The Wall Street Journal - 08.11.2019

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WORLD WATCH WORLD NEWS

will be available on Hulu one

day after they premiere, includ-

ing new shows from “Ex

Machina” director Alex Garland

and another starring Cate

Blanchett. Other Fox brands

like Fox Searchlight, the studio

label behind Oscar winners like

“The Shape of Water,” will also

develop shows and movies for

the service.

The ESPN streaming service

and Hulu will be sold as a bun-

dled collection for $12.99 a

month.

Disney seems to be borrow-

ing elements of Netflix’s play-

book for Disney+. The service

will allow users to download

shows and movies for later

viewing, and multiple user ac-

counts are to be permitted on

each household subscription.

But Disney is also diverging

in significant ways. All Disney+

programming will be family-

friendly, and episodes will pre-

miere one at a time, more akin

to traditional broadcast or ca-

ble television than to Netflix’s

binge-it-all approach. Mr. Iger

has also said he wants Disney+

to have a user interface that

feels more personally tailored

than Netflix’s algorithm-driven

model.

Industry insiders expect Dis-

ney+, which will cost $6.99 a

month, to siphon some users

from Netflix, whose most popu-

lar offering goes for $12.99.

Netflix in October missed its

subscriber-growth target in the

U.S. and overseas for a second

consecutive quarter.

Netflix lost domestic sub-

scribers for the first time in

nearly a decade two quarters

ago, and in its latest quarter

added 517,000 stateside users—

short of its expectation of

800,000.

By getting into streaming,

Disney has gone from a com-

pany that provided other plat-

forms—including Netflix—with

marquee entertainment, into a

rival competing for subscribers.

The awkwardness was high-

lighted last month in a recent

dispute with Amazon over

terms to carry Disney apps on

Fire TV devices. Mr. Iger said

Thursday that the two compa-

nies had reached a deal to

carry Disney+ on the Amazon

devices when it launches next

week.

That is a significant gain for

Disney+, since Amazon had

29% of the U.S. market for

streaming-media boxes in the

second quarter, according to

Strategy Analytics, behind only

rival Roku Inc.

Subscribers on Tuesday will

see a combination of classic

Disney programming coming

out of “the vault,” including

older movies like “Swiss Family

Robinson” or “The Little Mer-

maid.” That fare will be com-

bined with newer releases from

Marvel Studios and original

programming based on some of

Disney’s most popular fran-

chises, like the Star Wars

spinoff “The Mandalorian” and

a new series based on the 2006

made-for-television movie

“High School Musical.”

Star Wars is yet another ex-

ample of a franchise divided by

Disney’s streaming strategy.

While “The Mandalorian” is the

most notable original offering

on Disney+, the theatrical re-

leases of the franchise will go

on “a bit of a hiatus” following

the December release of “Star

Wars: The Rise of Skywalker,”

Mr. Iger said, acknowledging

the struggle some of the Star

Wars titles have had at the the-

atrical box office.

Disney’s total revenue in-

creased to $19.1 billion, slightly

missing analysts’ consensus es-

timate. Revenue jumped 22% to

$6.5 billion at the company’s

media networks, which include

ESPN, and 52% to $3.3 billion

at its studio entertainment di-

vision.

Excluding certain items,

earnings were $1.07 a share,

higher than the 94 cents a

share expected by analysts

polled by FactSet.

Depressed tourism in Hong

Kong, driven by the anti-China

protests that have filled the

city’s streets in recent months,

led to a significant decline in

attendance at Hong Kong Dis-

neyland. If current trends hold,

the location could post an op-

erating-income decline of $

million in the current fiscal

year, compared with just-ended

fiscal 2019, said Disney finance

chief Christine McCarthy.

—Allison Prang

and Dana Mattioli

contributed to this article.

The series ‘The Mandalorian’ is set in the Star Wars universe.

LUCASFILM

profitable division. The pros-
pect of long-term decline at the
cable sports network delivered
a shock to Disney’s share price,
since investors focused on the
company’s vulnerability to Net-
flix despite record-setting per-
formances at the box office and
in theme parks.
Disney is preparing a trio of
streaming services to appeal to
more than its core family de-
mographic; and no deal was
more instrumental to the strat-
egy than its absorption of Fox.
The integration of those assets
continued on Thursday when
Mr. Iger announced that Fox’s
FX network will begin produc-
ing programming for Hulu.
Hulu will become the service
where Disney sends its more
mature shows and movies. Epi-
sodes from original FX shows

ContinuedfromPageOne

CHINA

Fentanyl Traffickers

Sentenced to Prison

China sentenced nine fentanyl
traffickers to prison in an appar-
ent demonstration that it is seri-
ous about holding up its part of
a bargain with Washington.
The sentencing was the con-
clusion of China’s first successful
prosecution of a fentanyl traffick-
ing ring resulting from coopera-
tion between U.S. and Chinese
law-enforcement agencies. Fenta-
nyl has fueled a scourge of drug-
overdose deaths in the U.S. for
years.
In recent months, President
Trump has accused China of not
doing enough to stem the tide of
fentanyl flowing into the U.S.,
and has tied the issue to broader
trade negotiations.
In an unusual move aimed at
maximizing publicity, Chinese au-
thorities invited foreign media
outlets to a courthouse in the
city of Xingtai, a coal hub some
250 miles south of Beijing in
neighboring Hebei province
where the traffickers were sen-
tenced.
The vast majority of fentanyl
arriving in the U.S. comes from
foreign sources, mainly from
China, according to U.S. drug-en-
forcement officials. Chinese offi-
cials have routinely rejected sug-
gestions that the fentanyl and its
precursors that wind up in the
U.S. mostly originate from China.
—Fanfan Wang

BRAZIL

Ruling Gives da Silva

Path to Seek Freedom

Brazil’s Supreme Court ruled
Thursday that defendants can’t
be imprisoned before all their ap-
peals are exhausted, marking a
setback for graft investigations
that have led to the convictions
of dozens of politicians and busi-
ness leaders.
The ruling, which reverses pol-
icy adopted in 2016, means that
former President Luiz Inácio Lula
da Silva, who is serving an eight-
year sentence for graft and
money laundering, and others
who have been convicted of vari-
ous crimes could be released
soon, according to legal experts.
Mr. da Silva’s lawyers said in a
statement they will meet with
him Friday morning and file for
his immediate release.
The Supreme Court said local
judges are free to accept or deny
any release requests based on
the new decision. Justice Celso
de Mello, who sided with the
majority, said judges must en-
force constitutional limits to
prosecution. He added that de-
fendants could still remain in
custody if they have been
deemed a flight risk or too dan-
gerous to go free, for example.
—Paulo Trevisani

IRAN

At Least 5 Killed in

Magnitude-5.9 Quake

A magnitude-5.9 earthquake
struck northwestern Iran early
Friday, killing at least five people
and injuring 120 others, officials
said.
The temblor struck Tark
county in Iran’s Eastern Azerbai-
jan province, about 250 miles
northwest of Tehran, Iran’s seis-
mological center said.
Over 40 aftershocks rattled
the rural region nestled in the Al-
borz Mountains, and residents
ran out of their homes in fear.
—Associated Press

port the view in reports this

week that such a rollback was

under consideration and had

progressed.

Others disputed that a for-

mal rollback plan had been

agreed on.

“There is no agreement at

this time to remove any of the

existing tariffs as a condition of

the phase one deal,” said Presi-

dent Trump’s senior trade ad-

viser, Peter Navarro, in an in-

terview on Fox Business

Network. “The only person who

can make that decision is Presi-

dent Donald J. Trump, and it’s

as simple as that,” he said.

The Dow Jones Industrial Av-

erage rose 0.7%, to 27674.80, on

Thursday, while the S&P 500

advanced 0.3%, to 3085.18.

Michael Pillsbury, a Hudson

Institute expert who advises the

Trump administration, said he

ContinuedfromPageOne

tourism declines and residents

stay home to avoid violent un-

rest that has at times brought

the global financial hub to a

standstill. In some cases, pro-

testers have vandalized busi-

nesses viewed as pro-govern-

ment, such as the company

that runs Hong Kong’sStar-

bucksfranchise, or symbols of

state forces, such as Chinese

banks and the subway system.

“We just want the money to

be in the right guy’s pocket,”

said Jordi Chu, a 26-year-old

who protests regularly. “If it’s a

blue shop, we will just pass by.”

At least seven apps and

groups on social-media plat-

forms, including Facebook and

Instagram, allow users to

weigh in on where they think

a business’s allegiance lies.

None of the social-media

groups or apps reviewed by

The Wall Street Journal advo-

cated violence or vandalism.

Looking for lunch before a

protest on a recent Saturday,

Mr. Chu and a friend used

Whatsgap, an app that shows

yellow markers on a map.

They walked around for 20

to 30 minutes before settling

on a place, he said—adding

that it was worth the effort.

Yellow became associated

with antigovernment senti-

ment in 2014, when demon-

strators carried yellow um-

brellas. Blue police uniforms

have inspired government sup-

porters to adopt that color.

The unrest began over an

extradition bill but has broad-

ened into calls for democratic

reform, presenting the biggest

challenge to Chinese rule since

the former colony was handed

back by the British in 1997.

Whatsgap was originally

developed to help users find

arcade machines, said its cre-

ator, Ken Leung. But before it

launched in August, he ex-

panded the app’s functions.

Mr. Leung, 28, said he

wanted to help people save

time when researching shops.

The app has been downloaded

about 200,000 times, he said.

Mr. Leung said his team of

three at first added each shop

to the map based on users’

suggestions. Now, users vote

on a restaurant’s classification

before it is added to the map.

With so many users, he

said, “We don’t spend as much

time to fact check but let

other users do so.” Restau-

rants are voted on just once,

but if many users subse-

quently give a “dislike” to the

initial classification, adminis-

trators will remove the restau-

rant from the map, he said.

A Facebook group that

plays a similar role has more

than 104,000 members. Users

on the group, which translates

as “Hongkongers Food and

Shopping World,” post their

thoughts to identify which

places are yellow or blue.

An account called “HKShop-

list” on Instagram has more

than 37,000 followers. The ac-

count posts lists of yellow res-

taurants in various districts.

The Hong Kong Federation

of Restaurants and Related

Trades said it maintains a

neutral political stance.

Some businesses sense an

opportunity. In the Causeway

Bay district on a weekend af-

ternoon, a line stretched out

the door at the Lung Mun res-

taurant, which was offering a

“freedom stir fry udon.”

“They are taking a risk by

having a political stand,” said a

woman in the line who said she

picked the eatery because it is

known to be yellow. “It’s impor-

tant that we do whatever in our

very humble ways to help these

shops to survive and show that

we stand with them.”

—Joyu Wang

contributed to this article.

HONG KONG—In a city split

by months of antigovernment

protests, consumers now have

a way to identify which busi-

nesses appear to share their

views, putting shops on alert

and offering Hongkongers a

way to show their colors.

The colors, in this case, are

yellow or blue. With apps and

social-media groups, shoppers

and diners can search color-

coded maps to see if users

think an establishment is yel-

low (supports the protests) or

blue (is pro-government).

But staying neutral isn’t

easy as even shopping and din-

ing become political state-

ments in a city polarized by

protests that have attracted as

many as two million people, ac-

cording to organizers, in a city

of around 7.5 million.

Businesses are reeling as

BYMIKECHERNEY

ANDRACHELYEO

Shoppers Get Political in Hong Kong

Masked protesters paused to read a statement on their phones during a rally in Hong Kong on Tuesday. A custom-made layer in Google Maps identifies various shops.

believed the statement from

China’s Commerce Ministry

“may represent wishful thinking

on the Chinese side more than a

specific agreement.”

Still, there is growing pres-

sure on the Trump administra-

tion to reach a concession with

China as President Trump faces

possible impeachment by the

House and a 2020 re-election

campaign.

There are also signs that the

tariffs—paid by U.S. businesses

and ultimately passed on to

consumers—are becoming a

drag on U.S. economic growth.

U.S. importers paid a record

$7 billion in duties in Septem-

ber, the last figures available.

Economic growth slowed below

2% in the third quarter after ris-

ing almost 3% for most of 2017

and 2018.

Though the unemployment

rate has remained low, job

growth has stalled in the manu-

facturing sector this year.

Myron Brilliant, executive

vice president and head of in-

ternational affairs at the U.S.

Chamber of Commerce, wel-

comed reports that tariffs

would be phased out.

“We’re giving up tariffs that

hurt our economy, that hurt

manufacturers and farmers and

consumers and retailers,” Mr.

Brilliant said. “In return we’re

asking China to make concrete

commitments in specific ar-

eas—ag purchases, financial

services, financial markets—as

well as making additional con-

cessions in other areas.”

The U.S. has hit about $

billion of Chinese imports with

tariffs, in four tranches, and it

was unclear Thursday as to how

many of these tariffs could be

affected or under what timeline.

There were also no details as to

whether the U.S. would reduce

the tariff rate, or remove tariffs

entirely.

Mr. Brilliant said one option

would be to unwind the 15%

tariffs imposed Sept. 1 on about

$111 billion in goods and agree

to refrain from moving forward

with a tariff increase planned

for Dec. 15 that would hit major

categories of Chinese consumer

goods and electronics.

The removal of tariffs has

been a recurring sticking point

in the negotiations. Beijing has

pressed the U.S. to end all the

tariffs, describing that as one of

its bottom lines when talks fell

apart earlier this year. Washing-

ton has discussed removing tar-

iffs as part of a compliance

mechanism, under which tariffs

would come off gradually if

China fulfills its commitments

under a trade deal.

It was unclear whether what

the Chinese officials described

could be considered that com-

pliance mechanism.

Chinese officials have typi-

cally declined to characterize

the amount of progress in the

trade talks, but the officials on

Thursday depicted the phasing

out of tariffs as a hard-won re-

sult. Their statements could be

a sign of China’s confidence that

it has leverage in closing out

the first phase of their deal.

“The Chinese have decided

that Trump needs this more

than they do, and they’re trying

to do what they always do,

which is pushing their advan-

tages,” said William Reinsch, a

senior adviser at the Center for

Strategic & International Stud-

ies in Washington.

As Mr. Trump has expanded

and increased tariffs, China has

retaliated to each move with

tariffs of its own. Last month,

he agreed to cancel plans to

boost tariffs on some goods—

but the U.S. has yet to lower

any tariffs already in place.

A phase-one deal is widely

expected to deter Mr. Trump

from imposing new tariffs on

Dec. 15 as planned.

The top U.S. negotiator,

Trade Representative Robert

Lighthizer, has pushed Beijing

to let the U.S. establish enforce-

ment offices as part of a deal.

When the U.S. said in October

that the two countries would

try to resolve the trade dispute

in stages, Mr. Lighthizer said

the sides agreed to have a

“workable dispute-settlement

mechanism.”

The Chinese Commerce Min-

istry’s Mr. Gao reiterated

China’s longtime stance that the

U.S. is the instigator of the dis-

pute and should take responsi-

bility for de-escalating tensions.

—Grace Zhu in Beijing and

Alex Leary in Washington

contributed to this article.

China Says

Tariffs

Will Ease

There are signs that

the tariffs are

becoming a drag

on U.S. growth.

FROM PAGE ONE

Disney to

Focus on

Streaming

JUSTIN CHIN/BLOOMBERG NEWS

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