In today's ExchangeWire news digest: the French government resumes taxing tech giants as international tax reform talks continue; ViacomCBS sells publishing business Simon & Schuster to Penguin Random House; and the latest DPRI finds that digital publisher revenues fell by less than expected in Q2.
France pursues taxing big tech
The French government will go ahead with its plan to tax big tech. The ministry of finance has notified leading tech companies, including Facebook and Amazon, informing them that they will be obliged to pay a digital services tax next month.
The government had suspended the tax earlier this year for the duration of negotiations over reform of international tax rules with the Organisation for Economic Cooperation and Development (OECD). With talks set to continue into 2021, the decision is a kept promise from the Bruno Le Maire-headed ministry, which had vowed to resume collection if an agreement was not reached by December.
However, the Castex administration has stated that it will drop the tax once a deal is to update the rules surrounding cross-border taxation is agreed. The initial round of talks failed to result in a deal after the Trump administration refused to sign a multilateral agreement, according to officials.
The development marks a continuation of the saga of France’s attempts to impose tighter levies against US-based tech behemoths, who have long been criticised by the EU for dodging their fair share of tax. It remains to be seen whether the US takes a firmer stance in bringing big tech under financial constraints once President Biden moves into the White House.
ViacomCBS sells Simon & Schuster to Penguin
US-based media holdings giant ViacomCBS is selling its publishing business, Simon & Schuster. The division has been snapped up by Beterlsmann’s Penguin Random House for USD $2.175bn (£1.6bn) in cash. The deal is expected to close some point next year.
Viacom plans to put the money towards paying off its debt (which stood at over USD $20bn (£15bn) as of August), funding its dividend, and developing its new streaming businesses. The company has inflicted a series of job cuts this year in an effort to reduce its debt, laying off 550 members of staff from across the business, but in particular from the CBS Entertainment Group Division.
Financial necessity aside, the move also underscores the ViacomCBS’s increased focus on its businesses – TV, film, and digital media. Just last month, the company announced that it would undergo a significant restructuring to reflect its focus on growing its streaming offering, Paramount Plus. However, some commentators, such as Deutsche Bank, warn that getting into the streaming game won’t be enough to save ViacomCBS as business for traditional networks continues to decline.
Publisher revenue declines less severe than predicted, say AOP and Deloitte
A report commissioned by the Association of Online Publishers (AOP) and Deloitte has found that the fall in UK publisher revenues in Q2 2020 was less severe than expected. According to the latest Digital Publishers Revenue Index (DPRI), digital publishing revenues dropped to £96.6m in the period, a drop of 14.3% from Q2 2019.
Revenues from subscriptions grew substantially in Q2, rising 44.9% to £34.5m. The format has done well over the past 12 months, seeing a 27% growth to £112.3m on a rolling basis. Revenues from miscellaneous advertising also increased, growing 25.2% to £83.3m. However, declines were experienced across the board for display, online video, sponsorship, recruitment, and other classified advertising. B2C and B2B publisher revenues also saw a dip, although B2C publishers benefitted from a 41.9% rise in subscription revenue over the past year.
Speaking to members of the AOP board found that many feel optimistic about digital publishing’s recovery from the impact of COVID-19. However, those asked were unanimous in their view that diversifying their revenue streams should be a top priority for publishers over the next year, with no board members planning to make growing their advertiser revenue a part of their broader strategy.