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  • August 25, 2015

    The BBC, the press and online news

    The Government’s Green Paper on Charter Renewal asks whether BBC News is “crowding out” commercial news suppliers and, if so, whether this is justified. Our research shows that UK newspaper publishers have been damaged by the internet. They face inherent challenges in monetising online audiences, in common with other news publishers. To be blunt, the BBC plays no role in exacerbating these challenges. Scaling back BBC News will damage the UK’s sole source of impartial, quality and trusted news, whose independence is valued by users in the UK and around the world, risking the UK’s global “soft power”.

  • August 10, 2015

    ITV H1 2015 results: International Television

    The end of ITV’s five year transformation plan leaves it a different company to the one that had only just emerged from the recession and advertising collapse of 2008/9, with total external revenues up 37% on H1 2010 and EBITA more than doubling from £165m to £400m across the same time period. This turnaround comes off the back of a resurgent TV advertising market, with ITV NAR revenues up 15% since H1 2010, but ITV has also expanded its Studios division, investing an initial £760m in international production companies over the last three years. However, there are some areas of concern, particularly ITV’s 7.7% drop in share of viewing since H1 2010, the biggest among the main broadcasters. There are also doubts about the longevity of the Studios acquisitions – what happens when key hits dry up? Or top talent leaves at the end of the buyout period?.

  • August 6, 2015

    Sky plc growing synergies – Q4 2015 results

    The first set of annual results to include all three Sky pay-TV operations in Europe shows Sky plc to be off to a very good start: subscriber growth up by 5%, churn everywhere below 10%, adjusted group revenues up 5% and operating profit up 18%. Excellent though the start has been, each of the pay-TV operations faces its own specific challenges – be they to do with ARPU growth in Germany & Austria, subscriber growth in Italy, or football in some shape or form across all three markets and nowhere more so than in UK & Ireland. Most importantly for the Sky European merger, the latest results indicate that Sky is well on course with its target annual run-rate of £200 million in synergies by 2017; but with the UK model to act as a template, it is the fast-growing connected space that catches the eye.

  • July 30, 2015

    BBC Green Paper: red alert on funding

    The DCMS Green Paper on BBC Charter Review promises a nit-picking examination of all the BBC does, where the focus will be on how to redefine its mission as well as reform and/or improve BBC services in the internet age. A central theme is the scale of the BBC. The Green Paper underlines the “dramatic” expansion of BBC services in the last 20 years, and questions whether there is still a need for the current breadth and universality of the BBC’s offering in the online world of greatly expanded choice. Among the future BBC funding options laid out in the Green Paper, the suggestion of a mixed public funding and subscription model raises serious concerns with regard to its potential negative impact on the commercial television sector.

  • July 15, 2015

    BBC to pay for the over-75s

    The recently elected Conservative government took less than a week to negotiate a licence fee settlement with the BBC immediately prior to Charter Renewal in which it will offload the government’s over-75s licence fee subsidy on to the BBC in return for various financial benefits. But, there are strings attached to a financially poor settlement, making it very difficult for the BBC to protest in the run-up to a charter that promises a major diminution in its ability to contribute to the UK creative economy. The only possible gainers are the commercial media, though the benefits may prove much less than some anticipate, however pleased the newspaper publishers may be by the Chancellor’s criticism of the BBC’s “imperial ambitions” in online news. Much more to be feared is the likely negative impact on the UK TV production sector.

  • July 13, 2015

    The plight of the BBC post-intervention

    Last Monday’s (6 July) announcement by the Secretary of State marks the second major direct intervention by government without recourse to public consultation in the financing of the BBC throughout the corporation’s history. The previous occasion was 2010. As in 2010, the government has interfered by top-slicing the BBC’s licence fee revenues. We estimate the current annual top-slicing component that will appear in the annual accounts for 2014/15 (BBC year running from April to March) to be in the region of £525 million, including funding the BBC World Service for the first time (est. circa £245 million). By the time the BBC fully absorbs the over-75 subsidy (worth £608 million) in 2020/21, we are looking at a total revenue impact of circa £750 million; that is without taking inflation into account.

  • July 1, 2015

    A new Fox bid for Sky: when, not if

    News Corp’s original bid for full ownership of BSkyB was withdrawn because of the phone hacking scandal. It was never blocked by regulators. Had it not been for the scandal, the bid would almost certainly have been approved. With the phone hacking scandal fallout largely over and the election of a friendly government, the climate is now much more favourable to a renewed bid. With undertakings, we believe it would be approved by regulators. The increasingly global scale of TV and film distribution means the commercial case for the bid is, if anything, stronger now than in 2010. The questions are simply whether the right price can be agreed, and how high up it is on James Murdoch’s list of priorities.

  • June 30, 2015

    BT Sport – the Champions?

    BT will soon for the first time charge the majority of viewers for their own channels with the launch of the BT Sport Pack. The Pack includes BT Sport Europe, home to UEFA’s European football tournaments from this August, the rights to which BT are paying £299 million a year. Viewing figures for the big European tournaments are not as high as one might expect given their prominence. Consumer demand for the new channel will also be highly dependent on the success of British teams, notably lacking in recent seasons. We therefore do not expect a dramatic impact on BT Sport (or BT broadband) subscribers, and the widening losses will put pressure on BT’s margin squeeze test regulation, although they are easily absorbable at BT Group level.

  • June 16, 2015

    Channel 4 adapting to change: 2014 annual report

    After a testing 2013, which saw an 11% fall in audience share of main Channel 4, 2014 has seen a £30 million increase in total revenues to £938 million and return to financial surplus for the first time since 2011. Channel 4 is much more challenged than any other PSB group as well as much of the non-PSB sector by the steep recent decline in viewing among younger age-groups, yet has stuck close to its public service remit of reaching out to the 16-34s and a wide selection of minorities while maintaining its investments in programme origination. A buoyant TV advertising climate, innovative approach to content investment and focus within the digital space on getting to grips with the changing viewing behaviours of the 16-34s point to strong revenue growth in 2015.

  • June 11, 2015

    Amazon Prime and the video market

    DVDs are a core Amazon product, of which it is one of the largest retailers – the challenge is to sustain this position throughout the on-going transition to digital formats. Amazon Prime Instant Video’s first purpose is to help the transition by building Amazon’s digital video retail ecosystem. As part of the loss leader Prime bundle it also supports increased customer retail expenditure and stickiness. Despite strong headline growth in Prime membership and some high profile content, the streaming service has yet to generate significant consumer interest. Prime’s net cost is likely to rise as Amazon must finance content to meet rising consumer expectation while suffering competitive price pressures on the bundle.

  • May 29, 2015

    UKTV bucking the viewing trend: 2014 results

    UKTV 2014 results show a 2% increase in total revenues and a 10% year-on-year increase in EBITDA to £74.1 million, though the costs associated with the launch of Drama in 2013 will have contributed to the higher EBITDA increase. The 2% total revenue increase is surprisingly low, since we would have expected a circa 8-9% increase in UKTV’s main advertising revenue stream in 2014 due to a 5.4% increase in total TV NAR on top of a 2.9% growth in UKTV adult SOCI during 2013, with the lagged revenue benefits accruing in 2014. Whilst the outlook for 2015 appears very promising, the focus is now on investment in content, above all on new commissions, as a driver of revenue and audience share now that the factors behind UKTV’s successful rise since the Freeview launch in 2002 have largely played out.

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  • May 20, 2015

    Future of the BBC – no immediate need for the blues

    With both the current Royal Charter and licence fee settlement expiring in the next two years, press headlines proclaim the BBC has much to fear from the new Conservative government. Having read through the Culture, Media and Sport Committee's recent "Future of the BBC" report, which was led by the newly-appointed Culture Secretary, we do not share the same view. However, any reduction in BBC funding is likely to lead to further tightening of TV and radio programming budgets, with far reaching consequences across the entire UK creative sector.

  • May 7, 2015

    US and UK TV ad markets – apples and pears

    The US is seeing steep decline in measured TV viewing by younger age-groups and rapid increase in digital media adspend, prompting fears about the future of TV ad revenues across the major broadcasters and cable networks. The UK has seen similar trends, prompting suggestions that it will see similar effects. However, comparison of US and UK TV ad revenue trends since 2000 shows big differences in the underlying growth rates after taking economic factors into account. These undermine the inference that the decline in viewing and rise in digital adspend will have similar effects on either side of the Atlantic. Examination of the US and UK TV ad markets further points to big differences across a raft of major variables relating to supply and airtime trading practice, such as can be expected to yield very different outcomes with respect to TV ad revenue growth.

  • April 30, 2015

    Party positions on media & telecoms for GE2015

    The UK’s three main Westminster parties converge on sustaining the dynamic growth of the digital economy and the vibrant creative industries. The biggest area of divergence is on the EU. The Conservatives plan to hold an “in-out” referendum by 2017, while Labour and the Lib Dems are pro-EU and plan to engage with the Digital Single Market. Other important areas of disagreement include the future of the BBC and the Licence Fee, press regulation and reform of media plurality policy.

  • April 27, 2015

    Media & Telecoms: 2015 & Beyond slides

    Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides the accompanying slides for some of the presentations.

  • April 24, 2015

    Sky plc off to a good start – Q3 2015 results

    Sky plc has produced a strong first quarter across its three markets in terms of subscriber growth, record low churn and continuing firm control over costs, which has contributed to a 5% increase in revenues and 20% increase in operating profit over the first nine months of fiscal 2015. As expected, practically all the retail customer growth in Q3 occurred in the UK & Ireland and in Germany & Austria. Nevertheless, the results were also positive in Italy, as it registered the highest net customer increase in 3 years and record low churn. It is still too early to judge the success of the Sky plc strategy in terms of synergies, innovation and content origination. Whilst the potential appears great, the imminence of the next Bundesliga auction is a reminder that the issue of sports rights inflation is unlikely to disappear even after the latest PL auction.

  • April 20, 2015

    Free-to-air TV business models

    Prospects for European free-to-air commercial broadcasters are clouded by a weak advertising recovery, decline in TV set viewing by younger age groups and increased competition from pay-TV and international operators. Growth opportunities are nevertheless to be found in fine tuning families of channels to sustain audience shares, increased production of differentiating original content, wider HD and catch-up programmes distribution and smart pay-TV developments – broadcasters must focus on strengthening the quality gap between the TV set experience and online entertainment. ITV has shown the greatest increase in profitability, benefitting from its global production strategy. RTL and ProSiebenSat.1 have a modest upside from carriage fees for HD channels but production and pay-TV initiatives have yet to pay off. TF1 and M6 have withdrawn from pay-TV and face regulatory obstacles to launching channels and production investments. Mediaset in Italy should benefit from the ad market stabilising, but risks large pay-TV losses. In Spain, Mediaset and Atresmedia enjoy an ad boom.

  • February 9, 2015

    European Sky plc on the go: Q2 2015 results

    Sky plc, the coming together of BSkyB, Sky Deutschland and Sky Italia, has enjoyed an excellent start, as adjusted H1 2015 figures delivered a 5% increase in revenues versus a 3% increase in costs, resulting in EBITDA growth of 7% and with free cash flow up by 25%. The strong financial results were accompanied by strong subscriber growth figures, especially in the operations covering Austria, Germany, Ireland and the UK, while all markets showed large reductions in churn, reinforcing confidence in the strategic approach of Sky plc. It is too early to assess Sky’s delivery of its target group synergies. Individually, the former BSkyB and Sky Deutschland markets may be showing much stronger subscriber and product growth, but they also look to be more exposed to risk over football rights, while Sky Italia has more going for it than may appear at first sight.

  • February 3, 2015

    Digital UK 2015

    This Digital UK 2015 report is a collaborative effort by research partners Enders Analysis and EY. Encapsulating materials in the public domain and proprietary to the partners, it sets out to demonstrate the vibrancy of the UK’s digital economy and its potential for growth. Key UK strengths include: Rapid expansion of Next Generation Access (NGA) network coverage and 98% population coverage of 4G by the end of 2015 thanks to private and public investment. 45 million adult consumers on fixed line broadband and 45 million forecast to be using mobile broadband by 2020, thanks to the embrace of smartphones and tablets. Business e-commerce sales to consumers and other businesses of £556 billion in 2013, or 20% of non-financial business turnover, on a par with the US. The UK’s world-class digital infrastructure and its vast pool of smart connected consumers are unique strengths, and could be converted to leadership on the digital business models of the future. However, as important as the tech industry is to the future of the UK, the UK’s many existing businesses in other sectors could also aspire to be ‘fit for the digital age’. This will not only drive value for UK businesses, but if pursued energetically, it will help resolve the UK’s productivity puzzle.

  • January 26, 2015

    End of Netflix tightrope just in sight

    In marked contrast to its Q3 2014 results release, Netflix reported a strong Q4 with respect to paid subscriptions that was ahead of company guidance and consensus expectations. The positive news about subscriber numbers, which saw a sharp jump in share price immediately after the results, was heavily reinforced by Netflix’s announcement of its aim to expand its global base from 50 to 200 countries over the next two years and generate a material profit from 2017. As usual Netflix provided no international details other than to say that LatAm had passed the 5 million milestone in Q4. Elsewhere, BARB data suggest that Netflix passed the 4 million milestone in the UK, while it is still too early to assess the longer term potential of its September launches in France and Germany.

  • March 1, 2012

    UK cinema: 3D loses lustre

    In 2011, UK admissions were up 1% on 2010 and box office receipts rose 5% to just over £1 billion. Retail revenues were flat and screen advertising fell sharply. 3D took a lower share of box office receipts in 2011 on the success of British content and the rise of 2D in 3D dual release box office receipts. Although UK cinema-going appears insulated from home entertainment trends such as streaming video content, the weak slate of films in 2012 is a risk factor for admissions.