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US Supreme Court pick cautious on agency powers, environmental rules

Online Video Bolstering Consumer Home Video Spend, Spearheaded By Subscription Streaming

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

Most TV Everywhere Viewing Is Live TV In The Home

Public Companies Going Private


US Supreme Court pick cautious on agency powers, environmental rules

In his time as a federal appeals court judge, U.S. Supreme Court nominee Brett Kavanaugh has issued decisions to check federal agencies' powers and overturn certain environmental regulations affecting the energy sector.

If confirmed to the high court, Kavanaugh could shift the Supreme Court more solidly pro-business as he replaces Justice Anthony Kennedy, a swing voter who has sided with the majority in several cases defending agency authority and more stringent air and water quality protections. Kennedy recently announced that he will retire July 31.

SNL Image

U.S. Supreme Court nominee Brett Kavanaugh.

Source: AP

Kavanaugh, whom Trump nominated July 9 to replace Kennedy, has served since May 2006 on the U.S. Court of Appeals for the District of Columbia Circuit. The D.C. Circuit handles the bulk of lawsuits against federal agency actions and policies.

During his time on the D.C. Circuit, Kavanaugh pushed several times to rein in the power of federal agencies that regulate the energy sector and other industries.

Kavanaugh has also participated in decisions involving the Federal Energy Regulatory Commission, including authoring a 2017 opinion in NRG Power Marketing v. FERC (No. 15-1452) that curbed FERC's authority to modify regional power grid operators' market rules. The court found that FERC overstepped its jurisdiction by conditioning approval of the PJM Interconnection's proposed revised buyer-side mitigation rules on the grid operator adopting substantial changes the commission had crafted.

Kavanaugh also wrote an opinion for a three-judge D.C. Circuit panel that deemed the Consumer Financial Protection Board's single-director structure unconstitutional. The board's structure "poses a far greater risk of arbitrary decision-making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency," he wrote.

The panel suggested the agency be moved to the executive branch, making it subject to presidential oversight. However, the entire D.C. Circuit later reversed that ruling, finding that the board was structured much like other independent agencies.

Kavanaugh has taken aim at U.S. Environmental Protection Agency actions as well. He dissented with the majority of a three-judge panel on a challenge to the EPA's Mercury and Air Toxics Standards, or MATS, in White Stallion Energy Center v. EPA (No. 12-1100). The majority upheld the MATS rule, deferring to the EPA's interpretation of an ambiguous statute to decide the agency did not have to consider costs as part of the rulemaking.

But in a partial dissent, Kavanaugh said the notion that Congress would authorize the agency to regulate without any consideration of regulatory costs was unreasonable. The case later moved to the Supreme Court, which ruled that the EPA did not properly consider the cost of compliance when developing MATS.

Kavanaugh was also part of a panel that vacated the EPA's Cross-State Air Pollution Rule, known as CSAPR. He and fellow D.C. Circuit Judge Thomas Griffith found in EME Homer City Generation v. EPA (No. 11-1302) that the rule required states to make emissions reductions beyond what was legally required and that the EPA failed to give states the opportunity to reduce emissions before imposing federal implementation plans.

The Supreme Court reversed the D.C. Circuit's decision, determining that the EPA's over-control of some states did not require the entire rule to be vacated. However, the high court agreed with the D.C. Circuit that the rule required unneeded emissions reductions of smog-forming pollution in some upwind states.

Turning to coal, Kavanaugh also objected to the EPA's retroactive veto of a Clean Water Act permit for Arch Coal Inc.'s Spruce No. 1 mountaintop mine in West Virginia. The D.C. Circuit backed the EPA's veto of the permit in a split decision. But in a dissenting opinion, Kavanaugh said the EPA "did not come close" to justifying its revocation of the permit, which the agency vetoed four years after initially approving it amid concerns about downstream water quality.

Republican leaders in Congress praised Trump's choice for the high court. Kavanaugh's judicial record "demonstrates a firm understanding of the role of a judge in our Republic: Setting aside personal views and political preferences in order to interpret our laws as they are written," said Senate Majority Leader Mitch McConnell, R-Ky.

Kavanaugh's skepticism of certain EPA regulations has environmental groups fighting his nomination to the Supreme Court.

"We oppose Judge Kavanaugh's nomination because his overly restrictive approach to agency authority, and limited view of the public's right to access the courts, could jeopardize the ability of federal agencies to carry out their vital missions and threaten the American public's access to justice," Earthjustice President Trip Van Noppen said.

Senate Democratic Leader Chuck Schumer, D-N.Y., said his party will work to block Kavanaugh's nomination in favor of "a more independent, moderate selection."


Technology, Media & Telecom
Online Video Bolstering Consumer Home Video Spend, Spearheaded By Subscription Streaming

Highlights

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. 20 2018 — Spending on home entertainment is rising toward levels not seen since 2004, when consumers spent $24.37 billion building massive home-video libraries of DVDs and VHS cassettes. Since then, the optical-disc market saw more than a decade of significant declines as consumers shifted to digital entertainment. By 2012, total spending on home entertainment was down to $20.13 billion, with $4.13 billion coming from online video while DVDs and Blu-ray discs accounted for $12.88 billion and multichannel PPV/VOD contributed the remaining $3.13 billion.

Fast forward to 2017 and the mix of consumer spending has changed significantly. Consumers spent a total of $22.62 billion on home entertainment from multichannel, online and disc retail/rental sources. Online spending accounted for $13.00 billion of that total while spending on discs dropped to $6.84 billion and multichannel PPV/VOD shrank to $2.79 billion.

While the data might seem like good news for traditional providers of home entertainment, a key component of the growth in digital spending is the rise of subscription video on demand. The majority of online spending is going to over-the-top services like Netflix, Hulu and Amazon Prime, which increasingly have focused on creating original programming (mainly episodic TV) rather than licensing content from Hollywood studios.

Removing subscription streaming from the consumer spending pool paints a less favorable picture for traditional content providers. In 2012, consumers spent just $1.43 billion on non-subscription online video purchase/rental, and a total of $17.44 billion excluding the SVOD component. By 2017, while consumer spending on online video overall had risen to $13.00 billion, some $10.47 of that came from streaming subscriptions versus $2.53 billion from online video purchase/rental, and total home-entertainment spending was just $12.16 billion excluding SVOD.

Spending on sell-through home video peaked in 2006 when consumers shelled out $16.53 billion for DVDs and VHS cassettes. Since then spending has declined by hundreds of millions (sometimes billions) each year. In 2017, consumers spent $6.50 billion on DVD and Blu-ray sell-through and electronic sell-through. This seems to suggest that people are becoming less and less interested in adding to their home-video libraries and are turning to the more affordable streaming options. The story is similar for the home-video rental segment, which saw consumer spending peak in 2001 at nearly $8.45 billion before dropping to $2.87 billion by the end of 2017.

This has to be a somewhat unsettling trend for the major film studios, and is likely a key factor in shifting their strategy to focus on major franchise films and low-cost genre fare. The former tend to have broad worldwide appeal and can still move enough video units to help offset their high production and distribution costs. The low-cost genre fare, on the other hand, may be more risky and not sell as well internationally, but has a fair chance to break even. If the latter films lose money, the successful franchise films typically cover the losses.

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US Online Video Outlook To Eclipse $15B In 2018

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DVD, Blu-ray Spending Down $1B-plus For 11th Year In A Row

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

Highlights

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

Highlights

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 support@snl.com.

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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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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