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African bond sale haunts European banks; US to sanction Russia on election hacks

Flying Into The Danger Zone; Norwegian Air Shuttle

Banking

Street Talk Episode 39 - A New Era For Blockbuster Bank M&A

Advertising Market Growth Unable To Keep Up With Strong GDP

Street Talk Episode 38 - PG&E Bankruptcy Reveals Climate Change Risk Facing Calif. Utilities


African bond sale haunts European banks; US to sanction Russia on election hacks

* Credit Suisse Group AG, together with JSC VTB Bank and BNP Paribas SA, is part of an investigation by the U.S. Securities and Exchange Commission over its involvement in the sale of $850 million in bonds issued by Mozambique, The Wall Street Journal reports. The proceeds from the bonds, sold in 2013 and meant to develop tuna fishing in the impoverished nation, were allegedly also used to buy military equipment.

* The U.S. will announce today a series of sanctions against Russia for allegedly hacking into the computer systems of U.S. political institutions and individuals and leaking information to help Donald Trump win the presidential race, Reuters reports, citing two U.S. officials.

UK AND IRELAND

* U.S. lenders Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp. have paid nearly 1,000 of their top employees in London no less than €1 million in pay deals last year, The Guardian reports. In its regulatory disclosures, Goldman Sachs said 11 of its key City staff received at least €5 million.

* Barclays Plc Chairman John McFarlane expressed the bank's commitment to London post-Brexit, saying the City offers a "competitive advantage" in terms of financial services, The Daily Telegraph writes. McFarlane also stressed the lender's push to increase its focus on the U.K. and U.S. markets.

* Brexit pressure group Leave Means Leave has urged business groups in the other 27 EU member states to persuade their respective governments to pursue a "sensible" trade agreement with the U.K. in Brexit negotiations, Bloomberg News reports. In a letter, the group warned that trade barriers will have a "detrimental effect" on jobs across the bloc, and called for a trade deal that has near-zero tariffs.

* Data from the British Bankers' Association indicates that the number of mortgage applications approved by U.K. lenders dropped slightly last month to 40,659 from a five-month high of 40,835 in October, and was down 9% from the year-ago period, Reuters reports.

GERMANY, SWITZERLAND AND AUSTRIA

* PayPoint Plc sold its mobile payments business to Volkswagen Financial Services AG for £26.5 million in cash. The business comprises PayByPhone Technologies Inc., PayByPhone Ltd., Mobile Payment Services SAS and Adaptis Solutions Ltd.

* The Insurance Regulatory and Development Authority of India granted global reinsurer Hannover Re a certificate of registration to set up a branch in the country, the Press Trust of India reports. Munich Re and Swiss Re Ltd. were among those also granted final approval by the regulator.

* Damage to houses and industrial property from storms and related natural disasters cost Germany's insurers a total of €2 billion in 2016, less than the multi-year average of €2.4 billion, the German Insurance Association said in its annual report released Wednesday, Handelsblatt notes. Reuters also covers.

* Austria's insurance companies in the third quarter faced a 0.85% decline in premium volumes to €3.81 billion, mostly due to lower premiums from life insurances, according to a report issued by Austrian financial market supervisory authority FMA.

* UNIQA Insurance Group AG by year-end will pay back two capital bonds with a total nominal value of €250 million.

* AutoBank AG increased it capital by €800,000, converting subordinated bonds into equity, Der Standard notes.

* A group of Germany's regional administrations is lobbying for a tougher approach in dealing with so-called cum/cum trades, a practice that allows foreign investors to avoid paying a German tax on dividends, the Financial Times reports. The group is led by North Rhine-Westphalia, which is pushing for regions to be able to seek billions of euros in back taxes from banks involved in such transactions prior to 2016.

* Germany's Volksbanken and Raiffeisen cooperative banks are rejecting calls by the central bank and regulatory authorities to adapt their business model in the wake of negative interest rates, tighter regulation and digitization. Ralf Barkey, chairman of the board of the association of cooperative banks in Rhineland-Westphalia, and Michael Bockelmann, president of the association of cooperative banks in Frankfurt, tell Börsen-Zeitung that their business model is "working well" and is "fit for the future."

FRANCE AND BENELUX

* French companies can continue to choose collective prudential insurance providers, after the country's highest court threw out the government's latest attempt to limit their choice to insurance companies approved by unions and trade bodies, Le Figaro reports.

SPAIN AND PORTUGAL

* Bain Capital has acquired a portfolio of debt linked to real estate assets worth €364 million from Banco de Sabadell SA, Expansión reports. According to market sources, the U.S. firm may have paid about €150 million for the portfolio, dubbed Proyecto Traveller.

* Spanish restructuring fund FROB rejected an investigation into former Banco de España Governor Miguel Ángel Fernández Ordóñez for alleged fraud involving the stock exchange debut of Bankia SA, El Mundo writes.

* The ECB authorized Ibercaja Banco SA to repay 40% of the contingent convertible bonds issued by Caja3 in 2013, Europa Press writes. The early repayment will amount to €163 million.

* The Portuguese government postponed to 2017 the entire capitalization process of Caixa Geral de Depósitos SA. The first phase of the capital injection is now expected to take place in the first week of January. Meanwhile, the lender's outgoing president, António Domingues, is expected to be freed from his duties by the end of the week, the paper adds.

* Caixa Económica Montepio Geral will freeze employees' salaries at least until the end of 2017, as part of an agreement with union workers aimed at avoiding mass dismissals. In case the banks presents positive results, a 5% profit sharing may be considered, Dinheiro Vivo writes.

ITALY AND GREECE

* S&P Global Ratings said the Italian government's decision to set up a €20 billion fund to support its ailing banks, including Banca Monte dei Paschi di Siena SpA, has no immediate effect on its ratings on the country. The agency currently has BBB-/A-3 long- and short-term sovereign credit ratings on Italy, with a stable outlook on the long-term rating.

* The ECB and European Commission must ensure that Italy complies with European rules in the rescue of Monte dei Paschi, a German finance ministry spokesman tells Reuters.

* The boards of three of the four small-sized Italian banks bailed out last year are slated to meet tomorrow to approve plans to offload a portion of their nonperforming loans portfolio to the Atlante fund, ahead of the expected signing of a preliminary deal to sell these lenders to Unione di Banche Italiane SpA on Saturday, Il Sole 24 Ore reports.

* Intesa Sanpaolo SpA included Apollo Global Management, Cerberus and Christofferson Robb & Co. in its short list of bidders for a €2.5 billion NPL portfolio expected to be sold in the first quarter of 2017, sources tell Reuters.

* Eurobank Ergasias SA is looking to sell €1.5 billion of nonperforming loans, Kerdos writes.

NORDIC COUNTRIES

* Norges Bank Governor Øystein Olsen said the central bank expects to maintain its key policy interest rate and that there is a higher probability of a rate cut than of a hike, Reuters writes. Olsen also floated the possibility of negative rates in the event of "large new disruptions" to the Norwegian economy.

* The Norwegian FSA said BB Finans, the Norwegian subsidiary of Swedish niche bank TF Bank, meets the requirements for a banking license, Realtid reports. BB Finans has 12 months to evaluate the conditions for applying for such a license.

* The Swedish government, concerned about the lack of capital in many small and medium-sized businesses, wants banks to focus on finding ways to increase lending to businesses, Dagens Industri reports.

* Growth in household lending in Sweden keeps slowing down, SvD reports, noting that increase in lending was 7.2% in November, down from 7.5% in September, mainly due to the halt in the decline of interest rates.

EASTERN EUROPE

* The Russian central bank estimates that local lenders will earn about 900 billion rubles in 2016, compared to the 2015 profit of 200 billion rubles, Vedomosti writes. However, increasing profits did not benefit the Russian economy, as banks used the funds to pay off expensive financing rather than to increase lending.

* Russia's central bank revoked the license of Commercial Bank NKB (LLC), citing problems with asset quality and noncompliance with regulations aimed at combating money laundering and financing of terrorism, Banki.ru says.

* The Russian central bank refused to issue accreditation to Russia's National Rating Agency and RusRating, Vedomosti reports. So far, only Russia's Analytical Credit Rating Agency and Expert RA secured regulatory accreditation.

* Polish antimonopoly watchdog UOKiK head Marek Niechcial said the regulator is checking whether local insurance companies conspired in setting motor insurance prices, following their recent steep increase, Parkiet reports. The official warned that insurers involved in potential collusion face fines amounting to up to 10% of their annual turnover.

* Following the lowering of the cost of credit, planned by Polish authorities, local non-bank lending companies will most likely lose their ability to generate profits and will not be able to pay coupons on issued bonds, news agency PAP says, citing Poland's Association of Loan Companies.

* Converse Bank CJSC raised its statutory capital by 2.43 billion Armenian drams following a closed placement of additionally issued shares. The lender's total regulatory capital currently amounts to 31.9 billion drams, exceeding the required minimum regulatory threshold.

* S&P Global Ratings lowered JSC Kazinvestbank's long- and short-term counterparty credit ratings to D/D from B-/C and its national scale rating to D from kzB+ following the National Bank of Kazakhstan's decision to revoke its license.

* TBC Bank Group Plc said unit JSC TBC Bank recorded interest income and recovery of a provision expense of a previously written off amount in relation to a loan issued to a corporate client of $13.4 million, to be accounted for in its fourth-quarter statements.

* Türkiye Kalkinma Bankasi AS will sell those shares that remained unsubscribed following its rights issue, which raised the bank's issued capital to 500 million lira from the previous 160 million lira. The shares will be sold in the primary market of Borsa Istanbul on Jan. 2 and Jan. 3, Finans Gündem writes.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: China suspends banks for illegal FX deals; Hannover Re to set up Indian branch

Middle East & Africa: Mozambique bond sale under SEC scanner; Bahrain regulator seals Future Bank fate

Latin America: Peru to cut reserve requirements; Cuba's GDP shrinks 0.9%

North America: NYSE Arca's ETF listings shrink as funds switch to rivals

North America Insurance: Flood insurance needs rise; American United wins annuity contract

NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE

Data Dispatch Europe: Internal model-reliant European banks face Basel IV capital hit: Upcoming changes to rules on how banks calculate risk could pass a heavy capital bill to banks in the Netherlands and Scandinavia, data shows.

European banks: Key trends to watch in 2017: Regulatory fragmentation, possible fiscal loosening and more banking consolidation in several countries lie ahead in 2017.

NN Group bid leaves Delta Lloyd investors facing big decision: While some analysts say the proposed €2.5 billion deal would represent a bargain for NN Group, others think the offer represents a great opportunity for Delta Lloyd.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.

Xana Kakoty, Arno Maierbrugger, Danielle Rossingh, Esben Svendsen, Beata Fojcik, Thanasis Kakalis, Ali Kayalar, Heather O'Brian, Brian McCulloch, Sophie Davies and Mariana Aldano contributed to this report.

The Daily Dose has an editorial deadline of 7 a.m. London time. Some external links may require a subscription.


Credit Analysis
Flying Into The Danger Zone; Norwegian Air Shuttle

Highlights

This analysis was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global. This is not investment advice or a stock suggestion.

Feb. 13 2019 — The headwinds are picking up for Norwegian Air Shuttle ASA (“Norwegian”), the eighth largest airline in Europe. The carrier has been battling with rising fuels costs, increased competition from legacy carriers, and persistent aircraft operational issues. Norwegian’s problems are a continuation of what have been turbulent months for budget airlines in Europe resulting in a collapse of Primera Air, based in Denmark, near-default of WOW air, Iceland’s budget carrier, and most recently bankruptcy of Germania.

When we pull back the curtain and review the creditworthiness of European airlines to explore further some of the causes for Norwegian’s turbulent period, we see Norwegian’s business strategy and financial structure have made the carrier highly exposed. Coupled with the traditionally slow winter season, the airline may have to navigate through the storm clouds forming on the horizon.

A View From Above

S&P Global Market Intelligence has developed CreditModelTM Corporates 2.6 (CM2.6), a statistical model trained on credit ratings from our sister division, S&P Global Ratings. The model combines multiple financial ratios to generate a quantitative credit score and offers an automated solution to efficiently assess the credit risk of both public and private companies globally.1 Within CreditModel, the airline industry is treated as a separate global sub-model to better encompass the unique characteristics of this industry.

Figure 1 shows the overview of S&P Global Market Intelligence credit scores obtained using CreditModel for European airlines. Norwegian’s weak position translate into the weakest credit score among its competitors. The implied ‘ccc+’ credit score suggests that Norwegian is vulnerable to adverse business, financial, or economic conditions, and its financial commitments appear to be unsustainable in the long term. In addition to Norwegian, Flybe and Croatian Airlines rank among the riskiest carriers in Europe and share a similar credit risk assessment. The airlines with the best credit scores are also Europe’s biggest airlines (Lufthansa, Ryanair, International Airlines Group (IAG), and easyJet). The exception among the top five European airlines is Air France-KLM, which is crippled by labour disputes and its inability to reshape operations and improve performance.

Figure 1: Credit Risk Radar of European Airspace
Overview of credit scores for European airlines

Source: S&P Global Market Intelligence. For illustrative purposes only.
Note: IAG operates under the British Airways, Iberia, Vueling, LEVEL, IAG Cargo, Avios, and Aer Lingus brands. (January 3, 2019)

S&P Global Market Intelligence’s sister division, S&P Global Ratings, issued an industry outlook for airlines in 2019 noting that the industry is poised for stability.2 It stated the global air traffic remains strong and is growing above its average rate at more than 6% annually. The report also cited rising interest rates dampening market liquidity while increasing the cost of debt refinancing and aircraft leases. Oil prices are expected to settle, and any further gradual increases in oil prices are expected to be compensated by rising airfares and fees. The most significant risks for airlines are geopolitical. Potential downside scenarios include a crisis in the Middle East or other disruptions in oil, causing oil prices to spike. The possibility of trade wars and uncertainty surrounding the Brexit withdrawal agreement represent additional sources of potential disruption or weakening in travel demand.

Flying into the danger zone

Although Norwegian has so far dismissed any notion of financial distress as speculation, it has simultaneously implemented a series of changes to prevent further turbulence.3 The airline announced a $230mm cost-saving program that included discontinuing selected routes, refinancing new aircraft deliveries, divesting a portion of the existing fleet, and offering promotional fares to passengers to shore up liquidity.

In Figure 2, we rank Norwegian’s financial ratios within the global airline industry and benchmark them against a selected set of competitor European budget carriers (Ryanair, easyJet, and Wizz Air). Through this chart, we can conclude that Norwegian’s underlying problems are persistent and the company’s financial results are weak. Norwegian’s business model of rapid growth and a debt-heavy capital structure have resulted in severe stress for its financials. Norwegian ranks among the bottom 10% of the worst airlines in the industry on debt coverage ratios, margins, and profitability. This is in sharp contrast to other European budget carriers, which are often ranked among the best in the industry. On the flip side, Norwegian’s high level of owned assets represents its strong suit and gives the carrier some flexibility to adjust its operations and improve performance in the future.

Figure 2: Flying at Low Altitude
Norwegian’s financial ratios are among the worst in the industry

Source: S&P Global Market Intelligence. For illustrative purposes only. (January 3, 2019)
Note: Presented financial ratios are used in CreditModelTM Corporates 2.6 (Airlines) to generate quantitative credit score in Figure 1.

Faster, Higher, Farther

Norwegian has undergone a rapid expansion in recent years, introducing new routes and flying over longer distances. Between 2008 and 2018, the carrier quadrupled its fleet from 40 to 164 planes.4 This enabled it to fly more passengers and become the third largest budget airline in Europe, behind Ryanair and easyJet. However, unlike its low-cost rivals, Norwegian ventured into budget long-haul flights. After establishing its new base at London Gatwick, it started operating services to the U.S., South-East Asia, and South America.

As a result of this expansion, Norwegian’s capacity as measured by available seat kilometres (ASK) and traffic as measured by revenue passenger kilometres (RPK) grew nine-fold between 2008 and 2018, as depicted in Figure 3. By offering deeply discounted fares, the carrier was able to attract more passengers and significantly grow its revenues, which were expected to reach $5bn in 2018. However, to be able to support this rapid growth, Norwegian accumulated a significant amount of debt and highly increased its financial leverage. This rising debt is putting Norwegian under pressure to secure enough liquidity to repay maturing debt obligations.

Figure 3: Shooting for the Stars
Norwegian’s rapid growth propelled by debt

Source: S&P Global Market Intelligence. All figures are converted into U.S. dollars using historic exchange rates. Figures for 2018 are estimated based on annualized YTD 2018 figures. For illustrative purposes only. (January 3, 2019)

Norwegian’s strategy to outpace growing debt obligations by driving revenue growth is coming under pressure. The data tells us that expansion to the long-haul market and the undercutting of competitors to gain market share proved to be costly and negatively impacted Norwegian’s bottom line. Operational performance, measured as unit revenue (passenger revenue per ASK) and yield (passenger revenue per RPK), have been slipping continuously since 2008, as depicted in Figure 4. Negative free operating cash flow required Norwegian to continuously find new sources of capital to finance its operations, and profitability suffered. The carrier was able to ride a tailwind of low oil prices and cheap financing for a while, however, the winds seem to be turning.

Figure 4: Gravitational Pull
Slipping operational and financial performance

Source: S&P Global Market Intelligence, Norwegian Air Shuttle ASA: “Annual Report 2017”, Norwegian Air Shuttle ASA: “Interim report - Third quarter 2018”. Figures for 2018 are estimated based on annualized YTD 2018 figures. For illustrative purposes only. (January 3, 2019)

Norwegian’s plan to outrun a looming mountain of debt obligations is resulting in a turbulent flight. While growing its top line, the carrier has been unable to convert increased capacity and traffic into consistent profit. With a stable industry outlook and cost-cutting measures in place, Norwegian lives to fly another day. However, any additional operational issues or adverse macroeconomic developments could send Norwegian deep into the danger zone.

Learn more about S&P Global Market Intelligence’s Credit Analytics models.
Learn more about S&P Global Market Intelligence’s RatingsDirect®.

S&P Global Market Intelligence leverages leading experience in developing credit risk models to achieve a high level of accuracy and robust out-of-sample model performance. The integration of Credit Analytics’ models into the S&P Capital IQ platform enables users to access a global pre-scored database with more than 45,000 public companies and almost 700,000 private companies, obtain credit scores for single or multiple companies, and perform scenario analysis.

S&P Global Market Intelligence’s RatingsDirect® product is the official desktop source for S&P Global Ratings’ credit ratings and research. S&P Global Ratings’ research cited in this blog is available on RatingsDirect®.

1 S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence PD credit model scores from the credit ratings issued by S&P Global Ratings.
2 S&P Global Ratings: “Industry Top Trends 2019: Transportation”, November 14, 2018. https://www.capitaliq.com/CIQDotNet/CreditResearch/viewPDF.aspx?pdfId=36541&from=Research.
3 Norwegian Air Shuttle ASA, “Update from Norwegian Air Shuttle ASA”, press release, December 24, 2018 (accessed January 3, 2019), https://media.uk.norwegian.com/pressreleases/update-from-norwegian-air-shuttle-asa-2817995.
4 Norwegian Air Shuttle ASA: “Investor Presentation Norwegian Air Shuttle”, September 2018.

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Listen: Street Talk Episode 39 - A New Era For Blockbuster Bank M&A

Feb. 08 2019 — The days of large bank buyers pursuing deals to plant a flag in a new market might be gone with acquirers now seeing deals as a way to support investments in technology. BB&T touted that prospect when discussing its landmark merger of equals with SunTrust. In the episode, we spoke with S&P Global Market Intelligence colleagues Zach Fox and Joe Mantone about the drivers of BB&T/SunTrust merger, how much i-banks advising on the deal stand to earn and the prospect of other similarly sized transactions emerging in the future.

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Technology, Media & Telecom
Advertising Market Growth Unable To Keep Up With Strong GDP

Feb. 07 2019 — Cable and broadcast are losing their dominance in the viewing world. As more eyeballs migrate to online and mobile viewing, major media companies are struggling to adopt a common measurement system. Their goal is to track and consolidate the leaked viewers who have been switching first from analog, with a full ad load, to DVR, which lets them skip ads, and now to digital with limited or no advertising.

Click here for advertising market projections in Excel format.

The business models of the online services differ, with the majority of viewers still watching ads, albeit in much smaller pods. Others have voted with their wallets, paying a premium to view content on Hulu and other platforms without any advertising at all. Hulu with ads is only $5.99, while the subscription without ads is twice the price at $11.99. Clearly, viewers are willing to pay a premium for the privilege of not having to watch ads.

Although the broadcast networks have been somewhat flat for some time, the cable network industry has only recently had to cope with the reality that its heyday is over. After decades of showing strong single- or double-digit growth, cable networks have seen growth slow over the past five years to a range of just 3% to negative 1%.

A number of issues have been impacting cable networks, most notably cord cutting and cord shaving, with companies that are big in the children's market suffering disproportionately. Viacom Inc. was the first to show significant weakness: Gross ad revenue at its behemoth Nickelodeon peaked at nearly $1.3 billion in 2010 and 2011, then dropped to $1.10 billion in 2012. Nickelodeon's average 24-hour rating slipped from 1.44 in 2011 to 1.13 in 2012.

The company recovered slightly to a 1.2 rating in 2013 but has struggled significantly since then, with its overall rating at just 0.74 in 2017.

Parent company Viacom posted zero to negative ad revenue growth from the second quarter of 2014 all the way through the third quarter of 2018, an unprecedented negative run.

By contrast, the other cable network owners posted mixed results, but none have been as consistently negative as Viacom. The timing of big sporting events, especially the Olympics, contributes to much of the volatility at the various networks.

Broadcast and cable combined, including both local and national spots, increased ad revenue market share from 24% in 1988 to 32% in 2018. This was a strong showing given that cable alone rose from a less than 2% share in 1988 to almost 15% in 2018.

Overall, the ad market has continued to grow, mostly due to the popularity of digital spots. However, growth in the U.S. advertising market has been unable to maintain its historical trend of growing in lockstep with the gross domestic product, equating to approximately 2% of GDP.

Its share of GDP was generally in that range until the Great Recession, which pushed that metric from 1.8% in 2007 to 1.6% in 2008 and to 1.4% in 2009. In 2017, we estimate this fell as low as 1.2% with no sign that it can recover to the 2.0% range.

Although the growth of digital has been positive for the ad industry, there have been many less encouraging stories, particularly related to print, which shrank from 67.4% of the market in 1988 to just 41.1% in 2018.

Even after this dramatic shift over several decades left print with a much smaller base, all forms of print continue to struggle. Although the numbers below for the print sector do not include their digital operations, few companies have been able to offset the decline in traditional media with online initiatives.

Much of their revenue has been devoured by the usual internet giants such as Alphabet Inc.'s Google LLC and Facebook Inc. Even companies with disruptive business models targeting the younger generation, such as VICE Media LLC, have struggled.

We do not expect this to change much in our five-year outlook, although digital is certainly entering a mature phase. In 2023, we expect satellite radio to be growing the fastest, albeit from a much smaller base, and digital — although still in the No. 2 spot — is expected to grow at only 4.1% per year, down significantly from the 10.9% growth rate we expect for 2019.

Print is expected to continue to struggle, with Yellow Pages hit the hardest, declining at more than 16% per year. We do not expect most of these paper directories to survive over the long term, with the exception of those with very narrow niche audiences, such as small directories delivered to hotels in resort towns.

Digital has had remarkable progress, with a CAGR of 16.8% from $22.65 billion in 2009 to $91.89 billion in 2018. In sharp contrast, direct mail, the largest ad category in 2009, shrank from $44.50 billion in 2009 to $37.50 billion in 2018. The CAGR of decline has been modest at negative 1.9%.

Direct mail is now in third place with market share of 14.7% in 2018 versus 22.3% in 2009, behind digital at 35.9% and cable TV at 14.8%. The biggest slides occurred in Yellow Pages, which have fallen at a CAGR of negative 19.7% from a 5.5% share in 2009 to less than 1% in 2018; and daily newspapers, which contracted at a negative 11.8% CAGR from 12.4% in 2009 to 4.0% in 2018.

For a lengthy analysis which also includes an analysis of performance of the local ad market versus national, refer to the Economics of Advertising, or Click here.

Economics of Advertising is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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Listen: Street Talk Episode 38 - PG&E Bankruptcy Reveals Climate Change Risk Facing Calif. Utilities

Feb. 06 2019 — The PG&E Corp. bankruptcy shows that financial backers of California utilities need to consider the risks associated with climate change but that exposure might be unique to entities operating in the state. In the episode, Regulatory Research Associates analysts Dan Lowrey and Dennis Sperduto discuss the next steps in PG&E's bankruptcy process, the future of its power purchase agreements and the risks that climate change can bring to backing utilities.

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