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US power industry largely backing GOP incumbents in 2018 midterms


Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

Trading Of US Linear TV Advertising Shifting To Programmatic Trading

Every Industry Is Now A Technology Industry

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

US power industry largely backing GOP incumbents in 2018 midterms

Power producers and industry trade groups are largely backing incumbent GOP committee leaders in the upcoming 2018 midterm elections as Democrats push to reclaim the majority in at least one chamber of the U.S. Congress.

With help from President Donald Trump, Republicans in Congress have worked since early 2017 to support the easing of permitting requirements for energy projects and repeal Obama-era regulations for the sector. Although some power companies are wary of potential rollbacks in mercury and carbon emissions standards, industry trade groups have broadly welcomed the GOP's push for lighter federal regulation and lower taxes.

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The political action committee of the Edison Electric Institute, which represents investor-owned utilities on federal policy matters, has donated $401,000 to congressional candidates so far in the 2018 election cycle, 60% of it to Republicans, according to Federal Election Commission data of total election spending from January 2017 through Sept. 24, 2018. The data was aggregated by the Center for Responsive Politics.

In the House, which Democrats have a good chance of winning this November, two of the biggest recipients of the EEI PAC's campaign contributions were U.S. Reps. Fred Upton, R-Mich., and Kevin Brady, R-Texas, who each received $10,000.

Upton is chairman of the House Energy and Commerce Committee's energy subcommittee, which has advanced a raft of bills in the 115th Congress to lower permitting barriers for hydropower facilities and natural gas pipelines and bolster energy sector cybersecurity.

Brady helms the powerful tax-writing House Ways and Means Committee, which helped craft the GOP tax bill Trump signed into law in late 2017. The legislation included key priorities for the utility sector, including a lower corporate tax rate and the preservation of certain tax deductions and incentives.

The EEI PAC also donated $10,000 each to two top House Democrats: Rep. James Clyburn of South Carolina, who is the House assistant Democratic leader, and Democratic Whip Steny Hoyer of Maryland.

Most of EEI's biggest donations have been to Republican leaders for the entire House and individual committees of interest. House Majority Leader Kevin McCarthy, R-Calif., has received $7,500 from EEI this election cycle, while key GOP lawmakers on the House Energy and Commerce Committee and House Committee on Appropriations have received $5,000 each, including House Energy Committee Chairman Greg Walden, R-Ore.

In the Senate, EEI has spent more on Democratic candidates than Republicans so far this election cycle, even though Republicans are defending more seats in the midterms. But the institute's single biggest Senate campaign contribution went to U.S. Sen. John Barrasso, R-Wyo., who chairs the Senate Environment and Public Works Committee. EEI has spent $10,000 on Barrasso's re-election, firmly exceeding what it spent on its next biggest Senate recipient, Democrat Heidi Heitkamp of North Dakota, to whom EEI gave $7,000.

Barrasso has been a staunch coal advocate and worked to lower regulatory hurdles for energy developers, including through proposed updates to the Endangered Species Act and a bill to limit state reviews of Clean Water Act permits for new gas pipelines and proposed coal terminals.

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The American Public Power Association has also directed the bulk of its spending to GOP incumbents. Contributions from APPA's PAC to federal candidates this election cycle totaled $76,000, according to Federal Election Commission data. Of that, 69% went to Republicans, and the remaining 31% went to Democrats.

APPA's PAC only contributes to people already in office, said the group's vice president of government relations, Desmarie Waterhouse. Regardless of the party in charge, "we'll work with both of them," she said.

In the House, Walden was the biggest recipient of APPA's campaign support at $6,500, followed by $4,000 for Rep. Peter Roskam, R-Ill., who is a House Ways and Means Committee member.

The National Rural Electric Cooperative Association has also centered its support on incumbent GOP committee leaders. The data show that the NRECA PAC has spent about $1.4 million on federal candidates, about 63% of which went to Republicans. The top recipient was Rep. Martha Roby, R-Ala., who sits on several House appropriations subcommittees. Another top recipient of NRECA PAC funds this cycle was Rep. Mike Simpson, R-Idaho, who chairs the energy and water subcommittee of the House Committee on Appropriations.

Trend is similar for utility companies

Major U.S. electric utilities have also thrown their support to incumbent lawmakers, particularly Republicans. The PAC for NextEra Energy Inc., the largest U.S. utility by market capitalization, based on data compiled by S&P Global Market Intelligence, has directed 72% of its election spending this cycle to GOP candidates. In the House, the NextEra PAC's top donations went to Upton and McCarthy. Sen. Angus King, I-Maine, and Barrasso were the biggest recipients of NextEra PAC money in the Senate.

At a recent industry conference, NextEra President and CEO Jim Robo said expiring incentives for renewable energy and political risk were the company's two biggest concerns in the coming years, but NextEra was positioned well regardless of which party controls the White House and Congress.

Duke Energy Corp.'s PAC has given 81% of its federal campaign contributions to Republican candidates, including House Energy and Commerce Committee member Rep. Bob Latta, R-Ohio, who has received the most Duke PAC spending at $9,000.

Latta co-sponsored recent legislation to improve grid-sector cybersecurity, including through a voluntary program with the U.S. Department of Energy to identify and test cyber secure products and technologies. He also introduced legislation to require the U.S. Nuclear Regulatory Commission to create a framework for reviewing advanced nuclear reactor applications.

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Watch: Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

Steve Piper shares Power Forecast insights and a recap of recent events in the US power markets in Q4 of 2017. Watch our video for power generation trends and forecasts for utilities in 2018.

Technology, Media & Telecom
Trading Of US Linear TV Advertising Shifting To Programmatic Trading

Oct. 08 2018 — Both buyers and sellers of traditional linear TV advertising, not including connected TV or over-the-top video, are moving toward the adoption of programmatic trading. In 2017, Kagan estimates that $690 million or 0.9% of total linear TV spend was traded programmatically. Within the next five years, that figure is expected to climb to $9.76 billion or nearly 12% of total linear TV advertising revenue. MVPDs are forecast to trade the greatest percentage of their ad inventory programmatically in 2022 with 30% of ad revenue from programmatic trading.

Kagan defines programmatic trading as being automated and data-enhanced, not just one or the other. Trading may be through a private or open marketplace and does not have to be through an auction, which is more common in digital video advertising.

There are several issues holding participants back from programmatic trading. Unlike digital programmatic marketplaces, where there is a seemingly unending supply of ad inventory, linear TV has a finite supply. Demand for TV inventory exceeds the supply, so there is still an attitude of "If it isn't broken, don't fix it." TV ads are also bought well in advance, not immediately.

While many agencies have experimented with the programmatic trading of linear TV, not all are on board. Many of the advertisers and agencies are interacting directly with the supplier platform rather than going through a demand-side platform, or DSP, today. In their experiments, the agency needs to use separate platforms to aggregate inventory and tie it together, which is a lot of work.

The lack of inventory is one factor holding back programmatic trading. The only way it takes off is to make linear TV inventory available in some type of buyer platform that can combine the various supply platforms. It is even more complicated when the buyer wants to bring in connected TV (OTT).

Agencies do like the automation capabilities of programmatic, particularly where the process takes a lot of time. An algorithm may do better in areas such as weighting estimation, the first pass at scheduling and the negotiation process as well as postings and billings. The process of buying inventory is not difficult, but computing where a buyer will be able to find its preferred audience is. Therefore, interest in automating the planning and analysis to find an optimal audience is high.

We forecast a gradual uptake for programmatic trading with continued testing in 2018. Broadcast stations and networks, cable programmers, and MVPDs need to add more inventory to programmatic platforms before agencies begin using it in earnest. It will take time for all parties to feel comfortable transacting in a new way.

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Every Industry Is Now A Technology Industry


And every company is now a technology company.

Sep. 28 2018 — As machine learning (ML), artificial intelligence (AI), and robotics become commonplace and enter the operations of mainstream organizations, leadership teams are finding that failure to harness and leverage AI puts them behind the competition. Repeatable tasks are carried out by bots in a fraction of the time and employees are more focused on adding value, which means companies on the forefront of technology can be more reliable, more user-friendly, and faster to market.

In this highly disruptive environment, one traditional truth of business has withstood, or has perhaps even guided, these technological advances: above all, the customer experience is king. More than ever before, businesses have effective technologies at their fingertips to quickly and effectively address customer pain points, while at the same time dramatically improving their internal operations.

At S&P Global Market Intelligence, we strive to get beyond the buzzwords and truly deliver essential insight. And second to this, we strive to adopt real operational efficiencies into our delivery that are paralleled by the workflow efficiencies we promise to our customers. To that end, we are committed to remaining on the cutting edge of emerging technologies, first through optimization, then automation.

Download a recent analysis of how we’re applying new technology like natural language processing to structure data, robotic process automation to deliver insights faster, and predictive analytics to stay ahead of the market.

You can also view this analysis in Spanish, Portuguese, Mandarin, and Japanese.

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Natural Language Processing – Part II: Stock Selection

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Natural Language Processing, Part I: Primer

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


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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