From Static to Streaming: The Evolution of TV EntertainmentTelevision and video entertainment are changing dramatically as consumers face an ever-growing

number of choices for accessing video content, wherever and whenever they want. We anticipate

that certain companies can take advantage of this continued reinvention and its long-term growth

potential. As a result, we believe investors can add value and diversification to their portfolios by

purchasing stocks that will benefit from these trends.

Traditional vs. Internet-based VideoThe multimedia entertainment market has undergone a staggering evolution in just a few decades – from a limited number of national and local broadcast channels, to more pay-TV channels using cable and satellite delivery, and now multiple options for watching video content on any device using the internet. Subscription video-on-demand (SVOD) services, such as Netflix, Amazon Prime and Hulu, are disrupting the traditional TV (broadcast and pay-TV) market. Even user-developed and grassroots content on Alphabet’s (formerly Google) YouTube has diverted viewer attention from traditional TV.

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Please see the full company research reports for important disclosures on the companies mentioned in this report. You can also contact a local Edward Jones financial advisor, or write the Research Department, Edward Jones, 12555 Manchester Road, St. Louis, MO 63131, to receive a complete company opinion.

Traditional TV Internet-based Video

Broadcast ChannelsPay-TV Channel Examples

SubscriptionVideo-on-Demand(SVOD) Examples

Free (Ad-supported) Examples

ABC CNN Amazon Prime AwesomenessTV

CBS ESPN CBS All Access BuzzFeed Video

CW Network Fox News HBO Now Maker Studios

Fox TBS Hulu Verizon Go90

NBC USA Network Netflix YouTube

Many of the traditional broadcast and pay-TV networks are also introducing online services. For example, CBS introduced CBS All Access, and HBO rolled out HBO Now – both online subscription services, neither of which requires a traditional pay-TV subscription. At the same time, pay-TV distributors (i.e., cable-TV and satellite providers) are offering their subscribers online access to the same channel lineup they receive at home or smaller, more-targeted channel bundles. Most of these services are available via broadband or wireless connection to any device.

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Sling TV PlayStation Vue

Xfinity Stream Go90 DirecTV Now HBO Now CBS All

Access YouTube TV

Pro

vid

er

Dish Network

Sony Comcast Verizon AT&TTime

WarnerCBS

Alphabet (Google)

Cha

nnel

s

30 channels in basic

package, including

ESPN, TBS, AMC,

Disney Channel

45 channels in basic

package, including

ESPN, TBS, AMC,

Disney Channel

Broadcast networks

(ABC, CBS, CW, Fox, NBC, PBS

and Univision),

HBO

Live events; shows from

Comedy Central, ESPN

and NFL Network;

online content sources

71 channels in basic package including

ABC, CBS, ESPN, ESPN2, AMC, Disney

Channel, Comedy

Central, TBS and Univision.

Same original

programs and live

events as HBO

6,500 on-

demand episodes of current and past seasons

40+ channels including

ABC, AMC, CBS, Disney

Channel, Fox, NBC, ESPN and

ESPN2

Lim

itat

ions

No major broadcast networks

(ABC, CBS, NBC, Fox, PBS) on

basic package

Streaming limited to one device

on basic package

Local channels not available in all locations

No cable networks beyond

HBO

No streaming to TV set

Only available to Comcast internet

customers in certain

geographies

Wireless device

only – no TV set

streaming

Not a stream of TV

channels – only

selective

Not yet available in all

markets

DVR recording not yet

available and streaming only

available to one device on basic package

Potential delay in

availability of certain

programs & live events

Cost is higher than

HBO purchased

with a pay-TV

subscription

NFL games

blocked

Not yet available in all markets

Mo

nthl

y C

ost

$20 (basic package)

$39.99 (basic package)

$18Free (ad-

supported)$35 $15.99 $6 $35

Source: Company reports, BI Intelligence, Edward Jones estimates

Examples of Subscription Video-on-Demand (SVOD) Services That Offer Access to Traditional TV ContentA number of online video services provide access to TV content; however, the various options offer less content than a traditional pay-TV bundle, consequently leaving out popular programming. These offerings are priced lower than the traditional bundles, but subscribers may find they need to subscribe to multiple services to receive all of the content they want.

Using Entertainment to Add Value to Your PortfolioWe believe many stocks in the Communication Services, Technology and Consumer Discretionary sectors are trading below fair value, based on the opportunity for long-term growth associated with emerging video services. Talk with your financial advisor to determine how these particular sectors and investment opportunities might add value to your overall portfolio.

What Will Happen to Traditional TV?We expect that the traditional pay-TV distribution model will likely continue its current slow rate of decline. We estimate that the total number of households subscribing to pay-TV dropped in 2015, while total U.S. households grew modestly (see chart below). This trend demonstrates that some newly formed households are not subscribing to pay-TV (“cord nevers”), and some existing households are dropping pay-TV (“cord cutters”).

For many viewers, though, online services have been an addition to their home entertainment spending. In a recent survey, Pricewaterhouse Coopers (PwC) found that 65% of pay-TV subscribers also watch Netflix. Within the pay-TV market, some consumers are, however, choosing a smaller bundle of pay-TV channels and combining it with an online subscription,

such as Netflix. In many cases, viewers are not completely dropping pay-TV because they still want access to sports and other live events. Instead, they are eliminating channels they don’t watch frequently, which means media companies with the best, most relevant content are much better positioned to retain fees from the traditional pay-TV business and to sell content to the new online SVOD services.

Even though traditional pay-TV subscriber levels are declining, service providers are benefiting from the demand for high-speed connections needed to watch internet-based video. Service providers have been offering faster broadband internet on wireline networks and have been seeing some willingness among consumers to pay more for faster speeds. In addition, the rollout of 4G wireless networks created a much better wireless video experience, driving increased wireless data usage.

Investment RisksDespite the opportunity offered by emerging video services, consider some of the risks and challenges for these companies:

• Subscriber levels for traditional pay-TV services could fall faster than anticipated.

• Advertising and subscription revenue opportunities in online video may not grow as estimated.

• Traditional content companies may not be able to transition their business models to benefit from online offerings.

• The market for TV and video services is highly competitive and can be subject to economic cycles.

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Pay-TV Subscribers Are DecliningU.S. Pay-TV Subscribers as a Percentage of TV Households

Source: Television Bureau of Advertising, Edward Jones

70%

75%

80%

85%

90%

95%

100%

Feb

’96

Jan

’97

Dec

’97

Nov

’98

Oct

’99

Sep

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Aug

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Jul ’

02

Jun

’03

May

’04

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Dave Heger, CFA; Robin Diedrich, CFA, CFP®; www.edwardjones.com and Josh Olson, CFA Member SIPC Senior Equity Analysts

PAGE 4 OF 4

Analyst CertificationI certify that the views expressed in this research report accurately reflect my personal views about the subject securities and issuers; and no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in the research report. Dave Heger, CFA; Josh Olson, CFA; Robin Deidrich, CFA, CFP®. Analysts receive compensation that is derived from revenues of the firm as a whole which include, but are not limited to, investment banking revenue.

Other DisclosuresThe Edward Jones Research Rating referenced does not take into account your particular investment profile and is not intended as an express recommendation to purchase, hold or sell particular securities, financial instruments or strategies. You should contact your Edward Jones financial advisor before acting upon the Edward Jones Research Rating referenced.

All the proper permissions were sought and granted in order to use any and all copyrighted materials/sources referenced in this document.

All investment decisions need to take into consideration individuals’ unique circumstances such as risk tolerance, taxes, asset allocation and diversification.

It is the policy of Edward Jones that analysts or their associates are not permitted to have an ownership position in the companies they follow directly or through derivatives. In general, Edward Jones analysts do not view the material operations of the issuer.

This publication is based on information believed reliable but not guaranteed. The foregoing is for INFORMATION ONLY. Additional information is available on request. Past performance is no guarantee of future results. Diversification does not ensure a profit and does not guarantee against

loss. Special risks are inherent to international investing including those related to currency fluctuations, foreign political and economic events. Dividends can be increased, decreased or eliminated at any time without notice.

Buy-rated companies mentioned in this report that are followed by Edward Jones (prices as of December 14, 2017:

Alphabet Inc. (GOOGL – $1,057.47)

Amazone (AMZN – $1,174.26)

American Tower (AMT – $143.64)

AT&T (T – $ 37.74)

Comcast (CMCSA – $39.12)

Facebook (FB – $178.39)

Verizon (VZ – $52.34)

Vodafone (VOD – $31.27)

Technology

Alphabet (GOOGL) Has potential growth from YouTube and from online advertising on mobile video.

Facebook (FB) Will likely benefit from online video growth and related advertising revenue.

Amazon (AMZN)Expect to see continued increases in Amazon Prime subscribers and growth in its cloud-based services that provide the network backbone for Netflix and other emerging online video services.

Investment IdeasWe recommend several stocks across multiple sectors that we believe will benefit from the growth of online video services and that offer portfolio diversification. We feel these companies are attractively priced relative to their strategic positioning and long-term growth potential.

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Communication Services

Comcast (CMCSA) Has the largest footprint in the country for broadband internet services and offers some of the fastest consumer broadband speeds.

Verizon (VZ) Is the largest U.S. wireless provider and operates the most pervasive 4G (higher speed) network.

Vodafone (VOD) Expanding 4G services in Europe and emerging markets; continues to grow its broadband footprint.

American Tower (AMT)

As a real estate investment trust (REIT) for wireless towers, AMT’s earnings growth is closely tied to increasing worldwide data usage.

AT&T (T)Provides wireless, internet and video services across the U.S. Pending acquisition of Time Warner Inc. offers valuable content to distribute across AT&T’s customer base.