CABLE & SATELLITEResearch Brief

Sustainable Industry Classification System™ (SICS™) #SV0303

Research Briefing Prepared by the

Sustainability Accounting Standards Board®

December 2014

www.sasb.org© 2014 SASB™

™

I N D U S T RY B R I E F | C A B L E & S AT E L L I T E

SASB’s Industry Brief provides evidence for the material sustainability issues in the Cable &

Satellite industry. The brief opens with a summary of the industry, including relevant legislative

and regulatory trends and sustainability risks and opportunities. Following this, evidence for each

material sustainability issue (in the categories of Environment, Social Capital, Human Capital,

Business Model and Innovation, and Leadership and Governance) is presented. SASB’s Industry

Brief can be used to understand the data underlying SASB Sustainability Accounting Standards.

For accounting metrics and disclosure guidance, please see SASB’s Sustainability Accounting

Standards. For information about the legal basis for SASB and SASB’s standards development

process, please see the Conceptual Framework.

SASB identifies the minimum set of sustainability issues likely to be material for companies

within a given industry. However, the final determination of materiality is the onus of the

company.

Related Documents

• Cable & Satellite Sustainability Accounting Standards

• Industry Working Group Participants

• SASB Conceptual Framework

INDUSTRY LEAD

Nashat Moin

CONTRIBUTORS

Andrew Collins

Stephanie Glazer

Anton Gorodniuk

Jerome Lavigne-Delville

Himani Phadke

Arturo Rodriguez

Jean Rogers

Evan Tylenda

Gabriella Vozza

CABLE & SATELLITEResearch Brief

SASB, Sustainability Accounting Standards Board, the SASB logo, SICS, Sustainable Industry Classification System, Accounting for a Sustainable Future, and Materiality Map are trademarks and service marks of the Sustainability Accounting Standards Board.

EINTRODUCTION

The Cable & Satellite industry, which initially

brought television programs to households

across the U.S., is now the foundation of

modern communications and information

sharing. As more and more content is

consumed and transmitted over the Internet

rather than via traditional cable and satellite

networks, the industry is focusing on gaining

Internet service subscribers to make up for the

stagnation in video service subscriptions. The

growth of Internet content has strengthened

the industry’s position as a provider of key

infrastructure, including telephone and

broadband Internet service.

Communication and information services have

helped the public and private sectors increase

efficiencies and drive innovation through lower

transaction costs, and increased speed and

variety of communication mediums. The

industry faces several sustainability challenges

and opportunities relating both to physical

infrastructure and transmission of user data. As

companies expand their Internet service

segment, they have to handle more data and

manage the effects of increasing regulatory

scrutiny and consumer concern about data

privacy and security. The growing influence of

cable and satellite companies over modern

communication and info sharing is fueling the

debate over the best ways to ensure open

Internet access.

Management (or mismanagement) of material

sustainability issues, therefore, has the

potential to affect company valuation through

impacts on profits, assets, liabilities, and cost of

capital.

Investors would obtain a more holistic and

comparable view of performance with cable

and satellite companies reporting metrics on

the material sustainability risks and

opportunities that could affect value in the

near- and long-term in their regulatory filings.

This would include both positive and negative

externalities, and the non-financial forms of

capital that the industry relies on for value

creation.

SUSTAINABILITY DISCLOSURE TOPICS

ENVIRONMENT

• Infrastructure Energy Use & Fleet Fuel

Consumption

SOCIAL CAPITAL

• Data Privacy

• Data Security

LEADERSHIP AND GOVERNANCE

• Managing Systemic Risks From

Technology Disruptions

• Competitive Behavior & Open Internet

Specifically, performance on the following

sustainability issues will drive competitiveness

within the Cable & Satellite industry:

• Managing the environmental footprint

of companies’ large and expanding

network infrastructure and fleets;

• Ensuring the privacy of customer data

through effective data use policies, and

managing government relations and

business strategy on issues related to

data privacy;

• Managing the increasing risk of cyber

attacks, particularly for cloud-based

services and business or government

customers in sensitive sectors;

• Managing risks to networks and

operations that could potentially create

systemic or social disruption; and

• Balancing the need to expand revenues

in the face of increasing competition,

while preventing engagement in anti-

competitive practices.

INDUSTRY SUMMARY

The Cable & Satellite industry is comprised of

companies that provide various subscription-

based cable and satellite services, including

video, Internet, and phone services, throughout

the United States.I This industry excludes

I Industry composition is based on the mapping of the Sustainable Industry Classification System (SICSTM) to the Bloomberg Industry Classification System (BICS). A list of representative companies appears in Appendix I.

companies in the Telecommunications industry,

such as AT&T and Verizon, which SASB covers

in its standards for the Technology &

Communications sector.II

Cable providers distribute television

programming from cable networks to

subscribers. They typically provide consumers

with video services, high-speed Internet, and

telephone services over the Internet (VoIP).

These services are traditionally bundled into

packages that are billed as a unit, providing

subscribers with easier billing.1 Satellite

companies distribute TV programming via

broadcasting satellites orbiting the earth or

ground stations.2 Both satellite and cable

companies compete in the same market for

delivering television content to households, the

industry’s main market segment.3, 4

The global revenue for companies listed on

global exchanges and traded over-the-counter

from the Cable & Satellite industry is $232

billion.5 In the U.S., the majority of cable

provider revenue comes from video services (65

percent), followed by Internet (17 percent),

VoIP Services (6.2 percent), business services

like the capacity for multiple VoIP lines (5.8

percent), and other services (6 percent).6 In

contrast, nearly all of U.S. satellite provider

revenue (97.7 percent) is generated from video

services including basic programming, video on

demand, HD channels, and DVR service.7 Public

II Companies in the Telecommunications industry provide Internet and voice services in addition to wireless services.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 2

companies including Comcast, Time Warner

Cable (TWC), DIRECTV, Dish Network, Charter

Communication, and Cablevision Systems all

contribute significantly to overall revenue.8

Companies traded on U.S. exchanges generate

most of their revenue from the domestic

market, with the exception of a few companies

including Liberty Global and Charter.9

Programming—purchase of content—is the

highest operating expense for industry players.

For example, Charter disclosed programming

costs of $2.1 billion, or 40 percent of operating

costs and expenses for fiscal year (FY) 2013.10

Depreciation costs are also large due to

significant infrastructure needs.11, 12 Property

and equipment constituted 30 percent of

DIRECTV’s total assets13 and 46 percent of

Charter’s total assets.14 U.S. listed companies

have a median net income margin of 7.28

percent.15

The Cable & Satellite industry is highly

concentrated. The top four providers—

Comcast, DIRECTV, Dish Network, and TWC—

account for 78.2 percent of video subscribers

and 56.6 percent of industry revenue.16 In the

U.S., the satellite segment experiences even

higher levels of concentration with two major

players, DIRECTV and Dish Network, controlling

more than 96.4 percent of the TV satellite

market.17 The high degrees of concentration

are due to several barriers to entry, including

substantial up-front costs of establishing a

network infrastructure, building and launching

satellites, and regulation of and access to

various licenses and authorizations. Without a

large established subscriber base, it would be

challenging for new entrants to be profitable

after overcoming initial startup costs and high

fixed costs.18, 19

Although the Cable & Satellite industry has

high barriers to entry, its TV services segment is

facing increasing external competition as

subscribers obtain content via new sources.

Streaming content through mobile devices like

phones and tablets is becoming an increasing

threat to the industry as customers cut the cord

on traditional television. New Internet

streaming services like Netflix, Hulu, Amazon,

and Google are all now striving to capture

market share in Internet TV, thereby adding

alternatives to traditional TV providers.20 In

fact, U.S. households are sourcing their

programming and information from non-

traditional TV devices: 67 percent of content is

watched on computers, smartphones, and

tablets, and 48 percent is watched through

subscription services like Netflix and Hulu.21

As a result, TV providers have seen an increase

in customer churn rates. Between 2008 and

2013, the number of TV subscriptions has

decreased by 0.3 percent annually, and is

expected to decrease further over the next five

years.22 Conversely, the number of broadband

Internet connections increased 16.4 percent

annually during the same period.23 Broadband

growth mitigates the loss of revenue for cable

providers as subscribers substitute TV services

for broadband Internet connections.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 3

In January 2014, the DC District Court of

Appeals struck down certain clauses of ‘net

neutrality,’ giving cable providers additional

leverage to combat these new Internet-

streaming threats (discussed further in the

Regulatory Trends section). In contrast, satellite

companies have limited options to generate

revenue from new or growing segments, as

nearly 100 percent of their revenues comes

from TV services.24

As new technologies and methods constantly

shape and redefine the way consumers access

their favorite television programs, Cable and

satellite companies may suffer if they cannot

adapt. To deal with these external threats,

some companies have engaged in mergers and

acquisitions. Providers are looking to vertically

integrate with network content producers to

secure a competitive pricing advantage.

Currently four out of the top six cable providers

hold an ownership interest in network content

providers.25 For example, in 2011 Comcast

acquired 51 percent of General Electric’s share

of NBC Universal; it acquired the rest in 2013.26

Competitors also engage in mergers or

acquisitions of peers as they search for new

sources of value. Cable company Charter

Communications acquired Optimum West in

2013, adding more than 360,000 cable

customers to Charter’s existing 5.2 million-

subscriber base.27 Charter recently attempted to

acquire TWC in a deal worth $37.3 billion, but

TWC rejected the offer for being inadequate.28

After the failed attempt by Charter, Comcast

offered $45.2 billion, much closer to TWC’s

asking price.29 The deal is current being

evaluated by the Federal Trade Commission.

These mergers and acquisitions are an attempt

to stay competitive in a quickly evolving

market. The companies that vertically integrate

with networks can reduce licensing fees and

gain higher margins, as programming accounts

for the majority of operating expenses for cable

and satellite companies.30, 31

Despite growing demand for programming and

an increase in consumer disposable income, all

service providers expect a continued decline in

paid-TV subscribers. Satellite providers are

expected to provide more niche content, such

as multicultural and sports programming, to

increase their appeal. Furthermore, both

satellite and cable providers will look to original

content to generate revenue through

subscriptions and increased advertising.32 In the

future, wire and cable telecommunications

providers are expected to compete through

premium services accessed online. These

services might include cloud-based DVR

services, like the ability to access programming

from outside the home or bundled services that

provide remote control over home security or

energy usage. By partnering with mobile

telecommunications for value-added services,

cable companies have the potential to increase

revenue and reverse customer turnover in the

industry.33, 34

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 4

LEGISLATIVE AND REGULATORY TRENDS IN THE CABLE & SATELLITE INDUSTRY

The Cable & Satellite industry is highly

regulated, with extensive oversight of

networks, providers, and their intermediaries to

protect competition, intellectual property, and

consumers. Laws apply differently to the

various service offerings of the industry, adding

to the complexity of the legal framework. The

following section provides a brief summary of

key regulations and legislative efforts related to

this industry.III

The Federal Communications Commission (FCC)

regulates communications by radio, television,

wire, satellite and cable, and is the primary

authority for communications law, regulation,

and technological innovation.35 It was formed

under one of the earliest communications laws,

the Communications Act of 1934, which was

amended when Congress adopted the Cable

Communications Policy Act of 1984 (CCPA).

Over the following decades, the various

communications acts have attempted to

increase competition among providers of video,

voice, and, eventually, Internet services. The

CCPA established policies that promoted

competition in the industry, addressing

ownership, channel use, franchising, subscriber

privacy, service rates, authorization of services,

III This section does not purport to contain a comprehensive review of all regulations related to this industry, but is

and equal employment opportunity, among

other topics. Though the industry’s total

subscriptions and capacity grew as a result of

the new legislation, competition among cable

service providers did not increase, resulting in

higher service rates for many. The law had

failed to effectively promote competition, so

Congress went further, enacting the 1992

Cable Television Consumer Protection and

Competition Act, which promoted “availability

of diverse views and information.” The

Telecommunications Act of 1996 was created

to provide a framework for competition and

further remove regulatory barriers to entry,

promoting the development of technology in

the industry. To facilitate the entrance of new

players, the 1996 Act mandated

interconnection of telecommunications

networks, unbundling, non-discrimination, and

cost-based pricing of leased parts of the

network.36, 37

Telecommunication services are subject to

traditional common carriage regulation under

Title II of the Communications Act. A common

carrier is defined as “(a)ny person engaged in

rendering communications service for hire to

the public.” A common carrier cannot

discriminate within its area of service, except in

specific circumstances where there is potential

for damage, unreasonable level of risk, or it is

beyond a reasonable capacity. Common

carriage, as applied to telecommunications,

promotes interconnection, enhances

intended to highlight some ways in which regulatory trends are impacting the industry.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 5

competition, and assists in the provision of

universal service.38 Unlike legacy telephone

services, cable broadband services like Internet

and voice are not classified as

“telecommunication services;” whereby the

FCC has authority to regulate customer rates

and prohibit or restrict arrangements between

internet service providers and content and

network providers.39 The FCC released the

Open Internet Order in 2010, establishing

transparency rules and promoting an open

market in broadband Internet connections

while allowing for some degree of

management of congestion, traffic, and

security. However, in January 2014 the U.S.

Court of Appeals vacated the parts of the open

Internet access, or net neutrality, rule on

prohibition of blocking and unreasonable

discrimination.40 The decision now allows

Internet service providers to differentiate

transmission speed based on the type of

content. Companies have started to enter into

agreements with content providers like Netflix

to provide fast connection to its content.41

On May 15, 2014, the FCC launched a

rulemaking process and sought public

comments on protecting and promoting an

open Internet.42 One way to ensure open

Internet access would be to classify cable

broadband as a telecommunication service

under Title II. The FCC is currently in the rule

making process to ensure that broadband

companies, which provide the only access

consumers and business have to the Internet,

are non-discriminatory.43 In addition, in

November 2011, the FCC initiated a rulemaking

on Internet provider interconnection issues that

may have an impact on backend

interconnection arrangements with other

network operators.44

The concept of universal service, originating in

the context of the regulation of natural

monopolies, is a central tenet of the

Telecommunications Act of 1996, and it is

evolving as technology evolves. The Act and

subsequent actions by the FCC emphasize

access to new communications technology such

as high-speed Internet for all consumers at just,

reasonable, and affordable rates. Universal

service principles within the Act are specifically

focused on rural and insular areas and low-

income consumers. To implement provisions of

the 1996 Act, the FCC uses contributions based

on end-user revenues from telecommunication

providers, including wireline, wireless, and VoIP

providers like cable companies that provide

voice service.45

In 1999, Congress passed the Satellite Home

Viewer Improvement Act, which introduced

satellite network providers to the market.

Under this law, the FCC issues satellite

companies licenses for 10- and 15-year terms.46

As satellites are not confined to one nation,

international standards have been put in place

by the International Telecommunication Union

UN Convention on the Registration of Objects

Launched into Outer Space 47 and the Open-

Market Reorganization for the Betterment of

International Telecommunications (ORBIT) Act

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 6

of 2000. Like the communications acts in the

U.S., ORBIT promotes competition in the global

satellite services market through licensing of

orbital locations for satellites.48

Programming is a central offering of the

industry, and regulations encourage

competition to ensure end-users have a variety

of choices for their television services.49

Programming is usually protected under

intellectual property (IP) law, including

copyright law. The 1976 Copyright Act and the

Berne Convention Implementation Act protect

authors of material and grant exclusive rights to

the use and distribution of the work for a

limited or unlimited period of time. The Berne

Convention was an international agreement

first established in 1886, requiring its

signatories to recognize the copyright of works

of authors from other signatory countries.50 For

example, Sirius XM Radio, Inc. states in its

regulatory filings that it must enter into an

agreement with copyright holders of musical

works and copyright holders of sound

recordings. Performing rights organizations

represent these copyright holders. Large record

companies negotiate fees and licenses with

copyright users, and collect royalties and

distribute them to the rights holders.51

In addition, certain content providers can

require satellite and cable companies to acquire

consent for the transmission of their content.

Content providers are increasingly demanding

inflated payments for retransmission consent,

increasing programming costs or sometimes

forcing networks to stop transmitting the

station’s content, potentially leading to a loss

of customers in affected markets.52 For

example, TWC lost more than 300,000

subscribers largely due to a dispute between

the company and CBS over retransmission

costs. The month long dispute left CBS

channels blacked out, causing many customers

to end their cable subscriptions.53

In 2013, Senator John McCain proposed the

Television Consumer Freedom Act to encourage

the “unbundling” of cable TV packages. The

proposed legislation addresses growing cable

bills and the problem of consumers paying for

cable channels that they do not watch. It allows

customers to pick and choose which television

channels they are willing to pay for.54 Recently,

many large companies in the industry were

defendants in a class action lawsuit that alleged

violations of antitrust laws, arguing that cable

and satellite companies conspired to provide

customers with only bundled packages and not

“a la carte” options. This case was dismissed by

the District Court for the Central District of

California and was denied review by the

Supreme Court.55 Although legislation and

litigation have stalled, the industry continues to

face external competition, for example from

Internet media companies, to deliver value

commensurate price.

As operators in the industry maintain sensitive

personal information, privacy has been the

focus of a number of existing and proposed

laws.56 Several laws related to data privacy,

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 7

cyber security, and government access to user

data affect the industry. The FCC regulates the

collection of information by Cable and satellite

companies. The FCC determines how

companies can use such information, known as

Customer Proprietary Network Information

(CPNI), and what actions they need to take to

protect it, including specific requirements for

customers opting into or out of companies’ use

of CPNI.57

The Federal Trade Commission monitors

compliance with privacy laws. Cyber security

regulations have been rising in the United

States, as hackers get more sophisticated in

their attacks and attacks become more

frequent and high profile. The Data Security

and Breach Notification Act of 2013,

introduced to the Senate in June 2013, would

require companies that collect and store

personal information to protect that

information and provide individuals with a

notice in the case of security breach.58

Furthermore, on February 13th 2013, President

Obama issued an executive order that aims to

establish a framework under which the private

sector can work with the government to share

information about cyber-attacks and threats

that might undermine the broader population,

the economy, or other nations.59, 60

Finally, like any business with a physical

footprint, companies in the industry are subject

to federal, state, local, and international

regulations on air and water quality and waste

management. The increasing concern over

greenhouse gases driving climate change has

also spurred new policies around carbon

emissions and fossil fuel energy use. For

example, a California cap-and-trade law that

took effect on January 1, 2013 limits

companies’ carbon emissions. Although there is

no cap-and-trade system or carbon pricing at

the federal level, the President proposed new

legislation to limit greenhouse gas emissions

from new power plants in 2012. Laws such as

these place pressure on energy-intensive

activities like operating data centers by making

them more costly for cable and satellite

companies to operate.61, 62

SUSTAINABILITY-RELATED RISKS AND OPPORTUNITIES

Industry drivers and recent regulations suggest

that traditional value drivers will continue to

impact financial performance. However,

intangible assets such as social, human, and

environmental capitals, company leadership

and governance, and the company’s ability to

innovate to address these issues are likely to

increasingly contribute to financial and business

value.

Broad industry trends and characteristics are

driving the importance of sustainability

performance in the Cable & Satellite industry:

• Natural monopoly: While the industry

is facing some external competition,

the extremely high fixed cost of

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 8

distribution has resulted in a limited

number of companies serving each

market, hence posing antitrust risks.

Dominant positions by a few players

create concerns about terminal access

monopolies in the absence of “net

neutrality.”

• Growing data transmission: As the

Cable & Satellite industry increasingly

provides Internet services, giving

companies greater access to consumer

information, public concern heightens

the need for strong data privacy and

security policies

• Digital interconnectedness of the

economy: With enterprises,

governments, and individual consumers

increasingly depending on cable and

satellite providers for Internet services,

a robust communications infrastructure

becomes important to avoid systemic or

economy-wide disruptions.

As described above, the regulatory and

legislative environment surrounding the Cable

& Satellite industry emphasizes the importance

of sustainability management and performance.

Specifically, recent trends suggest a regulatory

emphasis on consumer privacy and competitive

behavior, which will serve to align the interests

of society with those of investors.

The following section provides a brief

description of each sustainability issue that is

likely to have material implications for

companies in the Cable & Satellite industry.

This includes an explanation of how the issue

could impact valuation and evidence of actual

financial impact. Further information on the

nature of the value impact, based on SASB’s

research and analysis, is provided in Appendix

IIA and IIB. Appendix IIA also provides a

summary of the evidence of investor interest in

the issues. This is based on a systematic analysis

of companies’ 10-K and 20-F filings,

shareholder resolutions, and other public

documents. It also based on the results of

consultation with experts participating in an

industry-working group convened by SASB.

A summary of the recommended disclosure

framework and accounting metrics appears in

Appendix III. The complete SASB standards for

the industry, including technical protocols, can

be downloaded from www.sasb.org. Finally,

Appendix IV provides an analysis of the quality

of current disclosure on these issues in SEC

filings by the leading companies in the industry.

ENVIRONMENT

The environmental dimension of sustainability

includes corporate impacts on the environment.

This could be through the use of natural

resources as inputs to the factors of production

(e.g., water, minerals, ecosystems, and

biodiversity) or environmental externalities and

harmful releases in the environment, such as air

and water pollution, waste disposal, and GHG

emissions.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 9

Although the environmental footprint of the

Cable & Satellite industry remains limited

relative to other industries, the industry’s

energy use is increasing and becoming more

material, as additional traffic drives the need

for new network capacity and data facilities.

Energy consumption translates into companies’

direct and indirect contribution to greenhouse

gas (GHG) emissions through large vehicle

fleets and electricity consumption in data

centers and network equipment, respectively.

Carbon pricing has potential cost implications,

as pricing of GHG emissions could be passed on

to companies purchasing fossil fuel-based

electricity. Energy management can influence

reputation and attractiveness to customers in

the medium- to long-term (as public concerns

drive a closer inspection by business customers

of the environmental impacts of their supply

chains).

Infrastructure Energy Use & Fleet Fuel Consumption

Management of electricity usage, particularly

within data centers, and fuel consumption

related to operating large fleets of service

vehicles are concerns for companies in the

Cable & Satellite industry. A large part of the

energy consumed by the industry is used to

power critical network and data center

infrastructure that supports the transmission of

video, Internet, and VoIP services. As industry

players are increasingly supplying broadband

data connections, the need for data centers

and related infrastructure will increase.

Such infrastructure needs to be powered

continuously; disruptions to energy supply can

have a material impact on operations,

depending on the magnitude and timing of the

disruption. At the same time, cable and satellite

companies operate large fleets of customer

service vehicles, so managing fuel consumption

may be a material issue, as fuel prices tend to

rise over the long term.

Managing the environmental footprint of the

significant infrastructure of cable and satellite

companies is important for managing costs,

obtaining reliable supplies of energy, and

lowering reputational risks. With an increasing

global focus on climate change, regulatory and

customer actions place greater emphasis on

resource conservation, and innovations in

energy efficiency and renewable energy provide

new avenues for energy management.

With the growth of high-speed data and VoIP

services, companies are likely to continue

expanding their data-center infrastructure.

Cable and satellite companies can pursue

various strategies to achieve energy efficiency.

To minimize electricity consumption by data

centers, companies can purchase more efficient

equipment, optimize data center locations,

manage energy “hotspots” in data centers, and

implement server virtualization, which can

reduce the need to install more physical servers.

The use of efficient routing and dispatching,

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 10

higher fuel economy, and cleaner vehicles

could reduce companies’ scope 1 GHG

emissions and fuel costs.

Company performance in this area can be

analyzed in a cost-beneficial way internally and

externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

• Operational energy consumed,

percentage grid electricity, and

percentage renewable; and

• Fleet fuel consumed, percentage

renewable.

Evidence

Individual cable and satellite companies

consume substantial amounts of energy, with

impacts on both operations and the

environment. Given that large corporations in

this industry amass more than $300 million

annually in energy bills,63 there is an

opportunity for companies to provide value to

shareholders by promoting energy efficiency

measures throughout their operations. As

traffic over Internet networks has increased, so

has the need for data centers. In 2008, the

median Comcast residential broadband user

consumed 2.5 GB of data per month.64 Four

years later, Comcast reported that this number

had quadrupled to a median monthly usage of

8-10 GB per consumer.65 Although network

equipment and data centers are becoming

more energy-efficient, their overall energy

consumption is increasing with the expansion

in cable infrastructure and data traffic.

According to the Electric Power Research

Institute, data centers use between 10 and 20

times more energy than an average commercial

building.66 In 2013, U.S. data centers consumed

91 billion kWh of electricity, equivalent of to an

annual output of 34 large (500-megawatt)

coal-fired power plants. That consumption is

expected to increase to 140 billion kWh by

2020, which would amount to $13 billion in

electricity bills annually. Such consumption

would result in 150 million metric tons of CO2

emissions per year.67

Cable and satellite companies may operate

their own data centers or rent space in multi-

tenant data centers. Cable & Satellite industry

players are expanding their market share for

high-speed Internet. In the U.S., the seventeen

largest cable and telephone providers added

more than 2.6 million high-speed Internet

subscribers in 2013. Eighty two percent of

added broadband connections came from cable

companies; Comcast, TWC, and Charter alone

accounted for almost 1.9 million new

subscribers. As of 2013, top cable companies

had a broadband subscriber base of 49.3

million.68 Increasing data use is likely to drive a

higher demand for data centers. The North

American multi-tenant data center market is

expected to hit $14.8 billion by 2016, a 32

percent increase. To capture that growth, some

cable companies are expanding to the data

center segment. In 2014, Shaw

Communications, a Canadian communications

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 11

company, acquired ViaWest, a Colorado-based

data center provider.69

While regulatory incentives related to GHG

emissions mitigation have not been

implemented consistently across the world or

continuously over time, they are likely to

increase costs of fossil fuel-based energy and

make renewable energy options more attractive

in the medium- to long-term. In the U.S., the

average retail price of electricity for the

commercial end-use sector has increased from

7.9 cents per kilowatt-hour (kWh) in 2001 to

10.3 cents per kWh in 2013.70 The U.S. Energy

Information Administration’s (EIA’s) long-term

projections show that nominal electricity prices

paid by the commercial end-use sector will

increase to around 18 cents per kWh by

2040.71 It is critical for cable and satellite

companies to provide uninterrupted service,

which may require additional capital

expenditures as their networks expand. As the

impacts of climate change intensify, electrical

grid disruptions are likely to increase, impacting

network operations. Weather-related significant

grid disturbances have been steadily increasing

in the U.S., from just over 20 incidents in 2003

to almost 140 incidents in 2011.72

Some states require that renewable energy

account for a certain percent of a utility

company’s total energy provided. Companies in

the Cable & Satellite industry may purchase

electricity in those states. In its 2013 CDP

report, DIRECTV states that the company may

be exposed to rising prices of renewable energy

if state and/or federal tax incentives are not

available to the owners of the renewable

energy generating facilities.73

Companies in this industry are addressing and

providing insight into many energy

management issues that are currently

impacting or may impact their operations in the

future. For example, Comcast’s efforts to

improve air flow and cooling methods in its

data centers are expected to save the company

more than $2 million over a 5-year period.74

Furthermore, by virtualizing physical servers,

Comcast was able to reduce the number of

physical servers significantly and lower power

consumption by 11 percent.75 DIRECTV used

171,200 MWh of electricity in 2012. The

company was able to reduce its Scope 2

emissions by upgrading essential equipment in

broadcasting operations as well as installing

efficient lighting and pumps. Upgrading remote

broadcast equipment helped to reduce annual

Scope 2 emissions by 2,500 metric tons of

CO2e.76 By upgrading older power supply

systems to more energy efficient ones, Telenet,

a Belgium-based provider of media and

communication services, improved efficiency by

10 percent, reduced annual Scope 2 emissions

by 431 metric tons of CO2e, and achieved

€285,000 in annual savings.77

Many companies in this industry also own large

commercial vehicle fleets for work related to

installation, infrastructure maintenance, and

customer service. Emissions from such vehicles

represent a significant portion of a company’s

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 12

overall carbon footprint.78 More than half of

DIRECTV’s total emissions (scopes 1 and 2) of

215,000 metric tons of carbon dioxide

equivalent (CO2e) were generated by mobile

sources.79 In 2012, the company purchased

432,127 MWh of energy in fuel, which is

almost three times the amount of their

electricity purchases.80 In 2013, Comcast

operated more than 37,000 vehicles in its fleet,

making it the fourth largest vehicle fleet in the

U.S. that year. Other companies in the industry

also have large fleets – TWC had about 19,000

vehicles, Charter Communications 8,000,

DIRECTV 6,000, Dish Network 5,000, and

Cablevision 3,500 fleet vehicles.81 These six

cable and satellite companies accounted for 6.6

percent of the vehicles of the top 500 largest

fleet owners in 2013.82

Companies are evaluating the current structure

and operations of their service vehicle fleets to

better respond to volatile fuel costs and reduce

carbon emissions. For example, Dish Network

introduced a new fleet of 200 propane gas

automobiles, which it expects will save the

company 55 percent in fuel costs, more than

$2,500 annually per vehicle83 or $12.5 million,

assuming savings across its entire fleet.84 In

2011, TWC implemented a program to reduce

the amount of time its fleet vehicles are

allowed to idle. The initiative saved the

company $3.3 million in 2011 and reduced the

company’s carbon emissions per vehicle by

more than 60 percent.85 By improving routing

and dispatching in its fleet operation, DIRECTV

was able to reduce Scope 1 emissions by

approximately 13,000 metric tons of CO2e in

2012. In the same year, the company also

added 37 lower emission alternative fuel

vehicles to its fleet and committed funds to

testing cleaner vehicle technologies such as

propane, compressed natural gas, and

biodiesel.86

Value Impact

Continuing growth of high-speed Internet

subscriptions requires cable and satellite

companies to expand their data centers and

other network infrastructure. At the same time,

operating a larger number of data centers

requires companies to increase their operating

and capital expenditures in order to ensure

uninterrupted delivery of services and mitigate

the risks of disruptions, which, in turn,

indicates that materiality of the issue is likely to

increase in the near to medium term. Cable &

Satellite companies that implement initiatives

aimed at reducing energy consumption and

GHG emissions may achieve significant cost

savings and improve their operational efficiency

over time. Changes in the total amount of

energy and fuel consumed by a company in

comparison to revenues indicate changes in

operational efficiency. At the same time, given

the volatility of electricity and fuel prices, these

metrics give analysts an ability to assess a

company’s risk exposure to energy price shocks

over time.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 13

SOCIAL CAPITAL

Social capital relates to the perceived role of

business in society, or the expectation of

business contribution to society in return for its

license to operate. It addresses the

management of relationships with key outside

stakeholders, such as customers, local

communities, the public, and the government.

It includes issues around access to products and

services, affordability, responsible business

practices in marketing, and customer privacy.

Cable and satellite companies have access to

growing volumes of customer data. Proper

management of data privacy and security will

enable companies to be well positioned to deal

with emerging regulations and concerns about

the use and protection of customer data.

Performance on the issues of data privacy and

cyber security is likely to influence whether

companies can attract and retain customers

and build brand value.

Data Privacy

Through the services that they provide, Cable

and satellite companies have access to growing

volumes of customer data. Companies are

increasingly looking to monetize such data,

which may include web-browsing history,

behavioral, and demographic information. One

popular use for the data is to provide targeted

advertising to customers.87

Cable and satellite companies having access to

an expanding range of customer information is

increasing privacy concerns. This is particularly

relevant as third parties also gain access to such

information, although it is generally provided to

them at an aggregate level for groups of retail

consumers. These concerns have led to

regulatory scrutiny from the FCC and other

authorities.

These trends are increasing the importance to

Cable and satellite companies of adopting and

communicating in a transparent manner

policies on providing customer data to third

parties, including the amount and type of data

provided and the nature of its use (for example,

for commercial purposes).

Collection of personal and content data is also

a concern for invasion of privacy by

governments, as accentuated by the recent

national debate on the Foreign Intelligence

Surveillance Act (FISA) and the role of the NSA

in surveillance activities in the U.S. NSA

surveillance of communications networks,

including Cable and satellite companies’

alleged sharing of customer data (such as

number called, time of the call, and data about

email and website visits), and associated

reputational risks highlight the growing

importance of protecting customer data.88

When companies are required to track user

information or share data with governments,

transparency about their privacy practices and

the degree to which they comply with

government requests will enhance their

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 14

reputation and lower the risk of legal actions or

customer backlash against them.

Company performance in this area can be

analyzed in a cost-beneficial way internally and

externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

• Discussion of policies and practices

relating to collection, usage, and

retention of customer information and

personally identifiable information;

• Percentage of users whose customer

information is collected for secondary

purposes, percentage who have opted

in;

• Amount of legal and regulatory fines

and settlements associated with

customer privacy; and

• Number of government or law

enforcement requests for customer

information, percentage resulting in

disclosure.

Evidence

Evolving laws on data privacy and protection in

the U.S. and abroad pose regulatory risks for

Cable & Satellite service providers and

demonstrate public concern about privacy laws.

Investigations and enforcement actions by the

FCC highlight industry practices leading to data

privacy breaches and potential additional costs

of ensuring regulatory compliance. Previously

the amounts of some of the fines and

settlements were small relative to company

revenues, but a recent investigation into

Verizon’s failure to comply with privacy

protection regulations resulted in a $7.4 million

settlement. Investigations revealed in failing to

notify 2 million new customers of their privacy

and opt-out rights, Verizon had violated

Consumer Proprietary Network Information

(CPNI) rules. Over the past few years, the FCC

has been vigilant in enforcing CPNI rules.89

Although most enforcement cases have

involved traditional telecom carriers, the FCC

has asserted that the rules also apply to

interconnected Voice over Internet Protocol

(VoIP) providers.90 Furthermore, a dynamic

regulatory environment can increase penalties

for data privacy violations.

In addition to regulatory investigations, lawsuits

over privacy issues have plagued many of the

largest competitors in the industry, including

Comcast, DIRECTV, Dish Network, and TWC.

Comcast and TWC have faced class action

lawsuits for collecting and retaining customer

credit card and social security information even

after services were canceled. It is unclear as to

the financial impact of these lawsuits but under

the Cable Communication Policy Act, which the

plaintiffs argue has been violated, individuals

are allowed to collect over $100 per day the

violation continues.91 The reputational harm

may be much greater than any cost to conform

to regulation or fines from violations.

The Financial Times reported in August 2013

that cable and telecom companies were

lobbying Congress to relax FCC control over

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 15

communications industry data and instead

grant the Federal Trade Commission greater

reach within the industry. The FCC has the

authority to limit the types of information that

can be sold.92 The sale of user data for

marketing or consumer-behavior analysis is a

potential area of growth in the industry. Sale of

user data was a $5.5 billion industry in 2012,

and is expected to reach $9.6 billion in 2016.

Cellular service companies like Verizon and

Sprint already sell customer data such as user

location and web surfing and application

history to third parties.93

In order to be able to capitalize on this growth

opportunity, Cable and satellite companies will

need to ensure they adopt best practices in

privacy protection, and are transparent about

their privacy policies. Some of these companies

allow customers to opt-in to share their

personally identifiable information, in order to

protect user privacy. For example, Comcast’s

XFINITY Internet support page mentions that

“No Personally Identifiable Information will be

shared with other companies for advertising

unless you tell us that you agree to share that

information.” However, for information that is

not personally identifiable, company policies

may be different – Comcast states that it “may

share your Non-Personally Identifiable

Information with other companies that we trust

IV The Federal Bureau of Investigation issues national Security Letters. The FBI issues these in connection with counter-terrorism or counter-intelligence matters; national security letters are limited to seeking non-content information like customer account information.

to help us provide content and advertising that

is more interesting and relevant to our users.”94

Furthermore, revelations of a broad surveillance

program conducted by the U.S. government

have raised concerns over user data privacy

within corporations and the general public.

Until recently, companies were not allowed to

disclose certain types of data requests by the

U.S. government. However, a recent ruling by

the U.S. Department of Justice allows

disclosures in broad ranges. After being

pressurized from civil rights groups, Cable and

satellite companies started issuing

‘Transparency Reports’ in order to improve their

reputation.95 Companies like Comcast and TWC

disclose requests for customer information

received from government and law

enforcement agencies. Comcast reported that it

received 24,698 criminal requests and between

0 and 999 National Security LettersIV in the first

half of 2013.96 Companies are not allowed to

disclose the exact number of National Security

Letter and FISAV Orders but can report them in

ranges. During the same period, TWC received

6,474 requests from government entities and

0-249 National Security Orders.97

Value Impact

In order to generate profits, retain existing

customers, and attract new ones, industry

players rely on innovative new services that

V The Foreign Intelligence Surveillance Court issues FISA Orders and Warrants. These orders and warrants typically seek both content and non-content information relating to national security matters, such as international terrorism or espionage.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 16

increasingly rely on the use of customer data,

leveraging such data with user networks to sell

targeted advertising or selling the data to third

parties. The changing regulatory landscape in

the U.S. and the E.U. concerning consumer

privacy and the use of personal information

could affect the ability of cable and satellite

companies to use customer data for

commercial purposes. At the same time, new

and emerging data privacy regulations are likely

to affect the operational expenses of

companies through increased costs of

compliance. As customers and regulators begin

to understand the privacy implications of the

use of customer data in the Internet and voice

services segments, the probability and

magnitude of these impacts are likely to

increase in the future.

Breaches of data privacy or unclear

communication to users regarding privacy

policies and the use of data for advertising

purposes are likely to affect company

reputation and brand value, with long-term

impact on market share and revenue growth

potential. Discussion around policies and

practices relating to the collection, use, and

retention of customer information is useful to

an assessment of the magnitude of possible

impacts if data breaches are to occur. Even

though material security breaches may be

infrequent in nature, the magnitude of their

impacts may be significant.

Companies’ exposure to data privacy risks can

be assessed through the percentage of users

whose information is collected for secondary

purposes. Further insight can be gained from

the percentage of consumer information

collected that is based on informed consent, as

opt-in approaches can shield cable and satellite

companies from consumer backlash.

The amount of legal and regulatory fines and

settlements associated with consumer privacy is

a lagging indicator of how well cable and

satellite companies have been managing this

issue. It also indicates the probability and

magnitude of direct costs associated with large

penalties, fines, and remediation

activities. Lastly, it is a proxy measure for the

effectiveness of a company's privacy policies

and practices, and it indicates potential long-

term impacts on reputation and a firm’s ability

to attract or retain clients.

Data Security

As cable and satellite companies increasingly

provide Internet and voice services, they are

entrusted with more and more customer data.

Companies in many industries, including Cable

& Satellite, are facing increasing risks from

security breaches and other malicious activities.

Companies need to ensure that policies and

processes are in place to manage these risks

and that they use hardware or software

systems that enable them to tackle data

security threats both to their own operations,

as well as those of their customers. As hackers

get more sophisticated, companies’ security

systems will also need to evolve.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 17

Cable and satellite companies are providers of

critical infrastructure serving several sectors

including finance, infrastructure, and

government agencies, in addition to retail

customers. If sensitive data of such entities is

exposed due to failings on the part of Cable

and satellite companies, there could be

repercussions for the wider economy and

reputational risks for Cable and satellite

companies. The National Institute of Standards

and Technology’s (NIST) cyber security

framework of February 2014 highlights the

risks to the nation’s security, economy, and

public safety, as well as the risks to companies’

bottom lines.98

Company performance in this area can be

analyzed in a cost-beneficial way internally and

externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

• Number of data security breaches,

percentage involving customers’

personally identifiable information; and

• Discussion of management approach to

identifying and addressing data security

risks.

Evidence

A recent U.S. study on the cost of cybercrime

found that the cost, frequency, and time to

resolve cyber-attacks had increased for four

consecutive years. The study found that the

average annualized cost of cybercrime incurred

per organization ranged from $1.3 million to

$58 million. The average time it took to resolve

a cyber-attack was 32 days, with an average

cost to organizations of just over $1 million

during this period.99 The 2014 global Cost of

Data Breach Study conducted by IBM and

Ponemon found that the average cost of a data

breach had increased to $3.5 million. The

average per capita cost of data breaches varies

widely between countries, but at $201, the

average cost in the U.S. was among the

highest.100

Providing Internet and voice services makes the

Cable & Satellite industry vulnerable to cyber

security threats. According to the study, the

communications industry was among the top

five industry sectors in terms of average

annualized costs incurred over a four-year

period to FY 2013.101 Furthermore, according to

Mandiant’s 2013 Threat Report, six percent of

all advanced cyber-attacks target the

telecommunications industry.102

Companies with access to large amounts of

customer financial data are a target for data

theft by hackers. Retail company Target

recently had data from more than 70 million of

its customers stolen.103 Target faced several

analyst downgrades on the news, as investors

feared the company might lose customers.104

Some analysts believed the breach could cost

the company over $1 billion.105 In 2009,

Comcast experienced a small breach by hackers

that exposed more than 4,000 customer

usernames and passwords.106 Although the

consequences were not as severe as the breach

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 18

at Target, where customers’ credit card

information was stolen, cable and satellite

company data breaches have the potential to

effect many more Americans due to the high

level of market penetration by the top players.

According to a survey of 405 investors, released

in February 2013 by security firm HBGary Inc.,

more than 70 percent of investors are

interested in reviewing company cyber security

practices.VI The U.S. Securities and Exchange

Commission (SEC) issued guidance in October

2011 asking all companies to disclose any

material information on cyber-attacks or risks.

Furthermore, the SEC has asked companies in

several sectors for more information than they

provided in their initial 10-K filings.107

Cable and satellite companies recognize the

risks to their business from security breaches.

Liberty Global states in its FY2013 Form 10-K

that “(a)ny disruptive problem that causes loss,

misappropriation, misuse or leakage of data

could damage our reputation and the credibility

of our operations.”108 Additionally, the

company recognizes the potential impacts from

non-compliance with data security laws, stating

that “(f)ailure to comply with these data

protection laws may result in, among other

consequences, fines.”109 Comcast adds that

data breaches could require companies like

theirs to make significant capital expenditures

and use other resources to remedy security

breaches and that “occurrence of any such

VI Note that the survey does not refer only to companies in this industry, but to all companies.

events or security breaches could have a

material adverse effect on our businesses.”110

Value Impact

Cable and satellite companies manage an

increasing volume of customer data, including

personally identifiable information as well as

demographic, behavioral, and location data.

Therefore, companies’ ability to combat cyber-

attacks is likely to affect their reputation and

brand value, with a long-term impact on

market share and revenue growth potential.

Additionally, companies may face acute impacts

through significant costs associated with

managing the consequences of a breach and

preventing future cyber-attacks or other data

breaches, which could result in increased

capital and operating expenditures as well as

regulatory penalties and contingent liabilities.

As customers and regulators begin to

understand the security implications of the

increasing volume of customer data managed

by cable and satellite companies, the

probability and magnitude of these impacts are

likely to increase in the future.

Companies at greater risk of breaches,

particularly high-impact ones, due to improper

data management policies or systems could

face higher costs of capital. The number of

data security breaches is a lagging indicator of

how well cable and satellite companies have

been managing this issue. At the same time, it

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 19

can serve as a proxy for an assessment of the

magnitude of long-term impacts on customer

retention. Discussion of the management

approach to identifying and addressing data

security risks, including policies and procedures

as well as training of personnel, would help

analysts assess a company’s exposure to

potential data breaches. As companies in the

industry manage increasing amounts of data

and hackers get more sophisticated, the

probability and magnitude of impacts related to

data breaches may increase in the future. Public

concerns around the issue are likely to

continue, pushing governments to implement

stricter cyber-security regulations.

BUSINESS MODEL & INNOVATION

This dimension of sustainability is concerned

with the impact of environmental and social

factors on innovation and business models. It

addresses the integration of environmental and

social factors in the value creation process of

companies, including resource efficiency and

other innovation in the production process. It

also includes product innovation and efficiency

and responsibility in the design, use-phase, and

disposal of products. It includes management

of environmental and social impacts on

tangible and financial assets—either a

company’s own or those it manages as the

fiduciary for others.

The ability of cable and satellite companies to

ensure innovation in business models and

services in the face of changing competitive

forces and regulatory drivers will be crucial to

future success. In particular, innovations that

revolve around protecting customer data and

mitigating risks of network disruption are

important. These topics are discussed under the

Social Capital and Leadership and Governance

sections.

LEADERSHIP AND GOVERNANCE

As applied to sustainability, governance

involves the management of issues that are

inherent to the business model or common

practice in the industry and are in potential

conflict with the interest of broader stakeholder

groups (government, community, customers,

and employees). They therefore create a

potential liability, or worse, a limitation or

removal of license to operate. This includes

regulatory compliance, lobbying, and political

contributions. It also includes risk management,

safety management, supply chain and resource

management, conflict of interest, anti-

competitive behavior, and corruption and

bribery.

In the context of the Cable & Satellite industry,

governance issues manifest themselves in the

form of antitrust concerns and business

disruptions that may have systemic impacts,

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 20

particularly as the industry serves as critical

infrastructure for the economy.

Managing Systemic Risks from Technology Disruptions

Cable and satellite companies own or operate

critical infrastructure that forms the basis of

modern communications and business

processes. Additionally, they provide

communications services that form the basis for

emergency communication systems, including

broadcast or cable television station news and

updates, emergency alert systems, and 911 call

processing.111 Systemic or economy-wide

disruption may occur if their network

infrastructure is unreliable and prone to

business continuity risks, or if they are not

prepared to handle major emergencies. Apart

from the Data Privacy and Security issues

discussed above, disruptions can occur in the

form of network downtime due to technical

errors, impacts of extreme weather events,

natural disasters, or electric grid disruptions.

As the frequency of extreme weather events

associated with climate change continues to

increase, cable and satellite companies will face

physical threats to network infrastructure and

will need to be prepared to convey emergency

communications. Long-term climate change

could also affect network equipment. This

could result in frequent or significant service

disruptions, outages, and the need to upgrade

or repair damaged or compromised equipment.

As cable and satellite companies expand their

offerings and increasingly provide Internet and

VoIP services, they need to ensure the reliability

and resilience of their systems so as not to

disrupt key services. Significant growth in data

volumes and the increasing complexities of

network management could pose risks for

service continuity and quality. Companies could

protect shareholder value by minimizing the

probability and magnitude of systemic impacts

and by actively investing in improving the

reliability, resilience, and quality of their

infrastructure and services.

Company performance in this area can be

analyzed in a cost-beneficial way internally and

externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

• Average Interruption Frequency and

Average Interruption Duration; and

• Description of systems to provide

unimpeded service.

Evidence

Given the systemic importance of

communication networks, the FCC has recently

taken several steps to ensure their resilience,

posing regulatory risks for cable and satellite

companies. The FCC is working to improve the

reliability of networks used to originate

emergency calls. Between 2008 and 2010,

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 21

residential and business interconnected voice

over Internet protocol (VoIP) services rose by 46

percent, and the FCC estimated that 31 percent

of residential wireline 9-1-1 calls were made

using VoIP service.112

In 2011, the FCC proposed rules regarding

outage reporting for interconnected VoIP and

broadband Internet, as cable and satellite

companies increasingly are offering both

services. In February 2012, the agency

implemented the rules for interconnected VoIP

service providers, while deferring a decision on

broadband Internet service providers. As a

result, VoIP providers are required to notify the

FCC within two hours of a discovery of major

service disruptions.113 The FCC requires VoIP

providers to meet Enhanced 911 obligations,

whereby emergency service personnel can

automatically receive a 911 caller’s call back

number and, in most cases, their location.114

The FCC also proposed rules to ensure that

wireline providers that route emergency calls

implement best practices in network design,

operations, and maintenance. Furthermore, a

public-private federal advisory committee to the

FCC has been asked to recommend best

practices for cooperation among network

providers during emergencies, including sharing

infrastructure and back-up power assets.115

According to the FCC, recent events have

exposed weaknesses in the infrastructure of

some Cable & Satellite providers. In March

2011, a Comcast outage in 19 communities in

New Hampshire resulted in those customers

being unable to make calls for hours.116

Furthermore, the FCC has noted that

inadequate back-up power and

communications backhaul redundancy were key

contributors to congestion or failure of

communication networks, particularly during

large-scale natural and man-made disasters.117

Regarding the need for new technology and

systems to maintain high standards of

reliability, the FCC states, “As the

communications infrastructure migrates from

older technologies to broadband technology,

critical communications services will be carried

over a communications network infrastructure

that may or may not be built to the high carrier

grade standards of legacy wireline systems. This

potential for differences in service reliability

could be a major source of concern for critical

sectors, such as energy and public safety, and

for consumers in general.” 118

The above discussion highlights the potential

for systemic impacts affecting individuals and

the economy, and also exposes risks that Cable

and satellite companies face in relation to the

resilience of their network infrastructure. In the

aftermath of Hurricane Sandy, Cablevision

reported 2012 Q3 losses of $3.8 million and a

decline in share price that stemmed from

concerns over losing video subscribers and the

financial impact of the hurricane. The loss is

significant, especially compared to 2011 Q3

profits of $39.3 million. The company

estimated that damages from Hurricane Sandy

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 22

would exceed the $16 million loss from

Hurricane Irene in 2011.119

In response to Hurricane Sandy, the City of

New York produced a plan to bolster the city’s

infrastructure and protect communities from

the impacts of climate change. Communication

infrastructure was specifically addressed in the

plan, and faces challenges such as risks from

flooding by oceanic storm surges and extreme

heat waves, which damage electronic

equipment.120 A 2010 report commissioned by

the U.K. Department for Environment, Food,

and Rural Affairs looked at the information and

communications technology industry’s climate

change adaptation. Broad, long-term climatic

changes, such as higher temperature,

precipitation, and wind variation can affect

infrastructure on a large scale. They can, for

example, accelerate damage to equipment,

which raises maintenance and replacement

costs, and affect the reliability of networks.

Extreme weather events such as hurricanes

tend to severely impact communication

infrastructure on a local geographic scale.121

Leading Cable and satellite companies generally

provide disclosures in their 10-K filings

highlighting the risks associated with

technology and network disruptions. Comcast

outlines in its Form 10-K for FY 2012 the

financial exposure from such disruptions,

stating “(t)hese events also could result in large

expenditures to repair or replace the damaged

properties, networks or information systems or

to protect them from similar events in the

future.”122

Additionally, compliance costs for emergency

communications may be significant. DIRECTV

discloses that in addition to existing regulations

on Emergency Alert Systems, the FCC “may

also mandate that satellite carriers interrupt

programming for local emergencies and

weather events. Any such requirement would

be very difficult to implement, would require

costly changes to our DBS/DTH system (…)FCC

is also considering whether to require that EAS

alerts be provided in multiple languages or via

text messages, which could also prove difficult

and costly.”123

Value Impact

Customers of cable and satellite companies

expect uninterrupted and reliable access to

such services as broadcast or cable television

station news and updates, emergency alert

systems, and 911 call processing. Therefore,

network disruptions can lead to reputational

damage and loss of customers, with long-term

impact on market share and revenue. As

communication services are becoming essential

for many personal and business activities, acute

disruptions can have a systemic impact that

could endanger a company’s license to operate

and affect its risk profile and cost of capital.

Given the increasingly systemic impact of

technology disruptions on society, combined

with the adoption of new technologies and

additional infrastructure by cable and satellite

companies, the probability and magnitude of

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 23

the value impact on industry players are likely

to increase in the future.

Network disruptions can also lead to

extraordinary expenses related to contractual

liability or claims for damages from customers.

In addition, technology and system upgrades

may be necessary to address the causes of

disruptions, resulting in additional operating

and capital expenditures. Average interruption

frequency and duration can be a proxy for

assessing the magnitude of losses associated

with a failure to provide reliable services.

Description of systems to provide uninterrupted

service can serve as a leading indicator of

performance, as robust management systems

and alignment with industry best practices

suggest a stronger ability to manage internal

risk factors as well as a better position to

manage externalities.

Competitive Behavior & Open Internet

The Cable & Satellite industry is a classic

example of a natural monopoly, where high

capital costs lead to a monopoly having the

most efficient production. A larger subscriber

base allows companies to offer lower prices

and gain higher margins due to economies of

scale. This, in turn, allows carriers to invest in

upgrading infrastructure to deliver better

services. Large-scale infrastructure and capital

VII Peering is the direct connection between Internet operations, for example, the connection between a content

requirements for both cable and satellite

providers also create barriers to entry, so the

first supplier to the market usually remains in

dominant position.

While the video124 and Internet125 provider

markets are highly concentrated, the

competitive behavior topic focuses on the

providing of Internet as a vital service in

modern society. It is the backbone of most

communications and is increasingly the

preferred method of delivery for media over

traditional delivery via cable or satellite.

Specifically, it explores the concept of open

Internet access, the associated social

externalities, and the financial risk to cable

companies mismanaging this issue.

Open Internet access is the concept that

owners of last-mile broadband access

infrastructure or Internet service providers (ISPs)

should not impair end user access to lawful

online applications, content, or services.126 The

Internet, as it is aptly named, connects a vast

network of content and service providers, like

Internet media and e-commerce companies, to

consumers. This exchange of Internet traffic

between content providers and end users

happens through various arrangements that

include, among others, transit, paid peering,

settlement-free peering, and content delivery

networks (CDNs).127 On the backend are transit

network providers that provide peeringVII

connections for anyone to use. On the

provider and a transit network provider or between a content provider and a last-mile ISP.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 24

consumer facing side, ISPs provide last-mile

delivery to consumers. Traditionally, all network

traffic would pass through these transit

networks, but major content providers are now

peering or connecting directly with ISPs to

hasten content delivery. Additionally, content

providers are also running content delivery

networks (CDNs) inside ISPs to streamline

delivery of popular content to the ISPs’

subscribers. ISPs have the technical ability to

monitor and filter network traffic and so can

act as gatekeepers.128

Since the market for Internet service provision

is so concentrated in the U.S., ISPs have the

potential to act as terminating access

monopolies, which is the cause of both public

and regulatory concern. Because of this, the

focus of the FCC’s net neutrality debate has

been on last-mile access. While some argue

that direct peering between content providers

and ISPs creates additive gains to network

capacity and efficiency,129 the FCC is also

looking into peering agreements between

content providers and ISPs.130

ISPs, both cable and telecommunications

companies, are under increasing pressure to

ensure net neutrality, or open Internet access,

where all data on the Internet is treated equally

in terms of performance and access. By having

the technical ability to speed up, slow down, or

throttle content delivery, Internet providers may

have an unfair advantage in terms of access to

consumers. There are concerns that ISPs may

charge content providers high fees to access

their networks and reach end-users. Together

with natural monopoly, the vertical integration

of cable providers with media producers creates

conditions for potential discrimination of lawful

content.

Cable and satellite companies therefore face

heightened regulatory risks from anti-trust

regulation and legislative changes aimed at

fostering competition and ensuring universal

service as technology advances. These have the

potential to impact market share and

profitability for dominant players.

Given the continued focus of regulations on

facilitating competition, cable and satellite

companies must balance two aspects in order

to protection shareholder value: the need to

expand market share and generate revenues in

an increasingly competitive market, and the

need to ensure that they do not engage in

unfair practices to restrict competition by using

their network advantages. In addition,

companies that are able to develop unique

pricing structures and ensure high quality of

service for rural and insular areas will be able to

expand their subscriber base while maintaining

their license to operate.

Company performance in this area can be

analyzed in a cost-beneficial way internally and

externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 25

• Amount of legal and regulatory fines

and settlements associated with anti-

competitive practices;

• Revenue from paid peering agreements

with content providers and other

networks and service providers; • Average actual sustained download

speed of owned and commercially-

associated content and non-affiliated

associated content; and • Discussion of risks and opportunities

associated with Open Internet

Principles and other potential

regulation.

Evidence

The changing dynamics of technology and

communications markets, in particular the rapid

expansion of the Internet, pose challenges to

the industry in terms of competitive behavior.

Cable and satellite companies maintain costly

infrastructure to enable communications

services and make continuous improvements to

ensure access to an increasing number of

products and services over communication

networks, including Internet. Consequently,

some Cable and satellite companies are seeking

ways to share the cost of maintaining the

infrastructure with Internet content providers,

who use telecom networks to deliver their

services. At the same time, Cable and satellite

companies could face regulations to ensure net

neutrality, restricting their ability to recover

costs and potentially limiting market share.

Natural monopoly conditions have led to high

market shares for the top carriers, creating

competition concerns. The top four providers -

Comcast, DIRECTV, Dish Network, and TWC -

account for 78.2 percent of video subscribers

and 56.6 percent of industry revenue.131

Though providing Internet services is not

limited to Cable and satellite companies, the

market for Internet service is also concentrated.

According to Leichtman Research Group,

seventeen of the largest cable and

telecommunications providers in the U.S.

represent 93 percent of the market,132 with the

top four – Comcast, TWC, AT&T, and Verizon –

accounting for 68 percent of Internet

subscribers.133 Due to the lack of competition

and perceived anti-competitive business

practices of dominant companies in the

industry, consumers are becoming displeased

with the price and quality of service.

Consumers continually voice their opinions over

cable and satellite companies’ pricing policies

and the topic has gotten a lot of media

coverage.134, 135, 136 This dissatisfaction is evident

in the poor reputational rankings received by

Internet service providers in the 2012 American

Customer Satisfaction Index. ISPs ranked lower

than airlines and health insurance companies.

Among ISPs, Comcast ranked the lowest,

followed closely by TWC. According to the

survey, customers were unhappy with ISPs’ call

center service, their Internet plans, and the

quality of online video streaming.137

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 26

Cable companies have been losing video

subscribers to satellite companies and telecoms.

Additionally, there is an overall decline in

television subscribers, a trend that is expected

to continue with the rise in Internet media

services.138 Cable companies are making up for

lost video subscribers,139 by making gains in the

Internet segment. Customers have filed

antitrust lawsuits against many of the major

companies in the industry, including Comcast,

DIRECTV, Dish Network, and Charter.140, 141 In

one of the antitrust cases brought against

Comcast in 2003, plaintiffs argued that

Comcast’s share of subscribers in the

Philadelphia area increased by “impermissible

means,” from 23.9 percent in 1998 to 77.8

percent in 2002. They alleged that Comcast

gained dominant market position by

“clustering,” or driving out competition and

gaining market share in a defined geographic

area by strategically giving up or swapping

holdings elsewhere.142 If companies do not

ensure competitive business practices, the trend

of customer frustration can result in the

continued loss of TV subscribers, which can

materially harm the industry’s core

business.143, 144

The industry faces ongoing legislative and

regulatory actions aimed at ensuring

competition, which could limit the market share

and growth potential of some of the larger

players. M&A activity by dominant market

players has come under regulatory scrutiny.

Telecom giant AT&T has made a bid to acquire

DIRECTV. They are competitors in the video

segment, but DIRECTV’s 38 million satellite TV

subscribers would be a significant addition to

AT&T 5.5 million video subscribers.145 Also

noteworthy is the proposed merger by the two

largest cable providers, Comcast and TWC,

which is pending approval from the FCC. The

combined company would provide video

services to a third of American homes and

Internet service to nearly 40

percent.146 However, Comcast is confident that

its acquisition of TWC will be approved since

the two companies do not serve the same

geographic markets, and so a merger would

likely not result in less competition in individual

markets.147 This claim is aligned with an FCC

analysis that found 64 percent of households

had between one and two choices for high-

speed Internet service in 2012.148 Since the

companies do not compete in the same

markets, the limited consumer choice would

not be diminished further. It is unclear how the

deal will impact consumers, but it would

undoubtedly provide Comcast with substantial

purchasing power over cable networks149 and

greater terminal access monopoly.

Regardless, the FCC weighs concerns of various

parties in proposed mergers and many are

opposed to Comcast’s acquisition of TWC,

including competitors and content providers.

Further industry consolidation may put even

greater power in the hands of a few companies

to act as terminal access monopolies. Netflix,

whose content dominates as much as a third of

bandwidth on broadband networks during

peak hours,150 and Dish Network, a satellite

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 27

video provider, are among those opposed to

the acquisition.151 Netflix has already signed

contracts with Comcast, TWC, Verizon, and

AT&T to ensure that the company can easily

stream its content to subscribers through these

networks.152

The FCC’s open Internet, or net neutrality, rules

included three key requirements for broadband

providers: “1) a prohibition against blocking

websites or other online applications; 2) a

prohibition against unreasonable discrimination

among Internet users or among different

websites or other sources of information; and

3) a transparency requirement compelling the

disclosure of network management policies.”153

In January 2014, the D.C. Circuit Court of

Appeals struck down all but the transparency

rule, citing that Internet provision was classified

as an information service and so was not bound

by the common carrier rules governing

telecommunications services.154 The

classification of Internet services and the fate of

open Internet rules are currently under debate

by regulators, adding to uncertainty and risks

around this issue. According to telecom analyst

and former FCC official Paul Gallant, “Under

Title II, cable and phone companies would

probably end up paying higher borrowing rates

for future network investments that [sic] they

pay today.”155

There are concerns that in the absence of open

Internet rules, Internet providers would favor

certain content. For example, they may lower

transmission speeds or provide poor quality

service to certain content providers and

increase the speed for their own content or

affiliated content. The absence of rules could

create an unequal playing field where larger

content providers are able to pay higher prices

to ensure faster speeds, but smaller

competitors or Internet media startups would

face difficulty in reaching end users.

Internet and video service providers may

continue to acquire content in order to lower

programming costs and gain competitive

advantage. Comcast owns the NBC and

Telemundo broadcast networks and Universal

Studios156 and DIRECTV has its own

professional and collegiate sports

programming.157 Vertical integration, with cable

and satellite video providers acquiring media

production companies, has also garnered

regulatory attention due to concerns over

differentiated Internet speeds. As part of the

consent decree when Comcast acquired

NBCUniversal, the company is required to

adhere to FCC open Internet rules.158

The FCC may want more authority to regulate

Internet broadband provision if the Commission

feels that it is not being deployed quickly

throughout the U.S. In April 2012, the FCC

requested comments on a proposal to tax both

cable and telecom broadband Internet services.

Similar to fees currently attached to both

landline and cellular telephone bills, the

revenue would be used to support universal

access by contributing to the newly created

Connect America Fund, which aims to subsidize

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 28

the construction of high-speed Internet

networks to the 19 million Americans who

currently lack access.159

Value Impact

With increasing regulatory scrutiny from the

FCC, more public attention has been focused

on cable and satellite companies’ ability to

ensure competition and access to services they

provide. Involvement in cases of antitrust

violation may result in extraordinary expenses

and contingent liabilities and could lead to

reputational damage. Due to high

concentration within the Cable & Satellite

industry, antitrust authorities can impact

companies’ ability to raise prices, with

subsequent impact on revenue. As customers

and regulators begin to understand the

implications of net neutrality, the probability

and magnitude of these impacts are likely to

increase in the future.

Heavy reliance on arrangements with content

providers such as paid peering exposes

companies to the risk of losing a substantial

portion of revenue if new regulations make

these types of arrangements illegal. Failure to

meet customer expectations around download

and upload speed may result in customer

backlash and may open service providers to the

risk of class action lawsuits. Differences in

download speeds between owned and

commercially associated content and non-

associated content would indicate prioritization

of specific content. Such prioritization could

result in additional regulatory scrutiny and may

be prohibited under open Internet principles.

Discussion of risks and opportunities associated

with net neutrality regulation is a leading

indicator of a company’s positioning to best

enable growth and new revenue streams in an

evolving market.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 29

REFERENCES

1 Sarah Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US," IBISWorld, November 2013, p.5. 2 Kahn, Sarah. “IBISWorld Industry Report 51711b: Satellite TV in the US.” IBISWorld, November 2013. p.2.

3 Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 5. 4 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 6.

5 Data from Bloomberg Professional service accessed on October 1, 2014, using the ICS <GO> command. The data represents global revenues of companies listed on global exchanges and traded over-the-counter from the Cable & Satellite industry, using Levels 3 and 4 of the Bloomberg Industry Classification System.

6 Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 4. 7 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 4.

8 Data from Bloomberg Professional service accessed on October 1, 2014, using the ICS <GO> command, representing of companies listed on global exchanges and traded over-the-counter from the Cable & Satellite industry, using Levels 3 and 4 of the Bloomberg Industry Classification System. 9 Author’s analysis of annual SEC filings by top companies in the Cable & Satellite industry

10 Charter Communications, Inc., FY2013 Form 10-K for the fiscal year ended December 21, 2013 (filed February 21, 2014), p.42 11 Kahn. "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 22.

12 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 23. 13 Author’s calculation based on Consolidated Balance Sheet from DIRECTV FY2013 Form 10-K for the fiscal year ending December 31, 2013 (filed February 24, 2014) p. 73. 14 Charter Communications, Inc., FY2013 Form 10-K for the fiscal year ended December 21, 2013 (filed February 21, 2014), p.35 15 Author’s calculation based on data from Bloomberg Professional service, accessed on September 30, 2014 using Equity Screen (EQS) for U.S.-listed companies (including those traded primarily OTC) that generate at least 20 percent of revenue from their Cable & Satellite segment and for which Cable & Satellite is a primary SICS industry. 16 Market Share. Data Library. BI CATVN <GO> command. Bloomberg Professional service. Accessed October 7, 2014. 17 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 21.

18 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 24.

19 Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 23. 20 Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 11.

21 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 9. 22 Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 7.

23 Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 23. 24 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 4

25 Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 24 26 Roger Yu, “Comcast to buy GE's 49% stake in NBCUniversal,” USA Today, February 13, 2013, accessed November 26, 2014, http://www.usatoday.com/story/money/business/2013/02/12/comcast-nbc-ge/1914059/.

27Serena Saitto and Alex Sherman, "Charter to Buy Optimum West for $1.63 Billion," Bloomberg, last modified Feb 09, 2013, accessed January 23, 2014. http://www.bloomberg.com/news/2013-02-07/cablevision-said-nearing-sale-of-optimum-west-to-charter.html

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 30

28 Liana Baker and Nicola Leske, "Charter takes rejected Time Warner Cable bid to investors," Reuters, last modified Jan 14, 2014, accessed January 23, 2014. http://www.reuters.com/article/2014/01/14/us-timewarnercable-charter-idUSBREA0C1IK20140114

29 Baker, "Comcast takeover of Time Warner Cable to reshape U.S. pay TV,” Reuters. February 13, 2014. Accessed February 13, 2014. http://www.reuters.com/article/2014/02/13/us-comcast-timewarnercable-idUSBREA1C05A20140213 30 Comcast Corp, FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 21, 2014). p.52

31 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 22 and Kahn, "IBISWorld Industry Report 51711a: Cable Providers in the US." p. 21.

32 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 11. 33 “Introduction to the Telecommunications Industry,” Plunkett Research, Ltd, accessed December 19, 2013. http://www.plunkettresearch.com/telecommunications-market-research/industry-and-business-data. 34 “Comcast Unveils Next Generation in Cable User Interface with X2,” Bloomberg Industries, Cable & Satellite, North America, accessed June 20, 2013. 35 “What We Do,” Federal Communications Commission, accessed December 20, 2013. http://www.fcc.gov/what-we-do.

36 “Evolution of Cable Television,” Federal Communications Commission, accessed December 19, 2013. http://www.fcc.gov/encyclopedia/evolution-cable-television.

37 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 32. 38 Eli Noam, “Beyond Liberalization II: The Impending Doom of Common Carriage” Columbia University, March 15, 1994. Accessed December, 2014. http://www.columbia.edu/dlc/wp/citi/citinoam11.html 39 Comcast Corp, FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 21, 2014) p.20

40 “Open Internet,” Federal Communication Commission. Accessed December, 2014. http://www.fcc.gov/openinternet 41 Betsy Isaacson, "Why You Should Be Freaking Out About The End Of Net Neutrality," Huffington Post, last modified January 22, 2014, accessed January 24, 2014. http://www.huffingtonpost.com/2014/01/14/net-neutrality_n_4597831.html

42 “Open Internet,” Federal Communication Commission. Accessed December, 2014. http://www.fcc.gov/openinternet

43 “Open Internet Explainer,” Federal Communications Commission. Accessed December, 2014. http://www.fcc.gov/document/open-internet-explainer

44 Comcast Corp, FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 21, 2014). p. 21 45 “Universal Service,” Federal Communications Commission, accessed October 17, 2014. http://www.fcc.gov/encyclopedia/universal-service

46 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 32. 47 DISH Network Corporation. FY 2012 Form 10-K for the Fiscal Year Ending December 31, 2012. (Filed February 20, 2013). p.18. 48 “Competition, Capacity, and Costs in the Fixed Satellite Services Industry,” US Government Accountability Office, September 2011, p.3. 49 Kahn, “IBISWorld Industry Report 51711b: Satellite TV in the US.” p. 23.

50 “Copyright Notice,” United States Copyright Office, last modified February 2013ccessed December 15, 2013. http://www.copyright.gov/circs/circ03.pdf.

51 Sirius XM Radio, Inc. FY 2013 Form 10-K for the Fiscal Year Ending December 31, 2013. (Filed February 6, 2014). p.8. 52 Charter Communications, Inc., FY2013 Form 10-K for the fiscal year ended December 21, 2013 (filed February 21, 2014).p.9.

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 31

53 Julianne Pepitone, "Time Warner Cable lost 300,000 subscribers amid CBS blackout," CNN Money, last modified October 31, 2013, accessed January 24, 2014. http://money.cnn.com/2013/10/31/technology/time-warner-cable-cbs/

54 John McCain, "SENATOR JOHN McCAIN INTRODUCES NEW “A LA CARTE” CABLE BILL," last modified May 09, 2013, accessed January 23, 2014. http://www.mccain.senate.gov/public/index.cfm/press-releases?ID=8a5d2818-ac05-71a2-5eae-5b58400e0019 55 DISH Network Corporation. FY 2012 Form 10-K for the Fiscal Year Ending December 31, 2012. (Filed February 20, 2013). p.30. 56 Emma Hall, “As Regulation Increases, WFA Must Decide on What’s Worth Protecting,” Adage, last modified March 11 ,2013, accessed December 16, 2013. http://adage.com/article/cmo-interviews/pernod-ricard-cmo-riley-leads-wfa-amid-regulation-concerns/240222/.

57 “Protecting your Telephone Calling Records,” Federal Communications Commission, accessed December 10, 2014, http://www.fcc.gov/guides/protecting-your-telephone-calling-records

58 Toomey, "S. 1193: Data Security and Breach Notification Act of 2013,” 113th CONGRESS, last modified June 20, 2013, accessed January 23, 2014. https://www.govtrack.us/congress/bills/113/s1193/text

59 Zach Whittaker, "Obama's cybersecurity executive order: What you need to know," last modified Feb 13, 2013, accessed January 23, 2014. http://www.zdnet.com/obamas-cybersecurity-executive-order-what-you-need-to-know-7000011221/

60 "Executive Order -- Improving Critical Infrastructure Cybersecurity," The White House, last modified Feb 12, 2013, accessed January 23, 2014. http://www.whitehouse.gov/the-press-office/2013/02/12/executive-order-improving-critical-infrastructure-cybersecurity 61 Robert J. Mullins, “New Global Warming Rules Put the Heat On Data Centers,” Network World, last modified August 26, 2013, accessed December 20, 2013. http://www.networkworld.com/news/2013/082613-data-center-rules-273102.html.

62 Michael D. Shear, “Obama Administration Presses Ahead With Limits on Emissions From Power Plants,” last modified September 19, 2013, accessed December 20, 2013. http://www.nytimes.com/2013/09/20/us/politics/obama-administration-announces-limits-on-emissions-from-power-plants.html?hp&_r=0

63 Bushaus Dawn, "Comcast Goes Green," Tellabs Insight, accessed January 13, 2014. http://www.tellabs.com/news/reprints/insight_1q11_comcast.pdf 64 “Announcement Regarding an Amendment to Our Acceptable Use Policy,” Comcast, Network Management Policy, October 1, 2008, accessed October 23, 2014. http://xfinity.comcast.net/terms/network/amendment/, 65 Roger Yu, “Cable Companies Cap Data Use for Revenue,” USA Today, October 1, 2012, accessed November 2, 2012. http://www.usatoday.com/story/tech/2012/10/01/internet-data-cap/1595683/, 66 Matthew Barg,, “Software & Services Industry Report,” Sustainalytics. 2012.

67 “America’s Data Centers Consuming Massive and Growing Amounts of Electricity,” Anthesis, August 26, 2014, accessed December 9, 2014. http://anthesisgroup.com/latest-research-by-anthesis-americas-data-centers-consuming-massive-and-growing-amounts-of-electricity/

68 “2.6 Million Added Broadband from Top Cable and Telephone Companies in 2013,” Leichtman Research Group Press Release, accessed December 8, 2014. http://www.leichtmanresearch.com/press/031714release.html

69 Ben Dummett and Judy McKinnon, “Shaw Communications to Buy U.S. Data Center Provider ViaWest,” The Wall Street Journal, July 31, 2014, accessed December 8, 2014. http://www.wsj.com/articles/shaw-communications-to-buy-u-s-data-center-provider-viawest-1406814471

70 Electricity Data Browser, Average Retail Price of Electricity: United States: Commercial: Annual, U.S. Energy Information Administration. http://www.eia.gov/electricity/data/browser

71 Electricity: End-use prices: Commercial (nominal cents per kilowatthour), Electricity Supply, Disposition, Prices, and Emissions, Annual Energy Outlook 2013, U.S. Energy Information Administration. Web http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2013&subject=3-AEO2013&table=8-AEO2013&region=0-0&cases=co2fee10-d021413a,co2fee10hr-d021413a,ref2013-d102312a

72 T. Randall, “Enlightened Power: New Eco Warriors Are Really Well Armed,” Bloomberg, 29 January 2014: http://www.bloomberg.com/news/2014-01-29/enlightened-power-new-eco-warriors-are-really-well-armed.html

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 32

73 “Investor CDP 2013 Information Request: DIRECTV.” CDP, Accessed December 9, 2014. https://www.cdp.net/sites/2013/73/4773/Investor%20CDP%202013/Pages/DisclosureView.aspx

74 Bushaus, "Comcast Goes Green."

75 Comcast - NBC Universal - 2012 CSR Report. p.74 76 “Investor CDP 2013 Information Request: DIRECTV.” CDP, Accessed December 9, 2014. https://www.cdp.net/sites/2013/73/4773/Investor%20CDP%202013/Pages/DisclosureView.aspx 77 “Investor CDP 2013 Information Request Telenet Group Holding NV.” CDP, Accessed December 9, 2014. https://www.cdp.net/sites/2013/51/31351/Investor%20CDP%202013/Pages/DisclosureView.aspx 78 DIRECTV, Corporate Social Responsibility 2011-2012, p. 58, Comcast 2012 CSR Report

79 DIRECTV, Corporate Social Responsibility 2011-2012, p. 58. 80 “Investor CDP 2013 Information Request: DIRECTV,” CDP, accessed December 9, 2014. https://www.cdp.net/sites/2013/73/4773/Investor%20CDP%202013/Pages/DisclosureView.aspx 81 “The 2013 FleetOwner 500,” Fleet Owner, accessed October 16, 2014, http://fleetowner.com/%5Bprimary-term%5D/2013-fleetowner-500-1-99. 82 Author’s calculations based on data from “The 2013 FleetOwner 500,” Fleet Owner, http://fleetowner.com/%5Bprimary-term%5D/2013-fleetowner-500-1-99, accessed October 16, 2014.

83 "DISH Combines Sustainability and Customer Service with New Fleet of ROUSH CleanTech Propane-Fueled Vans," Dish Network, last modified March 06, 2013, accessed January 13, 2014. http://about.dish.com/press-release/corporate/dish-combines-sustainability-and-customer-service-new-fleet-roush-cleantech- 84 Author’s calculations based on fleet size of 5,000.

85 "2012 Corporate Social Responsibility Report," Time Warner Cable, accessed January 13, 2014. http://www.twccorporateresponsibility.com/transportation.html.

86 “Investor CDP 2013 Information Request: DIRECTV.” CDP, Accessed December 9, 2014. https://www.cdp.net/sites/2013/73/4773/Investor%20CDP%202013/Pages/DisclosureView.aspx

87 “Comcast Web Services Terms of Service and Privacy Policy,” Comcast, September 11, 2014, accessed October 22, 2014. http://customer.comcast.com/help-and-support/internet/comcast-web-services-terms-of-service-and-privacy-policy/, 88 Siobhan Gorman, Evan Perez, and Janet Hook, “U.S. Collects Vast Data Trove,” The Wall Street Journal, 7 June 2013, accessed October 22, 2014, http://online.wsj.com/news/articles/SB10001424127887324299104578529112289298922?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424127887324299104578529112289298922.html 89 Mary Ellen Callahan, Samuel L. Feder, John Flynn and David M. Didion, “Verizon privacy settlement signals FCC’s growing privacy focus,” Lexology, September 9, 2014, accessed October 9, 2014. https://www.lexology.com/library/detail.aspx?g=a09d8298-f875-40b3-b14a-f5df4986fbf9 90 “FCC Enforcement Advisory: Telecommunications Carriers and Interconnected VoIP Providers Reminded of Requirement to File Annual Reports Certifying Compliance With Commission Rules Protecting Customer Proprietary Network Information,” Federal Communications Commission, February 16, 2012, accessed October 9, 2014. http://www.fcc.gov/document/fcc-enforcement-advisory-voip-cpni 91 Mike Holter,”Comcast, Time Warner Cable Face Privacy Class Action Lawsuits,” Top Class Actions, June 07, 2012, accessed January 24, 2014. http://www.topclassactions.com/lawsuit-settlements/lawsuit-news/1956-comcast-time-warner-cable-face-privacy-class-action-lawsuits/

92 Stephanie Kirchgaessner, “Telecommunications industry lobbies to relax privacy rules,” The Financial Times, August 18, 2013, accessed October 10, 2014. http://www.ft.com/intl/cms/s/0/f871e792-05b3-11e3-8ed5-00144feab7de.html#axzz2t9a1mAx8

93 O. Kharif,, and S. Moritz, “Carriers Sell Users Tracking Data in $5.5 Billion Market,” Bloomberg, 6 June 2013, accessed October 22, 2014, http://www.bloomberg.com/news/2013-06-06/carriers-sell-users-tracking-data-in-5-5-billion-market.html

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 33

94 “Comcast Web Services Terms of Service and Privacy Policy,” Comcast, September 11, 2014, accessed October 22, 2014. http://customer.comcast.com/help-and-support/internet/comcast-web-services-terms-of-service-and-privacy-policy/

95 Sam Gustin, “AT&T Follows Verizon With Plans For Transparency Report,” Time, Secember 20, 2013, accessed October 22, 2014. http://business.time.com/2013/12/20/att-transparency-report/

96 “Comcast Transparency Report,” Comcast, March 2014, http://corporate.comcast.com/images/Comcast-Transparency-Report-March-2014-FINAL-FINAL.pdf, accessed October 22, 2014.

97 “Protecting Privacy and Public Safety,” Time Warner Cable, accessed October 22, 2014. http://help.twcable.com/privacy-safety.html

98 “Framework for Improving Critical Infrastructure Cybersecurity, Version 1.0,” National Institute of Standards and Technology, 12 February 2014, accessed September 29, 2014. http://www.nist.gov/cyberframework/upload/cybersecurity-framework-021214-final.pdf 99 “2013 Cost of Cyber Crime Study,” Ponemon Institute, 2013, p. 1 & 4, accessed October 23, 2014. http://media.scmagazine.com/documents/54/2013_us_ccc_report_final_6-1_13455.pdf 100 “2014 Cost of Data Breach Study: Global Analysis,” Ponemon Institute. May 2014. Accessed November, 2014. http://www-01.ibm.com/common/ssi/cgi-bin/ssialias?subtype=WH&infotype=SA&appname=GTSE_SE_SE_USEN&htmlfid=SEL03027USEN&attachment=SEL03027USEN.PDF#loaded

101 “2013 Cost of Cyber Crime Study,” Ponemon Institute, 2013, p. 9, accessed October 23, 2014. http://media.scmagazine.com/documents/54/2013_us_ccc_report_final_6-1_13455.pdf

102 “2013 Threat Report,” Mandiant, p. 2, https://www.mandiant.com/resources/m-trends/

103 Jia Lynn Yang, and Amrita Jayakumar, "Target says up to 70 million more customers were hit by December data breach," Washington Post, last modified January 10, 2014. Accessed January 24, 2014. http://www.washingtonpost.com/business/economy/target-says-70-million-customers-were-hit-by-dec-data-breach-more-than-first-reported/2014/01/10/0ada1026-79fe-11e3-8963-b4b654bcc9b2_story.html

104 "Massive Target Breach Could Have Lasting Effects," NPR last modified January 10, 2014, accessed January 24, 2014.

105 John, Vomhof, "Target's data breach fraud cost could top $1 billion, analyst says," Biz Journals, last modified February 03, 2014, accessed February 13, 2014. http://www.bizjournals.com/charlotte/news/2014/02/03/targets-data-breach-fraud-cost-could-top-1-billion.html 106 Angela Moscaritolo, "Passwords of Comcast customers exposed," SC Magazine, last modified March 16, 2009, accessed January 24, 2014. http://www.scmagazine.com/passwords-of-comcast-customers-exposed/article/155060/

107 Chris Strohm, Eric Engleman and Dave Michaels, “Cyberattacks Abound Yet Companies Tell SEC Losses are Few,” Bloomberg, April 3, 2013, accessed October 23, 2014. http://www.bloomberg.com/news/2013-04-04/cyberattacks-abound-yet-companies-tell-sec-losses-are-few.html

108 Liberty Global plc, FY2013 Form 10-K for the fiscal year ended December 31, 2013 (filed Feb 13, 2014), p. I-46

109 Liberty Global plc, FY2013 Form 10-K for the fiscal year ended December 31, 2013 (filed Feb 13, 2014), p. I-46

110 Comcast Corp, FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 21, 2014) p. 34

111 “Emergency Communications,” Federal Communications Commission. Accessed December, 2014. http://www.fcc.gov/guides/emergency-communications

112 “FCC Adopts Outage Reporting Rule for Interconnected VoIP Services,” Federal Communications Commission,

21 February 2012: Web http://www.fcc.gov/document/fcc-adopts-outage-reporting-rule-interconnected-voipservices 113 “FCC Adopts Outage Reporting Rule for Interconnected VoIP Services,” Federal Communications Commission, 21 February 2012. https://apps.fcc.gov/edocs_public/attachmatch/FCC-12-22A1.pdf

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 34

114 “VoIP and 911 Service,” Federal Communications Commission, October 8, 2014. http://www.fcc.gov/guides/voip-and-911-service, accessed October 24, 2014.

115 David Turetsky, “Toward More Resilient Communications Networks,” Federal Communications Commission, October 28, 2013: http://www.fcc.gov/blog/toward-more-resilient-communications-networks 116 “FCC Adopts Outage Reporting Rule for Interconnected VoIP Services,” Federal Communications Commission, 21 February 2012. http://www.fcc.gov/document/fcc-adopts-outage-reporting-rule-interconnected-voipservices 117 “Notice of Proposed Rulemaking. In the Matter of: Improving 9-1-1 Reliability; Reliability and Continuity of Communications Networks, Including Broadband Technologies,” Federal Communications Commission. March 20, 2013, p. 6-7, accessed October 8, 2014. https://apps.fcc.gov/edocs_public/attachmatch/FCC-13-33A1.pdf

118 “Reliability and Continuity of Communications Networks, Including Broadband Technologies,” Federal Communications Commission, 2011: Web http://www.fcc.gov/document/reliability-and-continuitycommunications-networks-including-broadbandtechnologies 119 “Cablevision Shares Fall on Worries About Storm’s Costs.” The New York Times, November 6, 2012. Accessed October 8, 2014. http://www.nytimes.com/2012/11/07/business/media/cablevision-posts-loss-as-hurricane-sandy-costs-worry-customers.html?_r=0

120 “A Stronger, More Resilient New York,” PlaNYC, The City of New York, June 2013, Page 161.

121 L. Horrocks, et al, “Adapting the ICT Sector to the Impacts of Climate Change Final Report,” AEA group,

August 2010, Page 5 http://archive.defra.gov.uk/environment/climate/documents/infrastructure-aea-full.pdf

122 Comcast Corp., FY2012 Form 10-K for the fiscal year ending December 31, 2012 (filed Feb 21, 2013), p. 34. 123 DIRECTV, FY13 Form 10-K for the fiscal year ending December 31, 2013 (filed Feb 24, 2014), p. 20.

124 Market Share. Data Library. BI CATVN <GO> command. Bloomberg Professional service. Accessed October 7, 2014. 125 “2.6 Million Added Broadband from Top Cable and Telephone Companies in 2013,” Leichtman Research Group. March 17, 2014. Accessed November, 2014. http://www.leichtmanresearch.com/press/031714release.html

126 “Abstract: Open Internet,” Computer & communications Industry Association. April 2014. Accessed November, 2014. http://www.ccianet.org/wp-content/uploads/2014/04/Open-Internet.pdf

127 Raphael Leung, “Paid Peering, Paid Prioritization, and the Nuance of the Net Neutrality Debate”, Benton Foundation. July 28, 2014. Accessed December, 2014. http://benton.org/node/197702

128 “Abstract: Open Internet,” Computer & communications Industry Association. April 2014. Accessed November, 2014. http://www.ccianet.org/wp-content/uploads/2014/04/Open-Internet.pdf

129 Raphael Leung, “Paid Peering, Paid Prioritization, and the Nuance of the Net Neutrality Debate”, Benton Foundation. July 28, 2014. Accessed December, 2014. http://benton.org/node/197702

130 Comcast Corp., FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 12, 2014) p. 20

131 Market Share. Data Library. BI CATVN <GO> command. Bloomberg Professional service. Accessed October 7, 2014.

132 “2.6 Million Added Broadband from Top Cable and Telephone Companies in 2013,” Leichtman Research Group. March 17, 2014. Accessed November, 2014. http://www.leichtmanresearch.com/press/031714release.html 133 Author’s calculations based on “2.6 Million Added Broadband from Top Cable and Telephone Companies in 2013,” Leichtman Research Group. March 17, 2014. Accessed November, 2014. http://www.leichtmanresearch.com/press/031714release.html

134 Ray Routhier, "Time Warner Cable’s reputation tarnished," Portland Press Herald, last modified October 06, 2013, accessed February 12, 2014. http://www.pressherald.com/news/Time_Warner_Cables_reputation_tarnished_.html?pagenum=full 135 "DirecTV - Billing Problems," Consumer Affairs, accessed February 12, 2014. http://www.consumeraffairs.com/cable_tv/directv_bill.html

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 35

136 "Comcast Cable Service," Consumer Affairs, accessed February 12, 2014. http://www.consumeraffairs.com/cable_tv/comcast_cable.html

137 Brad Reed, "American ISPs are now hated even more than airlines," BGR, last modified May 21, 2013, accessed January 24, 2014. http://news.yahoo.com/american-isps-now-hated-even-more-airlines-040143420.html

138 Edmund Lee, “TV Subscriptions Fall for First Time as Viewers Cut the Cord,” Bloomberg. March 19, 2014. Accessed November, 2014. http://www.bloomberg.com/news/2014-03-19/u-s-pay-tv-subscriptions-fall-for-first-time-as-streaming-gains.html 139 Alex Sherman, "Time Warner Cable Loses 215,000 TV Customers in Fourth Quarter," Bloomberg, last modified January 09, 2014, accessed January 24, 2014. http://www.bloomberg.com/news/2014-01-08/time-warner-cable-loses-215-000-tv-customers-in-fourth-quarter.html

140 Edward Wyatt, "Court Rejects Antitrust Suit in Victory for Comcast," The New York Times, last modified March 27, 2013, accessed February 12, 2014. http://www.nytimes.com/2013/03/28/business/supreme-court-rejects-antritust-suit-against-comcast.html 141 " Consumers Challenge Bundles," Light Reading, last modified September 20, 2007, accessed February 12, 2014. http://www.lightreading.com/cable-video/video-services/consumers-challenge-bundles/d/d-id/647095

142 “Comcast V. Behrend: What’s at stake, hints from oral argument, and our predictions about what will happen,” Cohen Milstein. Accessed December, 2014. http://www.cohenmilstein.com/media/pnc/1/media.1271.pdf 143 Comcast Corp., FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 12, 2014). p.3

144 Alex Sherman, "Time Warner Cable Loses 215,000 TV Customers in Fourth Quarter," Bloomberg, last modified January 09, 2014, accessed January 24, 2014. http://www.bloomberg.com/news/2014-01-08/time-warner-cable-loses-215-000-tv-customers-in-fourth-quarter.html 145 Micahel Lindenberger, “Here’s the roadmap for AT&T’s proposed merger with DirecTV,” Dallas New, October 8, 2014. Accessed December, 2014.

http://www.dallasnews.com/business/technology/headlines/20141008-heres-the-roadmap-for-atts-proposed-merger-with-directv.ece

146 The Editorial Board, “A Cable Merger Too Far,” The New York Times, May 26, 2014, accessed October 21, 2014. http://www.nytimes.com/2014/05/27/opinion/a-cable-merger-too-far.html

147 Cecelia Kang, “Comcast, Time Warner agree to merge in $45 billion deal,” The Washington Post, February 13, 2014, accessed October 21, 2014. http://www.washingtonpost.com/business/economy/comcast-time-warner-agree-to-merge-in-45-billion-deal/2014/02/13/7b778d60-9469-11e3-84e1-27626c5ef5fb_story.html

148 The Editorial Board, “A Cable Merger Too Far,” The New York Times, May 26, 2014, accessed October 21, 2014. http://www.nytimes.com/2014/05/27/opinion/a-cable-merger-too-far.html 149 Baker, "Comcast takeover of Time Warner Cable to reshape U.S. pay TV."

150 Kang, “Comcast, Time Warner agree to merge in $45 billion deal.” 151 Robert Schoon, “Comcast Time Warner Cable Merger: New Arguments Emerge Against Proposed Buyout,” Latin Post, August 29, 2014, accessed October 21, 2014. http://www.latinpost.com/articles/20326/20140829/comcast-time-warner-cable-merger-new-arguments-emerge-against-proposed-buyout.htm

152 Schoon, “Comcast Time Warner Cable Merger: New Arguments Emerge Against Proposed Buyout.” 153 Charter Communications, Inc., FY2013 Form 10-K for the fiscal year ending December 31, 2013 (filed Feb 21, 2014) p. 15 154 Charter Communications, Inc., FY2013 Form 10-K for the fiscal year ending December 31, 2013 (filed Feb 21, 2014) p. 15 155 Tom Risen, “Net Neutrality: FCC May Regulate Internet Like Phones,” U.S. News, August 13, 2014, accessed October 22, 2014. http://www.usnews.com/news/articles/2014/08/13/net-neutrality-fcc-may-regulate-internet-like-phones 156 Comcast Corp., FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 12, 2014) p. 1

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 36

157 DIRECTV, FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 24, 2014), p. 2 158 Comcast Corp., FY2013 Form 10-K for the period ending December 31, 2013 (filed Feb 12, 2014) p. 20

159 Brendan Sasso, “FCC Eyes Tax on Internet Service,” The Hill, September 26, 2012, accessed October 22, 2014. http://thehill.com/blogs/hillicon-valley/technology/245479-fcc-eyes-tax-on-internet-service

I N D U S T R Y B R I E F | C A B L E & S A T E L L I T E | 37

iI N D U S T RY B R I E F | C A B L E & S AT E L L I T E

APPENDIX I: Five Representative Cable & Satellite CompaniesVIII

COMPANY NAME (TICKER SYMBOL)

Comcast Corporation (CMCSA)

DIRECTV (DTV)

Time Warner Cable (TWC)

Liberty Global (LBTYA)

Dish Network (DISH)

VIII This list includes five companies representative of the Cable & Satellite industry and its activities. This includes only companies for which the Cable & Satellite industry is the primary industry, companies that are U.S.-listed but are not primarily traded Over-the-Counter, and for which at least 20 percent of revenue is generated by activities in this industry, according to the latest information available on Bloomberg Professional Services. Retrieved on September 30, 2014.

iiI N D U S T RY B R I E F | C A B L E & S AT E L L I T E

APPENDIX IIA: Evidence for Sustainability Disclosure Topics

Sustainability Disclosure Topics

EVIDENCE OF INTERESTEVIDENCE OF

FINANCIAL IMPACTFORWARD-LOOKING IMPACT

HM (1-100)

IWGsEI

Revenue & Cost

Asset & Liabilities

Cost of Capital

EFIProbability & Magnitude

Exter- nalities

FLI% Priority

Infrastructure Energy Use & Fleet Fuel Consumption

33 75 3 Medium • Medium • Yes

Data Privacy 88* 83 1t High • • High • Yes

Data Security 88* 83 1t High • • • High • Yes

Managing Systematic Risks from Technology Disruptions

25^ - - N/A • • • High • • Yes

Competitive Behavior & Open Internet

69* 75 2 High • • High • Yes

HM: Heat Map, a score out of 100 indicating the relative importance of the topic among SASB’s initial list of 43 generic sustainability issues; asterisks indicate “top issues.” The score is based on the frequency of relevant keywords in documents (i.e., 10-Ks, 20-Fs, shareholder resolutions, legal news, news articles, and corporate sustainability reports) that are available on the Bloomberg terminal for the industry’s publicly-listed companies; issues for which keyword frequency is in the top quartile are “top issues.”

IWGs: SASB Industry Working Groups

%: The percentage of IWG participants that found the disclosure topic to likely constitute material information for companies in the industry. (-) denotes that the issue was added after the IWG was convened.

Priority: Average ranking of the issue in terms of importance. One denotes the most important issue. (-) denotes that the issue was added after the IWG was convened.

EI: Evidence of Interest, a subjective assessment based on quantitative and qualitative findings.

EFI: Evidence of Financial Impact, a subjective assessment based on quantitative and qualitative findings.

FLI: Forward Looking Impact, a subjective assessment on the presence of a material forward-looking impact.

^ The Heat Map score only covers the climate change adaptation angle discussed under this disclosure topic.

iiiI N D U S T RY B R I E F | C A B L E & S AT E L L I T E

APPENDIX IIB: Evidence of Financial Impact for Sustainability Disclosure Topics

Evidence of Financial Impact

REVENUE & EXPENSES ASSETS & LIABILITIES RISK PROFILE

Revenue Operating Expenses Non-operating Expenses Assets Liabilities

Cost of Capital

Industry Divestment

RiskMarket Share New Markets Pricing Power

Cost of Revenue

R&D CapExExtra-

ordinary Expenses

Tangible Assets

Intangible Assets

Contingent Liabilities & Provisions

Pension & Other

Liabilities

Infrastructure Energy Use & Fleet Fuel Consumption

• •

Data Privacy • • • • •

Data Security • • • • • •

Managing Systematic Risks from Technology Disruptions

• • • • • •

Competitive Behavior & Open Internet

• • • • •

H IGH IMPACTMEDIUM IMPACT

ivI N D U S T RY B R I E F | C A B L E & S AT E L L I T E

APPENDIX III: Sustainability Accounting Metrics | Cable & Satellite

TOPIC ACCOUNTING METRIC CATEGORYUNIT OF MEASURE

CODE

Infrastructure Energy Use & Fleet Fuel Consumption

Operational energy consumed, percentage grid electricity, percentage renewable

Quantitative Gigajoules, Percentage (%)

SV0303-01

Fleet fuel consumed, percentage renewable Quantitative Gigajoules, Percentage (%)

SV0303-02

Data Privacy

Discussion of policies and practices relating to collection, usage, and retention of customer information and personally identifiable information

Discussion and Analysis

n/a SV0303-03

Percentage of users whose customer information is collected for secondary purposes, percentage who have opted in

Quantitative Percentage (%) SV0303-04

Amount of legal and regulatory fines and settlements associated with customer privacy*

Quantitative U.S. Dollars ($) SV0303-05

Number of government or law enforcement requests for customer information, percentage resulting in disclosure

Quantitative Number, Percentage (%)

SV0303-06

Data Security

Number of data security breaches, percentage involving customers’ personally identifiable information**

Quantitative Number, Percentage (%)

SV0303-07

Discussion of management approach to identifying and addressing data security risks

Discussion and Analysis

n/a SV0303-08

Managing Systemic Risks from Technology Dispruptions

(1) Average Interruption Frequency and (2) Average Interruption Duration***

Quantitative Disruptions per customer, Hours per customer

SV0303-09

Description of systems to provide unimpeded service Discussion and Analysis

n/a SV0303-10

Competitive Behavior & Open Internet

Amount of legal and regulatory fines and settlements associated with anti-competitive practices****

Quantitative U.S. Dollars ($) SV0303-11

*Note to SV0303-05 - Disclosure shall include a description of fines and settlements and corrective actions implemented in response to events.

** Note to SV0303-07 - Disclosure shall include a description of corrective actions implemented in response to data security incidents or threats.

*** Note to SV0303-09 - Disclosure shall include a description of each significant performance issue or service disruption and any corrective actions taken to prevent future disruptions.

****Note to SV0303-11 - Disclosure shall include a description of fines and settlements and corrective actions implemented in response to events.

vI N D U S T RY B R I E F | C A B L E & S AT E L L I T E

APPENDIX III: Sustainability Accounting Metrics | Cable & Satellite (cont.)

TOPIC ACCOUNTING METRIC CATEGORYUNIT OF MEASURE

CODE

Competitive Behavior & Open Internet

Revenue from paid peering agreements with (1) content providers and (2) other networks and service providers

Quantitative U.S. Dollars ($) SV0303-12

Average actual sustained download speed of (1) owned and commercially-associated content and (2) non-associated content

Quantitative Mbps SV0303-13

Discussion of risks and opportunities associated with Open Internet Principles and other potential regulation

Discussion and Analysis

n/a SV0303-14

viI N D U S T RY B R I E F | C A B L E & S AT E L L I T E

APPENDIX IV: Analysis of SEC Disclosures | Cable & Satellite

The following graph demonstrates an aggregate assessment of how representative U.S.-listed Cable & Satellite companies are currently reporting on sustainability topics in their SEC annual filings.

Cable & Satellite

Infrastructure Energy Use & Fleet Fuel Consumption

Data Privacy

Data Security

Managing Systematic Risks from Technology Disruptions

Competitive Behavior & Open Internet

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TYPE OF DISCLOSURE ON SUSTAINABILITY TOPICS

NO DISCLOSURE BOILERPLATE INDUSTRY-SPECIF IC METRICS

75%

83%

83%

N/A

75%

IWG Feedback*

*Percentage of IWG participants that agreed topic was likely to constitute material information for companies in the industry.

SUSTAINABILITY ACCOUNTING STANDARDS BOARD®

75 Broadway, Suite 202

San Francisco, CA 94111

415.830.9220

info@sasb.org

www.sasb.org

ISBN#: 978-1-940504-45-2

The content made available in this publication is copyrighted by the Sustainability Accounting Standards Board. All rights reserved. You agree to only use the content made available to you for non-commercial, informational or scholarly use within the organization you indicated you represent to keep intact all copyright and other proprietary notices related to the content.  The content made available to you may not be further disseminated, distributed, republished or reproduced, in any form or in any way, outside your organization without the prior written permission of the Sustainability Accounting Standards Board.  To request permission, please contact us a info@sasb.org.