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Amazon buys Hollywood studio MGM in $8.45bn deal | Amazon

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Amazon has bought MGM, the Hollywood studio behind the James Bond and Rocky franchises, for nearly $8.5bn as the battle for global streaming supremacy reaches new heights.

The scale of the deal far exceeds the $5bn (£3.5bn) price tag suggested when the studio put itself up for sale in December, as the fight to secure must-watch programming fuels fierce bidding wars for owners of increasingly scarce “crown jewel” content.

MGM was also courted by Apple and the Sky owner, Comcast. However, both ultimately balked at the size of the cheque Amazon was willing to write.

The famous studio has a library of 4,000 film titles and 17,000 hours of TV programming – ranging from Gone with the Wind and The Hobbit to TV hits such as The Handmaid’s Tale – that has collectively won more than 180 Academy Awards and 100 Emmy Awards.

Founded in 1924, MGM (originally known as Metro-Goldwyn-Mayer) recorded huge success throughout the golden age of Hollywood with films ranging from The Wizard of Oz and Ben Hur to Raging Bull, Basic Instinct and The Silence of the Lambs. It has changed hands frequently and previous owners have included the drinks magnate Edgar Bronfman, the Las Vegas casino billionaire Kirk Kerkorian and CNN’s founder, Ted Turner.

It is the second-largest takeover deal ever struck by Amazon, the world’s second-largest streaming service, with 175 million global users. In 2017 it paid $13.7bn for the upmarket US grocer Whole Foods.

“The real financial value behind this deal is the treasure trove of intellectual property in the deep catalogue that we plan to reimagine and develop together with MGM’s talented team,” said Mike Hopkins, the senior vice-president of Prime Video and Amazon Studios.

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MGM explored the possibility of releasing the next film in the 59-year-old James Bond franchise on a digital streaming service after the coronavirus pandemic kept cinemas closed for much of the last year. The movie, No Time to Die, is Daniel Craig’s last appearance as 007. It is now scheduled to premiere in cinemas in September and is likely to be the biggest international box office hit of the year.

Bond is the fifth most-valuable movie franchise of all time, with its 24 films to date grossing more than $7bn, behind only the sprawling Marvel Cinematic Universe, Star Wars, Harry Potter and Spider-Man films.

Four years ago, Amazon splashed out $1bn on the rights to make six TV series in the world of The Lord of the Rings after its founder, Jeff Bezos, reportedly cited Game of Thrones as the sort of hit he wanted to drive the growth of the company’s streaming service.

Amazon spent $11bn on content last year, up from $7.8bn in 2019, as it increasingly invests in winning subscribers to its Prime subscription service. Netflix spent about $17bn last year. Amazon is vying for global streaming supremacy with Netflix, which has more than 200 million subscribers, and Disney+, which launched 18 months ago and has rapidly grown to more than 100 million subscribers.

Traditional media companies and Silicon Valley giants are also battling to win subscribers as viewers increasingly shift from traditional TV to streaming services.

On Wednesday, Kenichiro Yoshida, the chief executive of Sony, said the company would not look to sell its film and TV studio during the latest wave of media consolidation. One of the big five Hollywood studios, Sony Pictures, the home of franchises including Spider-Man, Ghostbusters, Jumanji and the Karate Kid, is valued by analysts at as much as $30bn.

This month, the US telecoms company AT&T announced a deal to merge its media division with Discovery to create a global content powerhouse to better compete in the streaming wars. AT&T already owns Warner Bros, the home of the Batman and Harry Potter movie franchises and TV hits such as Friends, the HBO network behind Game of Thrones and Succession, and the news broadcaster CNN.

Three years ago AT&T completed the $85bn acquisition of WarnerMedia, formerly known as Time Warner. It was Rupert Murdoch’s failure to buy Time Warner that prompted his shock decision four years ago to sell 21st Century Fox, which included the film and TV studios behind X-Men, Avatar, Deadpool and The Simpsons, admitting that without it his global media empire lacked the scale to compete.

Disney’s $66bn acquisition of the Fox assets gave the world’s largest media company the extra content muscle to successfully join the streaming wars with the launch of Disney+.

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London is the best European city for founders, Startup Genome report

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The UK capital was the only European city to make the top ten in Startup Genome’s ranking, tying with New York in second place for the second year in a row.

London is Europe’s number one start-up city, according to a recent report by Startup Genome. The research and advisory body which specialises in start-ups released its ‘Global Startup Ecosystem Report 2021’ report today (22 September).

The report identified London and New York as joint second-best cities in the world for start-ups. London was the only European location to make it into the top ten. The city is attractive to founders thanks to its educated workforce and tax incentives, the report found.

Silicon Valley in California took the top spot, unsurprisingly. This year’s global rankings were dominated by the US, with half of the top 30 ecosystems coming from this region, followed by Asia with 27pc and Europe with 17pc of the top performing ecosystems globally.

Silicon Valley, New York City, Boston, and Los Angeles alone contributed more than 70pc to the US’s total ecosystem value.

Paris made the top 20, coming in at number 12. The Amsterdam-Delta region followed in thirteenth place. Dublin improved its rank from the previous year’s report, coming in at number 36 this time.

Beijing, Boston, Los Angeles, Tel Aviv, Shanghai, Seattle and Stockholm also made the top ten best start-up cities.

The global start-up economy is currently worth more than $3.8trn in ecosystem value. There are 79 ecosystems generating over $4bn in value, which is more than double the number identified in 2017. This time last year, 91 ecosystems had achieved unicorn status.

Also in 2020, Startup Genome published a report indicating its concerns over the future of the start-ups ecosystem during Covid-19. The report suggested that 42pc of start-ups were in what it called ‘the red zone,’ meaning they had three months or fewer runway ahead of them.

Several countries  including the UK, France and Germany introduced special support packages for start-ups. Irish non-profit Scale Ireland also introduced a similar start-up scheme for Irish companies.

“Entrepreneurs, policymakers, and community leaders in Europe have been working hard to build inclusive innovation ecosystems that are engines of economic growth and job creation for all,” commented JF Gauthier, founder and CEO of Startup Genome on the report’s release.

“The Global Startup Ecosystem Report is the foundation of knowledge where we, as a global network, come together to identify what policies actually produce economic impact and in what context,” Gauthier added.

Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.

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Facebook oversight board to review system that exempts elite users | Facebook

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Facebook’s semi-independent oversight board says it will review the company’s “XCheck” system, an internal program that has exempted high-profile users from some or all of its rules.

The decision follows an investigation by the Wall Street Journal that revealed that reviews of posts by well-known users such as celebrities, politicians and journalists are steered into the separate system.

Under the program, some users are “whitelisted”, or not subject to enforcement action, while others are allowed to post material that violates Facebook rules pending content reviews that often do not take place. The Xcheck system, for example, allowed Brazilian footballer Neymar to post nude pictures of a woman who had accused him of rape, according to the report.

Users were identified for additional scrutiny based on criteria such as being “newsworthy”, “influential or popular” or “PR risky”, the Wall Street Journal found. By 2020 there were 5.8 million users on the XCheck list, according to the newspaper.

The oversight board said Tuesday that it expects to have a briefing with Facebook on the system and “will be reporting what we hear from this” as part of a report it will publish in October.

The board may also make other recommendations, although Facebook is not bound to follow these.

The Journal’s report, the board said, has drawn “renewed attention to the seemingly inconsistent way that the company makes decisions, and why greater transparency and independent oversight of Facebook matters so much for users”.

Facebook told the Journal in response to its investigation that the system “was designed for an important reason: to create an additional step so we can accurately enforce policies on content that could require more understanding”. The company added that criticism of it was “fair” and that it was working to fix it.

A representative for Facebook declined to comment to the Associated Press on the oversight board’s decision.

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Philippines imposes 12 per cent digital services tax • The Register

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The Philippines has become the latest nation to impose a digital services tax.

Such taxes require the likes of Netflix and Spotify to pay local sales taxes even though their services are delivered – legally, notionally, and physically – from beyond local jurisdiction.

The Philippines has chosen a rate of 12 per cent, mirroring local value added taxes.

“We have now clarified that digital services and the goods and services traded through digital service providers should generally be subject to VAT. This is just a matter of common tax sense,” said Joey Salceda, a member of the Philippines’ House of Representatives and a backer of the change to the nation’s tax code.

Salceda tied the change to post-pandemic economic recovery.

“If brick and mortar establishments, which are the hardest-hit by the pandemic, have to pay VAT, the giants of e-commerce shouldn’t be exempt,” he said.

However, local companies that are already exempt from VAT by virtue of low turnover won’t be caught by the extension of the tax into the virtual realm.

Salceda’s amendments are designed to catch content streamers, but also online software sales – including mobile apps – plus SaaS and hosted software. The Philippines’ News Agency’s report on the amendment’s passage into law even mentions firewalls as subject to VAT.

The Philippines is not alone in introducing a digital services tax to raise more revenue after the COVID-19 pandemic hurt government revenue – Indonesia used the same logic in 2020 .

But the taxes are controversial because they are seen as a unilateral response to the wider issue of multinational companies picking the jurisdictions in which they’ll pay tax – a practice that erodes national tax bases. The G7 group of nations, and the OECD, think that collaborations that shift tax liabilities to nations where goods and services are acquired and consumed are the most appropriate response, and that harmonising global tax laws to make big tech pay up wherever they do business is a better plan than digital services taxes.

The USA has backed that view of digital services taxes, by announcing it will impose tariffson nations that introduce them – but is yet to enact that plan.

Meanwhile, the process of creating a global approach to multinational tax shenanigans is taking years to agree and implement.

But The Philippines wants more cash in its coffers – and to demonstrate that local businesses aren’t being disadvantaged – ASAP. ®

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