UK Media

Filter by

Filter by

  • August 9, 2017

    BT Q1 2017/18 results: Back to growth (for now at least)

    BT Group revenue returned to growth, at least temporarily, helped by overlapping price rises in consumer, one-off regulated price cuts on leased lines annualising out, and mobile handset sales improving. Regulatory news was unusually positive, with Openreach taking the initiative on FTTP, and BT winning an appeal against damaging leased line regulation, which may end up being significantly eased. BT continues to do well in consumer and struggle in business markets, with the ongoing deceleration in the consumer broadband market the main cloud on the horizon.
  • August 4, 2017

    ITV Studios offsets weak NAR: ITV H1 2017 results

    ITV H1 2017 results are in line with guidance contained in its Q1 trading update issued in May, while full year guidance has remained largely unaltered. The 8% decline in TV NAR, timing of programme deliveries and increased business investment were main reasons for the 8% drop in group EBITA despite growth elsewhere limiting the decline in group external revenues to 3%. ITV continues to deliver strong group profit margins of close to 30%; however, online poses several threats to TV NAR. The threats can only be increased by the quest for retransmission fees, whilst the spate of production acquisitions raises questions about risk management
    Sector , .
  • July 26, 2017

    TalkTalk Group Q1 2017/18 results: Still growing the base

    TalkTalk sustained positive broadband net adds in the June quarter, adding 20k to its base, largely driven by reduced churn, which was largely driven by re-contracting a large proportion of existing customers onto its new cheaper bundles. Unfortunately, this had a negative effect on revenue growth, with Group revenue growth (ex-carrier) dropping to -3.2%, as the new cheaper bundle adoption diluted ARPU, but the company remains confident that revenue growth will turn positive for the full financial year as the ARPU dilution effect annualises out. The company recently announced a price rise due in August of around 5-6% for customers not on its new cheaper bundles (around 38% of its total broadband base), which will help with the ARPU turnaround, but may make maintaining positive broadband net adds more challenging
  • June 27, 2017

    UK broadband, telephony and pay TV trends Q1 2017: Profit warning [...]

    UK residential communications market revenue growth dipped modestly to 2.7% in Q1, from 3.3% in the previous quarter. This was mainly driven by ARPU weakness arising due to the timings of Sky and Virgin Media’s price rises, but weakness also stemmed from the sustained decline in broadband volume growth and continued new customer price competition.Looking forward, the implementation of an overlapping price increase from BT, as well as Sky’s price increases coming into full effect, should boost market revenues by around 1ppt in Q2 2017, but this will drop away again by Q3. The churn fallout from the communication of these price increases should also dissipate in Q2, benefiting BT and Sky competitively, and making it challenging for TalkTalk to repeat the feat of recovering to positive retail broadband net adds

  • June 10, 2017

    BT Q4 2016/17 results: Mobile strength, pressure elsewhere

    BT had a reasonable quarter in its consumer broadband business given market pressures, and a very strong one at EE with continued growth acceleration. It had a good quarter for fibre adoption as well, helping its wholesale divisions stabilise their revenue, but business/IT was weak as expected.Regulatory pressure remains intense despite the (welcome) Openreach agreement, with price cap regulation proposed or due on a range of products, and a regulatory approach which is far from investment-orientated. Pressures in the business/IT market are likely to continue, and pressures in the consumer broadband market are likely to intensify, justifying BT’s current cautious approach to guidance and dividends.

  • June 9, 2017

    UK General Election online: news and advertising

    In contrast to print coverage, most shared news and opinion content on social media was decidedly pro-Labour this election season, with fake news relatively non-existent compared to the US election in November. Facebook’s role in news distribution has steadily grown and now rivals Google’s, but only a half of the UK’s electorate are active users – for the platform to become decisive in political news would require much stronger turnout among young voters. Facebook was the chief digital ad platform for both main parties, with Conservatives targeting Labour seats, Labour defending them and both adopting a negative tone.

  • 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

    Sector , , .
  • May 22, 2017

    TalkTalk Group Q4 2016/17 results: Rebasing profits for growth

    TalkTalk managed to return to retail on-net broadband subscriber growth in the March quarter after years of decline, but at the expense of missing their EBITDA target for the year. They have stated a determination to grow the base going forward, but have admitted that this requires a rebasing of their EBITDA to spend the necessary amount on marketing, and guided to an EBITDA drop in the 2017/18 year. This looks much more realistic than their previous plans, but will in itself generate even more competitive intensity in the UK broadband market, which is already squeezed given the market volume slowdown and Virgin Media network extension.
  • Mounting risks to marketing effectiveness
    Mounting risks to marketing effectiveness
    May 19, 2017

    Mounting risks to marketing effectiveness

    A partial — if seductively persuasive and impressive — data framework for online advertising combined with short-term incentives have encouraged a dramatic shift in the ratio of brand to activation advertising from 60:40 to 50:50, depressing the pricing of display media. Mounting evidence suggests a focus on quick returns and cheap media at all costs is hurting marketing effectiveness, measured in long-term Return-on-Investment, brand equity and consumer satisfaction. Guarding against this risk requires brand-focused advertisers to create more space for long-term judgement for CMOs, and to refocus agency remuneration towards planning and creative work.

  • UKTV 2016 results: viewing continues to climb, what awaits online
    UKTV 2016 results: viewing continues to climb, what awaits online
    May 19, 2017

    UKTV 2016 results: viewing continues to climb, what awaits online [...]

    2016 was another good year for UKTV, with appreciable growth in revenue and linear viewing share; a trajectory the product of a sensitive pay/free balance of its channels, investment in productive EPG slots and development of its original programming suite. Recent deals with both Sky and Channel 4 will go some way to providing financial stability, allowing UKTV to invest with more certainty in new content and encouraging further development of its online proposition. UKTV Play has underperformed, chiefly due to a lack of content. But with plans to significantly ramp up both its offering and marketing spend, it may well unlock further audiences; specifically targeting elusive 16-34 year-olds.
    Sector , , .
  • TV platform forecasts to 2026: DTT and pay-lite set to grow
    TV platform forecasts to 2026: DTT and pay-lite set to grow
    May 5, 2017

    TV platform forecasts to 2026: DTT and pay-lite set to grow

    Our latest forecasts point to the continued strength of DTT within the UK broadcast market. We predict DTT-only homes will account for 42% of TV viewing ten years from now, up from 38% today. Much of this is due to the UK’s ageing population profile, since DTT skews older. The number of over-45s in DTT-only homes is set to increase by 13% by 2026. The other key factor is the continued growth of flexible pay-lite services—for example, Netflix and NOW TV—which are of greater appeal to younger audiences.

    Sector , , .
  • March 23, 2017

    Video viewing forecasts to 2026

    2016 was yet another year in which we saw big changes in the UK’s video consumption habits amongst the under-45s, with little let up in the decline of traditional broadcast linear TV viewing for the younger age groups. Online video-on-demand services will continue to grow, partly at the expense of traditional TV audiences. We also expect the overall volume of viewing to rise, mainly due to wider production of and access to short-form content. Despite these changes, conventional broadcasters look to be strong for years to come—we estimate they will still account for 80% of all video viewing in 2026
  • 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.
  • February 24, 2017

    Virgin Media Q4 2016 results: Accelerated build, delayed benefits

    Virgin Media successfully ramped up its network extension in Q4, passing more than double the homes in the previous quarter, and above the rate required to meet 2017 expectations. Net customer additions were, however, relatively weak, entirely due to extra churn caused by the price increase implemented in the quarter. The price increase’s effect on ARPU and revenue growth was muted by ARPU discounting for new customers, leaving revenue growth broadly unchanged. Subscriber growth has already improved in early 2017, and is likely to continue to improve through the year. The discounted ARPU impact will be more sustained, but robust revenue growth is still likely throughout the year.
  • February 7, 2017

    TalkTalk Group Q3 2016/17 results: Weak quarter, reassuring guida [...]

    TalkTalk had a weak quarter, as was pre-warned, with the decline in the broadband base accelerating and consumer revenue growth of -6% slightly worse than the previous quarter. Guidance was however very bullish, with the company confident that it can bounce back to return to positive net adds in the March quarter, while still hitting its profitability guidance. This looks a difficult task in a market which is still highly competitive, but if it can achieve it, the longer term aim of a stable customer base and growing revenue and profits looks much more plausible.
  • February 1, 2017

    BT Q3 2016/17 results: Strong core, let down elsewhere

    BT had a solid enough quarter, with revenue and EBITDA growth dipping due to pre-warned temporary factors, consumer continuing to outgrow business, and very solid operating trends evident, especially in high speed broadband and mobile. This has of course been entirely overshadowed by the profit warning, with prospective weaknesses in UK public sector and international corporate of far more concern than the contained, albeit surprising, accounting irregularities in Italy. BT has a large share of revenue and a much smaller share of profit from corporate/government data network/IT services, which are erratic in nature and arguably in long term decline in their current form, and without major changes they will continue to be so.

  • January 10, 2017

    TV set viewing trends: linear remains vital

    Timeshift viewing on the TV set has doubled since 2010, mainly due to PVR adoption. This has compensated for about 40% of the decline in live viewing, which has fallen by 19% per person on average. Timeshifting habits are widely spread across all age groups. They are proportionately higher for the young, who watch much less live TV, but are still substantial among over-55s, whose total viewing has hardly changed since 2010. Large genre variations in the volume of timeshift viewing (dramas high, live events low), and the fact that this still occurs very soon after the live broadcast, underlines the strength of the linear schedule. And, despite widespread initial concerns that timeshift viewers would fast-forward through all ads, nearly 50% of timeshifted commercials are viewed.
  • December 16, 2016

    UK broadband, telephony and pay TV trends Q3 2016: Peak growth?

    UK residential communications market revenue growth accelerated to 5.8% in Q3, from 5.0% in the previous quarter, helped by an overlapping price rise at BT, and supported by firm pricing and accelerating high speed adoption elsewhere. Volume growth in the core three products – broadband, line rental and pay TV – in contrast continues to slow, with little sign that this will ever re-accelerate. In the longer term we cannot see ARPU growth acceleration continuing to fully compensate, and market revenue growth might also have peaked. Virgin Media is putting extra pressure on the other operators through its network extension roll-out, broadband speed advantage and improving pay TV service. Sky and TalkTalk are becoming increasingly aggressive in marketing high speed broadband to help protect themselves (and perhaps also to boost ARPU), with Openreach’s high speed net adds being mostly derived outside BT’s retail divisions for the first time this quarter.
  • December 16, 2016

    TalkTalk Group Q2 2016/17 results: Growing profits, slowing reven [...]

    TalkTalk’s broadband subscriber decline has re-accelerated, with retail weaker than wholesale, and its consumer revenue is declining at 6%. This is partly due to price change timings, partly due to last year’s cyber-attack, but also partly due to underlying weak retail broadband subscriber growth. EBITDA did grow strongly, although this was in part due to less subscriber growth. The new pricing plans will likely drive more short term revenue weakness, but could potentially drive lower churn in the medium term, and they have renewed TalkTalk’s price competitiveness, particularly on high speed products.

  • November 10, 2016

    Virgin Media Q3 2016 results: Continued acceleration

    Virgin Media continued to accelerate in Q3, with subscriber numbers accelerating despite the broader market slowdown, driven by its network extension starting to have a material impact and an enhanced TV offering reversing its pay TV decline. The only weak area was mobile, with revenue and subscriber growth slowing, and convergence stalling. The company hopes that its 4G launch will reinvigorate this; we believe that consumer demand for fixed/mobile convergence remains limited. The early price rise implemented in November will likely help ARPU but harm churn during the rest of the year; for 2017 and beyond the accelerating network extension will increasingly drive volume and revenue growth.

  • 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.

  • September 14, 2016

    Untapped not tapped out -The over 50s -­ systemic consumption an [...]

    More than one third of the UK population is over 50 (over 23.6 million people) and this cohort is projected to keep growing. They account for substantial wealth, assets and expenditure. Over 50 consumers are more urban, educated, and tech-­‐savvy than the over 50s of previous generations. Given their outsize impact on the economy, influence on social trends and opportunity for brands, we believe the marketing industry underappreciates the diversity of over 50s, and their differentiated requirements. The key group in terms of potential in growth, wealth, expenditure and digital adoption are the 50-­‐65s: they are neither their children nor their parents.
  • August 23, 2016

    UK broadband, telephony and pay TV trends Q2 2016

    UK residential communications market revenue growth was broadly unchanged at 5% in Q2, despite volume growth continuing to slow across all products, with pricing and fibre adoption helping to boost ARPU. Virgin Media continued to gain momentum on the back of its Project Lightning network extension, and this impact is likely to continue to grow as the roll-out continues. Its ARPU was quite weak, hit by promotional discounting and other temporary factors, and this should recover in time, helped by its early price increase schedules for November.

     
  • 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.