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Succession plan in motion, Unilever hopes for more of the same

Studios, Exhibitors Set To Spar Over Streaming

Power Forecast Briefing Discusses Improved Spark Spreads and Profitability Projections for ERCOT and PJM

Energy

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

Nexstar Buys WGN For A Song; Divestiture Of WGN, Stakes In Food Channels Likely


Succession plan in motion, Unilever hopes for more of the same

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Source: Wikimedia Commons

Since being forced into an embarrassing climb-down on the proposition to move its headquarters from London to Amsterdam in October, Unilever PLC has stayed out of the spotlight. That changed Nov. 29 when the consumer goods giant announced that CEO Paul Polman would be retiring after 10 years in charge.

Polman's departure was well-signaled, and investor reaction to the news was muted, with the share price barely budging. Furthermore, Alan Jope, Polman's successor and current president of Unilever's beauty and care division, has all the markings of a continuity candidate.

As seamless as the transition may be, Jope and Unilever NV still have issues to address, two of which stand out immediately. Days after the succession announcement, the company confirmed its €3.3 billion acquisition of GlaxoSmithKline PLC health food drinks brands. It is one of the larger acquisitions in the company's recent history, and while Unilever says the transaction will be immediately EPS accretive, the purchase price appears full, not surprising given that Nestlé SA and Coca-Cola Co. were also reported to be in the running. At a time of growing concerns of overheating in the M&A market, the deal will surely attract more scrutiny than many of the company's recent smaller acquisitions.

In addition, the headquarters relocation that caused such unhappiness in Unilever's shareholder base remains the elephant in the room. The company said at the time that it continued to believe in its plan and would consider further options. Such was the backlash at the time that Jope must tread very carefully if he is to revisit the matter.

Chart of the week

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Automotive

Ghosn departure may set stage for Renault-Nissan power struggle

Tensions over the lop-sided distribution of power between partners Nissan and Renault have come to the fore since the arrest of Carlos Ghosn, but all sides will lose if a struggle for influence jeopardizes their two-decade-old alliance, analysts say.

Experts: Changing auto industry could shift populations, auto workforce

Auto industry design engineers are focusing on two types of cars now: personal and autonomous.

Report finds 9.6 million EV chargers will be needed in US by 2030

Electric utility companies are well-positioned to help with the massive expansion of the nation's electric vehicle charging infrastructure needed to accommodate exponential growth in the EV market, according to a new report.

General Motors to cut car production, 15% of salaried employees in North America

The automaker also announced it is closing three assembly plants in 2019.

Honda to test connected, autonomous tech in Ohio in 2019

The testing will be done in a 35-mile "mobility" corridor, an executive said.

Retail

Unilever signals continuity as internal candidate named as new CEO

Unilever said CEO Paul Polman would step down at the end of 2018 and would be succeeded by Alan Jope, head of the beauty and personal care division.

Black Friday sales up YOY; driven by online, smartphone purchases

Consumers spent a record $6.22 billion online on Black Friday, according to an initial report from Adobe Digital Insights.

Cyber Monday sales set record, jump 19.3% YOY

Holiday shopping is expected to continue on the Black Friday and Cyber Monday momentum through Christmas.

Lawmakers continue to press Amazon on facial recognition software

Amazon has until Dec. 13 to respond to queries from members of Congress regarding its facial recognition technology.

Food, Beverage & Tobacco

Unilever to buy GSK's health food drinks brands for €3.3B

Unilever said the portfolio, which includes Horlicks, and the category had grown at a double-digit rate, but the category remains underpenetrated, allowing scope for further development.

Lettuce labeling to ease E. coli fears, but experts point to additional steps

Enhanced traceability and renewed efforts to avoid contamination on farms should also be part of plans to avoid and contain future outbreaks, experts said.

Analyst: Growth at grocers' private labels losing momentum

While still gaining market share against Kraft Heinz, Conagra and similar companies, own brands may be losing steam as grocers raise prices.

Potential Altria-Juul deal would benefit both companies, analysts say

A deal could help both companies deal with regulatory moves on menthol and e-cigarettes but also raises questions about Altria's ambitions in heated tobacco, analysts said.

Analysts: Papa John's should focus on franchisees, deals after buyout bid fades

The struggling pizza chain needs to reassure franchisees hit by declining sales that management can turn the business around, analysts said.

Consumer Edge is a weekly collection of critical developments across the automotive; retail; and food, beverage, and tobacco industries that draws on exclusive analysis and value-added content from the Consumer News team at S&P Global Market Intelligence.


Technology, Media & Telecom
Studios, Exhibitors Set To Spar Over Streaming

Dec. 14 2018 — According to an article published in Variety in November, Warner Bros. and Universal Pictures are expected to reopen conversations with exhibitors about earlier VOD releases for their films. The studios argue that an earlier on-demand release helps minimize piracy and allows them to better leverage the multimillion-dollar ad campaigns launched for their films' theatrical debuts.

Exhibitors, on the other hand, worry that a shorter theatrical window will reduce ticket sales as potential patrons opt to wait and watch films at home. Fewer ticket sales also lead to lower concession revenues -- the most profitable aspect of the exhibition business.

The article also notes that studios have an extra incentive to negotiate earlier release windows, as WarnerMedia is launching its own streaming service in 2019 while Comcast, home of Universal, is looking to expand its streaming offerings. Having their major films released on their respective services shortly after theatrical release could help drive subscriber growth.

Pushing for a film's possible VOD release just weeks after its big-screen debut could be seen as an aggressive move, but studios have been slowly shrinking their theatrical release windows over the past 20 years. In 1999, the average theatrical window was 169 days; this was just as the DVD market was beginning to explode and the VHS cassette was still a market factor. Soon, DVD became a massive source of revenue for studios and they began to release their films on home video at a quicker pace. In 2017, the average theatrical window dropped to 105 days before dipping to 99 days in 2018.

The major studios all trimmed their theatrical windows by a fair amount between 2000 and 2018, from an average of 172 days down to 94 days, a difference of more than two and a half months. Twentieth Century Fox and Universal Studios had the shortest average theatrical window at 89 days, while Walt Disney had the longest theatrical window at 107 days.

We tracked eight blockbuster films in 2018 that were released on home video less than 90 days after premiering in theaters. The shortest window belonged to "Venom" ($212.3 million domestic gross), which was released in theaters on Oct. 5 and will debut on DVD and Blu-ray just 74 days later on Dec. 18.

The motion-picture business has always been able to capitalize on new technology, from the TV to the VCR to the DVD player, to drive growth. Streaming video has become the primary source for home entertainment — just ask Netflix and its 137.1 million subscribers worldwide. If studios are launching their own services, they naturally want their own premiere content on those services. Studios may not get the rapid release window they are hoping for, but they will likely keep bringing it down slowly, as they have for the past two decades.

If you are a client then learn more about Economics of TV & Film below:

Movies make their way to your home in less than 100 days in 2018

State of Home Entertainment 2018

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Watch: Power Forecast Briefing Discusses Improved Spark Spreads and Profitability Projections for ERCOT and PJM

Dec. 13 2018 — In our latest Power Forecast Briefing, Steve Piper discusses recent power market activity and a forecast that points to profitability for merchant generation regions of ERCOT and PJM. Both saw improved spark spreads in 2018, but ERCOT's upside appears more limited than PJM going forward. More data and market tracking tools can be found on the Market Intelligence platform’s Power Forecast subscription.

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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.

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Technology, Media & Telecom
Nexstar Buys WGN For A Song; Divestiture Of WGN, Stakes In Food Channels Likely

Dec. 10 2018 — Walt Disney Co.'s pending acquisition of much of 21st Century Fox Inc. certainly raised the bar for cable network valuations — at 15.4x cash flow — and the divestiture of the regional sports networks may see another double-digit-multiple transaction with Amazon.com Inc. in the mix of buyers. Another deal, Nexstar Media Group Inc.'s pending acquisition of Tribune Media Co., sees stakes in three cable nets going to the buyer for single-digit multiples (6.9x).

The deal follows the collapse of Sinclair Broadcast Group Inc.'s deal to buy the company, which is now being litigated. We think that Nexstar is getting quite a deal on the cable network assets and will likely flip them for a quick profit.

When Discovery Inc. agreed to buy Scripps Networks Interactive Inc. in July 2017, the domestic cable networks were valued at $10.14 billion, or 10.5x cash flow, with Food Network (US) valued at $4.5 billion (Scripps owned 68.7%) and Cooking Channel (US) (also at 68.7%) valued at $525 million.

In the current transaction, the valuations come to $3.47 billion and $323 million, respectively. Thus, if Nexstar can get Discovery Communications to pay at least what it paid in the Scripps transaction, Nexstar may make a quick profit. Granted, minority interests typically trade at a discount. Scripps Networks Interactive, however, has tried for years to cut a deal to buy out the minority stake and it may be willing to strike a deal at a higher price to put this issue behind it.

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