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  • November 29, 2017

    Google: A Trojan Horse for the TV industry?

    While Google dominates the online video market via YouTube, efforts in the TV industry have constantly fallen short of expectations. However, Google is now positioning itself to become a critical part of the TV value chain.
  • November 28, 2017

    UFC: pay-per-view heavyweight, subscription contender

    TalkTalk continued to maintain positive broadband net adds in Q2 despite increased churn, and its on-net revenue growth turned positive as well, helped by the turnaround in subscriber growth trends and an overlapping price increase implemented during the quarter. The return to growth is taking its toll in marketing costs however, and the company is now guiding to a full year ‘headline’ EBITDA at the lower end of its previous given range, and this is after redefining ‘headline’ to exclude losses from its winding-down mobile business. Even this looks challenging given the cost trends in the first half of the year. The company’s new strategy of subscriber growth and focusing on the basics is probably the right one, but it is proving tough to implement in a slowing and increasingly competitive market
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  • October 23, 2017

    21CF/Sky transaction heads to the CMA

    21CF’s bid for 100% ownership of Sky has been referred for a Phase 2 investigation to the Competition and Markets Authority (CMA), which will decide by 6 March 2018. Third parties Avaaz and Ed Miliband MP complain of the influence of the Murdoch Family Trust (MFT) and family members over the UK’s news agenda and political process. A remedy could insulate Sky News from this influence. The offer of a Sky News Editorial Board at Phase 1 was refused. Third parties will ensure the debate in Phase 2 is very lively.
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  • August 29, 2017

    Video Market Outlook – FY17: SVOD is driving growth of the mark [...]

    The Australian Video Market is plateauing, as growth continues for SVOD alongside losses for traditional media. We anticipate the market to reach A$5.3b by 2022. Streamed digital media (SVOD, TVOD and EST) are growing strongly at the expense of physical media (Blu-ray and DVDs). SVOD subscriptions are anticipated to reach over 6 million by 2020, driven predominantly by Netflix.
  • June 1, 2017

    ITV et al. facing the NAR squeeze

    ITV’s latest trading Q1 trading update has sent a clear warning signal to the commercial TV industry as it gave guidance of 8-9% year-on-year decline in TV NAR (Net Advertising Revenue) in H1 2017. A substantial portion of the projected decline may be attributed to economic issues and relatively tough Q1 comparatives as per ITV guidance; however, there are clear signs of growing intrusion by online video advertising on traditional broadcast TV NAR. A review of trends points to major biases that swing the market towards the online space. It is time for all to reconsider both the impact of CRR (Contract Rights Renewal) in restraining TV NAR and the factors – by no means all sound – pushing up online video spend

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  • March 16, 2017

    BT tightens grip on Champions League TV

    The latest auction of UEFA Champions League televised UK rights has seen further high inflation (32%) as BT renewed its ownership for the three seasons from 2018/19 for an annual payment of £394 million. Although BT annual payments are to increase by £95 million from 2018/19, the new contract offers added commercial attractions, though we expect BT’s efforts to monetise them will fall some way short of the cost increase. However, BT had to win to cement its position against Sky as a strong number two in UK premium pay TV and we expect weaker future inflation of premium football rights. For Sky followers, the focus is now on the UEFA auctions in Germany and Italy, where the outcome is far from certain.
  • November 30, 2016

    The future of free-to-air television Part 2: Profiting from New F [...]

    The provision and consumption of on-demand video is exploding. FTA broadcasters must adapt to these new media and audience behaviour trends. They are well placed to exploit the significant opportunities that exists in redefined ‘TV’ and adjacent markets but the price of failure will be irrelevance and decline.
  • October 19, 2016

    Revenues what count for Sky: Q1 2017

    2017 has started well as group revenues grew by 5% on a like-for-like constant currency basis and operating costs were 2% lower year-on-year. The outlook for continuing strong revenue growth in the coming quarters is very positive in light of the numerous and ongoing product and service synergies in all three Sky markets. Cord-cutting is now a major concern in the US; however, there is no evidence for it with respect to Sky operations in Germany & Austria and Italy, while the evidence from the UK & Ireland is so far inconclusive. We expect some to occur, but not on the scale seen in the US.

  • September 16, 2016

    BT Sport: positive first year with the Champions League

    BT Sport has seen a very clear positive impact from its first year airing the Champions League, with viewing up 60% year-on-year to June. Remarkably, its reach is now not too far off Sky Sports, though it still has some way to go in terms of consistent viewership.

  • August 12, 2016

    US and UK: Cord-cutting-shaving-nevering

    Cord-cutting has become a major headache for US pay-TV operators in the last three years, while cable network channels face further erosion due to cord-shaving and we now see a rapidly growing population of cord-nevering households that have never taken a pay-TV subscription. Should we expect it to be only a matter of time for the UK to follow the US? The short answer is no, due to major differences in the pay-TV market infrastructures of the two countries, which leave the UK much less exposed. However, downward pressures from the online space do exist in both countries, while the big cord-cutting-shaving-nevering threat we now see in the UK has most of all to do with the chill Brexit winds on the economy.

  • April 18, 2016

    Vivendi, Mediaset and the Latin strategy

    Vivendi is to acquire the main pay-TV division of Italy’s Mediaset in an all-share transaction, creating a ‘strategic alliance’ between the two groups. Each partner will own a 3.5% stake in the other. The deal is positive for Mediaset but the benefits for Vivendi can only accrue long term. Mediaset Premium claims two million subscribers and recorded €640 million revenue in 2015. However, EBIT losses amounted to €115 million and are likely to more than double through 2016 and beyond. The deal has no discernible impact on Premium’s bigger rival Sky. Vivendi and Mediaset will also jointly operate a ‘global’ online video platform and collectively develop content production and distribution. The pair’s respective assets are sizeable but domestically focused with little demonstrable international synergy.
  • April 1, 2016

    Sky’s originals: seeking iconic differentiation

    Sky is steadily expanding its output of scripted content – now almost at the same volume as HBO’s. It is an attempt to strengthen the Sky brand in a more competitive market, the ultimate prize being exclusive association with ‘iconic’ content. So far so good: in the UK most originals deliver higher audiences than average and than US imports. Emergence of an iconic hit may be just a matter of time. Sky’s Italian productions are closer to the domestic hit status, but harder to sell to British viewers. The challenge for Sky is to stay in the global series budget race through US co-production and sales without compromising editorial sharpness. Continental European platforms increase Sky’s financial clout, but will require distinct content.
  • September 30, 2015

    Video Market Outlook – Physical makes way for Digital

    We don’t expect the overall size of the video entertainment market to change materially but we do expect the platform share to change dramatically over the next five years. We expect xVOD services to represent 20% of the overall market from around 5% currently (replacing Physical Media and Premium Pay-TV).

  • September 10, 2015

    BBC TV – impact on investment in UK content

    Responding to the Green Paper’s question on the BBC’s market impact, this report finds that the UK’s creative economy would suffer a 25-50% decline of investment in new UK content “if BBC TV did not exist at all”. Advertising-supported broadcasters would gain little, if any, extra revenue from expanded commercial audiences. ITV, Channel 4, Channel 5 and non-PSB multichannel broadcasters would be unable to fill the gap in investment left by the BBC. Pay-TV platforms could gain significant revenues although the loss of BBC TV programming, with 30% viewing share, would increase costs. Pay-TV platforms invest <10p on the £ of revenue in new UK content excluding sport so they, too, would not fill the gap left by the BBC.

  • December 10, 2014

    Sky Italia pushes upmarket model, but conditions still tough

    Sky Italia's latest strategy presentation to investors focuses on a number of positive revenue-generating and cost-cutting initiatives it is taking in the Italian pay-TV market. Sky Italia is taking a disciplined approach to subscriber recruitment and upsell of optional products as it anchors its brand at the upper end of the Italian entertainment market, supported by proactive development of original content, advertising sales and IPTV distribution. Growing product penetration has helped to reduce churn and support ARPU growth, but Sky Italia's ability to arrest subscriber erosion and return to growth in fiscal 2015 and beyond also depends on the degree to which the economic climate becomes milder, as expected by forecasters.

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  • December 9, 2014

    UK advertising expenditure forecast 2014-2016

    2014 has been a good year for total advertising, which we forecast to grow by 5.5% across the year; display advertising spend is also forecast to grow by over 6% year-on-year. This is largely thanks to a positive economic backdrop, where we have seen a significant rise in consumer expenditure over the last two years. Online advertising spend has been the biggest recipient of growing ad spend, with 20+% growth last year, this year and next. This has mostly been to the detriment of print revenues, where online classified search solutions, amongst other factors like declining circulation, have disrupted print marketplaces. Video has been the largest growth area in internet advertising as online video consumption increases. Up to now online spend has largely been accretive to TV budgets but we are starting to see some advertisers switch to online video spend. However we do not expect TV to suffer in the same way as press.

  • December 5, 2014

    UK broadband, telephony and pay TV trends Q3 2014: Quad play and [...]

    Market revenue growth in the UK residential communications sector dipped down to 4.5% in Q3, from 5.4% in the previous quarter, but underlying revenue growth actually rose a touch by our estimates. In an intensely competitive quarter, BT lost ground relatively in broadband, with its net adds dropping compared to growth at the others, but BT still had the highest net adds in absolute terms, and continued to lead the way in revenue growth. With BT's mooted bid for a mobile operator and quad play moves being highlighted by several operators, in this report we re-examine the evidence for consumer demand for quad play and find it still wanting. In the UK since 2001 there have been eight attempts at cross-selling between fixed and mobile, with five outright failures (three of which were from BT), two attempts that lost market share after an acquisition but are now growing modestly, and one attempt which has successfully gained modest share. The UK fixed business has better growth and far better margins than the mobile business. BT alone makes more cashflow in the UK than the entire mobile industry put together – the grass may always seem greener on the other side, but in this case it definitely is greener in fixed. The fixed operators have far more to lose than to gain, and for this reason alone they should perhaps be wary in their approach to quad play.

  • October 20, 2014

    The TV/digital advertising debate

    In the last few days we have spoken to key authorities in advertising in the US, UK and Europe. We have been exploring the critical debate: the degree to which TV consumption and TV advertising are shifting and will shift to digital. Recent media coverage has argued traditional TV business models could start to unravel in the medium term. We disagree.

  • October 20, 2014

    BSkyB growing on demand – Q1 2015 results

    Q1 2015 results show steady underlying revenue growth in retail subscription and increases in other segments, along with the continuing extraction of cost efficiencies, resulting in an 11% year-on-year increase in Q1 operating profits.Quarter-on-quarter, Q1 2015 retail subscription revenues and ARPU were flat in spite of the strong uptake and growing use of connected products. Main causes appeared temporary - a mixture of seasonal factors and the launch of Sky Sports 5 with its two-year free broadband offer - while underlying growth remains firmly positive.Meanwhile, Sky's accelerated investment in connectivity during 2014 is bearing fruit. Eyes may be focused on the formation of the “new Sky” (on schedule for November) and the long awaited Premier League auction, yet other developments such as Sky Store and Sky AdSmart also deserve full attention.

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    October 14, 2014

    Retransmission fees

    ITV and Channel 4 have asked the regulatory authorities to review the case for legislation that would for the first time allow the commercial PSBs to charge carriage fees for their main free-to-air channels on the pay-TV platforms. To this end, ITV has presented a detailed analysis showing the great contribution to the US creative economy due to the introduction of Retransmission Consent Compensation for free-to-air broadcasters in the US, but without setting this against the very different market structure in the UK, where the commercial PSBs enjoy significant privileges. Any change to UK rules will require primary legislation and is not expected until after the May 2015 General Election. Should action be taken, the choice appears to lie between regulation (adding “must carry” rules) and deregulation of commercial PSB privileges, where the end result might not be what the PSBs wished.
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    October 8, 2014

    Core TV and connectivity trends

    The period between 2010 and 2013 was one of technological change in video consumption as connected devices achieved mass market adoption and online video players grew in popularity. Amongst the young, TV set viewing fell across this period, particularly in the UK, but this shift in behaviour has yet to impact older demographics in the same way. An ageing population, and associated longer viewing time among older audiences, helped maintain the total number of TV minutes viewed in the three key markets of the UK, US and Germany. Video industry revenues also look resilient; internet advertising has not impacted TV advertising to the same extent it has print, while we are yet to see any meaningful evidence of cord-cutting as a result of increased penetration of SVOD services.

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  • October 8, 2014

    EE TV: Triple play focus

    EE has launched a new TV service featuring an advanced set-top box with a snazzy interface offered for free to its broadband/mobile customers. The lack of premium content means that the service is of little threat to the established pay TV operators Sky and Virgin Media, and the lack of integration with mobile or steep quad play discount makes it non-threatening to the mobile market. It does however reposition EE Broadband as a differentiated service, making it more competitive without lowering its headline price, with triple play the focus of this move in our view

  • October 5, 2014

    Virgin Media calls for PL auction investigation

    Virgin Media's request for Ofcom to open a formal investigation into the auction mechanism of live televised Premier League rights is a timely reminder of the need to consider the consumer as the auction draws ever closer with all eyes focused on the battle of BT versus Sky. When the EC last intervened before the 2006 auction, its remedy focused on the need for more than one winner for the sake of a more competitive downstream market, but without considering other variables affecting the outcome, to which Virgin Media has drawn attention. As the European country with much the highest rights fees per game, much the fewest televised top league games, highest package prices and by far the biggest outlay on player wages, the current PL auction mechanism gives the UK consumer little cause for cheer.

  • September 14, 2014

    Media in an independent Scotland

    Claire Enders set out the implications of a Yes vote in the Scottish independence referendum for the media available in Scotland. She critically examines the SNP's plans for a Scottish media, and argues that Scotland's small population would make an independent media hard to sustain. When the effect of a nationalist 'nation-building' project is factored in too, the overall results would be serious costs to the quality of democracy Scots enjoy.