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The Cost of the Streaming War: CEO Daily

Good morning from London. This is Katherine Dunn, filling in for Alan.

Today, a quick break from the U.S.-China trade war—more news on that below—while we check up on another battle: the streaming wars.

Entertainment colossus Walt Disney Co. is challenging Netflix and HBO on the streaming front, but its results yesterday show that the company’s efforts might not be going as smoothly as analysts expected.

The company said its latest quarterly profit fell by 40%. The results astounded analysts since Disney’s shares hit a record last week and the studio has already accumulated the biggest annual box office ever this year, thanks to mega-blockbusters like Avengers: Endgame and Toy Story 4. Plus, the results reflected the first full quarter since Disney acquired Fox, and they served as a chance to gauge how Disney’s preparations to launch its upcoming streaming service are going.

Rather appropriately, Chief Executive Bob Iger called the quarter “complex to explain.”

One factor behind the disappointing results was a run-up of costs, the largest of which is the bill for mounting the Disney+ streaming service. The platform will have a lower subscription price than its rivals. (Disney+ is expected to cost $7, while the integrated Disney, Hulu, and ESPN platform will cost about $13.)

But there were other stumbles, too: the costs of expanding Star Wars attractions at its theme parks, even as attendance waned; write-offs on a box-office bomb inherited from Fox (X-Men: Dark Phoenix); and losses after mega-draw cricket matches on its Indian channel were cancelled.

But if the cost of the streaming war, in particular, seems concerning, Disney at least knows it’s not alone. The company can find reassurance in the fact that arch-rival Netflix had a disappointing quarter, too. It fell far short of subscription targets and acknowledged that it is facing stiff competition—in the form of Disney’s new service.

More news below.

Katherine Dunn

katherine.dunn@fortune.com

@katherine_dunn

TOP NEWS

Looking for Havens 

Another sign of the growing impact of the U.S.-China trade war today (alongside general geopolitical jitters): the search for safe havens. Gold is rising (up by 14% since the start of this year), currency havens like the Japanese yen and the Swiss franc are strengthening—putting pressure on the central banks in both countries—and U.S. government bonds are gaining ground. FT

Germany Jitters 

In Germany, signals continue to mount that the eurozone’s largest economy is being squeezed. In June, the country’s industrial output fell far more than expected, dropping by 1.5% on the month. That was only the latest sign that Germany is caught in the middle of the U.S.-China trade war—both countries are major export markets for the country’s manufacturing base; it’s raising worries of a recession. Reuters

Barneys Gets a Lifeline 

One day after filing for bankruptcy protection, Barneys New York received a last-minute lifeline. Brigade Capital Management and B. Riley Financial offered the retailer $218 million to help cover its costs and determine a direction as it looks for a buyer. The department store has pledged to close a number of its locations, including in Chicago and Las Vegas, while keeping open a handful of others, including its New York City flagship. Fortune 

China’s Cash Crunch 

A cashflow problem at many of China’s private businesses is adding up to a growing glut of IOUs—or commercial acceptance bills—largely due to banks’ reluctance to lend to smaller, private companies. Those IOUs now total an estimated $200 billion. Past experience suggests this will go badly: 20 years ago, those notes added up to $86 billion, or a fifth of the Chinese economy, spurring a debt crisis that eventually spiraled and required government intervention.  New York Times

AROUND THE WATER COOLER

The End of a (Shipping) Era 

For decades, the Harland and Wolff shipyards were at the heart of Loyalist Belfast, in Northern Ireland, a major employer and cultural touchstone; it was the place where the Titanic was born, among others. But now, the shipyard’s days look to finally be over, after the Norwegian shipping family that owns it put it into administration. Employees are asking for a reprieve, but there doesn’t seem to be signs that a rescue is in the works. The shipyard hasn’t built a ship since 2003. FT

Walmart Employee Claims Retaliation

After two shootings in Walmart stores, an employee attempted to stage a walkout to protest the company’s gun policies, and said he was locked out of company computer systems as a result. The employee is part of the company’s e-commerce business, highlighting the potential tension as Walmart increasingly hires West Coast tech workers, who are accustomed to employee activism. Walmart, the country’s largest employer, has said it has no plans to change its gun sales policy, but it did increase the age to purchase a gun in its stores last year. Fortune 

Swipe Right  

Dating app Tinder just keeps on growing. On Tuesday, the company said the app—the most popular product from dating conglomerate Match Group—gained 1.5 million subscribers in the quarter for a total of 5.2 million. It’s not alone: downloads on Hinge, another of its apps, more than tripled in the quarter. But there are signs of trouble, too: a former executive has filed suit against the company’s former CEO and others, alleging sexual assault. (Match denies the claims.) WSJ / Fortune

Robot Researchers 

The applications for A.I. are widespread, and now, they include replacing financial analysts and researchers. In the U.K. alone, that means a 30% drop in research funding last year, and a 7% drop since 2015 in researching and analyst jobs. On-the-ground analysts in emerging markets—where investors can still actually find yields—have been hit particularly hard. Bloomberg

This edition of CEO Daily was edited by Katherine Dunn. Find previous editions here, and sign up for other Fortune newsletters here.