Enders Analysis

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  • New
    April 21, 2021

    Brief reprieve from COVID turbulence: UK mobile market in Q4 2020

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    The sector rebounded slightly in the quarter to December thanks to a seasonal improvement in the roaming drag, although the partial lockdown tempered the recovery. We await imminent news on spectrum trading, and there may also be some licence fee reductions as a consequence of the lower prices in the recent 5G auction. While the sector is likely to continue to struggle into Q1, the outlook is much brighter thereafter thanks to the annualisation and even reversal of some lockdown effects, and to higher price increases from the spring.
  • New
    April 21, 2021

    Super League, super backlash: Naked power bid over European compe [...]

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    On Sunday, 12 football clubs announced they were launching a new European league with an inaugural season “as soon as practicable”. The 12 Super League clubs include six English teams (Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur), and three Spanish teams (Atlético Madrid, Real Madrid and Barcelona) and three Italians (Inter and AC Milan plus Juventus).
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  • New
    April 19, 2021

    Spotify Loud & Clear: 5% of artists generate above $1,000 in [...]

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    Spotify paid $5 billion in royalties last year to the music industry. Critics claim the $0.0038 per-stream average royalty rate is too low. However, this is largely due to high volumes of ad-funded listening, a core part of Spotify’s freemium model, and a defence against piracy. To silence the critics, the “Spotify Loud & Clear” site presents data on the distribution of industry royalties, which are heavily skewed to established artists. Only the top 5% of artists generate annual industry royalties above $1,000, though they take home less under their deals.
  • New
    April 16, 2021

    US content distribution: Studios go direct to consumer

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    Despite relying on a narrow IP base, US content production is booming, overwhelming other markets and seeking alternative distribution to cinemas. Responding to the rise of Netflix and Amazon Prime, studios seek to shift distribution from wholesale to retail—but only Disney may succeed. Most content is likely to remain accessed by consumers through bundles. Provided they engage with aggregation, European broadcasters can adjust to the new studio model.
  • April 8, 2021

    The recovery stutters: UK broadband, telephony and pay TV trends [...]

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    • Market revenue growth sunk back to -3% in Q4 from -2% in Q3, with further backbook pricing and lockdown effects to blame.
    • Backbook pricing will improve with numerous price increases announced, but these will only start to take effect in Q2 2021.
    • Demand for broadband and ultrafast looks promising, but will also take time to filter through to revenue, with Q1 again lockdown affected.

  • April 6, 2021

    Sky and football: Italian wager on aggregation

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    The contract includes exclusive coverage of seven weekly games (including top picks) and non-exclusive rights to the other three fixtures, for €840 million per year. In the current cycle DAZN holds three games per week for €193 million. Crucially, DAZN has displaced Sky as the lead broadcaster, displaying a dramatic shift in strategy.
  • March 30, 2021

    (UK) Ecommerce forecasts 2021: Pandemic shifts remain for now

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    • Goods ecommerce accelerated in 2020 by four years above trend to reach 28% of retail sales (excl. fuels) from 19% in 2019. We anticipate that ecommerce in 2021 will remain in the same share range of 27-29%
    • Food and drink grew faster than any online category in 2020, doubling to over 10% of associated sales. Aside from food and drink, the agony of zero sales on the shuttered high street continued, with over half of all sales being online in 2020, likely persisting in Q1 2021
    • Offline retailing will recover due to deconfinement and the share of ecommerce will edge down in Q2 2021 and thereafter, but these new shopping habits will be sticky and anchored by persistent work-from-home, driving all retailers that are left standing to massively adopt online channels and associated advertising media
  • March 26, 2021

    Mail scoops Telegraph print advertising: Telegraph outsourcing fo [...]

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    • The Telegraph’s carefully executed outsourcing of print advertising sales to Mail Metro Media fine-tunes its subscriber-first strategy
    • Consolidation and collaboration are inevitable in a highly-competitive, structurally-shrinking news industry
    • Reader-first models have emerged as the consistent theme for quality publishers, but the trade-offs, investment approaches and executions are highly differentiated
  • March 25, 2021

    UK’s Creative Industries: Boosting the regional economy

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    • The Creative Industries accounted for 6% of UK GVA in 2019, more than the automotive, aerospace, life sciences and oil and gas industries combined. The UK’s Creative Industries are the largest in Europe and are central to promoting the UK’s soft power globally.
    • At the core of the creative economy is the AV sector, which, in turn, is driven by the UK’s PSBs. In 2019, the PSBs were responsible for 61% of primary commissions outside London and are the pillar upon which much additional regional economic activity depends.
    • Going forward, only the PSBs are likely to have the willingness and scale to invest in production centres outside London with sufficient gravitational pull to reorientate the wider creative economy towards the nations and regions.
  • March 25, 2021

    A worthwhile flurry of activity? Mobile towers companies in focus

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    • The wave of deal-making in the European towers sector is driven by cash-strapped telcos seeking a form of sale and leaseback financing
    • While the operators are incentivised to provide a medium-term growth trajectory for these towers companies, sustainability of that growth is more questionable, especially as 5G will not require additional base stations
    • Cellnex continues to insinuate itself into the UK market with its most recent deal signaling the ultimate unwinding of the MBNL JV. Further UK towers consolidation seems a long way off but could facilitate, or indeed be facilitated by, consolidation at the MNO level
  • March 22, 2021

    UK full fibre regulation: The mist clears…somewhat

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    Ofcom’s full fibre regulation statement, released today, is largely as trailed, i.e. it allows BT’s Openreach considerable relaxation of wholesale pricing in return for building out full fibre.

    On the longer-term regulatory prospects, Ofcom continues to be fair but more obtuse than it could and should be, unnecessarily dampening investor enthusiasm. Ofcom will decide on a case-by-case basis whether to allow Openreach to offer geographic/volume discounts, using slightly contradictory principles.

    The publication and increased certainty may allow BT’s Openreach to extend its full fibre roll-out further, faster or even with external financing. The build plans of others will come under increasing question.

  • March 18, 2021

    End-of-line spectrum 50% off: UK second 5G auction results

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    Proceeds in the swiftly concluded second 5G auction were £1.36bn, very much towards the bottom end of the estimated £1-2.7bn range in our recent report 2021 spectrum auction: Uncertainty prevails [2020-117]. The prices paid are very low by historic standards, particularly for the 700MHz band but the spectrum most suitable for 5G (3.6-3.8GHz) is also more than 40% below the price achieved in the auction for very similar spectrum in 2018.
  • March 17, 2021

    ITV FY 2020 results: Waiting for lockdown to end

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    ITV’s advertising revenue was down 11% in 2020—probably a relief given the unprecedented depths the TV ad market found itself in during April-July. However, the current lockdown has stunted advertising’s recovery and its trajectory will continue to be tied to the loosening of the same restrictions that continue to dictate movement and spend. It is not until April that ITV forecasts (+60-75% YoY) that money will rush back into the TV ad ecosystem, looking to make up for lost time.
  • March 16, 2021

    Into the wild: Facebook prepares for a world without trackers

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    • Facebook emerged from 2020 reporting record revenue growth of 22% over the year, built on its huge volume of usage, its simple buying tools and its trove of first-party data
    • Facebook’s ability to match third-party data for targeting and attribution is also central to its success. However, Apple and Google are restricting data-matching tools like third-party cookies and mobile IDs, and Facebook is moving to minimise the damage
    • Facebook is trying to turn its sites into storefronts by launching ‘Facebook Shops’. It is also taking public stands on the use of data for advertising, and on the need for brand-building in marketing plans. These are conversations all advertisers and media owners should be engaged with
  • March 16, 2021

    Decarbonising Work

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    • Growth in the UK production sector is being driven by increased investment by American streaming services, while local broadcasters rely on co-productions to fund increasingly-expensive, high-end content
    • However, while this investment is welcome, the output is predominantly less ‘British’ than that commissioned directly by local broadcasters
    • Distinctive and diverse British cultural touchpoints are created or perpetuated by television. Current trends suggest a dilution of this, a globalisation of local content, and perhaps less relevance to British viewers
  • March 11, 2021

    Outsourcing culture: When British shows aren’t ‘British’ [...]

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    • Growth in the UK production sector is being driven by increased investment by American streaming services, while local broadcasters rely on co-productions to fund increasingly-expensive, high-end content
    • However, while this investment is welcome, the output is predominantly less ‘British’ than that commissioned directly by local broadcasters
    • Distinctive and diverse British cultural touchpoints are created or perpetuated by television. Current trends suggest a dilution of this, a globalisation of local content, and perhaps less relevance to British viewers
  • March 10, 2021

    DMGT reinforces consumer science: New Scientist joins Mail stable

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    The sale represents an impressive increase in value: New Scientist was offloaded by RELX in May 2017 for £17.7m (c.4.4x EBITDA), 1 an all-in sale price c.£21m.
  • March 9, 2021

    Virgin Media: Subscribers strong, ARPU tough to turn

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    • Virgin Media’s subscriber growth continues to be very strong, and it looks like next quarter’s price rise will (at worst) only stall, not stop, the renaissance
    • ARPU was hit in Q4 by the postponed price rise, and it will likely remain in decline in 2021, with regulatory pricing pressure and lockdown effects still weighing, despite firm new customer pricing
    • Nonetheless, accelerating subscriber growth is expected to drive group revenue growth positive again (helped by B2B growth), and Virgin Media’s main strategic problem—its fibre trilemma—looks like it will be dealt with after the merger with O2, expected
  • March 3, 2021

    O2 :Trending nicely, outlook challenging

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    • All of O2’s operational metrics ticked up this quarter with service revenue growth, continued strong net adds and OIBDA growth particular highlights in spite of the end of O2’s Carphone Warehouse relationship
    • Next quarter will be hit by the prolonged lockdown and, in spite of an improving picture thereafter, there remain several challenges particularly lower in-contract price rises than peers and some pressure on MVNO revenues post Sky MVNO renegotiation
    • The merger with Virgin Media appears on track for a mid-year approval. O2 management will need to work hard to sustain their sharp operational focus at a time when merger integration and strategic question marks risk diverting much of their attention
  • March 2, 2021

    (UK) Learning from “The Independent” : Sustainability [...]

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    • In a challenging media marketplace, quality online news services generated hundreds of thousands of new buyers in 2020, perhaps inching ahead of print in terms of UK household propensity-to-pay
    • But reader-first models are not only about subscriptions. The UK’s first national print title to go online-only, The Independent, has achieved operating profits since reconfiguring its cost base in 2016
    • The Independent defies many investor assumptions about news. Solutions for smaller businesses may diverge more from industry giants than is commonly expressed, and without distribution change, editorial, product and commercial transformation is slower
  • March 2, 2021

    Serie A rights auction: Sky ready for radical revamp

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    Serie A held a formal auction in January where reserve prices were not met by bidders. Since then, it has entered into direct negotiations with potential buyers. Two rival deals have emerged. Reportedly, Sky is offering €750 million per year for all ten weekly games.
  • February 24, 2021

    Google and Facebook lay out diverging news strategies: Battlegrou [...]

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    Google is demonstrating support for news by stepping up its efforts to license content from publishers and provide unpaywalled access within its Google News app—an attempt to diffuse regulatory pressure.

    Google is reconfiguring its relationships with publishers worldwide, putting $1 billion on the table to license news content to News Showcase through a series of flat fees over a set period of time.

  • February 22, 2021

    Vodafone: Leverage looms large

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    • Generating cash is top of Vodafone’s agenda right now, and we may be seeing early signs of that driving operational tactics ahead of resolving its leverage crisis through either an IPO of Vantage or a sale of its Iberian assets
    • EBITDA growth would really help. Analyst forecasts of +4% for next year are not supported by recent history and a simple bounce-back of roaming revenues should not be assumed
    • Q3 results were a mixed bag with the very slight improvement in revenue trends accounted for by easing roaming pressure. Green shoots in German fixed is a highlight, with growth in UK mobile a touch disappointing
  • February 18, 2021

    BT: A bumpy road

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    • BT’s December quarter results were mixed, with revenue growth improving but EBITDA growth worsening, and next quarter will be hit by the effects of lockdown 3 on mobile, with B2B likely to be hit by business failures following the end of furlough
    • BT has maintained/nudged up its financial guidance regardless, and there are plenty of positive longer-term signs, with subscriber growth strong in the quarter, pricing pressure easing, and full fibre roll-out and adoption progressing nicely
    • Overall, we expect the road to continue to be bumpy, but a recovery by 2022/23 still seems very plausible, ultimately driven by the wholesale and retail benefits of full fibre, and perhaps helped if it can get ‘Digital’ right, a particular challenge historically for BT