Economist 4/8/15

  1. Shell, an Anglo-Dutch giant, has pounced, with a £47 billion ($70 billion) cash and shares offer which pay BG shareholders a 50% premium on what their holdings were worth just before the bid. Barring regulatory objections, the deal, which will create a $300 billion oil and gas company, will be complete within 15 months.The deal shows that for the beleaguered international oil giants, buying reserves, even juicily priced, is cheaper and easier than finding and developing them. It also highlights the scope for consolidation since the fall in the oil price last year, which has sent companies scrambling to cut costs and pacify investors.Shell managers highlight the increasing attractiveness of midstream (transport) and downstream (refining and distribution) activities, which offer less risk and fatter margins than finding and developing new oil and gas. One of BG’s strengths, for example, is in the liquefaction, transport and storage of gas.
  2. Major League Baseball (MLB), or more specifically HBO’S media-technology arm, MLBAM, which has become a leader in the video-streaming business.Sports are the type of content that viewers are keenest on watching in real time, which has driven rights fees to record levels. MLB, whose new season opened on April 5th, holds 2,500 games per year—and thus produces far more content than other sports. But by 2000 baseball’s officials foresaw mass broadband, and its 30 teams launched MLBAM as a joint venture. They agreed to chip in $1m per club per year over the next four years. That proved unnecessary: thanks to the launch of MLB.tv, a subscription service that shows live games to viewers outside the teams’ local markets, it only spent $77m before becoming profitable in 2003.It is far pricier and slower to build video architecture from scratch than to use MLBAM, which can withstand crushing demand loads, and authenticate and geo-locate viewers in milliseconds. In 2010 the firm began handling online distribution for ESPN, a sports network owned by Disney. In 2011 it powered the launch of TheBlaze, a conservative news channel. In 2013 World Wrestling Entertainment hired it to run a new OTT offering.
  3. The illegal-drugs trade, worth perhaps $300 billion a year, has been creeping onto the web.This was all upset on March 18th when Evolution Marketplace, the Amazon of the dark web, vanished in a puff of pixels. Unlike Silk Road, shut down by the FBI in 2013, Evolution seems to have been taken down by the people who ran it.In a brazen “exit scam”, the site’s anonymous administrators apparently made off with up to $15m in Bitcoin payments that they were holding in escrow.A few days later, users reported that Agora, the next-biggest drug-peddling site, was inaccessible.A rush of users migrating from Evolution may have put its servers under strain.
  4. Many societies are ageing, from America to China, but Japan has a head start. One in four Japanese are over 65; by 2035 it will be one in three. So the country is serving as the world’s laboratory for selling to older consumers. Elderly Japanese outspend younger ones, says a study by the Boston Consulting Group. They now account for two-fifths of personal consumption.Panasonic, a maker of domestic appliances, has rolled out a string of new products, including foot heaters and lightweight vacuum cleaners. Japanese firms have been equally inventive in the area of medical products for the elderly. But this is an area where cumbersome regulation can hold them back.Businesses are finding it is easier to invent products that the elderly might find useful than it is to market those products to them. One reason is that older consumers do not appreciate being reminded that they are old.
  5. UNESCO named the Great Barrier reef World Heritage Site in 1981. Nowhere else, the organisation says, contains biodiversity to match its 400 types of coral, 1,500 fish species and myriad other forms of ocean life. But in June it will decide whether to add it to the short list of world heritage sites—just 46 out of 1,007—it regards as in danger.In the past 30 years half the reef’s coral has disappeared. Marine scientists say people are largely responsible for its decline. Rising sea temperatures and acidification, both linked to global warming; and nutrients and pesticides washed from farms into its waters, help to feed coral-eating crown-of-thorns starfish.Australia’s foot-dragging on climate action makes it a poor advocate. Tony Abbott, the prime minister, pronounced coal “good for humanity” last October when he opened a new mine in a Queensland coal-mining region inland from the reef; Queensland is one of the world’s biggest coal exporters. Dredging waste at Gladstone, a southern reef port, was being dumped in waters within the world heritage site to allow some of the world’s biggest exploration companies to start exporting liquefied natural gas.Together with the Queensland state government, his administration will spend about A$2 billion ($1.6 billion) over the next ten years to sustain the reef.
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