NEW YORK, Nov. 15, 2017 /PRNewswire/ -- S&P Dow
Jones Indices, a leading provider of financial market indices, and
MSCI Inc., a leading provider of research-based indexes and
analytics, announced today that as a result of their annual review
of the Global Industry Classification Standard (GICS®) structure,
the Telecommunication Services Sector is being broadened and
renamed as Communication Services to include companies that
facilitate communication and offer related content and information
through various media. The renamed Sector will include the existing
telecommunication companies, as well as companies selected from the
Consumer Discretionary Sector currently classified under the Media
Industry Group and the Internet & Direct Marketing Retail
Sub-Industry, along with select companies currently classified in
the Information Technology Sector.
The last several years have seen an evolution in the mode in
which people communicate and access entertainment content and other
information. This evolution is a result of the integration between
telecommunications, media, and internet companies. Companies have
moved further in this direction by consolidating through mergers
and acquisitions and many now offer bundled services such as cable,
internet services, and telephone services. Some of these companies
also create interactive entertainment content and aggregate
information that is delivered through multiple platforms such as
cable and internet, as well as accessed on cellular phones.
Another important change being made to the GICS structure is the
reclassification of online marketplaces for consumer products and
services regardless of whether they hold inventory to the Internet
& Direct Marketing Retail Sub-Industry under the Consumer
Discretionary Sector. All of these e-commerce companies are
dominant players in the Internet Retail Industry, targeting the
same consumers and competing with one another.
"The GICS structure is evolving to stay abreast with the ever
changing business environment. Convergence between
telecom and media companies is not just a trend but a fact.
Companies in these two industries are clearly finding synergies
between creation of content and its delivery," according to
Sebastien Lieblich, Managing
Director and Global Head of Equity Solutions Research at MSCI. "The
proposed Communication Services Sector reflects this evolution.
Also, the universal nature of internet has led to it being
integrated in almost all aspects of communication and business
transactions. Online market places and e-commerce companies are
slowly and surely increasing their share of the overall retail
segment and should be classified under Internet Retail to align
with the underlying business."
"The GICS structure continues to evolve to align peers and focus
on a company's core business when assigning classifications,"
according to David Blitzer, Chairman
of the Index Committee at S&P Dow Jones Indices. "The internet
began as a technological approach to sharing information; it has
become the way many businesses operate. Cable companies are
combining with telecom companies, creating their own media content
and delivering it to consumers. The lines among media,
communications, and content are blurred. It is time to acknowledge
this convergence and the overlapping services these companies
provide. The Communication Services Sector addresses this
progression. Additionally, there is no longer any question that all
e-commerce belongs in retail. Online marketplaces will move to
Internet & Direct Marketing Retail to ensure that companies are
classified according to their underlying business."
The annual GICS methodology review is intended to ensure that
the GICS structure continues to appropriately represent the global
equity markets and, thereby, enable asset owners, asset managers
and investment research specialists to make consistent global
comparisons by industry. The GICS revision is the result of a
consultation with members of the global investment community.
The changes to the GICS structure will be implemented in GICS
Direct after the close of business (ET) on Friday, September 28, 2018. The full list of
companies affected by these changes will be made available to GICS
Direct clients no later than August 1,
2018. A select list of large market capitalization companies
affected by the changes will be announced in January 2018. S&P Dow Jones Indices and MSCI
will each consult with clients regarding implementation in their
respective indexes.
The results of the consultation and changes to the GICS
structure in 2018 are summarized below.
Communication Services Sector
The Telecommunication Services Sector is being renamed to
Communication Services and will contain two Industry Groups:
Telecommunication Services and Media & Entertainment. The
Telecommunication Services Industry Group will remain under the
Communication Services Sector and continue to include providers of
telecommunication services and related services. In addition,
internet service providers offering internet access to end users
will be classified here.
The Media Industry Group will move out of Consumer Discretionary
and into the Communication Services Sector, and will be renamed
Media & Entertainment. It will remain an Industry Group and
contain three Industries: Media, Entertainment, and Interactive
Media & Services. The Media Industry will contain companies
engaged in Advertising, Broadcasting, Cable & Satellite, and
Publishing.
The Entertainment Industry will contain companies engaged in
producing and selling entertainment products and services. It will
now also include online entertainment streaming companies. In
addition, companies producing interactive home entertainment
content such as games and mobile gaming applications will be
classified here.
The Interactive Media & Services Industry will include
companies engaged in content and information creation or
distribution through proprietary platforms, where revenues are
derived primarily through pay-per-click advertisements. It will
include search engines, social media and networking platforms,
online classifieds, and online review companies.
Internet & Direct Marketing Retail Sub-Industry
The Internet & Direct Marketing Retail Sub-Industry under
the Consumer Discretionary Sector will be updated to include
companies providing online marketplaces for consumer products and
services. The Sub-Industry will include e-commerce companies
regardless of whether they hold inventory.
Information Technology Sector
The Internet Software & Services Industry and Sub-Industry
will be discontinued.
A new Sub-Industry will be created under the IT Services
Industry called Internet Services & Infrastructure. This
Sub-Industry will include companies providing services and
infrastructure for the internet industry including data centers,
cloud networking and storage infrastructure, and web hosting
services.
In addition, the Application Software Sub-Industry will include
cloud-based software companies.
The new GICS structure will consist of 11 Sectors, 24 Industry
Groups, 69 Industries and 158 Sub-Industries.
For a detailed document covering the upcoming changes, please
visit S&P Dow Jones Indices' web site at www.spdji.com and
MSCI's web site at www.msci.com.
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