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* * * * * TUESDAY, JANUARY 20, 2015 ~ VOL. CCLXV NO. 15 WSJ.com HHHH $3 .00
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CONTENTSArts in Review.......... D5CFO Journal................. B6Corp. News....... B2,3,5,7Global Finance............ C3Health & Wellness D2-4Heard on the Street C8
Media............................... B4Moving the Market C2Opinion................... A11-13Sports.............................. D6U.S. News................. A2-4Weather Watch........ B8World News........... A6-9
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What’sNews
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World-Widen Obama is set to outline aplan for tax increases andhigher government spendingin his State of the Union, re-igniting partisan debates. A1nMore Americans are upbeatabout the economy but remainfrustrated about political lead-ership, a newWall Street Jour-nal/NBC News poll found. A4n The Argentine prosecutorwho accused President Kirch-ner of working with Iran tocover up a 1994 terror bomb-ing was found dead. A6n Yemeni forces clashedwithmilitants who are seeking agreater say in a new constitu-tion, leaving nine dead. A6n Iran said an Israeli air-strike in Syria killed a Revo-lutionary Guards general andsix Hezbollah fighters. A6n Saudi Arabia’s flogging ofa writer convicted of insult-ing Islam has renewed debateover corporal punishment. A6n European authorities prob-ing terror networks are ham-pered by porous borders. A7nGerman politicians criti-cized a decision by police toban an anti-Islammarch. A7n Protesters in Chechnyadenounced Charlie Hebdo’scaricatures of Muhammad. A7n Indonesian investigatorssaid they have found no signsof terrorism or pilot suicidein the AirAsia crash. A7n Power outages rolledthrough Brazil as drought hurthydroelectric generation. A7n Nuclear talks between Iranand six powers will resumenext month, the EU said. A7
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The Fed is staying on trackto start raising short-term
rates later this year, even asthe ECB is poised to launch astimulus program. A1, A8nChina’s growth slowed to7.4% last year, its weakest ratein almost a quarter century, af-ter decades of expansion thatbuoyed the global economy. A1nShanghai shares slid 7.7%Monday, the worst drop in oversix years, on amove to curbmargin trading. Stocks were upin early Tuesday trading. A9n The IMF downgraded itsoutlook for more than a dozenof the world’s largest econo-mies, including China. A8n Google is close to investingabout $1 billion in SpaceX tosupport satellite-based Inter-net service, valuing the com-pany at over $10 billion. B1n The EU is weighing a taxon U.S. Internet firms such asGoogle in its effort at a singledigital market in Europe. B3n BP plans to argue that acourt should weigh oil pricesin deciding how much it mustpay in fines for the 2010 Gulfof Mexico spill. B1, B7nMany money managerssee stocks recovering thisyear but worry about earn-ings and global growth. C1n U.K. authorities closed anaccounting probe into H-P’s$11 billion purchase of soft-ware company Autonomy. B1n Two deal makers arelaunching an activist hedgefund with a collaborative ap-proach to management. C3n Ackman’s Pershing Squareis hiring a veteran mergerlawyer as vice chairman. C3
Business&Finance
Deadly Clashes With Militants Leave Yemen on Edge
HaniA
li/Xinh
ua/Zum
aPress
ARMED RESISTANCE: Houthi militants, who want a greater say in the crafting of a new constitution, shouted slogans Monday during clashes withgovernment 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 ofan Iraq War veteran sets opening-
weekend record, boosted byaudience of cultural conservatives.
WORLD NEWS | A6
Argentine WhoAccused Leader Dies
A prosecutor who said PresidentKirchner helped quash a probe intothe bombing of a Jewish center wasfound dead from a gunshot wound.
Inside
KAGGALAHALLI, India—On avisit to India last fall, ViacomInc. executive Bob Bakish rode30 miles south of Bangalore,past rice paddies and milletfarms, to a television-productionset in this village of 1,100.
He came to see the filming ofthe South Indian soap opera“Lakshmi Baaramma,” a Cinder-ella tale about a village girl whomarries a wealthy businessmanto escape a life of oppression.That day they were shooting awedding scene in which thebride and groom play a ceremo-nial game, racing to fish their rings out of a pot ofmilk.
Soon, that show will be a Viacom production.The U.S. media giant, owner of TV networks in-cluding MTV, Comedy Central and Nickelodeon, iscompleting a deal with India’s Reliance Industries
BY AMOL SHARMA
FOREIGN CHANNELS
Media Giants Look Far AfieldFor New TV Audience
Ltd. that will give it half owner-ship of five entertainment chan-nels around the country thatspecialize in low-budget, local-language soaps.
Until recently, such regionalforeign fare wouldn’t have beenon 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 consumershave begun rebelling over highcosts by dropping cable and sat-ellite connections altogether. In-vesting in fast-growing foreignTV markets—however unfamiliarthe terrain or content—is look-ing more attractive.
Viacom’s India initiative is part of a broadermove to step up channel launches, acquisitionsand investments in countries ranging from theU.K. to Brazil to Spain. Competitors such as Dis-covery Communications Inc., 21st Century Fox and
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Source: Macquarie The Wall Street Journal
Overseas PlayPercentage of revenue frominternational operations, 2013
Discovery Communications
TimeWarner
Viacom
Disney
45%
29
26
24
ROME—For a decade, ClaudiaPizzuti, owner of Tre Scalini res-taurant in Rome’s PiazzaNavona, dished out pasta totourists at some 35 outdoor ta-bles, serving up the languorousmeals and stunning views of theBaroque square that are the stuffof once-in-a-lifetime Roman holi-days.
The fact that the tables—which spilled into the piazza—violated Ms. Pizzuti’s city licensewas of little concern to the res-taurateur.
That was untilRome Mayor IgnazioMarino declared waron the rampant vio-lation of rules gov-erning outdoor tablesthat had spreadwilly-nilly over time.
“We had to doaway with the insaneinvasion of the ta-bles,” said Mr. Marino. “Do wecare about the beauty and archi-tecture of our piazzas, or not?”
Last summer, City Hall sentpolice to enforce the rules, com-pelling most restaurateurs to
slash the number ofoutdoor tables andput the remainingones into the perime-ter set out in their li-cense. Authoritieseven took to paintinggreen lines demarcat-ing the allowed areasto reduce squabblingwith inspectors.
Today, patrons sit ear-to-jowlin a smaller clutch of outdoor ta-bles at Ms. Pizzuti’s restaurant.But she still flaunts the ban ongas-fired patio heaters and, when
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BY LIAM MOLONEY
Federal Reserve officials arestaying on track to start raisingshort-term interest rates laterthis year, even though long-termrates are going in the other di-rection amid new investor wor-ries about weak global growth,falling oil prices and slowingconsumer price inflation.
The Fed’s stance, as it pre-pares for a policy meeting laterthis month, is striking becauseEuropean Central Bank officialsare poised to take the oppositeapproach later this week.
The ECB is nearing a decisionon whether to launch a contro-versial stimulus program knownas quantitative easing on Thurs-day. It is widely expected to an-nounce it will buy hundreds ofbillions or more of euro-denomi-nated government bonds in aneffort to beat back Japan-styledeflation.
The world hasn’t seen an eco-nomic divergence like this sincethe mid-1990s, when growth inthe U.S., Japan and Europe wentin different directions. Back then,Japan was mired in a post-real-estate bubble downturn, Europewas grappling with the conse-quences of the collapse of theSoviet Union and the U.S. wasenjoying a burgeoning technol-ogy boom.
The looming moves have im-portant implications for marketsand growth. Investors have al-ready been driving up the valueof the U.S. dollar in anticipationof the moves and driving down
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BY JON HILSENRATHAND BRIAN BLACKSTONE
Fed HoldsTo PlanOn RatesDespiteTurmoil
In Rome, Fiddling Mayor Makes Locals Burni 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 mightaddress state of his party...... A4
tives.The plan would increase taxes
on investments held by high-in-come households by boostingtop capital-gains tax rates andimposing capital-gains tax onmany inherited assets.
Republicans, who control theHouse and Senate, have balked atthe president’s plan, calling it thetype of redistribution of wealththat Mr. Obama has long knownRepublicans oppose. But like Mr.
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were really interested in tax re-form, rather than making politi-cal statements, he would haveapproached Congress and mem-bers of the Ways and Meanscommittee in thoughtful ways.”
Mr. Obama surprised Republi-can leaders when the WhiteHouse announced over the week-end that he will propose some$320 billion in tax increasesover 10 years that are targetedat high-income Americans, andto use that money to pay for$235 billion in tax breaks mostlyfor moderate-income workers,plus other yet-unspecified initia-
calling for tax increases, theWhite House may have compli-cated negotiations on an issuethat both parties recently citedas ripe for compromise.
“This is just another poke inthe eye at Republicans, ratherthan showing a willingness tocooperate,” said Rep. CharlesBoustany (R., La.), a member ofthe tax-writing Ways and MeansCommittee. “If the president
WASHINGTON—President Ba-rack Obama’s plan for billions ofdollars in tax increases andhigher government spending, tobe outlined in Tuesday’s State ofthe Union address, is reignitingfamiliar partisan debates aboutoverhauling the tax code andhow to best aid the middle class.
The White House views Mr.Obama’s proposals as the startof a broad discussion with thenew Republican Congress over arewrite 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 FightGOP Pans State of the Union Proposal to Boost Inheritance, Capital Gains Levies
China Economic GrowthIs Slowest in Decades
BEIJING—China’s economicgrowth slowed to 7.4% in 2014,downshifting to a level not seenin a quarter century and firmlymarking the end of a high-growthheyday that buoyed global de-mand for everything from ironore to designer handbags.
The slipping momentum in
China, which reported economicgrowth of 7.7% in 2013, has re-verberated around the world,sending prices for commoditiestumbling and weakening an al-ready soft global economy.
China’s economy grew 7.3% inthe fourth quarter from a yearearlier, the National Bureau ofStatistics 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 in2015.
Beijing had said it expected“about” 7.5% growth in 2014.The chief of the statistics bureausaid Tuesday the rate was withinthat range.
Chinese stocks rose on thenews, a day after their largestone-day drop in more than sixyears following a crackdown onmargin trading.
While 7% growth would bethe envy of most economies, Bei-jing says at least this level isneeded to create enough jobs forChina’s huge population. TheCommunist Party sees social sta-bility as an essential componentin maintaining its grip on power.
The results follow decades ofPleaseturntopageA9
By MarkMagnier,LinglingWeiand Ian Talley
Shanghai market plunges........ A9
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