Talking Points
- India's west coast was left reeling from the worst cyclone in decades
- Myanmar's junta deployed the military against Mindat in Chin State
- A tech giant rose in Indonesia: a merged Gojek and Tokopedia
- China's Zhurong Mars rover stuck its landing beautifully
- Cryptocurrencies crashed globally after Beijing restricted trades
- Hamas and Israel agreed to a ceasefire in Gaza
- The International Energy Agency outlined a narrow path to net-zero
- A new threat stalked the deserts: cactus traffickers
- New York's AG launched a Trump Organisation criminal probe
- America heard testimony from the 1921 Tulsa massacre
Dive deeper
You spent a good deal of 2020 watching streaming movies on the couch, and it shows. The streaming wars are well underway and the combatants are spending untold billions to capture your attention.
The waterworks
Hollywood is a tough town. And making a movie is an arduous affair – costly, time-consuming, and scarcely profitable most of the time. But all the pain is forgotten when a studio hits pay dirt with a successful release. For every Turbulence, there is the hope of a Titanic (2009). And for every Avatar (2009) there is the further promise of (often unnecessary) sequels.
In their histories the studios have been held by curious billionaires, greedy cable barons, and speculating telecommunications companies alike. On some occasions there have been prudent tie-ups, as in the case of distributors linking up with the producers. (If you own the pipes you may as well buy the waterworks). On other occasions, there have been scrambling, ill-advised, defensive investments that were destined to hang like an albatross around the neck of the owner. Rather conveniently, we have some examples at hand.
The lion
Studios are always rising and falling in America. Metro-Goldwyn-Mayer Studios, for one, has seen better days.This week Amazon – owner of a significant content pipe in Prime – made a $9b offer for MGM and the trademark roar of its lion, Leo. If successful, Prime members will be able to while away their evenings watching the daring (if dated) antics of James Bond, or trying to divine the lines Sly Stallone mumbled in Rocky. Or, better yet, bask in the glory of the world's towering artistic accomplishment: Legally Blonde. It's a significant investment, not least because MGM is being courted for its back catalogue more so than its contemporary film-making chops.
Media analyst Tuna Amobi noted , "Everyone is upping their spending significantly. It seems almost what you have to do to be considered a very serious or viable competitor." Netflix is writing cheques with a $20b content budget. Amazon is spending half a billion dollars on a single season of its Lord of the Rings TV show. There is a frankly ludicrous amount of cash being splashed about for your eyeballs. We don't know how many of Amazon Prime's 200m members are actually streaming, but the target is clear. Netflix, still the market leader with 208m members, is suffering from slowing growth amid competition from Amazon, Disney, HBO, and Viacom.
The first-mover advantage has worn off for Netflix and its slowing growth has an existential ring about it. But Amazon has no such issue; Prime is just an expensive bauble that keeps shoppers within its network and is subsidised by that far-more profitable wing of the empire.
The albatross
And then there is AT&T. Three years ago, the telecommunications giant fought and lobbied the Trump administration to let it purchase WarnerMedia (owner of CNN, HBO, and the vaunted Warner Bros. studio). What they got for their troubles was an $85b headache and a lawsuit from the Department of Justice. The antitrust cops get fired up about this telco for good reason: even after the legally enforced "Ma Bell" divestiture over three decades ago, AT&T is still the largest telecommunications company in the world. We may never fully understand why AT&T – which specialises in literal not just figurative pipes – lashed out and purchased WarnerMedia.
But what we do know is that this week AT&T shot the albatross and sold its carcass to the reality TV giant Discovery . As Discovery was quick to point out, the combined company will have a larger content library than Netflix. What it won't have, is a content budget to match. Or a flight of ageless franchises it can plumb for content like Dis ney. Or millions subscribers like Amazon Prime.
The $43b mega-merger may be one of the last in this period of media consolidation. That's because there is not that much left to buy. Comcast/NBCU and ViacomCBS are already miles behind the rest of the competition in size. The new lead characters are unlikely to change any time soon. So settle in with a big bag of popcorn.
EDITOR'S NOTE: Maybe. Maybe not. We're often overawed by the scale, speed and audacity of today's tech giants. Netflix and its ilk have stormed onto the scene and laid claim to the future of entertainment. But there may be new twists coming. Long before it was sliced and diced by regulators, or bought and sold for the nth time, AT&T began its life by putting up telegraph poles. Maybe Uber will buy Quibi and start recommending short episodes for us to watch as we ride.
Worldlywise
A world without stuff
Supply-chains are awful dreary subjects right up until the moment the shelves of supermarkets and department stores run bare. Do you recall the run on toilet paper last year? A fear of the unknown sent people into a panic-buying frenzy. At the same time, factories and farms all over the world went quiet in the long slumber of lockdowns. Now many major economies are emerging from the pandemic. Demand is ravenous. There's just no way to meet it.
The world is running short of just about everything and there is no stricken bulk carrier to blame it on. There has never been a supply-side shock quite like this. There's not enough copper for batteries or soy bean for feedstock. Lumber is in short supply. Microchips, in short supply before the pandemic, can scarcely be bought for love or money. Whether you are buying bicycles or ballistic missile guidance systems, expect a lengthy wait. Manufacturers are buying up as much raw material as possible to meet the rising demand. Retailers are snapping up inventory to fill their warehouses. And all the while transportation costs are ballooning. It costs three times more to send a 40 foot container from Shanghai to Los Angeles than it did in 2019. Weakened supply chains and voracious demand do not make for a pleasant time – indeed the moment is ripe for significant inflation.
It's not just the pandemic. Brazil, the world's largest producer of coffee and sugar, is in crisis after the last wet season failed to produce meaningful downpours. The drought in some of the country's most fertile regions is placing inflationary pressure on global food prices. The story is repeated all across the globe: one study warned that one third of total food production is prone to disruption from soaring temperatures and patchy rainfall. The supply shock is here, gird yourself for the price shock.
A Spanish border crisis... in Africa
Ceuta and Melilla are gorgeous, sunny Spanish cities on the Mediterranean. They are just on the wrong side of it. Both are autonomous Spanish cities carved off from what is now Morocco in North Africa. Think of them as the Spanish response to Gibraltar. But these are not just popular yachting destinations for Europe's elite. Being Spanish territory and all, they are also prime destinations for migrants trying to gain a toehold into Europe to seek asylum. Each year, the walls around Ceuta and Melilla are raised, but that has not deterred the climbers. This week some 8,000 migrants burst through rows of seaside fences – many swimming – and made it to Spain. 1,500 of them are children. The attitude towards these migrants on the mainland is febrile and furious; one Spanish aide worker was harangued when a photo emerged of her hugging an exhausted migrant .
Behind the dramatic scenes on Ceuta is a simmering diplomatic argument. The European Union has for years outsourced its refugee intake mechanisms to countries outside of Europe. At the height of the Syrian civil war, perhaps the most dire moment of need for our species in recent years, the EU began paying Turkey billions to stem the human tide. Now, Morocco has learned to play hardball. Spanish diplomats have lashed Rabat for "blackmail". The call was echoed by an Amnesty International spokesperson, "Morocco is playing with people's lives. They must not use people, among them its own citizens, as pawns in a political game ".
Turkey forced the issue to win European acquiescence for its bloodyminded intervention in Syria. Rabat, it has been posed, is attempting to reach an end-game on the issue of its flatly-ludicrous claim over Western Sahara . The former Spanish colonial possession has for decades been under Rabat's military control at the expense of the Sahrawi people.
The worst of times
Poisonous run-off
Thousands of Peru’s Indigenous population have been exposed to toxic metals and substances due to nearby mining projects. A report released by Amnesty found that 8,000 inhabitants were affected by high levels of arsenic , lead, copper, mercury, and cadmium. As a result, many suffered from dental, kidney, and prostate problems, as well as headaches and cancerous tumours. Despite this, the country has no permanent solution for monitoring the consequences of its mining on either its people or its environment.
A manhunt in Belgium
Belgium’s top virologist went into hiding this week after receiving threats from a soldier listed as a potential terrorist. 46-year-old Jurgen Conings disappeared from his military base with a rifle and four anti-tank rockets at the start of the week after making threats against several officials. Following his escape, the country’s army and three other counter-terror units launched a manhunt in a nearby forest. While Conings’ car was recovered on Tuesday, authorities are still searching for the heavily armed man.
The best of times
Pompeii's lost frescoes
This week six stolen frescoes were returned to Pompeii years after they had been stolen. An investigation by Italian police found three of them had been removed from the walls of two Roman villas during the 1970s. They were then (twenty years later) sold to collectors in the United States, Britain, and Switzerland. The other three were recovered after an illegal dig just outside Pompeii was foiled by authorities in 2012.
Typical Swedish overachievers
A Swedish hamlet is providing a blueprint for how municipalities can live without reliance on national grids or fossil fuels. With a population of 200, Simris uses locally-produced renewable energy stored in batteries within residents’ homes. The project was created as an experiment under the supervision of German energy giant EON SE. As a result, locals can live off the clean power generated cheaply, but they can also sell surplus energy to utility companies.
Weekend Reading
The image
The quote
“I lack some of the skills that make an ideal manager."
– ByteDance CEO Zhang Yiming announced he would step down in a moment of heightened regulatory scrutiny for China's roaring tech sector. ByteDance is one of the largest privately-held tech companies in the world, responsible for TikTok and its Chinese original Douyin. There are many skills that contribute to an ideal manager, but surely building a private company valued at $250b is among them.
The numbers
$10,000,000,000
- This week Swedish oat-milk brand Oatly raised $1.4b on a $10b valuation. In less than a decade, the Malmö-headquartered alternative milk producer has become a household name with catchy marketing and well-documented brawls with Sweden's dairy industry. It also boasts quite an agreeable taste.
170km by 25km
- The world's largest iceberg has calved off Antarctica's Ronne Ice Shelf. It's larger than New York's Long Island and is roughly the same size as Majorca.
The headline
"Spain Turns to Corruption Rehab for Officials Who Can't Stop Stealing" – The New York Times . They should count themselves lucky; for much of the last century, 'corruption rehab' in Spain was a euphemism for 'a bridge over a deep ravine'.
The special mention
A very well-deserved special mention goes to Melinda Gates French's flak-catchers . In the days after her high-profile split from Bill, we've been inundated with reports about the Microsoft founder's affairs, fumbling attempts with employees, and unusually close friendship with the late child sex offender Jeffrey Epstein.
A few choice long-reads
- It's fickle to attribute epochal change to individuals, but with Biden there is at least a hint that the age of impunity is behind us. Foreign Affairs with a pressing read.
- Gamers loathe Electronic Arts. The most powerful woman in the industry wants to change that. Businessweek with an at-times hilarious read on the company that we all love to hate.
- Why we travel and why we shouldn't stop: a whimsical and unlikely piece from the Financial Times.
Tom Wharton @trwinwriting
