Econ_Sep_22

60 Business

The Economist

September 22nd 2018

rather than inmachine learning.

Most worryingly, Mrs Merkel’s interest

notwithstanding, Germany does not seem

ready to get fully behind

and to teamup

with its Europeanneighbours. Abig reason

for that is its existing economic strength.

Policymakers, industry leaders and re-

searchers tend to argue that Germany is al-

ready an

power and that it will suffice to

inject more of the technology into the con-

tinent’s industrial products and manufac-

turing machinery. Co-operation with

France does not appear to be a priority.

Plans for a joint

research centre, men-

tioned in the German government’s co-

alition agreement, have been abandoned.

To become a powerhouse in

, Europe

will have to overcome its divisions, digital

and otherwise. That seems unlikely in the

current climate. But where there is a politi-

cal will, there may be a way. In the 1980s,

when Europe felt under economic threat

from Japan, Helmut Kohl and FrançoisMit-

terrand, the then German chancellor and

French president respectively, pushed

through an

-wide wireless standard,

which came to be called 2

and helped Eu-

rope dominate themobile-phone industry

for decades. To be sure,

is a much more

complex beast than a wireless standard.

But it showswhat may be possible.

N THE 20th century people could be-

come wealthy philanthropists by start-

ing publications. Henry Luce and his busi-

ness partners raised $86,000 to start

Time

magazine in 1923, but he left a fortune of

more than $100m when he died in 1967.

These days, wealthy philanthropists be-

come press barons by rescuing publica-

tions likeMr Luce’s brainchild.

On September 16th Marc Benioff, a co-

founder of

Salesforce.com

, a cloud-soft-

ware company, and his wife, Lynne Be-

nioff, purchased

Time

for $190m. They are

the latest in a series of tech billionaires to

invest in print journalism, following Jeff

Bezos, the boss of Amazon, who bought

the

Washington Post

in 2013, and Laurene

Powell Jobs, widow of Steve, Apple’s co-

founder, who took a majority stake in the

Atlantic

last year. Each has avowed a civic

interest in supporting journalism, not

meddling in it.

Time

has grappledwithfinancial uncer-

tainty for over a decade. In 2014 TimeWar-

ner, its parent, spun it off, along with other

titles including

Fortune

People

and

Sports

Illustrated

, into an entity called Time Inc,

raising fears that the magazines would lan-

guish as unloved corporate orphans. Last

year, to cut costs,

Time

reduced its print cir-

culation from3m, announcinganewtarget

of 2m. In January this year Meredith, an

American media company, bought Time

Inc for $1.8bn, and assumed another $1bn

in debt. That deal was backed by Charles

and David Koch, billionaire brothers who

are active in Republican politics, prompt-

ing ill-founded fears of a conservative take-

over of the newsweekly.

What

Time

needs fromits latest owners,

besides their largesse, is a vision that can

sustain it as a business. Many newspapers

and magazines have folded in the past de-

cade, some of them prominent names

with long histories—the

Village Voice

, a

newspaper in New York, shuttered in Au-

gust. Media-watchers argue that the fame

of the

Time

brand should enable it to sur-

vive, but thus far it has done so by way of

belt-tightening. It has yet to strike a rich

newvein of earnings in the digital age. The

magazine’s revenue is expected to decline

this year, according to a report in the

Wall

Street Journal

, from$173m to $158m.

Mr Benioff might be able to help. He is

hailed as a master marketer and salesman

(some call it “marc-eting”). He reportedly

wants staff at

Time

to ponder what the

publication should look like in 2040. But

even if they fail to work that out, with his

resources (about $7bn) at least

Time

should

still be around 22 years from now—which

was not something that seemed as likely

before thisweek’s news.

In themeantime, the Benioffs are taking

on some political risk. As the owner of a

prominent media property he, like Mr Be-

zos, maywell draw the ire of President Do-

nald Trump. Shareholders in Salesforce

might worry about retaliation. The Be-

nioffs declared upon purchase that they

would not be involved in the day-to-day

operations of the magazine. That may not

matter if unflattering images of the presi-

dent appear on the cover.

American media

The newpress

barons

NEW YORK

MarcBenioffis the latest tech

billionaire to buya famousmagazine

And for my next trick…

AILWAYS played an integral role in the

development ofmodern America. The

first coast-to-coast line, finished in 1869, al-

lowed the West to be settled. But after the

second world war people abandoned

trains for cars. After several rail lines went

bust, in1971Congress nationalised the rem-

nants as Amtrak to stop passenger services

from ending completely. But Amtrak has

not revived rail’s fortunes.

Brightline, a startup from Florida,

thinks it can. Instead of being greeted by

grey concrete and the whiff of urine, as at

many Amtrak stations, Brightline’s Miami

terminus looks like the lobby of a posh ho-

tel. Early this year it opened its debut line,

costing $3bn, between Miami and West

Palm Beach in Florida, America’s first new

privately-funded passenger line for over a

century. On September 18th it announced

plans to expand, starting with a new line

between Los Angeles and Las Vegas.

Wes Edens of Fortress, a private-equity

firm, is the founder of Brightline. He thinks

that the industry is ripe for a rebound. In

2007 he purchased the land (and some

tracks) that Brightline now uses, thinking

mainly of their value for moving freight.

He then saw the potential of starting pas-

senger services on them, too. Some 6m

people live near Brightline’s tracks in Flori-

da, taking 365m trips a year between Mi-

ami, Fort Lauderdale (a stop on the line)

andWest PalmBeach, nearly all by car. An-

alysts at Fitch, a credit-ratings agency, reck-

on that Brightline needs to take 0.4%of that

traffic to break even. It is also developing

tower blocks with offices for rent and sale

around and on top of itsmain stations, tak-

ing advantage of land values that have

been boosted by its rail services.

Mr Edens hopes to tap more lucrative

routes. Brightline plans to focus on those

between big cities “too far to drive, too

short to fly”, such as between Atlanta and

Charlotte, Houston and Dallas, and Chica-

go and St Louis. Several trendsmayhelp fill

the trains. The number of youngsters who

drive is falling: only 69% of 19-year-old

Americans have licences, compared with

87%

in1983.Wi-

Fi means that business peo-

ple canworkon trains.

Amtrak has not managed to capitalise

on these trends. It still runs the same sort of

long-distance routes as in the early 1970s,

using tired equipment, and has lost money

every year it has existed. That is not all its

fault, says Ray Chambers of the Associa-

tion of Independent Passenger Rail Opera-

American passenger railways

Back on track

NEW YORK AND MIAMI

Brightline is behind the first new

privately-funded line for a century