The Wall Street Journal - 22.02.2020 - 23.02.2020

THE WALL STREET JOURNAL. **** Saturday/Sunday, February 22 - 23, 2020 |B

uct in the first quarter, China

Renaissance Securities (Hong

Kong) Ltd. estimates, with

additional GDP lost in manu-

facturing and construction.

Insurers do offer costlier

extended policies that cover

public-health risks, often

bought by leisure and travel

companies. But they come

S&P Global 1200 performance by sector, year to date

Source: FactSet

Note: Figures through Feb. 20

6

0

2

4

%

January2020 February

Propertyand

casualtyinsurance

Hotels,restaurants

andleisure

Overall benchmark

Airlines

BUSINESS WATCH

NISSAN MOTOR CO.

Exit Package Is Cut

For Ousted CEO

Nissan MotorCo.’s board

sharply reduced the exit package

of Hiroto Saikawa, who as chief

executive presided over a pro-

nounced decline in the car

maker’s earnings, according to

people familiar with the decision.

The company’s human-re-

sources staff initially calculated

that Mr. Saikawa—who was

ousted as CEO in September—

was due about $15 million as a

lump sum upon leaving the auto

maker, but the board decided to

pay him about $3 million, these

people said.

The board also ended a sys-

tem that allowed departing exec-

utives to remain with the com-

pany in a consulting role. As a

result, Mr. Saikawa’s connection

with Nissan was severed as of

Tuesday. The 66-year-old execu-

tive had been with the company

since 1977, when he entered its

ranks right out of college.

—Sean McLain

DEERE & CO.

Farm Machinery

Maker Is Upbeat

Deere& Co. said the cooling

of U.S.-China trade tensions was

giving farmers more confidence

to buy equipment.

Deere on Friday maintained

its profit forecast for 2020 and

reported better-than-expected

equipment sales and profit for

the latest quarter.

The machinery company said

it would continue to reduce ex-

penses; last year, it cut produc-

tion to reduce equipment inven-

tories and initiated a voluntary

layoff program for salaried em-

ployees.

The farm-equipment industry

has been struggling through a

six-year slump in the U.S. agri-

cultural economy that has made

many farmers reluctant to buy

machinery. China’s tariffs on U.S.

farm exports last year choked

off sales of farm products. That

further undermined demand for

new farm machinery.

Deere executives said farmers are more willing to buy equipment because trade tensions have eased. LUKE SHARRETT/BLOOMBERG NEWS —Bob Tita

EBayInc. is taking steps to-
ward a potential sale of its
classified-ads business, which
could be worth roughly $10 bil-
lion, according to people famil-
iar with the matter.

Private-equity firms includ-
ing TPG andBlackstone Group
Inc. and strategic bidders in-
cludingNaspersLtd. and Ger-
man publishing companyAxel
Springer SEhave recently ex-
pressed interest in the busi-
ness, the people said. The com-
pany has also started reaching
out to other potential buyers.
Indications of interest for
the classifieds business are due
in March, they said.
After The Wall Street Jour-
nal reported on interest in the
unit on Friday, eBay confirmed
that it has been exploring op-
tions for the business and is
talking to multiple parties.
The classifieds unit primar-
ily operates internationally and
allows users to post goods and
services in their local commu-
nities, similar to Craigslist in
the U.S. For much of the past
year, San Jose, Calif.-based
eBay has been mulling its op-
tions for the unit, which could
also include a spinoff or joint
venture.
Internet conglomerate
Naspers has an existing classi-
fieds business called OLX
Group that operates in more
than 30 countries.
Axel Springer, which is
backed by private-equity firm
KKR & Co. and owns Business
Insider and Rolling Stone mag-
azine, also owns several online
advertising and classifieds
businesses.
It has been a time of tumult
for eBay, a onetime internet
darling whose core marketplace
business has been weakened by
the rise of Amazon.com Inc. A
company that once housed fast-
growing brands ranging from
PayPal to StubHub has been
slowly peeling them off as their
prospects diverge from those of
the marketplace. New York
Stock Exchange parent Inter-
continental Exchange Inc. re-
cently approached eBay about
buying the company, with a
primary interest in the market-
place business.

EBay

Explores

Sale of Ad

Business

ByCara Lombardo,

Corrie Driebusch

andMiriam Gottfried

Fox Corp. and Comcast
Corp. are each in discussions
to acquire advertising-sup-
ported video services, as en-
tertainment giants increasingly
look to offer free or low-cost

alternatives for consumers
who don’t want to pay for
streaming subscriptions.
Fox has expressed interest
in acquiring Tubi, an ad-sup-
ported streaming service that
carries reruns of television
shows and movies, according
to people familiar with the
matter. The companies are dis-
cussing a deal that could be
valued at north of $500 mil-
lion, the people said.
Separately, Comcast’s NBC-
Universal is in advanced talks
to acquire Vudu from retail gi-
antWalmartInc., according to
people familiar with the dis-
cussions. Vudu allows consum-
ers to buy or rent movies or
shows and in 2016 launched a
free, ad-supported service that
includes thousands of movies
and TV shows.
Almost all major entertain-
ment companies have launched
or are preparing ad-free sub-
scription streaming services to
compete withNetflixInc. and
Amazon.comInc.
But several companies also
see the need to offer free, ad-
supported tiers to reach other
consumers. A Wall Street
Journal-Harris Poll survey last
fall found that Americans are
willing to spend an average of
$44 monthly on streaming
video to subscribe to an aver-
age of 3.6 services.

Fox, Comcast

Pursue Video

Services

ByLillian Rizzo,

Joe Flint

andPatience Haggin

The coronavirus is proving

costly for global business—

and insurance won’t be much

help.

With large parts of China

in lockdown and other Asian

countries on high alert, the

virus, which causes an acute

respiratory disease called

Covid-19, has disrupted

shops, hotels, airlines, facto-

ries and much else. Multina-

tionals including Apple and

Starbucks have closed many

outlets in mainland China.

It has some companies

poring over insurance poli-

cies in hopes of filing a claim

for losses from business in-

terruptions. “We are getting

lots of questions about it,”

said Gisele Norris, a strategic

account manager at insurance

broker and consultant Aon

PLC, and co-leader of its

global infectious disease task

force.

The odds of getting help

aren’t great. Insurers and re-

insurers learned a costly les-

son from the outbreak of se-

vere acute respiratory

syndrome in 2002 and 2003.

In Hong Kong, 325 million

Hong Kong dollars (US$41.

million) was claimed for busi-

ness interruptions from

SARS; hotel chain Mandarin

Oriental International Ltd.

alone recouped US$16 million

from its insurers, led by

American International Group

Inc.

Now insurers across the

board exclude epidemics in

standard business-interrup-

tion policies, which mainly

cover property damage from

events such as fire, terrorism

and natural catastrophes.

“Since the SARS outbreak,

insurers added specific exclu-

sions for bacterial or viral

outbreaks to our insurance

coverage,” said a spokes-

woman for Yum China Hold-

ings Inc., which operates

Pizza Hut and KFC in China

and is the country’s biggest

restaurant group.

Forced to close more than

three in 10 outlets, the group

has warned of possible oper-

ating losses for at least the

first quarter. Yum has a pru-

dent financial policy and

maintains a strong balance

sheet, the spokeswoman

added.

“The potential losses from

communicable diseases can

be terribly large,” said Simon

McConnell, Hong Kong-based

BYJINGYANG

Insurers Are Immunized Against Virus Costs

managing partner at law firm

Clyde & Co. “If all economic

losses were insured, it would

become commercially unvi-

able for insurers themselves.”

“Insurers are in the busi-

ness of covering risks they

can understand,” said Neil

Thomas, head of claims for

Asia at insurance brokerWil-

lis Towers Watson. “There’s

not an insurer on the planet

willing to put themselves on

the front line of something

they can’t quantify.”

The current epidemic is

broader in scale than SARS. It

is also hitting a Chinese econ-

omy that is much larger and

more connected to the world

than in 2003, so the eco-

nomic impact is likely to ex-

ceed the $54 billion that the

World Bank estimates SARS

cost the global economy.

Disruptions in China’s ser-

vice sector alone could slice

474 billion yuan ($67.5 bil-

lion) off gross domestic prod-

with strict conditions.

Earlier this month, China’s

government ordered casinos

in the semiautonomous city

of Macau—which include

units ofWynn ResortsLtd.

and Sheldon Adelson’sLas

Vegas SandsCorp.—to shut

their doors for an unprece-

dented 15 days to help curb

the spread of the virus. Their

insurance, though, pays off

only for closures caused by

an infected person, according

to Willis Towers Watson’s Mr.

Thomas.

“All the casinos have been

looking carefully at their poli-

cies,” he said Thursday. “No

claims have been filed as of

this moment, although some

may make claims in due

course.”

With Macau reporting no

additional cases since the

shutdown, the casinos were

allowed to reopen Thursday.

—Serena Ng

contributed to this article.

Casino workers in Macau awaited customers on Thursday following a 15-day stretch when they were kept closed on official orders.

CARMO CORREIA/EPA-EFE/SHUTTERSTOCK

BUSINESS NEWS

ing on the time period in

which they were assembled

and other factors.

The inspections have raised

red flags, some of the officials

said, because Boeing’s com-

mercial-airplane unit tradi-

tionally has been recognized

as a leader in devising sys-

tems to combat such produc-

tion lapses. All tools used in-

side aircraft are supposed to

be logged and tagged, with

employees double-checking

each other to verify each

piece of equipment is re-

moved. The Boeing spokesman

said the company has ramped

up such checks to prevent fu-

ture problems.

—Doug Cameron

contributed to this article.

said that once Boeing in-

formed it about the problems,

the agency moved to step up

surveillance and plans further

action as appropriate based on

additional inspection findings.

On Friday, an agency spokes-

man reiterated the voluntary

inspections are “part of the

company’s ongoing efforts to

ensure manufacturing quality.”

Boeing has also broadened

its debris inspections to cover

other interior spaces and com-

partments inside the MAX be-

sides fuel tanks, according to

industry and government offi-

cials.

Industry officials cautioned

that the percentage of planes

with problems may decline as

inspections progress, depend-

Boeing on Tuesday said it

came across evidence of such

assembly-line lapses in several

MAX jets, without disclosing

the precise number or the to-

tal that had been inspected.

On Friday, the Boeing

spokesman said inspections

first found the fuel-tank debris

in late November and immedi-

ately notified the Federal Avia-

tion Administration. He said

the manufacturer has added

safeguards to prevent workers

from leaving materials inside

fuel tanks at its 737 factory in

Renton, Wash., and beefed up

efforts across the company.

“Boeing is taking it very,

very seriously,” the spokes-

man said.

The FAA earlier this week

While Boeing disclosed the

debris problem publicly earlier

this week, the latest details

shed more light on the scale of

the issue. Industry officials

said Boeing has so far in-

spected about 50 of roughly

400 MAX planes awaiting de-

livery once regulators allow

the jet back in the air. Materi-

als left behind include tools,

rags and boot coverings, ac-

cording to industry officials

familiar with the details.

The problem marks the lat-

est in a string of setbacks

stretching over many months

that have delayed the return

of the MAX to commercial ser-

vice while raising questions

about the plane maker’s safety

and engineering culture.

BoeingCo. has found debris

inside the fuel tanks of about

two-thirds of undelivered 737

MAX jets inspected so far, ac-

cording to federal and avia-

tion-industry officials, indicat-

ing a bigger production-related

problem than the company

previously suggested.

The revelation comes as the

plane maker struggles to re-

store public and airline confi-

dence in the grounded fleet.

A Boeing spokesman said

Friday the plane maker has

found debris in fuel tanks of

about 35 jets.

ByAndrew Tangel,

Andy Pasztor

andAlison Sider

Boeing Details Production Lapses