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click to expandFrench fixed line 2009 corporate results [2010-025]

Despite the recession, in 2009 the French broadband market added 1.8 million connections to reach 19.6 million, but we expect the deceleration in growth to persist in 2010

Orange’s leading position weakened further in Q4 2009, despite retail price cuts, and we expect a further decline in market share in 2010, impacting FT’s top-line

SFR was the star performer of 2009, although its Ebitda margin has improved slightly. Iliad remains the ‘best in class’ in terms of profitability, but must address high churn at Alice. Bouygues’ fixed line début was an impressive splash – at a cost


click to expandMobile media goes beyond the iPhone [2010-024]

Mobile content is moving to the centre of strategies for online media. At MWC, the world’s biggest mobile conference, Google announced it now develops all products ‘mobile first’ and Facebook reported a quarter of its 400m users access the service through mobile

Three years after the iPhone launched, the handset industry is catching up, adding decent user interfaces and mobile apps to colour touch screens and taking easy access to mobile content beyond the iPhone

Beyond the self-selecting early adopter iPhone base, we found real evidence of companies already successfully providing mobile content to much wider segments of the population


click to expandITV FY 2009 results – Preparing for transformation [2010-023]

ITV survived the worst recession and advertising downturn in its history thanks to market outperformance, cost cutting and other measures that delivered a full year profit of £25 million despite a 7% decline in total revenues, largely the result of a £134 million drop in its core advertising revenues

With the worst of the recession past, the focus of the incoming management is on revival and sustainable earnings growth through a transformation that will make ITV increasingly less reliant on at best stable broadcast advertising revenues in the digital age

Announcement of the transformation strategy awaits the conclusion of the ongoing internal review. We are slightly more optimistic about the TV advertising outlook over the next five years and see some upside potential from possible changes in the airtime rules, whilst the key to revival rests with the future coordination of ITV’s content and multichannel interests


click to expandIFNCs and the politics of local news provision [2010-022]

The IFNC process remains on track, but the pilot contracts may not be signed off this side of the general election – if Labour wins the election, this will not be material to the pilots or the wider IFNC project in the Digital Economy Bill

Given their opposition to IFNCs, we expect a win for the Conservatives would halt the pilot negotiations – as well as the wider IFNC project

The Conservative plan appears to be the creation of a network of local media companies. We are sceptical that such LMCs would be commercially viable


click to expandUK quarterly internet trends [2010-021]

The internet continues to gain share of media consumption and advertising at the expense of traditional media in the UK. This report highlights key online trends in the UK and our current forecasts for internet advertising in 2010 (we will address mobile advertising separately).


click to expandApple: The power of music [2010-020]

Apple’s hardware-driven strategy for music recently passed two major milestones, with 10 billion paid track downloads and 250 million iPods sold

In 2009, Apple ‘returned’ to record labels and publishers roughly $1.9 billion, while generating gross profits in the region of $3.2 billion from the sale of iPods and music

Of wider significance to Apple is the music strategy’s contribution to building a mass market brand and expanding its customer base, helping to drive adoption of their computers and, more recently, the iPhone


click to expandVirgin Media Q4 2009 results: continuing strong performance and positive outlook [2010-019]

VMed’s Q4 results were again strong; the May 2009 price increases continued to lift revenue and operating cash flow, as expected

There are continuing grounds for optimism, including further price hikes, cost reduction and modest turnarounds at Mobile and Business

There was no news regarding content M&A, but a sale some time this year appears likely and should have a significant positive impact on the company’s financial position


click to expandEuropean digital television platforms update [2010-018]

The switchover to digital television is well advanced in Europe – it is already completed in The Netherlands, Sweden and Germany (but not on cable) and will be over in all other large markets by 2012. This report presents a cross-country comparative assessment of TV platforms switching over and the emergence and adoption of new digital platforms, such as DTT, IPTV and free digital satellite.


click to expandBT FY 2009/10 Q3 results: recovery continuing, but longer term outlook uncertain [2010-017]

BT’s Q3 results and improved guidance for the year to March 2010 showed the current turnaround is well on track. But revenue continued to decline and improvements were concentrated at Global Services, the results for which were flattered by the dire prior year comparable

The UK business’s long term prospects also depend on successful deployment of next generation access, but this is over two years away

The results were overshadowed by the Pensions Regulator initially expressing ‘substantial concern’ over some features of the pension deficit valuation and recovery plan that the company has agreed with the trustees. Clarity on this is also some way off


click to expandTrinity purchase could signal consolidation phase [2010-016]

Trinity Mirror (TM) has acquired Guardian Media Group’s (GMG) regional media business for £7.4 million cash, also releasing GMG from a £37.4 million liability print contract

The deal is the first significant consolidation play since the cyclical downturn that started in 2008 helped reduce local newspaper advertising by about 35% or £1 billion. TM is understood to have beaten private equity to the deal, signalling that consolidation activity in local media may be starting to warm up

While the price tag appears small for a business that generated £94.5 million in FY 2009, its operating profit had fallen to £0.5 million, and TM should be able to realise measurable local synergies and cost savings


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News
 
The Guardian

Commenting on the universal decline in sales of regional newspapers (Regional papers run out of tricks to beat circulation slide), the Guardian observed: "Across the UK, local papers recorded heavy sales falls as the long-term trend away from print readership continued. All of this, of course, has a further deflationary effect on advertising revenues, already under severe pressure as classified advertising migrates to the internet". Douglas McCabe was asked for his view. He said: "There's no sense that things are slowing down and I wouldn't expect it to show that. "The trend is very much circulation decline at a pace that accelerated in the early years of the last decade, as fewer and fewer people relied on a daily local paper. That market just started to fall away quite rapidly."

Douglas McCabe made a distinction between big city titles, which suffer from competition from Associated's freesheet Metro, and the papers serving other markets. "In big cities like Glasgow, there's not the same need for a local paper, whereas it's still there in the further away places where there's more community and more reliance on community news," he said. "My gut feeling would be that the weeklies are a bit more of a robust format." He added: "Weeklies are a more appropriate frequency in the internet age – a digest of what's going on in the local area is actually quite useful, you don't need that information every single day. And the format remains very attractive to both advertisers and consumers interested in that advertising."

01 Mar 2010
 
The Guardian

In an article which queried assumptions about the value of TV advertising (Broadcasters review the revenue), the Guardian commented: "Subscription, advertising and the licence fee used to be roughly equal in value. But over the past five years more money has been generated by TV subscription, especially by Sky, and less by TV advertising. It's a trend media analysts expect to continue".

 

Toby Syfret was asked for his view. He said that he does not expect TV advertising to grow significantly, at current prices, over the next couple years, but he does expect Sky to increase subscription revenue by £500m. He said that the BBC will struggle to see any real increase in income under either a Labour or a Conservative government as it remains under pressure to contain costs and because BBC income has traditionally matched TV advertising income, which will remain depressed.

26 Feb 2010
 
The Guardian

Following the announcement that Alexander Lebedev was closing in on a deal to acquire the Independent newspaper (The Independent weighs up the costs), the Guardian asked "In a market often devoid of rhyme or reason, two questions loom large: how badly does Independent News & Media want to rid itself of the Independent and Independent on Sunday? And how much are these newspapers worth to Lebedev?" The article claimed that the existence of a printing contract with Trinity Mirror could jeopardise the deal.

Douglas McCabe was asked for his view. He said he suspected that this contract – rather than haggling over price – lies at the heart of negotiations between INM and Lebedev. "The print contract has been the really material thing," he said.

The Guardian pointed out that The Independent's advertising problem stems from circulation weakness. "They have a real problem of scale," said Douglas McCabe. "At these levels of circulation, you start to drop off the radar screen at advertising agencies. The Independent's circulation is now the size of a big regional newspaper."

22 Feb 2010
 
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