The cost of building out networks has left the lossmaking “altnets” saddled with over £9bn in net debt, according to calculations by Enders Analysis. Some providers, such as London’s G.Network, have fallen into administration, while lenders to others have been forced to write down the value of their debts.

“The crucial difference between these deals is that TalkTalk is a proven failed-firm situation, with it having been publicly for sale for at least the past four years but with no credible buyer,” said Karen Egan, head of telecoms at Enders Analysis.

Enders Analysis has identified Virgin Media O2 and CityFibre as leading consolidators, as several heavily indebted fibre networks struggle to win sufficient business to justify high investment levels.

“The overarching problem is the amount of long-form content people watch is going down,” Tom Harrington, head of television at Enders Analysis, said. “If the whole thing is shrinking … then that’s a challenge for every broadcaster and streamer.”

Skydance has a net debt of roughly $80bn, or around seven times its profits. That is almost three times higher than the 2.5x level normally associated with the industry, according to Enders Analysis.

Karen Egan, at telecoms research group Enders Analysis, said: “Equity shareholders will be asking for some pain on the debt side of the equation in return for the £900m of equity injection, even if that pain isn’t in the form of an official write-down of the debt stack.”

The European contest has achieved success online by expanding the cultural relevance of existing entertainment intellectual property. It remains to be seen whether Eurovision Asia can “drive comparable engagement for a sister brand that does not carry the same heritage and audience buy-in,” says Ben Woods, head of creator economy at Enders Analysis.

Claire Enders, founder and chief executive of Enders Analysis, said the idea of a tie-up between BBC Studios and Channel 4 was "a perennial that flowered every so often".
 

Although BBC Studios could end up as the ultimate home for Channel 4, Priya Dogra, who became Channel 4 CEO in March, had already taken steps to improve its financial footing, such as winning Skydance-owned Channel 5's advertising sales business, Enders said.

"We're very far from a situation where Channel 4 is a failing firm," Enders added.

The push gives platforms an incentive to control both sides of the equation: media buying and the creative feeding it. As Enders Analysis senior research analyst Jamie MacEwan said, “This is absolutely about ad platforms who have invested heavily in AI using it to solve their own problems.”

“The more creative is automated within the platform’s systems, the greater the scope for them to introduce format innovations and optimize performance across placement and creative,” MacEwan said.

Opus said its interest in the consumer business “remains unchanged”.

However, Enders Analysis described BT as a “buyer of last resort” and warned the ramifications of a TalkTalk collapse would have been “very serious”.

Its analysts wrote: “Some of BT’s competitors may well protest but unless they actually make an alternative offer for the company, the failing firm theory is proven.”

“It’s probably the least bad deal for BT, because they were going to take some pain anyway,” said Karen Egan, head of telecoms at Enders Analysis. “They were going to lose wholesale revenues for a few months [and] they were going to have a bad debt for Openreach.”

“There’s now a question mark over whether BT is going to be able to stabilise that customer base,” Egan said. “I would say stabilising is a big challenge and they’re probably not going to be able to immediately.”

“BT’s a big group — they can find £50m, £100m down the back of the sofa here and there … You don’t have to cut that many costs in order to get [TalkTalk] to almost break even on an operating cashflow basis”, said Egan at Enders Analysis.