly agriculture and

transport equipment and electri-

cal machinery. The European

Union boosted deliveries by

US$2.7-billion, mostly via addi-

tional machinery exports, it

found.

“The longer the trade war goes

on, the more likely these losses

and gains will be permanent,” Mr.

Nicita said. Not all of Chinese

trade losses were picked up by

other economies and billions of

dollars in trade were lost entirely.

The paper did not analyze the

effect of Chinese tariffs on U.S.

imports into China because de-

tailed data were not yet available.

REUTERS

U.S.tariffscutChineseimportsby$35-billion:study

UNreportsaystradewar

ishinderingbothparties

andissettocausemore

harmifleftunresolved

EMMAFARGEGENEVA

TrucksqueueatthePortofOaklandinCaliforniainJuly.U.S.importsofChineseofficemachineryandcommunicationequipmenthavebeenthe

hardest-hitsectorthisyearbecauseofthetariffwar.ThesectorisdownUS$15-billioninthefirsthalfof2019,aUNstudysays.BEN MARGOT/AP

W

henApple Inc.’svideo streaming service made
its debut on Friday, it came with US$2-billion
worth of original programming–afeature wide-
ly considered to be the most powerful magnet
for new subscribers.
But for Apple TV+ and its rivals, whose monthly subscrip-
tions are cheaper than traditional cable packages, keeping
viewers is a huge challenge.
Streaming providers such asNetflix Inc., Apple TV+,Walt
Disney Co.’sDisney+ andAT&T’sHBO Max tout flexibility:
sign up to watch a new show, cancel when you want.
Besides spending millions of dollars on library content,
media companies are using programming, promotions and
other strategies to avoid cancellations, or “churn” in industry
parlance, and retain subscribers who are costly to acquire
and easy to lose.
“Churning off of a service once meant finding the phone
number of your cable operator, navigating an automated me-
nu and waiting on hold,” said Rich Greenfield, an analyst at
LightShed Partners. “We now live in a world where with a
couple of clicks of your finger on your phone, all of the fric-
tion from cancellation is gone.”
Disney is the only streaming provider that has used a mul-
tiyear promotion to lock in subscribers. In August, the com-
pany offered new and existing members of its D23 fan club an
annual rate of US$47 for a three-year commitment to Dis-
ney+ – 33 per cent off the standard price.
Disney has the advantage of making content for children,
who watch the same movies and TV shows again and again.
Netflix, HBO Max and Apple TV+ have invested in kids’ con-
tent to keep subscribers from cancelling while they wait for
the next original, adult-focused
show.
In May, Netflix made a rare ac-
quisition of the children’s media
brand StoryBots, for an undis-
closed sum. In July, it announced
seven new series targeting pre-
schoolers.
Apple TV+ programming in-
cludes two series from Sesame
Workshop, the non-profit that
makesSesame Street. HBO Max is
airing newSesame Streetepisodes and most of the show’s li-
brary.
Streamers are also being strategic about the number and
timing of new releases.
“There has to be a cadence to the release slate so there’s
something you want to watch coming out throughout the
year,” Fitch analyst Patrice Cucinello said.
HBO Max will air one new episode of its original series a
week. For most Apple TV+ drama series, includingThe Morn-
ing ShowandSee, Apple will release three episodes at a time,
followed by one a week. Disney+ will unveil one episode a
week for new series such asLoki.
Hulu for years has been releasing weekly episodes of its
original series such asThe Handmaid’s TaleandCastle Rock.
CBS Corp.’s CBS All Access, another streaming pioneer, re-
leases most original shows weekly.
CBS All Access and its sibling Showtime engage in cam-
paigns to win back subscribers who cancel, according to Marc
DeBevoise, chief executive of CBS Interactive. The services
contact viewers when a show they used to watch is back on
the air, and often offer a promotional rate.
Showtime is in active talks with Amazon Inc., Apple and
Roku Inc. about creating bundles of two or three services,
said a source familiar with the premium cable and satellite
TV network. The combined services, with a diverse menu,
could replace the cable bundle as a one-stop shop for pro-
gramming.
HBO Max and Netflix are also investing heavily in broad
swaths of content. Netflix paid roughly US$15-billion cash for
content in 2019, and AT&T will spend US$4-billion over the
next three years building HBO Max.

REUTERS

HowwillApple,Disney,

AT&TandNetflixretain

streamingsubscribers?

HELENCOSTER

Disney has the

advantage of making

content for children,

who watch the same

movies and TV

shows again

and again.

Boeing Co.chairman Dave

Calhoun said on Tuesday the

company’s board believed chief

executive Dennis Muilenburg

“has done everything right,” just

days after he came under attack

from U.S. lawmakers and re-

peatedly refused to step down

at a hearing on two fatal crash-

es involving Boeing 737 Max

airliners.

“He has our confidence,” Mr.

Calhoun said in a CNBC in-

terview, adding that Mr. Muilen-

burg called him on Saturday,

offering to give up much of his

compensation for 2019 and

could lose equity grants until

early 2021. The board had

stripped Mr. Muilenburg of his

chairman title last month.

“From the vantage point of

our board, Dennis has done

everything right,” Mr. Calhoun

said.

Boeing did not plan to cut

the production rate of the 737

Max or to rebrand it, he said.

Last week, several U.S. law-

makers urged Mr. Muilenburg to

resign, pressed him on whether

he would refuse compensation,

and criticized him and Boeing

for not being entirely candid.

Mr. Muilenburg repeatedly

said last week his focus was on

seeing the Max through to

returning to service and told

Congress: “It’s not about the

money for me.”

In the wake of the criticism

by lawmakers, Mr. Muilenburg

called Mr. Calhoun on Saturday

to suggest that he not be award-

ed any bonuses for 2019 or any

equity grants “until the Max in

its entirety is back in the air

and flying safely,” which Mr.

Calhoun said could be by the

end of 2020 or in early 2021.

REUTERS

BOEINGCHAIRMANSAYSCEOMUILENBURG‘HASDONEEVERYTHINGRIGHT’

Is itoutwiththeold andinwiththenew?

Frommeatlessmeattothe deathofthemall,learnabout

10 differentindustries experiencingtumultuous change.

FEATURINGSEANSTANLEIGH,

HEAD OF GLOBE CONTENT STUDIO

Seasontwonowavailable!Search“IndustryInterrupted”

whereveryoufindpodcasts,orvisittgam.ca/industryinterrupted

BROUGHT TO YOUBY

ABUSINESSPODCASTFROMTHEGLOBEANDMAIL

SEASON TWO

LISTEN NOW