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YELLOW ***** TUESDAY, JANUARY 20, 2015 ~ VOL. CCLXV NO. 15 WSJ.com HHHH $3.00 DJIA 17511.57 Closed NASDAQ 4634.38 Closed NIKKEI 17014.29 À 0.9% STOXX 600 353.18 À 0.2% 10-YR. TREAS. Closed yield 1.815% OIL $48.69 Closed GOLD $1,276.90 Closed EURO $1.1608 YEN 117.57 CONTENTS Arts in Review.......... D5 CFO Journal................. B6 Corp. News ....... B2,3,5,7 Global Finance............ C3 Health & Wellness D2-4 Heard on the Street C8 Media............................... B4 Moving the Market C2 Opinion................... A11-13 Sports.............................. D6 U.S. News................. A2-4 Weather Watch........ B8 World News ........... A6-9 s Copyright 2015 Dow Jones & Company. All Rights Reserved > What’s News i i i World-Wide n Obama is set to outline a plan for tax increases and higher government spending in his State of the Union, re- igniting partisan debates. A1 n More Americans are upbeat about the economy but remain frustrated about political lead- ership, a new Wall Street Jour- nal/NBC News poll found. A4 n The Argentine prosecutor who accused President Kirch- ner of working with Iran to cover up a 1994 terror bomb- ing was found dead. A6 n Yemeni forces clashed with militants who are seeking a greater say in a new constitu- tion, leaving nine dead. A6 n Iran said an Israeli air- strike in Syria killed a Revo- lutionary Guards general and six Hezbollah fighters. A6 n Saudi Arabia’s flogging of a writer convicted of insult- ing Islam has renewed debate over corporal punishment. A6 n European authorities prob- ing terror networks are ham- pered by porous borders. A7 n German politicians criti- cized a decision by police to ban an anti-Islam march. A7 n Protesters in Chechnya denounced Charlie Hebdo’s caricatures of Muhammad. A7 n Indonesian investigators said they have found no signs of terrorism or pilot suicide in the AirAsia crash. A7 n Power outages rolled through Brazil as drought hurt hydroelectric generation. A7 n Nuclear talks between Iran and six powers will resume next month, the EU said. A7 i i i T he Fed is staying on track to start raising short-term rates later this year, even as the ECB is poised to launch a stimulus program. A1, A8 n China’s growth slowed to 7.4% last year, its weakest rate in almost a quarter century, af- ter decades of expansion that buoyed the global economy. A1 n Shanghai shares slid 7.7% Monday, the worst drop in over six years, on a move to curb margin trading. Stocks were up in early Tuesday trading. A9 n The IMF downgraded its outlook for more than a dozen of the world’s largest econo- mies, including China. A8 n Google is close to investing about $1 billion in SpaceX to support satellite-based Inter- net service, valuing the com- pany at over $10 billion. B1 n The EU is weighing a tax on U.S. Internet firms such as Google in its effort at a single digital market in Europe. B3 n BP plans to argue that a court should weigh oil prices in deciding how much it must pay in fines for the 2010 Gulf of Mexico spill. B1, B7 n Many money managers see stocks recovering this year but worry about earn- ings and global growth. C1 n U.K. authorities closed an accounting probe into H-P’s $11 billion purchase of soft- ware company Autonomy. B1 n Two deal makers are launching an activist hedge fund with a collaborative ap- proach to management. C3 n Ackman’s Pershing Square is hiring a veteran merger lawyer as vice chairman. C3 Business & Finance Deadly Clashes With Militants Leave Yemen on Edge Hani Ali/Xinhua/Zuma Press ARMED RESISTANCE: Houthi militants, who want a greater say in the crafting of a new constitution, shouted slogans Monday during clashes with government forces near the presidential palace in San’a. The fighting, which left nine dead, subsided with a late-afternoon cease-fire. A6 MARKETPLACE | B1 Wide Appeal Lifts ‘American Sniper’ Film based on the memoir of an Iraq War veteran sets opening- weekend record, boosted by audience of cultural conservatives. WORLD NEWS | A6 Argentine Who Accused Leader Dies A prosecutor who said President Kirchner helped quash a probe into the bombing of a Jewish center was found dead from a gunshot wound. Inside KAGGALAHALLI, India—On a visit to India last fall, Viacom Inc. executive Bob Bakish rode 30 miles south of Bangalore, past rice paddies and millet farms, to a television-production set in this village of 1,100. He came to see the filming of the South Indian soap opera “Lakshmi Baaramma,” a Cinder- ella tale about a village girl who marries a wealthy businessman to escape a life of oppression. That day they were shooting a wedding scene in which the bride and groom play a ceremo- nial game, racing to fish their rings out of a pot of milk. Soon, that show will be a Viacom production. The U.S. media giant, owner of TV networks in- cluding MTV, Comedy Central and Nickelodeon, is completing a deal with India’s Reliance Industries BY AMOL SHARMA FOREIGN CHANNELS Media Giants Look Far Afield For New TV Audience Ltd. that will give it half owner- ship of five entertainment chan- nels around the country that specialize in low-budget, local- language soaps. Until recently, such regional foreign fare wouldn’t have been on the menu of a U.S. media con- glomerate. But after years of go- go growth, the U.S. pay-TV mar- ket is saturated, and consumers have begun rebelling over high costs by dropping cable and sat- ellite connections altogether. In- vesting in fast-growing foreign TV markets—however unfamiliar the terrain or content—is look- ing more attractive. Viacom’s India initiative is part of a broader move to step up channel launches, acquisitions and investments in countries ranging from the U.K. to Brazil to Spain. Competitors such as Dis- covery Communications Inc., 21st Century Fox and Please turn to page A10 Source: Macquarie The Wall Street Journal Overseas Play Percentage of revenue from international operations, 2013 Discovery Communications Time Warner Viacom Disney 45% 29 26 24 ROME—For a decade, Claudia Pizzuti, owner of Tre Scalini res- taurant in Rome’s Piazza Navona, dished out pasta to tourists at some 35 outdoor ta- bles, serving up the languorous meals and stunning views of the Baroque square that are the stuff of once-in-a-lifetime Roman holi- days. The fact that the tables— which spilled into the piazza— violated Ms. Pizzuti’s city license was of little concern to the res- taurateur. That was until Rome Mayor Ignazio Marino declared war on the rampant vio- lation of rules gov- erning outdoor tables that had spread willy-nilly over time. “We had to do away with the insane invasion of the ta- bles,” said Mr. Marino. “Do we care about the beauty and archi- tecture of our piazzas, or not?” Last summer, City Hall sent police to enforce the rules, com- pelling most restaurateurs to slash the number of outdoor tables and put the remaining ones into the perime- ter set out in their li- cense. Authorities even took to painting green lines demarcat- ing the allowed areas to reduce squabbling with inspectors. Today, patrons sit ear-to-jowl in a smaller clutch of outdoor ta- bles at Ms. Pizzuti’s restaurant. But she still flaunts the ban on gas-fired patio heaters and, when Please turn to page A10 BY LIAM MOLONEY Federal Reserve officials are staying on track to start raising short-term interest rates later this year, even though long-term rates are going in the other di- rection amid new investor wor- ries about weak global growth, falling oil prices and slowing consumer price inflation. The Fed’s stance, as it pre- pares for a policy meeting later this month, is striking because European Central Bank officials are poised to take the opposite approach later this week. The ECB is nearing a decision on whether to launch a contro- versial stimulus program known as quantitative easing on Thurs- day. It is widely expected to an- nounce it will buy hundreds of billions or more of euro-denomi- nated government bonds in an effort to beat back Japan-style deflation. The world hasn’t seen an eco- nomic divergence like this since the mid-1990s, when growth in the U.S., Japan and Europe went in different directions. Back then, Japan was mired in a post-real- estate bubble downturn, Europe was grappling with the conse- quences of the collapse of the Soviet Union and the U.S. was enjoying a burgeoning technol- ogy boom. The looming moves have im- portant implications for markets and growth. Investors have al- ready been driving up the value of the U.S. dollar in anticipation of the moves and driving down Please turn to page A8 BY JON HILSENRATH AND BRIAN BLACKSTONE Fed Holds To Plan On Rates Despite Turmoil In Rome, Fiddling Mayor Makes Locals Burn i i i Crackdown on Rules Enrages Restaurateurs, Artists; Banning Scooters ECB nears crucial test ............... A8 IMF cuts growth forecasts..... A8 Mounting worries hit stocks.. C1 Gerald Seib: How Obama might address state of his party...... A4 tives. The plan would increase taxes on investments held by high-in- come households by boosting top capital-gains tax rates and imposing capital-gains tax on many inherited assets. Republicans, who control the House and Senate, have balked at the president’s plan, calling it the type of redistribution of wealth that Mr. Obama has long known Republicans oppose. But like Mr. Please turn to page A4 were really interested in tax re- form, rather than making politi- cal statements, he would have approached Congress and mem- bers of the Ways and Means committee in thoughtful ways.” Mr. Obama surprised Republi- can leaders when the White House announced over the week- end that he will propose some $320 billion in tax increases over 10 years that are targeted at high-income Americans, and to use that money to pay for $235 billion in tax breaks mostly for moderate-income workers, plus other yet-unspecified initia- calling for tax increases, the White House may have compli- cated negotiations on an issue that both parties recently cited as ripe for compromise. “This is just another poke in the eye at Republicans, rather than showing a willingness to cooperate,” said Rep. Charles Boustany (R., La.), a member of the tax-writing Ways and Means Committee. “If the president WASHINGTON—President Ba- rack Obama’s plan for billions of dollars in tax increases and higher government spending, to be outlined in Tuesday’s State of the Union address, is reigniting familiar partisan debates about overhauling the tax code and how to best aid the middle class. The White House views Mr. Obama’s proposals as the start of a broad discussion with the new Republican Congress over a rewrite of the tax code that in- cludes not just corporate but in- dividual taxation, as GOP law- makers have wanted. But in By Carol E. Lee, John D. McKinnon and Kristina Peterson Obama Reignites Tax Fight GOP Pans State of the Union Proposal to Boost Inheritance, Capital Gains Levies China Economic Growth Is Slowest in Decades BEIJING—China’s economic growth slowed to 7.4% in 2014, downshifting to a level not seen in a quarter century and firmly marking the end of a high-growth heyday that buoyed global de- mand for everything from iron ore to designer handbags. The slipping momentum in China, which reported economic growth of 7.7% in 2013, has re- verberated around the world, sending prices for commodities tumbling and weakening an al- ready soft global economy. China’s economy grew 7.3% in the fourth quarter from a year earlier, the National Bureau of Statistics said, buttressed by tar- geted moves to ease borrowing. But it continued to face a hous- ing glut, soaring debt and over- capacity in many industries, fac- tors likely to erode growth in 2015. Beijing had said it expected “about” 7.5% growth in 2014. The chief of the statistics bureau said Tuesday the rate was within that range. Chinese stocks rose on the news, a day after their largest one-day drop in more than six years following a crackdown on margin trading. While 7% growth would be the envy of most economies, Bei- jing says at least this level is needed to create enough jobs for China’s huge population. The Communist Party sees social sta- bility as an essential component in maintaining its grip on power. The results follow decades of Please turn to page A9 By Mark Magnier, Lingling Wei and Ian Talley Shanghai market plunges........ A9 Stepping away is easier with someone showing you the steps. Wealth management asset management asset servicing When it comes to succession planning, it’s never too soon. Northern Trust has the insights you need to make a smooth transition. 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