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tv   Video Revolution  BBC News  July 14, 2019 12:30am-1:01am BST

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this is bbc news. the headlines: tropical storm barry is bringing torrential rain and high winds to the southern us state of louisiana. millions of people are bracing themselves for potentially life—threatening flooding. tens of thousands of homes and businesses are without power and new orleans airport has been closed. al—shabaab militants have killed 26 people and injured many more in their biggest attack in years on the southern somali port of kismayo. politicians, aid workers, and journalists were among the victims, who were gunned down in an exclusive hotel. the authorities say three of the islamist militants died, a fourth was captured alive. russia has launched one of its most ambitious space projects. the spektr—rg space telescope
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will map the universe on the x—ray spectrum in unprecedented detail and is expected to reveal new information about black holes and the expansion of the universe. now on bbc news — amol rajan meets ted sarandos, arguably the most powerful, creative figure in modern television, whose vision for netflix has revolutionised our viewing habits. when ted sarandos left college in arizona, he got a summerjob in a local video store. he watched a lot of films and became a big player in the world of video distribution. then he met a visionary computer whiz called reed hastings and together, they would change the world. their story, netflix's story, charts the revolution in our film and television industries, and today, sarandos is the most powerful creative figure in global media. i asked him why he is investing
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in shepperton, these legendary studios in britain, and why britain is a growth market, when i sat down with him recently at the bbc. ted sarandos, thank you so much for doing this. i'd like to get a sense of your own background, who were the sarandos family? the sarandos families are... my grandfather was alex sarandos, he came from greece as a young man, he left home, in search of what he thought was a realjob in america, which was to be a trial cook, because he used to read cowboy novels all the time and he thought that was going to be a realjob he could do in america. he went to new york and became a cook, but not on the trail, in a kitchen. and from there, eight kids, and he made one vacation in his lifetime, which was to go to arizona to see a rodeo, and talked about it until the day he died, and the day he died, all of his eight kids, almost in tribute to him, moved to arizona, so i was raised in phoenix and i've been in la now for about 20 years.
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it's a classic immigrant story, isn't it? of extremely hard work, extremely determined and ultimately, driven by the power of a story, which is the story of an american promise, right? yeah, pretty much. and what did your parents do for a living? my father was an electrician and my mother was a stay—at—home mother. five kids, very young parents, so we had a real chaotic home, so my escape and my sense of peace was television. did you watch a huge amount as a kid? a huge amount, a reckless amount of television. laughing. it's not a great act of parenting to allow me to sit in front of the tv and watch that much. i think it worked out in the end. how would you characterise the era of american media, the era of american film and tv that you had as a kid? i think it was probably the best time, if i think about television, how enduring those shows were from the 70s, mash for example, the shows that had been enduring the culture of today. but i think what's interesting about that time and what was interesting for me, was that i was very aware of things that happened in the decades before.
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unlike young people today, who i think know very little about television in the 70s and 80s, i knew everything about tv from the 50s and 60s, because it was on, and i would... i was never much of a sleeper, so i would stay up late and watch the dick van dyke show, the andy griffith show, the jack benny show, burns and allen. i know i've seen every episode of every one of those shows over the years. so you were binge watching back then? 0h, forsure. you went to glendale community college in phoenix, arizona, did you have a sense then of what you wanted to do with your life and career? yeah, but i was totally wrong. i think when i was about 12, i had an influence from television, i was sure i was going to be a journalist, and that's. .. why would you do anything like that? laughing. we would have had to switch seats. yeah, we could switch round, i'd be very happy to. and i worked on the high school newspaper, worked on the college newspaper, spent all my academic time on the newspapers, instead of getting good grades,
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and i realised after two years of community college that i was a horrible writer and i was probably not going to be a professionaljournalist, and i really didn't have a plan b at that time, and my part—time job during that period was working at a video store. and i wound up taking that on as my full—time job while i figured out what i was going to do next. so did you end up working in a video store because you were a film fanatic orjust because someone said, there are some shifts going, do you fancy a go? a little bit of both. there was a stroke of timing that the second video store in the state of arizona opened up in my neighbourhood, it was a few blocks from my house. and my parents, they were young, they were not responsible with money, so we sometimes would not have electricity, not have water or gas or the phone, but we always had whatever that thing was, we had a little dish to get hbo, we had a vcr, which at the time, i say it like this, because they were big machines back then, and it made no sense that we would have this luxury item. this was your passport to another world, though, wasn't it? yes, definitely.
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and having the store open, i was able to roam into the store and walk the shelves and read the boxes and talk to the owner about films. did you binge watch then? in the downtime, did you get through 900 films? i definitely did. when you're working in a video store, the beauty of the store is that it's empty all day. laughter. so, they do all the business in the last two hours at night, so you can watch everything, and i did, there were probably 900 films in the store when i started and ifeel like i must have seen every one of them. would you say that yourjob then was to have the knowledge and dare i say it, the data, to be able to say to customers, if you like that, you'll love this? which is kind of what netflix's algorithms do now. it kind of evolved to that because having been able to see everything, i was able to make natural connections in the patterns, i didn't know at the time what it was, but when people would come back in and say, they'd return something and say, i liked this, and i'd say, well, if you liked that, you'll love this. it was a very organic,
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natural thing. but now, when i think back on it, there would be queues of people waiting to check out and waiting for me specifically so they could ask, what do you suggest? they wanted ted's take? yeah, and i didn't realise that was all happening, except it was a more informed guess. but it did tell me a lot about what people really value in their choice. it felt really good to be the one that helped them find something that they loved. for some people, and they have found their favourite movie for the rest of their lives from that suggestion, who knows? thanks to your recommendation. so you rose up the chain of that company and worked for a few different distribution companies. how would you characterise... say this is the 80s, going into the mid—90s, how would you characterise the distribution business that you are in then? there was a lot of turmoil, and at one point, you had to go around the country putting people out ofjobs, making people redundant. the company i worked for was the distributor that serviced all the blockbuster stores, and they put the videos and every store around the country, around the world, and we wound up... eventually, blockbuster went direct
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with all the studios and we were this billion dollar business that became a $600 million business overnight and had to adjust to the new reality. because the guy who did this college project on how to make the most efficient distribution and worked out the way of doing it was a guy called reed hastings. how did you first come across him? back in the distribution days, one of my clients, who became a friend, named mitch lowe, was working with reed in the early days of netflix, when we were doing dvds mailing around. and reed is a really brilliant man, in terms of an engineer, writing code, and just a real visionary. so, this was 1999, and mitch said, you should meet ted, he knows all about home video distribution, so i went out... my very first e—commerce transaction was buying a ticket to go up to see reed, and we met in 99. he described netflix almost exactly like it is right now. what did he say it was? what did he say it was going to be? we talked about downloading instead of streaming, because streaming literally did not exist at the time,
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but the internet would be the vehicle that all film and entertainment would get into the home. not satellite or cable, which in 1999, that was a very crazy idea. i did think he was a little nuts when he was talking about it. because he approached you a few times, didn't he? he offered you a job a couple of times and you said no. what turned the no into a yes? again, his sense of incredible clarity. so, when i said to him... when he offered me thejob and i said i had ajob, i was running a retail chain at that time, this was after the distribution days, and we had a 400 store chain and a national chain, and we were talking, and he said, why don't you come and do this? and i said, well, i'm already doing this, and that chain i worked in was kind of a mess. 0ne company had bought another company, they were both in bad financial trouble, so it wasn't like they were going to get together and be a giant, there werejust trying to get together. and i basically had to renegotiate all the deals and renegotiate leases
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and it was a busy time in my life, professionally. and he said, why don't you come and join netflix and we can get this thing going? and i said, i've got these deals and this and that, and he said, oh, it sounds like they need you. and i go, yes, they need me. and he goes, well, don't they need you in some country to feed starving children? and i said, yeah, maybe. he said, why aren't you doing that? so, it was just a sense of logic and clarity that made me laugh and i said, i want to be... i don't know what reed was, i didn't know if he was going to do something that would change things as much as netflix has, but i knew he was going to do something amazing. applause. this is going to be a big year for us. house of cards was a moment that you made yourfirst big bet, and you made it based on data, because you look at the fact that house of cards had david fincher, who had an extraordinary pedigree, kevin spacey and robin wright, it had a very good writer, and you liked the original michael dobbs house of cards, which was a british production.
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i only knew of it because of that video store. because i was able to rent it beforehand. most people, when commissioning something like house of cards, would expect a pilot, they go through many layers, you commissioned it without a pilot, you put down a reported £100 million, what made you confident that was a bet worth making? there was no real data, meaning there was no data that would tell you yes or no or this or that. it was mostly the real human intuition. about being able to say, this is a pedigree, a television show with an incredible pedigree, david fincher directs, robin wright, kevin spacey, beau willimon wrote three amazing scripts that were almost shootable at the time. so if there ever was a project that you could just add water, this was going to be it. and i felt if we were going to get into original programming at some point, then let's do this in a way that we can't look back and say, maybe we didn't try hard enough, maybe it wasn't big enough, maybe it was the wrong shot, and this was the clearest shot to try this.
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to tell you something about the culture of netflix, i told reed about the deal after we did it. what was his first response? i remember six months earlier, we had just told wall street that we would never do that, so when he said, basically, why would you do that? i just said, look, if we are wrong and the show doesn't work, we will have terribly overpaid for one show. and if we are right, then it could fundamentally change our business. and he said, oh, that's a good risk reward, so that was a good trade—off. and as your companies evolved, how is the balance between those intuitions and hunches and the raw data that you have now? how has that changed? because there is the interesting question, which is more thanjust semantics, but whether you are an entertainment company, which is how you class yourself, or a technology company, we will talk about how that technology is investing in places like britain, but you have got extraordinary troves of data now.
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have you found that human intuition is taking a bit of a back step and data is taking a forward step in how you commissioned things? if anything, the opposite. i think the instinct of a company born in tech would be to let data drive everything. and so when you bring in new people, they are concerned all the time that may be the data is the thing that you have to justify or you have to figure out, and the truth of it is that human intuition, the one that can recognise that this is a great story and a great storyteller, and this is a great world, there is no data that can tell you that. there is an argument which some people at the bbc put out that there is a danger that if film and television around they will become dominated by a few companies, based on the west coast of america, even if they are international in outlook, you get the kind of homogenisation, you get a kind of like it worldview, which is filtered through a californian mindset. have you got any time for that argument? no, mostly because our shows are being produced by local storytellers all over the world. here in the uk, ourfilms and television series commissions,
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those decisions are made in the office in london, just a few blocks from here, and local production and local crew, local writing, local producers, and increasingly more and more infrastructure being built for us right here in the uk to produce those shows. and do you think being invested in local communities, locally embedded with local teams will eventually make its way into sports rights? i don't think so. i don't mean never. have sports never attracted you? people like amazon getting it into a big way, why do sports not strike you as a huge opportunity? it's not that it's not a huge opportunity, it's is it the next best opportunity? i think about this as the way that when sports, if sports, i look at it as when it is the next best way to invest $10 billion. because i think that is a cost of doing it right and doing it in a way that consumers care about it, and to look at that and say, have we maxed out what we can do in the world of television and film
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and documentary and stand up comedy and all those things? when we get to that number, you would say, well maybe the next best use is to do a big league deal. but until then, i don't think we are anywhere near that yet. notoriously, netflix doesn't release viewing figures for its shows. what is the reason behind that? is it because you have not wanted to give an indication to competitors as to what's popular? 0r because you genuinely don't know that viewing figures are particularly useful? i don't think they are particularly useful in the way that they are reported today, meaning the driver of it is mostly for advertising sales, so live, live plus seven days, live plus 30 days, those are all advertising measurements and we don't have advertising. so we do have value and when people watch, not in the moment, but in some time periods. so what people watch in the first month does give us some indication, the first month that they join, it gives us an indication as to why theyjoined. so some people may have joined to watch a movie or watch a tv series that we have, that helps us understand the value of that show.
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we will increasingly give out that information more frequently. first to our producers, then ultimately, to our members and to the press, because i do think there is some real value in being part of the global conversation about something. just to go back to the bbc and your investment in britain, what is your relationship with someone like the bbc like? is it ultimately a competitor or is it a supplier? both. and i think what is important that i really want to make sure that they know that we are a good partner for them, we are a good partner for them as a licensor of their content, we are a good partner as a co—producer, right now, we are in production on dracula, which is a very big project, we did bodyguard most recently and watership down, where we came in as a co—production partner, helps raise the budget of these projects, so they can make even more ambitious projects. but a raised budget works for you because you are rich and you have a growing
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subscriber base. the bbc has got a finite—ish income from the licence fee, and that inflation might work to your advantage over them, might it not? like i said, they get the advantage of it here in the uk by having the first window for that project in the uk. the more we are producing our own british programming, the less dependent we are to have the first window on everything, so it makes us a very good partner in that way. i also want to make sure we are a good partner when we compete, and that we are always competing fairly with local broadcasters. what does that mean? be a good partner when you compete? i mean, if you bid better and higher? to understand that there are things are important to them, there are things that are important to us, but also, to know that one deal doesn't change the dynamic for everything else. that is interesting, because our planet and david attenborough was seen by lots of people, it was a huge moment, that was seen as a mega moment for the bbc, because attenborough, who is a bbc name, although he has done stuff elsewhere,
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was making a big segue to netflix. is that a strategic move by which you want to encroach on other people's tariff? is it a way of showing that you are in the game and that no one is off limits? that is what i mean about being a good partner when you are a competitor, is you wouldn't do things just because you can, so there are certain things that are more valuable to us around the world than there will be to the bbc, so if we were able to outbid for something, it's because it has outsized value to us only, and in that case, what we were able to do was, because of the unique connection with the world wildlife fund, it made it a very difficult project... it was a charitable thing, wasn't it? correct. so we were uniquely positioned to do it, and because... and i remember in the first couple of weeks, 25 million people were watching our planet, right away, out of the gates. david attenborough: this is the story of our changing planet. it's incredibly valuable programming for us and we have a rich history of licensing this programming.
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there is this whole thing that happens with a supplier and a competitor over time, you get very weary of each other. i would say that one of our motivation is to get into original programming was a core belief that our suppliers weren't always going to want to sell us programming. and i think our suppliers are always wondering, well, what if they don't want to buy our programming anymore? and eventually, that becomes a reality. the truth of it is that if there was a way that we could continue to work together, i think the bbc is one of the best models for it in the world for us, of being a co—production partner, a licensor, and sometimes a competitor. what is the one bbc or british production that you have seen that you would most like to have that you don't currently have? probably killing eve. i think killing eve is a great show. and what about line of duty? have you seen that? i have, i like it a lot. could you see netflix bidding for that? in the future? it's already gone. but in the future. we have actually licensed line of duty in other territories, but that is the kind of... that is why i think the bbc... people often talk about hbo
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and the golden age of television, i think the bbc is right there and always has been, day in, day out. we talked a bit about the technology you have got and developed, trying to give people joy and keep people coming back to your service, are you surprised that your growth, although it was spurred by your own creative risk—taking, that for many years, people like the bbc or all around the world, disney, for example, gave you so much content? is it in retrospect a bit naive of them to allow you to grow so fast and be so powerful, spreading joy, as you have done, with their stuff? i wish they would have given it to us, we had to pay for it. laughing of course you did, but it was the ultimate, it was the exemplary strategy, it was a business that grew whilst buying stuff, it was a licensing business, you didn't always take the risk upfront and you are able to build a huge library, create user engagement, a committed base, but you didn't ultimately have to come up with a production cost. well, that will only take you so far. so it gave us the ability to existence proof the proposition to consumers, the kind of commercial free binging, all you can eat for one flat price.
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but in general, all the suppliers were selling that programming somewhere. studio space in britain is very much a premium, there is a lot of buzz in the industry, what is your view of the british creative industries in this sphere? it's spectacular. that is why we have invested so heavily here, that is why our original production in the uk is so big. it is about a $2.7 billion business for the television market in the uk that we hope to be a bigger and bigger part of. we are shooting notjust here in london, but with six sex education shot in wales, the english game was shot in manchester, we are looking at being able to help to put a lot of people to work, but also taking advantage of the great stories that can only exist in this country, and also this incredible typography that is the variance from place to place, to go from top boy in the east end, to scotland shows you the diversity of this island.
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let's talk a bit about the future of television, you look at what netflix has done over the last five years, you have massively increase the quality of production, there is hyperinflation in the industry, you have a direct consumer relationship, very sophisticated technology, if you look forward to the next five or ten years, how is tv going to change? if i went back five years, i bet i predicted a lot of wrong things back then, so it's very difficult to predict the consumer and how things will change. i think that there are some interesting hints about things, the way that people have loved to engage in the interactive storytelling with bandersnatch and you vs wild. now, will that change storytelling? will all storytelling come interactive? i don't think so. i think it will be an interesting evolution. if you go back to when people saw avatar 3d, how many of them thought, oh, my god, movies will never be the same. well, movies are mostly the same, and i think this will be something similar that gives a lot more option to consumers, how they want to consume, when they want to consume,
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and the benefit of that is the things that will get made will be even more diverse, more choices, i think it will be interesting to see how international programming plays a role in people's lives today that doesn't around the world, with very few exceptions, the reason why there is such great british programming is this market has been plenty big to produce for itself, so there is a lot of local programming that people love. that is true injapan, that is true in korea, that is true in india, and it's true in the united states, but almost everywhere else in the world is very much watching programming from everywhere else in the world. and the ability to do that i think could change the way stories get told. do you think streaming is going to continue to eclipse scheduled television? definitely. so if you think about an organisation, take the bbc, which is this licence fee, it still distributes a huge amount through traditional tv, linear schedules, which has a cap on its income, and its direct consumer offer, the iplayer, is slightly restricted by regulation. you would think that netflix...
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there are a lot of things netflix is doing, which an organisation like the bbc isn't able to do at the moment, and the momentum seems to be with you rather than with the old way of distributing stuff through linear channels. that is a problem for old school organisations, isn't it? well, it's the coupling... when public funding and regulations come together, so in this way, you're able to innovate outside of that regulatory system, but i do think that even in that world, the innovation that comes out of something like the iplayer was way ahead of its time, and they way that people adapted to the way that they watch and all those things. so it was just a matter of how these programmes are available, relative to the business models with producers. the ideas, how you make sure these platforms and networks all remain relevant, and they way to do that is to give the consumers what they want first, and then figure out the business model after. where going the other way around i think ends up with a very frustrating experience. disney, like i said, has content coming out of netflix eventually, disney have launched their own streaming rival,
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which is going to be half the price. what are you more worried about? losing disney from netflix or the rise of a disney streaming service? neither. i mean, honestly, ithink it's an exciting development, meaning that the more competitors you have in the direct space that keeps everybody on their toes, it's great for consumers, because it's price competition and also, everyone has to one—up each other on the quality of programming. but don't you think subscription fatigue will fit in at some point? people are going to get a bit bored of paying all this stuff? itjust depends, if you have to find great value in it, what we find with our subscribers is they find great value because there are so many shows to watch and many of them are your favourite shows on television, and they will add other subscriptions to the mix. if you love netflix but you love game of thrones, you have to go somewhere else for game of thrones. but everything you love is on netflix, and that is what we are really trying to focus on. but i do think in general, disney should do great with their service and programming, i have a lot of love for marvel and for a star wars and the disney animation films and their tv library, but in general,
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i think when you look at what people are looking for and what they are going to value, they are going to tell you if they value this are not pretty early. and how much they value it at. ted sarandos, thank you very, very much indeed for your time. thank you. ted sarandos there, talking to me in london recently. no one in the history of film or television has caused so much disruption so quickly as netflix, and the truth is, they are just getting started. the company is pivoting from an american distributor to a global production powerhouse, deeply embedded in local economies. rivals might grumble about an over mighty californian giant, but viewers are not complaining, and anyway, that's showbiz. thanks for watching. hello. the first half of the weekend has
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been mainly dry and fine for most. for others, a few hefty showers, across the eastern side of scotland, pennines, for the midlands, east anglia and south—east england. the area of high pressure will tend to ease away most of the showers but we could keep one or two going first thing on sunday across east anglia and south—east england. a lot of cloud to start the day. it will thin and break and we'll see some spells of sunshine, particularly across northern ireland. one or two showers across the high ground of scotland, northern england and one or two across south—west england but most are fairly dry day except for the eastern coast. brisk breeze and more in the way of cloud keeping temperatures peg back to around 17 or 18. further west the best of the sunshine, 21— 2a celsius. fine conditions for the cricket world cup final at lourdes. fine conditions for the cricket world cup final at lords. cloud around in the morning but it will then and break. lighter gentler north—easterly breeze. similar conditions
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at wimbledon as well. a fine evening for most. more cloud feeding into northern scotland, eastern parts of scotland and england could be low enough to bring patchy drizzle but for most it is a dry night. clear skies further west. a cooler night. 9—13 celsius. a quiet start to the new week. we have the area of high pressure so mainly dry. cloud thinning and breaking, much more sunshine in the afternoon and fewer showers, if any. most will stay dry. temperatures up a notch. a little bit warmer along eastern coasts as the winds changes direction. on tuesday, the high—pressure still with us. but from the atlantic, a frontal system making inroads. it will produce showers on tuesday across northern ireland, the western side of scotland and filtering a bit further north and east words.
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and eastwards. it could become heavy in places. for much of england and wales, dry, fine and very warm. 2a or 25 degrees celsius on tuesday afternoon. as you go into wednesday, the front pushing further east words. as you go into wednesday, the front pushing further eastwards. while most of england and wales will stay dry for a time, we will see increasing cloud and eventually some outbreaks of rain. that means in terms more unsettled by the end of the week.
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this is bbc news. i'm reged ahmad. our top stories: storm barry weakens as it strikes land, but the danger for america's gulf coast is not over. we are out of the eye, but we are not out of the conditions that will cause heavy rainfall for the city of new orleans. 26 people are killed in an attack on a hotel in southern somalia. al sha baab militants claim responsibility. a a,500—year—old pyramid south of the egyptian capital cairo is opened to visitors. simona halep wins her first wimbledon title —

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