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May 5, 2021BBC licence fee settlement: Push outside London will need further [...]
Focus Report, Reports- The launch of the BBC’s blueprint for its approach to the Nations and Regions is timely, coinciding with the kick-off of negotiations over the BBC’s financial settlement for the next charter period
- If the licence fee were to be frozen or only an inflationary increase applied, by 2027 the BBC’s annual licence income would be £302-539 million lower in real terms. Just to maintain the BBC's current levels of funding, it would need an inflationary increase, plus an annual increase of 2.0%
- The BBC's commercial ventures are unlikely to cover any shortfall in licence fee income. To generate sufficient dividends to cover the shortfall for the PSB group, income produced by BBC Studios (and the BBC’s other commercial ventures) would need to grow by an order of magnitude
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April 21, 2021Brief reprieve from COVID turbulence: UK mobile market in Q4 2020
Market Outlook, ReportsThe 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. -
April 16, 2021US content distribution: Studios go direct to consumer
Focus Report, ReportsDespite 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, 2021The recovery stutters: UK broadband, telephony and pay TV trends [...]
Focus Report, Reports- 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.
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March 30, 2021(UK) Ecommerce forecasts 2021: Pandemic shifts remain for now
Focus Report, Reports- 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
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March 26, 2021Mail scoops Telegraph print advertising: Telegraph outsourcing fo [...]
Flash Report, Reports- 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
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March 25, 2021UK’s Creative Industries: Boosting the regional economy
Focus Report, Reports- 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.
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March 18, 2021
End-of-line spectrum 50% off: UK second 5G auction results
Flash Report, ReportsProceeds 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, 2021ITV FY 2020 results: Waiting for lockdown to end
Flash Report, ReportsITV’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 9, 2021Virgin Media: Subscribers strong, ARPU tough to turn
Flash Report, Reports- 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
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March 3, 2021O2 :Trending nicely, outlook challenging
Focus Report, Reports- 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
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March 2, 2021
(UK) Learning from “The Independent” : Sustainability [...]
Flash Report, Reports- 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
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February 22, 2021Vodafone: Leverage looms large
Focus Report, Reports- 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
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February 5, 2021Global Britain is born: Post-Brexit muddle
Flash Report, Reports- The EU-UK Trade and Cooperation Agreement (TCA) grants zero-tariffs only to goods compliant with rules of origin, a subset of the goods previously traded freely, and dramatically raises barriers to exports, especially services, relative to the Single Market
- UK (and EU) traders of goods must assume new onerous, costly and disruptive customs clearance procedures, also applicable to other third parties, which are certain to radically downsize trade with the EU, especially B2C e-commerce, typically single parcel
- The UK’s initial vision of Global Britain via a pact on trade, security and defence with the US, rather than the EU, is not a priority now for President Biden, who also has a stake in the open border on the island of Ireland
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February 2, 2021Still the iPhone company: Apple’s record pandemic year
Flash Report, ReportsMobility is vital to companies selling products, rather than online services. However, all regions grew double digits in the quarter, with global growth hitting a bumper 21%.
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January 27, 2021CES 2021: Consumer tech show switches on to the pandemic
Flash Report, ReportsThe home is now a bastion of more activity than ever before, from working to entertaining to socialising—more is being demanded of the domestic space—and in 2021 the consumer tech show offered a more holistic approach to the Internet of Things (IoT), accepting a ‘new normal’ would be centred on the home, even as the effects of the pandemic recede. -
January 21, 2021Top 5 Telco Trends in 2021
Flash Report, Reports2020 was a disruptive year for everyone, including the telecommunications industry. But as a semblance of normality emerges, change in the industry continues unabated. Our top telco trends for 2021 are:- Low end operator brands seize leadership in the consumer market
- Telco infrastructure comes into play as operators seek to monetise assets
- Government refocus on regional communications as nbn rollout ends
- Enterprise market shift as nbn disrupts the fibre wholesale market
- 5G comes into its own as handset availability surges and coverage expands
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January 21, 2021(UK) Update 2021: COVID-19 and Mobility
Flash Report, Reports- The UK entered 2021 in the grip of a dangerous third wave of the pandemic, despite Lockdown 3.0 over Christmas, driving down trips taken by people to depressed levels last seen in Lockdown 1.0, reducing economic activity for Q1
- Time spent at home closely tracks the severity of lockdowns and mandates to work from home (WFH). Underpinned by the UK’s advanced digital infrastructure and services, WFH is providing resilience to Gross Value Added (GVA) creation, while staff in B2C activities are furloughed
- The City of London is emblematic of the potential for outsourced GVA creation under WFH. Its skilled and highly paid staff are too valuable to employers to risk exposure to the virus. WFH, largely preserving GVA, will anchor the future of work
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January 19, 2021(UK) TalkTalk: Mixed results, future opaque
Flash Report, Reports- TalkTalk’s latest results were mixed at best, with ARPU and revenue growth improving off a low last quarter, but net adds worsening, EBITDA falling sharply and full year EBITDA guidance suspended
- Its outlook remains challenging, with the move to high speed still a drag on EBITDA, and the migration to ultrafast a further (even greater) challenge, although this brings opportunity as well, especially if the company can move away from its discount brand focus
- Its prospective new owners highlight the need to invest in brand, systems, and full fibre capabilities to meet this challenge, but it is not clear where the money to do this is coming from, and it is also not clear if the desire to ‘reposition the brand’ includes a move upmarket
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January 15, 2021Roaming charges to return for some: Free EU roaming an optional e [...]
Flash Report, Reports- Lockdown 1.0 in March-April-May 2020 reduced mobility in London to 65% of its pre-pandemic baseline, swelling time spent at home. London’s mobility tracked a similar decline to Paris and New York City, all hugely reliant on public transport
- Easing lockdowns and good weather slowly led to a mobility recovery through the summer and early autumn, but it sharply declined again after November’s Lockdown 2.0. The mobility decline was greatest in the City of London, which is more acutely affected by working from home
- Each nation in the UK diverged slightly from September due to varying local policies adopted by England, Wales and Scotland to address their public health crises. Notably however, Lockdown 2.0 did not cause mobility to fall to the same degree as late March
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January 14, 2021(UK) COVID-19 and Mobility
Flash Report, Reports- Lockdown 1.0 in March-April-May 2020 reduced mobility in London to 65% of its pre-pandemic baseline, swelling time spent at home. London’s mobility tracked a similar decline to Paris and New York City, all hugely reliant on public transport
- Easing lockdowns and good weather slowly led to a mobility recovery through the summer and early autumn, but it sharply declined again after November’s Lockdown 2.0. The mobility decline was greatest in the City of London, which is more acutely affected by working from home
- Each nation in the UK diverged slightly from September due to varying local policies adopted by England, Wales and Scotland to address their public health crises. Notably however, Lockdown 2.0 did not cause mobility to fall to the same degree as late March
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January 11, 2021(UK) Montgomery shakes news market again: JPI, third largest loca [...]
Flash Report, ReportsThe low price paid reflects the dismal prospects for print media, especially regional and local titles relative to national titles. Over the past decade, regional publications were affected at a greater rate than national counterparts by the structural decline of print circulation and advertising, resulting in significantly more closures, as well as issue frequency reductions. -
January 8, 2021Future to buy GoCompare Diversification shifts further to ecommer [...]
Focus Report, Reports- Publisher Future paid a premium to acquire listed GoCo, the financial services comparison platform, for a cash and shares deal valued at £594 million, provided GoCo shareholders approve the deal at a vote in January
- For Future, the purchase of GoCo gives it a platform for consumers for whom the service is free, deepens its tech stack and diversifies revenues to affiliate fees earned from ecommerce
- Future's strategy of growth by acquisition has helped offset structural decline in the print portion of the business. The question is whether GoCo will generate sufficient returns to justify the premium paid
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January 4, 2021
Steady now, brighter outlook: European mobile in Q3 2020
Focus Report, Reports- Mobile growth improved very marginally to -3.6% this quarter as roaming revenues were harder hit and competitive intensity bounced back, but usage recovered from the lockdowns in Q2 and cuts to intra-EU calls were annualised
- Italy’s fortunes took a turn for the worse as roaming hit particularly hard and Iliad resurged. After a spate of downgrades to the outlook last quarter, there were some tentative upgrades in Q3 although the tone remains cautious
- The diminished drag from roaming is the primary positive driver from here. Although lockdowns of some degree are in place in Q4, their impact will be less severe than those in Q2
