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Financial consumer agency's powerful investigative tool faces overhaul

Can ComScore Break Nielsen's Near-Monopoly On Ratings?

Most TV Everywhere Viewing Is Live TV In The Home

Consumer Insights Online Video User Overview

Public Companies Going Private

Financial consumer agency's powerful investigative tool faces overhaul

Blake Johnson was stunned when the Consumer Financial Protection Bureau demanded hundreds of detailed financial and operational records from his credit repair company, Prime Credit, at the start of 2015.

The CFPB offered little insight into why it wanted the information, but the California-based company that Johnson co-founded was confident it had not breached any rules and turned over 200 pages of documentation.

"I don't think they really understood what they were asking for," Johnson said in an interview. "So they asked for everything, and then some."

Prime Credit was facing a civil investigative demand, or CID — a powerful CFPB tool that lets the bureau's enforcement team dig into a company's documents to determine whether it is upholding federal consumer financial laws.

A CFPB spokesperson declined to say how many CIDs have been issued since the agency was formed in 2011, but the process could be poised for change. Acting bureau director and Trump-appointee Mick Mulvaney asked for recommendations on changing the CID process as part of a broad effort to shrink an agency that, during the Obama administration, held a reputation for strongly policing the financial services industry. On Jan. 24, the CFPB launched a request for information on CIDs, the first of 12 public comment requests asking industry stakeholders to provide evidence that the agency is following its mandate to protect consumers.

As public comments wrap up for all the requests for information, Mulvaney or his named successor, Kathy Kraninger, will have the opportunity to overhaul the way that CIDs are issued.

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Separating examination and supervision

Consumer advocates see CIDs as a necessity in ensuring that companies are adhering to post-financial crisis rules.

"If the CFPB didn't have the CID authority, it would not be able to effectively conduct investigations," said Christopher Peterson, a former senior counsel for the CFPB's enforcement office who is now a law professor at the University of Utah.

Peterson criticized regulators such as the Federal Reserve for treating the financial services industry with "kid gloves" prior to the CFPB's creation.

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But CID critics contend that the process is too difficult, costly and complex.

In public comments on CIDs, some industry groups pointed to general inefficiencies at the CFPB. For example, the American Bankers Association's member institutions commented that the bureau's enforcement teams often ask for materials that have already been provided in regular examinations.

Communication within the CFPB is another concern for some. Steve Henslee, who served in the CFPB's early years as an examiner before becoming chief of staff for supervision, said the examination and supervisory teams operate separately, potentially hampering the flow of information and leading to misunderstandings or even mistrust.

Henslee suggested requiring the enforcement team to communicate findings to the supervision team, which would then investigate those issues. The CID would be a last resort if the supervisory process did not adequately address enforcement's concerns.

But the separation of supervision and enforcement is by design, counters Joanna Pearl, who spent six years as chief of staff for the CFPB's enforcement office. Supervision relies on its own set of tools to assess the broad operations of a company while enforcement uses CIDs to "drill down" to specific activities, Pearl said.

Pearl, who now works for the policy startup Public Rights Project, said the enforcement office sometimes shares information with other offices on a "case-by-case basis," adding that there are rules barring the office from sharing confidential investigative information.

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Street Talk is a podcast hosted by S&P Global
Market Intelligence.

In this episode, Brian Cheung discusses the CFPB's
use of the civil investigative demand, or CID, and
how changes to the process could impact banks
and consumers.

Listen on SoundCloud and iTunes.

Purpose and petitions

Industry groups frequently criticize the breadth of CID requests. By law, the CFPB cannot ask for too many documents or "tangible things" without explaining the conduct under investigation and the laws applicable to any possible violation.

The Federal Reserve's Office of Inspector General released a report in September 2017 noting that CIDs are issued fairly as required under Dodd-Frank, but that the agency's guidance is vague, leading the scope of some CIDs to be too broad. The CFPB says it has since tightened its statements of purpose to clarify the relevant case law.

Companies do have the opportunity to negotiate the terms and timing of a CID and can even petition the agency to modify or set aside the CID.

Christopher Willis, a Ballard Spahr partner who has represented financial services companies facing CIDs, said that in his experience, CFPB attorneys have been "generally courteous" and willing to compromise on the scope and timing of compliance.

"If you're working with the staff to negotiate a compromise, you don't file the petition because you'd rather resolve the issue amicably with the staff than litigate the issue," Willis said.

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But since its creation, the bureau has never fully granted a petition. The CFPB partially granted one from Synchrony Financial, but only because the agency had previously withdrawn some portions of the CID.

The outcomes of the CFPB petition process are similar to those at another agency that issues CIDs, the Federal Trade Commission, which allows companies to file a "petition to quash." The FTC has not granted a single petition since 2012.

Former CFPB Director Richard Cordray has said companies can pursue due process through the legal system. "Like every other part of the federal government, no different for us, what we do can be challenged in the courts," Cordray told Congress in April 2017.

It remains unclear what stance the bureau's current leader takes on CIDs, though comments earlier this year suggest he is sympathetic to companies going through this process. A day before issuing the request for public comment in January, Mulvaney told CFPB staff in a memo that "[i]f a company closes its doors under the weight of a multiyear civil investigative demand, you and I will still have jobs at the CFPB." Mulvaney vowed to pull back on Cordray's legacy of actively pursuing wrongdoing in the financial services industry, which Mulvaney characterized as "regulation by enforcement."

At Prime Credit, Johnson and other executives settled for $1.5 million in June 2017, without admitting or denying the CFPB allegations of misleading advertising and illegal advance fees.

Johnson said the company tried to work with CFPB attorneys to argue the allegations, but was ultimately forced to settle. He said documents handed over to the CFPB show no wrongdoing, but he alleged that the bureau's attorneys were intent on fining the company.

"For me, it was incredibly expensive," Johnson said. "I spent well over $1 million on attorneys. For what purpose?"

Technology, Media & Telecom
Can ComScore Break Nielsen's Near-Monopoly On Ratings?


The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Sep. 17 2018 — Advertising agencies are becoming increasingly frustrated with the inability of Nielsen Holdings PLC's Nielsen Media Research to convince the major media companies to embrace its new cross-platform measurement system, called Total Audience Measurement. This creates a huge opportunity for comScore Inc., formerly Rentrak.

ComScore is trying to reinvent itself following its delisting in 2017 — it was relisted June 1 — following an accounting scandal. The company's stock has fallen from $65 per share intraday on Aug. 17, 2015, to close at just $18.06 per share on Sept. 6. It currently has a total enterprise value of less than $1.2 billion, paltry in comparison to Nielsen Holdings' $12.9 billion.

In April, comScore named Bryan Wiener, previously executive chairman of Dentsu's digital media agency 360i LLC, as its CEO. On Sept. 5, the company announced that it hired Sarah Hofstetter to serve as president and head up commercial strategy, including sales and marketing.

Wiener and Hofstetter have worked together for two decades, most recently at 360i, where Hofstetter was CEO and chairwoman. The two executives' deep ties to the advertising community may be just what is needed to bring a competing cross-platform measurement system to the broadcast and cable network industries.

Cable network ad revenue grew for decades before stumbling, albeit modestly, during the last recession. More recently, despite a booming economy the cable network ad industry has faltered, in part due to cord cutting and cord shaving but also because current ratings do not include all of online viewing and out-of-home viewing.

Currently, the ratings only include online viewing within a three-day period, which includes the exact same commercial load as linear. Many media companies do not believe that online viewers will tolerate the huge ad load that exists on linear TV and do not include the same commercial pods that appear on linear TV when serving up the shows online.

Although negotiations between Nielsen Media Research and the major media companies have been going on for some time, many in the industry are tired of the delays in adopting a new system and are looking at alternate ways to measure viewing.

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Technology, Media & Telecom
Most TV Everywhere Viewing Is Live TV In The Home


The following post comes from Kagan, a research group within S&P Global Market Intelligence. To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Summary: subscribers to telco operators were more likely to indicate they streamed TV Everywhere content compared to cable and DBS subscribers.

Sep. 17 2018 — Streaming live TV Everywhere to a mobile device inside the home is the TV Everywhere activity most often performed at 52% of multichannel TV respondents, according to data from Kagan’s MediaCensus online consumer survey.

While 58% of respondents surveyed in multichannel homes viewed TV Everywhere in the last three months, just 46% did so out of their home. Click here for the full Kagan report.

Viewing live TV inside the home was not only the TV Everywhere activity performed by the most respondents; it was also the most frequently performed.

Subscribers to telco operators were more likely to indicate they streamed TV Everywhere content compared to cable and DBS subscribers. Subscribers to some operators are more likely to stream TV Everywhere content, with AT&T U-verse (64%) being the highest and WOW! (42%) the lowest among operator subscribers surveyed.

Younger subscribers, especially Millennials, were more likely to stream TV Everywhere content compared to older subscribers.

For more information about the terms of access to the raw data underlying this survey, please contact

Data presented in this article is from the MediaCensus survey conducted in February 2018. The online survey included 20,035 U.S. internet adults matched by age and gender to the U.S. Census, with additional respondents subscribing to the top multichannel video operators in the U.S. The survey results have a margin of error of +/-0.7 ppts at the 95% confidence level. Generational segments are as follows: Gen Z: 18-20, Millennials: 21-37, Gen X: 38-52, Boomers/Seniors: 53+.

Consumer Insights is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.

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Technology, Media & Telecom
Consumer Insights Online Video User Overview


49% of survey respondents use more than one SVOD service.

Sep. 14 2018 — Data from Kagan’s U.S. online consumer surveys shows that 23% of respondents exclusively use one service, while almost half (49%) use more than one SVOD service. The service which is most commonly used exclusively is Netflix, while users of smaller services almost always use at least one other service.

Netflix is so universally used that it is both the most exclusively used service and the service most often used in conjunction with another service. In terms of demographics, Netflix users are very similar to the general population compared to smaller services that tend to have a younger user base.

With the exception of Netflix, most respondents indicated they have never subscribed to the top four services, including Netflix, Hulu, Amazon Prime Video and HBO NOW. Among those who indicated they dropped one of the top services, price was a principal reason for dropping, although content-specific reasons differed by service. Content is one of the most defining characteristics of online streaming services, which can be seen in the content viewed and most enjoyed on each service. In large part users of Netflix, Hulu and Amazon Prime Video most enjoy the content each service is known for.

A broader overview of this data was presented in a recent webcast.

Data presented in this blog is from U.S. Consumer Insights surveys conducted in September 2017 and March 2018. The online survey included 2,526 (2017) and 2,523 (2018) U.S. internet adults matched by age and gender to the U.S. Census. The survey results have a margin of error of +/-1.9 ppts at the 95% confidence level.

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Capital Markets
Public Companies Going Private

Sep. 14 2018 — The recent tweet from Elon Musk has understandably made big news, but it is worth pointing out that the appetite for taking public companies private has been a key area of activity this year. S&P Global Market Intelligence’s data shows that 2018YTD is already at 39% of 2017 numbers, standing at €17.8bn of deal value across 32 completed deals, globally. Going-private closed deal count is at a healthy 49% compared to full 2017 numbers.

In terms of most popular sectors for going-private deals, since 2013 - Information Technology has been leading the pack with €108.9bn of aggregate deal value recorded across 104 deals, while Consumer Discretionary* is trending as a distant second with €49.7bn of total deal value.

The top target location for going private deals is the US, and interestingly – China comes in at second place, with UK following. The three regions have seen total deal size of €218.8 during the period of 2013 through 2018YTD. The popularity of these locations is further supported by the fact that after going private, average target’s EBITDA values have increased compared to when those companies were public. The US-based going private targets grew their EBITDA by average of 56% since leaving the public market, while Chinese and the UK-located companies grew EBITDA by 10% and 38%, respectively. Overall, the going private moves proved to be successful for ex-public companies globally within the 2013 – 2018YTD deals’ time frame, where their average Net Income values grew by 58% while EBITDA values grew by a smaller but yet attractive 29%.

In terms of the deal pipeline, 18 going-private deals were announced globally since 1st January 2018 and would add €25.8bn of aggregate deal value to already closed €17.8bn.

The following was originally published on Angel News on August 16, 2018: Public companies going private, S&P Global comment

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