Enders Analysis

BT’s plans to deploy next generation access, combined with state-aided rural broadband projects, look set to give almost three quarters of UK households access to high speed broadband by 2016

New wireless technology is a feasible substitute for wireline for some low-end users and in specific areas, but we do not expect it to have a major impact on high speed broadband deployment

This is the third in our series of notes on UK newspapers and concerns regional newspapers. Unlike other media sectors, 2002 has got off to a positive start (as we predicted) due to resilience in newspaper advertising, particularly recruitment. This can deliver 25% plus of revenues. We expect recruitment to remain resilient, primarily due to continued government recruitment. As a result, we forecast 2-3% growth in advertising to this media sector in 2002.

UK recorded music retail sales fell 8% in 2012 to £1 billion, as CD sales fell 21% to £540 million whilst digital formats rose 15% to £484 million on a huge 70% climb in subscriptions.

HMV store closures in 2013 will further dent CD sales, but accelerate the point of inflection (at least 50% digital sales) of the UK’s retail market.

The UK remains a robust source of royalties from performance of sound recordings, with PPL reporting revenues in 2011 of £153.5 million, up 7%.

Trinity Mirror, Northern & Shell and DMGT helped the market more or less offset the absence of the News of the World, though impressive volumes have come at a price

More generally, newspaper circulations have a temporary reprieve, as strong newsflow but also discounts and marketing techniques have been deployed to attract readers

What happens next at News International, and also competitor responses, could soon change market dynamics again

Leading pay-TV operators Sky and Virgin Media (VMed) have shown little sign of recessionary damage in 2008 and the outlook for Q1 2009 remains positive. Difficulties are apparent at complementary pay-TV service provider Setanta

Ofcom’s pay-TV investigation enters its final stages in 2009. Ofcom faces a formidable challenge to devise a workable wholesale must-offer solution for premium film and sports content that fosters competition across all platforms

UK national newspapers are in poor shape. The inherent problem of the industry – too many papers chasing too few readers – has been exacerbated by a sharp decline in advertising revenue since September. As a result of these challenges coupled with the implications of forthcoming media legislation, we expect to see significant changes in newspaper ownership over the next two years.

The likely development of overall advertising in Europe in 2002 and 2003;

The development of overall online advertising in the same period;

UK mobile advertising jumped 157% year-on-year to £203 million in 2011, marginally higher than our forecast of £180 million, with strong growth in both search and display

Mobile advertising now accounts for 6% of internet search and display spend, but still lags mobile devices’ share of internet consumption, which has been rising strongly due to rapid smartphone and tablet adoption, and we estimate is now at around 15%

We expect much of the lag between mobile’s share of internet consumption and ad spend to disappear over the next five years, indicating continued high growth

This note shows the mixed evidence on household penetration. Most surveys report a distinct plateau in subscribing household numbers in the UK, particularly compared to France and Germany, where numbers are still growing. Other surveys show a continuing rise in individual users. On balance, we think the data does point to a clear deceleration in the growth in subscribing households. Current penetration is just over 10m homes, or 40% of the UK total.

Driven by growing broadband connectivity, the internet continues to gain share of media consumption and advertising at the expense of traditional media, hit by the double whammy of substitution to online and deepening recession

In the near-term, the recession will be the dominant factor across many business sectors. The enclosed presentation highlights key online trends in the UK and our current forecasts for internet advertising in 2009 and 2010