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Technology, Media & Telecom

Analyzing The State Of Municipal FTTH Broadband Deployments

Capital Markets

S&P Global - Data Services

Disney Ups Its Bid For Fox Assets To $84.97 Billion

Energy

Power Forecast Briefing: Natural Gas And Coal Dynamics, Pressure On Nuclear, And Southwest Capacity

Bidding War Over Fox Could Spur Titans To Take A Look At Paramount Pictures


Analyzing The State Of Municipal FTTH Broadband Deployments

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.

Local governments, commonly in conjunction with private entities, continue to be drawn into providing broadband in the U.S. to satisfy demand for more quality choices in high-speed internet service. An analysis by Kagan, a media research group within S&P Global Market Intelligence, counted 218 municipal-run internet service providers (ISPs) in the continental U.S. as of January 2018, up 25% since October 2015.

The trend could continue if national and state governments allow it. Incumbent wireline ISPs contend that municipal-backed broadband services are anti-competitive, and some argue the infrastructure expense exposes taxpayers to unnecessary debt. Kagan research shows 19 states have laws restricting municipal broadband projects. For instance, Louisiana requires a municipality to pass a referendum. In Pennsylvania, communities cannot build their own broadband networks unless the incumbent telco will not offer a service at the same speed or higher. The continental U.S. counted 218 municipal-run internet service providers in January 2018.

On Jan. 18, House Democrats introduced legislation that would stop states from writing such laws. Similar bills struggled in the past. However, despite regulatory attempts to restrict the industry, at least 28 municipalities either launched or secured necessary funding to launch operations in 2017 through January 2018, according to data compiled by Community Broadband Network and Broadband Communities. Sixteen of these were in Massachusetts, where such initiatives are openly supported.

Of the 218 municipal and public-private broadband operators identified from Broadband Communities' database, 168, or 77%, are overbuilding a company offering similar services. That's down from 83% in our previous update, suggesting that recent builds are focused more on unserved areas. Of those 168 operators, 69 are in states with some kind of restriction. The largest number of operators that have undertaken overbuilding projects are in Massachusetts, Washington and Tennessee.

Separately, our analysis indicates that 54 municipal-level operators offer gigabit internet in 135 locations, up from 84 locations as of October 2015, according to data compiled by Community Broadband Networks as of January 2018. Nearly 80% of these locations are in states with some kind of regulation against municipal-level deployments.

Our analysis also surveyed nearly 19 electric utility cooperatives providing 1 Gbps broadband services in underserved or unserved areas. There are 163 locations where local cooperatives are providing gigabit-tier internet. Up to 91 of these locations are in restrictive states. Co-ops have been excluded from our main analysis as they distorted historical comparison.

Operators of all stripes prefer to target dense population clusters, which often leaves sparsely populated regions underserved or unserved. Utility co-ops with smart-grid technology would be especially well-positioned to fill that gap. FCC Chairman Ajit Pai recently proposed giving small rural providers and cooperatives $500 million to expand their broadband offerings in rural areas.

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Watch: S&P Global - Data Services


Technology, Media & Telecommunications
Disney Ups Its Bid For Fox Assets To $84.97 Billion

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.

Jun. 21 2018 — Walt Disney Co. on June 20 submitted a new bid for 21st Century Fox Inc.'s assets valued at approximately $71.17 billion in equity, or $84.97 billion including assumed debt.

The new bid is $38 per share, a step up from Disney's previous $28-per-share offer made in December 2017, and more in line with Comcast Corp.'s $35-per-share all-cash bid from June 13. In the merger release, Disney said, "Since the original agreement was announced, the intrinsic value of these assets has increased, notably due to tax reform and operating improvements."

Disney's new bid allows Fox shareholders to choose cash or stock, something the management of both companies believe is a better deal than Comcast's proposal. There is a collar on the stock consideration that will ensure that 21st Century Fox shareholders receive a number of Disney shares equal to $38 in value if the average Disney stock price at closing is between $93.53 and $114.32.

The previous Disney bid for the Fox assets had a seller's multiple of 12.8x and a buyer's multiple of 9.0x. The new bid puts the seller's multiple at 15.4x cash flow and the buyer's synergized multiple at 10.8x cash flow.

After six months of integration planning, Disney's management team is confident in its outlook as the company has made progress toward meeting regulatory requirements in countries around the world.

On the investor call to discuss the bid, Disney Chairman and CEO Bob Iger said the combination would allow for the creation of more appealing content while also expanding Disney's direct-to-consumer offerings and international presence, especially in Europe, India and Latin America. He also cited the acquisitions of Pixar, Marvel and Lucasfilm as recent evidence of Disney's ability to effectively integrate cultures across corporations.

Iger said that vertical-integration concerns with Comcast are significant because the Philadelphia-based company is the leading provider of broadband in the U.S. Disney feels it has a much clearer path to the merger, as it is not a leading provider of video or broadband distribution.

Judge OKs AT&T/Time Warner, Opening A Potential Bidding War For FOX Assets

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Bidding War Over Fox Could Spur Titans To Take A Look At Paramount Pictures

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Watch: Power Forecast Briefing: Natural Gas And Coal Dynamics, Pressure On Nuclear, And Southwest Capacity

Jun. 20 2018 — Steve Piper shares his Q1 2018 analysis and power market insights along with guidance from our Power Forecast solution on the Market Intelligence platform. The next guidance report will be released around mid-July 2018.

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Technology, Media & Telecommunications
Bidding War Over Fox Could Spur Titans To Take A Look At Paramount Pictures

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.

Jun. 15 2018 — Potentially boosting its international portfolio and massively increasing the company's film and television library, Comcast Corp. on June 13 announced a $35-per-share cash bid for most of 21st Century Fox Inc., a 25% premium to the $28 per share offered by Walt Disney Co.

Kagan estimates that the Comcast offer values the Fox filmed entertainment division at $17.76 billion, nearly $4 billion more than the value placed on it in Disney's original bid. The transaction places the most value on the regional sports networks at more than $19 billion, or 24.2% of the total offer, with filmed entertainment coming in a close second at 22.4%.

While 21st Century Fox has close to a 16% share of the box office year-to-date, it has done better in prior years when big franchise films were in release. Comcast's NBCUniversal Media LLC would benefit greatly by adding the Fox studio to its portfolio. NBCU currently has less than a 10% share of the box office versus Disney's more than one-third share for its films.

The question is, who is next? Long-struggling Viacom Inc. missed a chance to sell a 49% stake in Paramount Pictures Corp. to Dalian Wanda Group Corp. Ltd. in 2016 at a valuation of $8 billion-$10 billion, an impressive number given the fact that the filmed entertainment division had negative operating income before depreciation and amortization of $328 million in fiscal 2017 and negative $407 million in fiscal 2016.

With the much-publicized showdown between Shari Redstone and Les Moonves over the future of Viacom, a sale of Paramount Pictures, all of Viacom or even a piecemeal sale of Viacom assets at high prices could help resolve this simmering feud.

Economics of TV & Film 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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