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Technology, Media & Telecom

AT&T Gets Smart About The Challenges Of In-Home Wi-Fi

Capital Markets

S&P Global - Data Services

Disney Ups Its Bid For Fox Assets To $84.97 Billion

Energy

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


AT&T Gets Smart About The Challenges Of In-Home Wi-Fi

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.

Following Comcast Corp.'s lead, AT&T Inc. announced the availability of a smart home Wi-Fi extender, designed to eliminate dead spots and boost signal coverage in homes with its U-Verse broadband service. The device, designed and manufactured by AirTies, is an 802.11ac access point with integrated mesh network capabilities. The device ties into AT&T's Smart Home Manager software platform, which helps broadband customers manage the performance of their Wi-Fi networks.

With the rollout of the Wi-Fi extender, AT&T is addressing a growing set of problems customers encounter when relying on Wi-Fi in their homes. First, traditional home routers, while powerful enough to generate a signal for a good percentage of a home, often have very limited and clunky user interfaces, making it challenging for users to set specific network parameters or preferences. Second, in larger or older homes, where brick or cinder block walls can quickly dampen a Wi-Fi signal, there are likely to be dead spots. Historically, these dead spots have been addressed through the use of Wi-Fi extenders, which simply repeat the signal generated by the central access point. But the problem with traditional Wi-Fi extenders is two-fold:

  • The extender can only do its job when it can detect the original Wi-Fi signal.
  • Each time the signal is repeated or extended, signal loss occurs, to the tune of a 30% to 60% reduction in throughput.

Mesh networking capabilities, such as those included in the AirTies extender, as well as from companies such as eero, Luma, Google Inc., NetGear Inc., and D-Link Corp., do a far better job of maintaining a clean wireless signal, though they do still rely on signal repetition. By having multiple units spaced throughout a home, these systems effectively create multi-hop communications for wireless devices. Essentially a wireless device, when it receives or transmits data, is either the first leg or anchor in a Wi-Fi relay race, with the data transfer hopping from one access point to another until it reaches the primary access point, which is connected to the DSL, cable, or fiber gateway. The multi-hop attributes of a mesh network essentially reduce the distance the wireless signal has to hop from one point to the next.

Kagan, a media research group within S&P Global Market Intelligence, expects shipments of mesh Wi-Fi routers to increase from 2.7 million units in 2017 to 13.5 million units in 2022. Mesh routers and extenders will primarily be limited to the North American market, where homes are typically large enough to have signal dead spots. Also, there is a natural ceiling to the adoption of mesh routers, as not every household will need them, particularly multiple dwelling units and smaller single-family homes.

Just as crucial to AT&T as the improvement of the Wi-Fi signal itself is the increase in control users will have over their Wi-Fi networks, passwords, and devices on those networks. Like Comcast, AT&T is betting on its Smart Home Manager platform as a means to not only retain broadband customers, but also as a means to expand into new services, including home automation and security. A centralized dashboard for the control of a customer's total online experience is an important tool in the fight to maintain control over the home experience with Amazon.com Inc., Google, Apple Inc., and Roku, among others.

At this point, AT&T's Smart Home Manager is focused solely on managing the in-home Wi-Fi experience. Through the online portal or smartphone apps, a customer can:

  • View devices on their network
  • Invite guests to connect to the network
  • Disconnect devices from their network
  • View their Wi-Fi network information
  • Change their Wi-Fi network name or password

These are very basic functions that are generally included with all Wi-Fi routers. The addition of the AirTies Wi-Fi extender does provide for some additional capabilities, including:

  • Creation of individual user profiles with the devices belonging to these users and traffic prioritization by user and device
  • The ability to pause Wi-Fi access on demand and at scheduled times for all users or for selected users
  • An advanced set of parental controls, restricting access to a pre-defined or customized set of Web locations

But AT&T will also need to update its existing roster of xDSL gateways principally because many are 802.11n only. The most recent VDSL2 gateways — the ARRIS 5268AC and BGW-210 — both support 802.11ac and are compatible with the new Wi-Fi extender. But true end-to-end mesh networking functionality, as well as the additional features listed above won't be offered as part of the Smart Home Manager platform until a new set of xDSL or GPON gateways with those integrated capabilities are made available.

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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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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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