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Daily Update: April 1, 2024


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Daily Update: April 1, 2024

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

A Boom Year for Broadcast

It's a big year for US broadcasters as politics and sports are set to drive viewers and dollars to local station owners.

S&P Global Market Intelligence Kagan estimates that local broadcast TV stations will bring in nearly $4 billion in political ad revenue during the 2024 election cycle, with dollars driven by a US presidential election rematch, party battles for Congressional control and contentious issue campaigns. Three US media companies stand to benefit the most from the political ad haul: Gray Television, Sinclair Broadcast Group and E.W. Scripps. Each of those companies owns more than 20 full-power, Big Four-affiliated broadcast stations in the seven states expected to host some of the closest campaigns, according to Kagan.

Longer-term, however, the broadcast market is facing key challenges. A persistent trend of declining pay TV subscribers means growth from a major revenue source is flattening. Kagan expects single-digit percentage growth for retransmission consent fees in the next few years amid the contracting linear TV market. With slower retrans revenue growth, broadcasters face more pressure to produce growth in the industry's other major revenue category: advertising.

Aside from cyclical political ad boosts, broadcasters are turning more to event programming to lock in live linear audiences — and the advertising dollars that follow them. In the live-event arena, sports is considered a top category, as avid sports fans rarely choose to record games and watch later. Sports "are the new prime time," a Warner Bros. Discovery ad sales executive told S&P Global Market Intelligence in a recent interview.

But investing in sports programming comes at a cost as leagues and teams demand more dollars for their broadcasting rights. The Chapter 11 bankruptcy restructuring of Diamond Sports Group, the largest US sports rights network operator, underscores the challenges of going all-in on a sports-rights strategy.

Amid the volatility in the regional sports network market, some local broadcast stations are picking up newly available rights to their hometown teams' programming. Speaking on a recent episode of S&P Global's "MediaTalk" podcast, Kagan Principal Analyst Justin Nielson said he expects to see more local sports rights deals struck as team owners see the appeal of partnering with local stations. "I don't think you're going to see a major shift to broadcast, but it will be a complimentary part of some of these rights deals," Nielson said.

Meanwhile, some media companies are looking to appeal to pay TV-averse audiences by embracing newer formats. Warner Bros. Discovery, for instance, shut down all of its regional sports networks, but the media company is signed on to a new sports streaming joint venture with Fox and ESPN. This fall, the partners plan to launch a streaming package for sports fans that combines programming from 14 networks owned by the JV partners. The JV faces some pushback from established sports streamer FuboTV, which alleged in an antitrust court filing that JV partners charged it more for airing some of the same networks on its streaming platform.

In an analysis of the proposed JV offering, Kagan analyst Scott Robson said the new streaming bundle is likely to be competitive in price, but it will have some gaps in major sports programming given that the JV partners do not include CBS owner Paramount Global or NBC owner Comcast.

Today is Monday, April 1, 2024, and here is today's essential intelligence.

Written by Christina Mitchell.


Economic Research: Economic Outlook Eurozone Q2 2024: Labor Costs Hinder Disinflation As Rate Cuts Loom

The key changes to our forecasts are a weaker growth rebound in the medium term, less room for disinflation, and fewer rate cuts in 2025. The eurozone economy is on the verge of a soft landing. Developments in GDP, inflation, real wage growth, and employment over the past quarter confirm this, in our view. As a result, we have trimmed our short-term forecasts. We now expect modest GDP growth this year in the region of 0.7%, compared with 0.8% in our previous forecast. The major part of this revision comes from a weaker carry-over effect from 2023 GDP.

—Read the article from S&P Global Ratings

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Capital Markets

Private Equity Investments In Taiwan Plunge In 2023

Private equity and venture capital-backed investment in Taiwan plunged in 2023, its third consecutive year of decline, on the back of tensions with mainland China and the global rise in interest rates. Aggregate deal value stood at $96.6 million in 2023, compared with $985.2 million in 2022 and $2.33 billion in 2021, according to S&P Global Market Intelligence data. The number of deals slipped to 13 from 27 in 2022.

—Read the article from S&P Global Market Intelligence

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Global Trade

Houthis Could Partner With Iran, Somali Pirates On Indian Ocean Attacks

Yemen-based Houthi militants could keep the promise to extend their attacks to merchant ships in the Indian Ocean, potentially with drones and assisted by Iran and Somali pirates, security specialists said. Since the war between Israel and Iran-backed Hamas broke out on Oct. 7, the Houthis have launched more than 60 attacks on commercial ships around the Bab al-Mandab Strait -- mainly with missiles and unmanned aerial vehicles -- and claimed those were in support of the Palestinians.

—Read the article from S&P Global Commodity Insights

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Sustainability Insights Research: E-fuels: A Challenging Journey To A Low-Carbon Future

Synthetic fuels, or e-fuels, could support decarbonization objectives across numerous sectors. We think aviation and shipping will be the main users of future e-fuels. Policy moves in Europe will likely create a market for these fuels, but huge investment will be required to supply the inputs that make them a low-carbon solution.

—Read the article from S&P Global Ratings

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Energy & Commodities

Iran's Crude Production Upside Faces Risk Of Further Western Sanctions

Shackled by Western sanctions, Iran's oil sector has been largely stuck in neutral, restricted from much-needed foreign investment to reinvigorate its mature fields and develop new finds, while its crude exports have been limited mostly to China. Despite holding some 12% of the world's proven global oil reserves, Iran is unlikely to raise its production much further and reach its geologic potential, analysts say, particularly if Tehran's geopolitical relations become further entangled in the Israel-Hamas war.

—Read the article from S&P Global Commodity Insights

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Technology & Media

Listen: Next In Tech | Episode 160: AI Use Cases

While there is no end of generative AI discussion, it’s not often clear how it’s being used. Nick Patience and Alex Johnston return to explore the results of a recent study that digs into AI use cases with host Eric Hanselman. Projects are charging forward and concerns around data dominate. Getting access to data remains challenging, but, as use matures, data quality has become increasingly critical. Interestingly, trust in AI results is declining as understanding grows. Hallucination anyone?

—Listen and subscribe to Next in Tech, a podcast from S&P Global Market Intelligence

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