In an article which revealed an upturn in UK regional newspaper property advertising (Johnston buoyed by property ads), the Financial Times quoted an optimistic Johnston Press which predicted that the "total advertising revenues [should] fall less than 3 per cent in the third quarter of 2010, compared with a nadir of 32.7 per cent declines in the depth of the recession last year".

Douglas McCabe was asked for his view. He said: “It’s hard to share Johnston’s optimism that job or property advertising are going to improve or even stay flat in the next year.”
 

In an interview with Gavin Patterson, Chief Executive of BT Retail (Sleeping giant wakes up to technology), the Financial Times observed that BT Vision "has not tackled its rivals impressively since launching in 2006. With fewer than 500,000 subscribers, it missed its initial target of 2m-3m".  The article also revealed that BT's average revenues per broadband customer were declining in the company’s first quarter, due to discounting.

Ian Watt was asked for his view. He estimated that BT will need 2m customers to match Sky’s cost base and see the real benefits start to flow.

http://www.ft.com/cms/s/0/9e987b64-a963-11df-a6f2-00144feabdc0.html

Speculating on the future of Channel Five following its acquisition by Richard Desmond (Knives at Five: Can Richard Desmond rescue his new channel?), the Independent observed: "all eyes are on his next move, as he sets about building a business that he wants to "go toe-to-toe with the biggest players in the TV world".

Claire Enders was asked for her view. She said when the deal closed that his edge was in the "free publicity" from his publications. "He will build the buzz and the glamour in the publications, which is something the channel has been sorely lacking." 

Following ITV's announcement to offer some of its channels on pay- television platforms and invest in online content to reduce its dependence on advertising (ITV Plans to Offer Pay-TV Channels, Reduce Dependence on Advertising Sales), Bloomberg asked Toby Syfret for his comments. He said: “ITV did try to get into pay-television 10 years ago, but ITV Digital collapsed and was withdrawn in 2002". He added that providing the pay-TV channels “gives a little bit extra but doesn’t solve the basic issues of looking at future revenues outside advertising.”

In an article which heralded the release of ITV's half-yearly results (ITV turns the corner but still needs direction for the future), the Observer scrutinised the plans of newly appointed chief executive, Adam Crozier, to turn the ailing broadcaster around. Toby Syfret was asked for his comments. He said there is "no magic formula, but the priority [for ITV] should be to protect its [48%] share of the television advertising market, and not get too preoccupied with diversification".

Following the sale by RTL of  the UK TV channel, Five, to the proprietor of the Daily Express newspaper, Richard Desmond (Desmond comes to the rescue of Five with £104m deal), the Independent revealed that Mr Desmond had pledged to retain Five's status as a public-service broadcaster, thus ensuring the screening of a certain amount of news and current affairs programming, and furthermore would commit £20m to Project Canvas, the online catch-up TV service, whose partners also include BBC, Channel 4 and BT.

Claire Enders was asked for her view. She said: "Desmond is someone who has a real interest in the media. He is an innovative entrepreneur. The edge he has is the free publicity in the Star, OK! and the Express. He will build the buzz and the glamour in the publications, which is something the channel has been sorely lacking." She added: "Mr Desmond will be able to build market share at the channel through investment and cross-promotion, but will Five ever be a competitor to ITV? Hell no."

With news that Richard Desmond, proprietor of the Daily Express, would become the first individual in the UK to own a public-service broadcaster (RTL sells Five to Desmond for £103.5m), the Financial Times suggested that "in spite of the fact that Five will be the smallest player in the television market by some distance, with an 8 per cent share of net advertising revenue, Desmond would not be bullied". Toby Syfret was asked for his view. He said:  “Television buyers will not take any notice of Mr Desmond’s other media assets. A television deal is a television deal and they will not care about his share in the newspaper or magazine market.” He added that Five had an older audience and lower income mix than many advertisers were seeking.

Following the announcement by France Telecom that it aims to double revenue from emerging markets to around €7 billion over the next five years, and to boost its number of clients from 200 million to 300 million (France Télécom Unveils Growth Strategy), The Wall Street Journal examined the company's decision to review its heavy investment in content, commenting: "The strategy shift reflects France Télécom's struggle to find new revenue sources as traditional telephone service stagnates. Like most other European carriers, its growth has slowed due to saturated mobile markets and regulators' limits on fees".

François Godard was asked for his view. "The strategy was the wrong one in the first place" he said, adding: "France Télécom needs to focus on how to distribute content, not own it."

The Financial Times covered the race to acquire Le Monde (New proprietors eye Le Monde makeover), observing that: "the winning consortium will not be able to do much about heavily unionised print works or France’s mutualised press distribution system, which together keep the cost of producing and selling newspapers higher than elsewhere in Europe".

François Godard was asked for his view. He said: “I hope the journalists have learnt the lesson. The corporate structure has been a disaster because of the journalists insisting on management rights.”

http://www.ft.com/cms/s/0/30605e96-85f5-11df-9618-00144feabdc0.html

Highlighting the rivalry between BT, British Sky Broadcasting and Virgin Media as exemplified by their competing pay-TV packages (Football’s pay-TV turf war heats up), the FT observed that BT "must stem the loss of broadband customers to rivals... as well as win new ones. The ability to offer live Premier League football at an attractive price is the key to that".

Ian Watt was asked for his view. He said that BSkyB is "one of the best-managed companies in the retail space” and added that it also enjoys economies of scale in pay-TV. He also observed that while BSkyB was forced to sell its sports channels to rivals such as BT by the recent Ofcom pay-TV ruling – against which it is appealing – the remedies imposed on it were nowhere near as restrictive as BT submitted to over its fibre broadband network in 2005.

Ian Watt further pointed out that BT has not adjusted the guidance that it gave to markets that it would be spending £200m on new ventures this year, suggesting that "they have already budgeted for the worst, even for the dramatic move by BSkyB, on the eve of the BT football announcement, to increase its retail and wholesale prices by up to £3 a month, which in turn increases the loss to the telecoms group".

He said that BSkyB’s pricing ploy was “a classic example of Sky thinking ahead about what they do”; for each bundle of Sky Sports 1 and 2 it sells at £12, BT must pay BSkyB £19.07, which increases both BT’s loss and BSkyB’s margin. He warned: “You start stepping on Sky’s lawn and you are going to get hurt in ways that you never even dreamed of. They are very creative.”

http://www.ft.com/cms/s/0/c879c8b4-8606-11df-bc22-00144feabdc0.html

In covering the competition for pay tv viewing (BT locks horns with Sky over pricing for sports), the Independent reported the war of words between the principal rivals, BT and BSkyB, and quoted Mike Darcey, Sky's chief operating officer, who claimed: "It is now clear that Ofcom has been duped and that BT wants to set retail prices below wholesale prices. Their agenda is all about using artificially cheap TV to sell expensive broadband and phone services. This is not price competition, it is cross subsidy."

Toby Syfret was asked for his view. He pointed out that the sports packages would be crucial in preventing BT's customers leaving for Sky or Virgin, which also shows Sky Sports content. "There has been a lot of drift from BT to Sky; this will help head it off."  He added that when broadband and telephone line prices were factored in, there was not a huge difference in price between the rival pay TV providers.  He added: "This is just one of a number of aggressive actions Sky has taken to stall the competition."

Reporting on Google's attempt to salvage its operations in China (Google overhauls China site to help renew licence), the Independent observed that "the olive branch will not be enough to save its operation in the country from closure". The article revealed that Google had made changes to its Chinese home page to mollify the authorities, claiming the move was not a commercial decision as the current revenues from the country were "immaterial".

Ian Maude was asked for his view. He said: "Google is in a difficult place and has come up with an elegant solution. It is unlikely to be favourably received by the Chinese government, however." He added: "The most likely scenario is Google will be blocked."

Following AOL's sale of the social networking site, Bebo, for a fraction of the price it originally paid for the business (Big media's losses on social networking sites break through £1bn barrier), the Guardian observed: "The media industry has now lost $1.5bn (£1bn) on investments in the social networking craze... The soured investments underline the hazardous nature of gambling big money on internet businesses. Ever-developing applications and a lack of customer loyalty mean social networking sites can become huge, almost overnight, and crash just as quickly when the next big thing comes along".

Ian Maude was asked for his view. He said: "Barriers of entry online for new entrants are very low and so if someone comes along with a better idea, it's very hard to protect against that."Facebook is still growing and making smarter moves. It is also much more appealing to a wider audience. But someone could come along with a better idea tomorrow and eat Facebook's lunch."This is an intensely competitive market. It's not like signing up to Sky, where you have a commercial relationship. If you see something better, you can click and go elsewhere. You can build an audience very fast online but you can lose it very quickly as well. You have to keep investing in technology."

Ian Maude observed that the two most successful internet businesses in the sector, Google and Facebook, have stayed independent and that studies suggest mergers and acquisitions don't work. "If you get sucked into a corporate bureaucracy and strategy, it almost certainly leads to a dilution of the business," he said, adding: "AOL has destroyed the value of all the companies it has acquired. Mark Zuckerberg [Facebook's founder] has made choices that have enabled him to stay in control. But even then, there is no guarantee of success."

Commenting on the News Corp. plan to acquire the remaining 60.9% of BSkyB for $11.5bn (What’s Murdoch’s Aim With Latest Deal?), the New York Times observed: "Mr Murdoch is already pushing News Corp to generate more revenue from consumers, rather than advertising, which took a big hit during the recession..The Times of London, is set to start charging visitors to its website for access, and other papers owned by the company are expected to follow.  Might it be easier if access to the website were bundled into a satellite television subscription?"

Toby Syfret was asked for his view. He said: “You cannot help but thinking there must be ways of linking the two businesses and helping them out." He added: “In theory the commercial opportunity is quite an interesting one.”

With news of Virgin Media's accusation of regulatory leniency over BSkyB's wholesale pricing policies (Rival sides challenge Ofcom pay TV ruling), the FT reported that Virgin had lodged a legal appeal against Ofcom's efforts to set fair prices for the market in Premier League football coverage. Toby Syfret was asked for his view. He said:  “There have been worries expressed by Virgin and the others that, unless the other sports and movie channels are included in some form of regulation, Sky would be able to ‘game’ the system so that they can make what their rivals are offering much less attractive to consumers.”

Following news of the closure of over 60 local newspaper titles, the Financial Times found evidence of a revival in regional journalism (Brummies in a cupboard lead media fightback), and concluded that a web-based subscription model for well-targeted business news is profitable. The article highlighted the success of a news site, TheBusinessDesk, which has attracted 4,500 registered users. Douglas McCabe was asked for his view. He said: “A lot more businesses like this will pop up", adding “Newspapers will be faced with many tiny competitors with very small costs.”

In an article which revealed that 60 regional newspapers had closed in the UK during 2009 (Hope that local newspapers can turn the page), the Financial Times ascribed an over-dependence on classified advertising as the systemic weakness of the regional press: "As a result, advertising revenues at three of the largest regional publishers – Johnston Press; Northcliffe Media, the regional arm of the Daily Mail & General Trust; and Trinity Mirror's regionals division – tumbled 26-30 per cent year on year in 2009, while total revenues fell between 19.5 and 23.5 per cent".

The article quoted from research published by Enders Analysis which indicates that "births, deaths, and marriage announcements, along with miscellaneous personal items, became the richest seam of classified revenue for the regional press in 2009 contributing an estimated £392m overall".

Douglas McCabe was asked for his view. He said: “There is a debate at the heart of the industry about whether the fall in advertising is purely cyclical – the result of a deep recession – or a structural decline”. He also observed that regional newspapers will survive but they must engage more broadly with local businesses, and better differentiate their print and online editions.

In measuring commercial broadcasters' reaction to Ofcom's review on UK Pay TV (Danger of viewers defecting), the Financial Times focused on the barely concealed outrage of BSkyB which had provided evidence to the review in at least six separate submissions. The FT anticipated that BSkyB will "use all legal avenues to obtain a reversal of the ruling, or at least what it sees as the most damaging elements".

Although the impact on BSkyB's profits is thought likely to be small: "A 10 per cent reduction in wholesale revenues – as implied by Ofcom’s new pricing – would see a 1.6 per cent fall in operating profits in 2011," the article suggested that "a bigger threat is lurking in that BSkyB customers may defect to broadband based TV services".

Thus the FT concludes: "BSkyB could face a still more profound threat if one of its rivals decided that it had built up a sufficient large subscriber base to justify bidding for the next round of Premier League television rights." Toby Syfret was asked for his view. He said: “Sky are so far ahead on this that nobody will be able to match them for years to come.”
 

http://www.ft.com/cms/s/0/e60b096e-3cf1-11df-bbcf-00144feabdc0.html

Following in the wake of Ofcom's publication of its long-awaited review into the UK pay-TV market (Regulator sets the fuse for shake-up of pay-TV), the Independent concluded that "Ofcom is ready to force down the prices that Sky charges its rivals for sports and movie channels".

The Independent revealed that Ofcom intends to "force down the wholesale rates that Sky can charge for Sky Sports 1 and 2 and Sky Movies by between 15 per cent and 30 per cent". Asked for his view, Toby Syfret said: "The move holds considerable symbolic significance. Whether it will make any financial difference in the first few years is a different question. In the longer term it will." He added: "Up to now there has been no regulation preventing Sky from growing its share of the pay market."

With news breaking of Google's decision to retreat from the Great Firewall of China (Google China: Hacking bid that quickly grew into a clash of titans), the Guardian quoted from a report published by Enders Analysis (Google.Cn shutdown could cost $2-4 bn to 2015) which estimated that Google.cn takes about 20% of revenue from paid search advertising in China, which is a little bit lower than its market share.

The Guardian quoted the report's authors, Alice Enders and Ian Maude, who said: "There are much bigger stakes for Google in China than closing Google.cn and losing the associated search advertising."  They added: "Google cannot risk becoming persona non grata in China. These stakes require Google to manage the situation carefully and with diplomacy."

Speculating on the future of EMI following the surprise promotion of Charles Allen as executive chairman (Can Katy Perry stop EMI going to US bank Citigroup for a song?), the Observer reminded its readers of the seriousness of EMI's predicament: "If Allen cannot persuade Terra Firma's investors to stump up another £120m, EMI will be in breach of its loan terms, and its main creditor – US bank Citigroup – could seize control of the company. If it does so, Citigroup is likely to sell it to Warner Music".

Claire Enders was asked for her view. She said: "It is a very big moment. The next two or three months are critical for the future of EMI."

With growing evidence of EMI's financial difficulties, Bloomberg reported rumours that even the label's stalwart artists are reviewing their allegiance (Pink Floyd, Queen May Ditch EMI as Buyout ‘Implodes’). Claire Enders warned that an exodus of top bands would sound EMI's death knell: “This is how a company implodes,” she said, adding that EMI rivals Universal Music Group, Sony Music Entertainment and Warner Music Group would be likely to court the label’s top artists such as Lilly Allen and Katy Perry.

Following EMI Music's announcement that it had appointed Charles Allen as executive chairman (Change of tune at EMI. Guy Hands' Terra Firma has endured a torrid time since its acquisition of EMI. Now it is changing its management), the Independent asked Claire Enders for her view. She said that Mr Allen was used to complicated deals, "He has a lot of financial experience, which is what is required for EMI. He's a good negotiator and the financial situation with the company means this will go down to the wire." She added: "It will be a hard-sell anyway, whoever is doing the selling."

With news of EMI Music's appointment of Charles Allen as executive chairman (EMI Chief Has to Raise Money in ‘Make or Break’ Dash), Bloomberg suggested that Mr Allen would face the immediate task of designing a business plan for the company as the owner, Guy Hands prepares to convince Terra Firma's investors to inject new capital to keep EMI afloat. Without the funding, Bloomberg concluded,  the label may end up in the hands of its creditor, Citigroup Inc which Mr Hands is now suing, following his claim that the bank tricked him into buying EMI. 

In commenting on Charles Allen's fitness for the task, Claire Enders said: "There isn’t any more important task than raising money to meet covenants.” She added:  “This is a make or break dash. He also will have to be charming and reassure managers and musicians he is working to the best possible outcome without knowing what that outcome is.”

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."

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.

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."

Announcing the sale of the Manchester Evening News (MEN) to Trinity Mirror (Guardian Media Group sells off regional papers), the Guardian recorded the historic disposal valued at £7.4m which included 21 other titles in the north-west and 10 papers in the south of England, and the release from a £37.4m printing contract.

The Guardian asked Douglas McCabe for his view. He said: "This deal is a win-win. Trinity Mirror gets the benefits of synergies and cost savings in the north-west and south. GMG gets an opportunity to focus on its core business."

Following Apple's launch of the iPad (Electronic commerce: A page is turned), the FT observed  that "e-book sales have overnight become both the focus of the industry and a potentially lucrative new battleground for technology companies". Reflecting on the dispute between Amazon and Macmillan Publishing, which followed the latter's decision to seek a higher price for its electronic books, the FT predicted that the emergence of e-readers would "determine the future of book publishing as it follows music and film online. Every media sector to make this transition has had its economics destroyed in the process".

Benedict Evans was asked for his view. He said: “Amazon is trying to use all the power it has from its physical product business to secure a dominant position in the digital business." He added: “Content companies are getting into an area where there are powerful technology companies that have no particular interest in them. As someone once said, Google destroys entire industries without even noticing.”

In revealing the Conservative Party's policies on the media and telecoms industries (Conservative victory would pose BT threat), the FT cautioned that, if the Labour Party should lose the General Election, then  BT's planned programme of improvement in infrastructure would be derailed. The article observed: "Labour’s telephone tax, allied to regulatory incentives by Ofcom, the telecoms watchdog, offer BT the chance to recapture a dominant position in the broadband market."

In quoting comments made by George Osborne, the shadow chancellor, which inferred support for  “breaking up the BT monopoly”, the FT concluded that the Conservatives "want to see how far market-led investment could take fibre networks".

Ian Watt was asked for his view. He said that Conservative proposals to open up BT’s ducts to rivals may be difficult to implement: “The Conservative statement on superfast broadband does sound negative for BT, but there are significant obstacles to using options like duct access.”

Comparing forecasts of ad spend for 2010 (Advertising pins hope on World Cup for recovery), an article written by Roy Greenslade for the Evening Standard reproduced figures published recently by Enders Analysis which suggest "that the overall press ad spend will fall by 8.4 per cent compared to 2009 while television drops by 4 per cent....(and) while there will be an improvement in internet spending, this will not offset the general decline".

Both Claire Enders and Douglas McCabe were asked to give their prognosis for the British economy in 2010. Claire Enders believes the Government will do nothing this side of the election about the underlying problem of debt and whoever gets elected, the incoming government will have to face up to the reality. “Uncertainty over the UK's indebtedness is so great,” she said. “Even if things feel relatively buoyant now, economic realities at the back part of the year could be hard to deal with. We'll be living minute by minute.”

Douglas McCabe said he feared that a double-dip recession would have a further disastrous effect on advertising. He said he believes whatever the outcome of the election, that there is likely to be a further decline in spending on TV and newspaper advertising. “It's going to be pretty tricky,” he said.

A report published by Enders Analysis entitled UK TV Anytime and the flexilinear future was relayed in detail by the Guardian (TV advertising will survive the rise of on-demand viewing, says report) which summarised the author, Toby Syfret's, claim that "despite the "brouhaha" about viewing figures for watching TV via computers, 99% of total viewing of video content is still through the TV set. About 90% of this is still live TV viewing".

The Guardian explained that Enders Analysis' research looked at the rise over the next decade of video-on-demand services available via PCs and through TV sets such as the iPlayer, Virgin Media service, YouTube and US joint venture Hulu: "At these levels, and after taking into account the lower tolerance of interruptive advertising in on-demand programming, non-linear VOD services are unlikely to have a significant impact on commercial spot advertising revenues during the next 10 years".  The article quoted from the report to conclude that: "The traditional linear broadcast TV model continues to work well in terms of reliability, simplicity, ease of choice and ability to deliver popular programming with mass appeal."

In publishing Enders Analysis' estimates that only 4m UK households have access to proper video on demand services through a TV, the Guardian cited the report's conclusions which claim that: "On-demand consumption is, of course, growing steadily, though not at a rocket pace. We expect growth rates to be dampened over the next five years by the continuing rapid mass-market adoption of devices with personal video recorder functionality. Most VOD consumption is of recent and popular programmes aired on linear TV, with little evidence of significant appetite for archive and other long-tail content."

Following Rupert Murdoch's thinly veiled threat to prevent Google from aggregating proprietary content (The Google conundrum), The Independent asked Claire Enders for her view. She said: "I suspect Rupert Murdoch is just sabre-rattling to see what responses he will get from the rest of the newspaper industry and from Google. He might well hope that Google reaches out with a revenue sharing deal." She added: "Actions speak louder than words. He could take his content off Google at any time, but he hasn't. It still generates income for him. Not a lot, but it is real money... All the papers are thinking about it, but there is still no consensus. There have been no advances on a model to make it pay."

Claire Enders told the Independent that she is not convinced that charging for online articles – outside the financial press – can work. "The New York Times put up pay walls, then took them down. The NYT has a stronger reputation for original news gathering than The Sun. The model has been tried and it has failed."

Commenting on the news that YouTube is currently recording one billion views each week (YouTube cashes in on one billion weekly views), The Daily Telegraph wondered how Google would derive revenue from the site which it bought for $1.65 bn (£883m) in 2006, cautioning that "a lack of knowledge about how much it costs to operate, as streaming video online en masse, is extremely costly."

Ian Maude was asked for his view. He predicted that YouTube will generate $400m (£243m) by the end of this year, which is double his estimates of 2008 turnover. This figure includes revenues generated by both video and display advertising, as well as Google AdSense. He said: “It is difficult to model out YouTube’s costs accurately, so knowing how close it is to profit is near impossible. However, I think its revenues are growing ahead of expectations and pretty rapidly in a tough advertising market."

He added: “It is also good news for them that the site is starting to attract full length quality content – as is the case with its Channel 4 deal. This is crucial in a bid to make it a more attractive proposition for advertisers.”

Following the decision of John Cresswell not to accept the offer of chief executive of ITV, but to remain with the company on a temporary basis only until the appointment of a new chairman (Bishop leaves ITV's search for a chairman in disarray), the Independent asked Claire Enders for her view. She said:  "There is a lot of sadness around John's decision to go. There is now a lot of talk that Peter Fincham will be the compromise candidate."

Commenting on the allegation that the joint search for replacement chairman and chief executive has led to question marks over the handling of the situation by the ITV board, with talk that its composition could face a shareholder vote at an extraordinary meeting, she added: "This is a very difficult, unusual and groundbreaking situation for a public company to find itself in."

Following publication of the Internet Advertising Bureau’s report, jointly published with PricewaterhouseCoopers, which revealed that a record £1.75 billion was spent by brands advertising online in the first six months of this year, compared with £1.64 billion spent on TV (Online advertising boom driven by search), the Daily Telegraph asked Ian Maude for his view. He said: “This is a key milestone for the UK advertising market, with the success of online having been driven for the most part by money spent on search advertising.  Search advertising is much bigger here than it is in US or anywhere else. We are a nation of shoppers. E-commerce sites have taken off massively here and search advertising has rocketed. The number of search queries has really increased over the past year, with financial services and travel companies having fuelled the boom.”

Commenting on the fact that Google has been a key driver of the internet’s success in luring advertisers’ money away from TV and other media sectors, and is being hailed a winner in this battle, he added: “Google is now earning more from advertising spend than any other company in the UK. It has now overtaken ITV.”

Following the acquisition of Razorfish by Publicis, the Daily Telegraph wondered if WPP had opted out because it could ill afford to take on more debt (Admen look to WPP boss Martin Sorrell to predict better times). Claire Enders was asked for her view. She agreed that Sir Martin "has calmed down on the deal front in the past year". She also suggested that buying Razorfish was not a necessity. "The company doesn't have many gaps [in the digital space and elsewhere]. Razorfish was not a must-have deal for WPP", she said. However, she and other analysts agreed that WPP probably paid over the odds for its more recent large deals such as the May 2007, pre-recession acquisition of digital business 24/7 Real Media for $649m, and the late 2008 purchase of TNS, which came before the severity of the recession was understood.

Commenting on Sorrell's reputation for economic forecasting, Claire Enders said: "This is someone that is brilliant at foreseeing the future. Martin is a genius. He predicted the structural decline of traditional media, although no one believed him at the time. He's always had the ability to see 10 years ahead, which is something his rivals lack. He probably did not foresee the catastrophic nine months that the advertising community has endured; he has the tendency towards over-optimism, but he is always ahead of the curve."

Breaking news of a radical reform of its business model (Setanta considers wholesale switch), the Financial Times suggested that the sports broadcaster would consider ditching its retail customers in order to reduce annual losses of £100m.

It would instead become a wholesale supplier of programmes, including Premier League football, to broadcasters such as British Sky Broadcasting and BT Vision, reported the FT.

Quoting from a note on Setanta’s cash crisis written by Claire Enders and Toby Syfret, the FT endorsed their view that the participation of BSkyB would be a key to the success of a scheme, “the one escape route from Setanta’s predicament”.

Allowing BSkyB to sell to customers on Setanta’s behalf would bring the benefit of Sky’s broader subscriber base and more than halve its current annual operating expenses to about £55m. As the FT pointed out: "Setanta, with 1.2m subscribers, is still far from reaching a break-even point that Ms Enders estimates at 1.9m."

Summarising their views on Setanta, Claire Enders and Toby Syfret added:  “The sum total of £125m in annual cost savings by 2011 comfortably exceeds the current estimated annual operating loss of £90m in Setanta’s UK operation. On balance, we believe that the switch to a wholesale-only model leaves Setanta with a fighting chance, and it is vital it happens quickly.”

Following implementation in January of the French government's ban on prime time advertising (TV ad ban creates no windfall for webs), Variety suggested that analysts had originally predicted that the dominant commercial channels, TF1 and M6, would receive a windfall: "Sarkozy's critics argued the real aim of the scheme was to benefit his private sector friends. But things turned out differently."

Variety reported that TF1 recorded a 27% drop in first quarter advertising revenue compared to the same period last year, to $442 million. With audience levels "satisfactory," the company blamed the plunge on the deteriorating advertising market, strong downward pressure on prices, and the compensation tax. M6 reported an 11% fall in advertising revenue to $202 million in the first quarter, blaming the drop on low volumes.

François Godard was asked for his view. He said: "We're in some sort of negative feedback loop... There's less inventory on sale, and the prices are collapsing, whereas you would expect lower inventory to sustain prices." He added: "Indications are that (DTT) net revenues have increased, but we don't know for sure the exact balance of the market... There is still some fog around exactly what has happened."

Following the collapse of plans to revolutionise television over the internet (Kangaroo 'dead in the water' as UK competition watchdog pulls the plug), The Independent expressed "disbelief at the decision to block the project, designed to provide a catalogue of thousands of hours of programming, largely for free".

Ian Maude was asked for his view. He said: "I thought it would be approved but with some serious conditions." He added: "It is a lucky escape as they would have spent tens of millions at the worst possible time for the economy. The companies saw it as a big part of their digital future, but it was poorly thought out."

Referring to an earlier report published by Enders Analysis which estimated that £25m had already been spent on the project, Ian Maude said: "They should have foreseen the issues with the Competition Commission, but were unprepared,"

Against a rapidly shifting landscape for regional newspaper publishing in the UK (Newspapers suffer from a shortage of willing tycoons), The SundayTimes cited research published by Enders Analysis which forecast that 30% of Britain’s local and regional titles could be making losses within two years.

The article concluded that, increasingly, the future of print journalism will lie in the hands of media owners with the deepest pockets. Citing the example of the Evening Standard, the Times concluded that its continued existence could prove to be the exception rather than the rule. The new owner, Alexander Lebedev, has said:  “This is not my way to make money, but I’d like to explain to the public that newspapers are something they should love and cherish.”

In an article which laid bare the crisis facing the diversity of public service broadcasting in the UK (When just one BBC is not enough), The Economist suggested that Ofcom "reckons that unless something is done soon, the three networks’ worsening finances may force them to hand back their public-service licences and join the race for ratings out in the digital jungle".

Toby Syfret was asked for his view. He argued that the BBC’s heavy spending is in fact bidding up the cost of presenters and programmes, making it harder for Channel 4 and the other networks to survive. But if these are now given taxpayers’ money to take on the BBC, this will in turn make survival even harder for local newspapers. 

Commenting on the move by Ofcom to ease consolidation of struggling broadcast networks (U.K. Regulator's Easing Paves Way for TV-Network Merger), the WSJ emphasised how European regulators are loosening the control of the TV industry in the face of growing competition from cable and the internet. The article also highlighted the steep decline in advertising spend in the UK, citing research published by Enders Analysis, which forecasts that revenue from TV ads is expected to fall 10% this year to £2.9 billion.

In an article which questioned the ability of editors to monitor the readership value of content (How can news publishers maintain their values while maximising web traffic?), The Guardian emphasised "that the engagement of audiences with targeted and relevant news content is more likely to attract advertisers". Douglas McCabe was asked for his view.  He said that advertisers "are increasingly demanding access to well-defined groups of loyal and engaged audiences, rather than to the transitory eyeballs briefly attracted by the flicker of salacious or sensationalist stories".

Following the announcement of Virgin Media's new super-fast broadband service (New Virgin broadband will need deep pockets), the Financial Times explained that Virgin will allow customers to upgrade to 50 megabits-per-second broadband, which allows hour-long TV shows to be downloaded in a minute. By the end of 2008, the article revealed, Virgin plans to have 40 per cent of its network online with the new service, with the rest completed by summer 2009.

However, the FT queried the ability of Virgin to deliver the service, quoting from research published by Enders Analysis which indicates that customers would experience about 75 per cent of the advertised 50MBps speed. Enders Analysis research also shows that the UK still lags behind South Korea, France and Italy, where speeds of 100MBps are becoming available.

Asked for his view, Ian Watt said the first year cost of £602 – including broadband, line rental, installation and free wireless router – is “very high in the context of a consumer recession and the price of some lower speed offers". Furthermore, he believes that: "It’s less likely that Virgin will attract significant numbers of new customers as a result of this offer, in what is already a rapidly maturing market." 

He added that he expects about 20 per cent of existing Virgin customers will upgrade to either the 20MBps or the 50MBps offers within three years.

Following news that the BBC would seek to share proprietary technology with other UK public service broadcasters to protect the licence fee (BBC offers rivals a share in iPlayer), the FT explained that the initiatives - which include a new set-top box connected to the internet, sharing regional news premises with ITV and waiving television listings fees - are meant to address the threat faced by the BBC over the estimated £235m funding required to maintain public service broadcasters by 2012.

Reporting the reaction of other broadcasters, the article revealed that Channel Five welcomed the proposals, but Channel 4 – which has said it would need up to £150m annually in state funding by 2012 – said they offered it no tangible financial benefit. ITV said it was giving them careful consideration.

The FT quoted from an Enders Analysis report published coincidentally on the future of public service broadcasting (UK TV Advertising and PSB survival), which stated: “The BBC is offering genuine help to other PSBs during what is going to be a horrendous time over the next couple of years... But the BBC has stopped short of offering the crown jewels of content and licence fee money.”

Covering the Westminster Media Forum, Media Week reported the views of speakers calling for media ownership laws to be relaxed to allow consolidation among regional news groups to enable the sector to survive.

Claire Enders, who spoke at the forum, said: "There has to be an end to barriers to consolidation of media ownership. Speed is of the essence." Explaining that the effects of the current economic climate would be "catastrophic" and half the jobs in media would be lost over the next five years which will have a "huge impact", she expected a third of all publications to close with "at least two national newspaper titles to go".

Claire Enders also said that media owners needed to generate more money from digital formats, but their efforts are being hampered by Google's re-use of their content. She added: "Google's the biggest player online. Its UK turnover is £1.2bn, yet Google does not pay any copyright to the media owners whose websites it uses on its news channel. Google should pay copyright."

Forecasting a deep recession in the UK media industry (UK media set for thousands more job cuts), Reuters revealed that the index for Britain's media groups in the FTSE 350 is down 40 percent already this year, with even the most resilient groups plunging from previous highs.

Claire Enders was asked for her view. She said: "We calculated the total jobs in the media in the UK at about 400,000, that includes newspapers, radio, TV, production companies, advertising and so on, at the end of 2007. Between the beginning of 2008 and 2013 we're expecting half of those jobs to go. The big employers are the regional press, magazines, local advertising sales. Real numbers are in print."

Quoted widely in an article on ad spend (Advertising faces severe downturn), forecasts published by Enders Analysis prompted the FT to state: "The recession will hit the British advertising market harder than previous downturns, as the shift to online compounds cuts to marketing budgets...total advertising revenues will fall by 4.8 per cent in 2008 and 11.9 per cent in 2009 - the largest single year fall since 1975".

Reiterating the Enders Analysis outlook, the FT explained that "the structural challenges of the shift of advertising spending online, coupled with the recession, have a "multiplier effect". The article quoted Enders Analysis forecasts which indicate that "print media are suffering most from this decoupling because of the fall in property and retail advertising, falling 14.1 per cent this year and 21 per cent next. In real terms, television advertising spending will fall 30 per cent between 2007 and 2010".

Commenting on the impact of budget constraints on commercial broadcasting in the UK (Corporation's rivals caught in cash squeeze), the FT inferred that "BBC Local is only one symptom of a growing divergence between the increasing sums available to the licence- funded BBC and the falling revenues and profits of the commercial sector".

The article pointed to research published by Enders Analysis which show the projected 'decoupling' of the guaranteed income provided by the licence fee - currently £3.4bn - from the diminishing revenues of newspapers, radio stations and commercial television channels. Toby Syfret was asked for his view. He explained that BBC Local, with its proposed budget of up to £68m, highlighted the size of the divergence, with ITV and Channel 4 being forced into such constraints: "The BBC is in a position now in television and the internet, as it has been for some time in radio, where there is a growing decoupling between its spending ability and that of the commercial sector."

He added: "In the end, the commercial broadcasting sector was bound to suffer, and now, with BBC Local, we are seeing this going over to the press sector.So there is now, across the piece, an imbalance between public investment as opposed to private, which will make it incredibly hard for the private sector to compete. It is a gap that will only widen."

Reporting on the progress of EMI's internal reorganisation (EMI Music to outline plans for restructure), the FT confirmed that EMI Music is to be split into three global units: new music, catalogue and music services. Although EMI Music’s first half physical recorded global music sales were down 3 per cent but fell 12 per cent in the US, the FT reported that neither EMI Music nor EMI Music Publishing would report losses in the current year.

Commenting on the ruling of the Copyright Royalty Board in Washington on the adjudication of royalty rates for the music industry (Panel of judges imposes truce between music producers and digital sellers), the FT observed that "the ruling gave none of the parties what they had asked for, but allowed each to claim that it would boost the nascent but growing digital music market".

Asked for his view, Ian Maude said: "Even number two looks like a big ask unless Ballmer can somehow persuade Yahoo! shareholders to sell to Microsoft."

Commenting on the success of the BBC iPlayer (iPlayer is a runaway success … but could it backfire on the BBC?), the Sunday Herald explained that the introduction of the iPlayer raises numerous questions about the licence fee. "With more and more people opting out of viewing schedules in favour of the iPlayer, the old system for deciding who pays a TV licence is in danger of becoming outdated", the Sunday Herald claimed.

Toby Syfret was asked for his view. He was not in favour of including internet access in the licence, regarding it as impractical and outmoded, observing: "That would involve the collection of all sorts of data". Although he did not offer an alternative, he argued that moving away from the licence fee, rather than widening it, would reduce what he sees as an unfair financial advantage for the BBC.

He said the loss of revenue to commercial stations in the current market is creating a widening gap between the BBC and its competitors: "I think that the licence fee is too big at the moment."

He added: "We've got a very difficult advertising market and you now have the BBC coming in as a competitor on the internet. What you have is a funding gap and that is something that is going to have to be looked at when the charter comes up for renewal in 2012."

Signalling a slowdown in the relentless subscriber growth for pay-TV (Sky "likely to miss" 10m target as economy bites into pay-TV boom), the Daily Telegraph forecast that Sky will miss its key target for new subscribers when it reports its full year results at the end of July.

Asked for his view, Toby Syfret explained that cheaper pay-TV options like BT Vision could see some growth, but that satellite and cable, which now has 3.3m subscribers, were nearing their peak. He said: "The pay TV market will taper off at around 50% penetration. All the major growth has happened. The only thing driving pay-TV now will be pay-light options and population growth."

Commenting on the ambitious plans of the French Government to stamp out internet piracy (France sets date for anti-piracy law; Offenders to lose Internet access), Variety quoted French Culture and Communications Minister Christine Albanel, who claimed that the new proposals will cut unauthorised downloading by 70-80%.

Alice Enders was asked for her view. She said: ``The problem has always been that legal action against a person on a site has been considered like Godzilla against Bambi, very disproportionate. The idea of having a soft-enforcement mechanism is more appealing. The measure will not halt physical piracy and copying works after they've been downloaded legally. Copying CDs for friends, for example. That's become accepted social practice."

Commenting on research published recently by Enders Analysis (Online adverts put TV in the shade), The Times reiterated our forecast that spending on online advertising will increase by 26% this year to £3.56 billion - compared with a 2.5% fall in revenue to £3.39 billion for television - and concluded that the internet will surpass television this year to become Britain’s largest advertising medium.

Ian Maude was asked for his view. He said: “The TV market is flat at best if not weakening, whereas online advertising has continued to grow much more strongly than expected,”

Following publication of a report by Enders Analysis on the UK regional press [Regionals at the cliff edge] the Daily Telegraph highlighted the sharp decline in advertising revenue (Local papers hit by surge in online ads), and emphasised the report's conclusion that regional papers have reached a point of "no return".

Interviewed for the article, Douglas McCabe disputed the industry's view that the decline in advertising represented a cyclical trend: "This downturn is different because it was preceded by a massive shift of classified advertising online," he said, and added: "Online is just cheaper and a much more effective classified ad medium. Publishers will be under pressure to rethink their advertising rates."

Overall, he suggested that the regional newspaper sector is facing difficult times: “It’s a one-way street, that money is simply leaving the sector as a whole and will never return," he said.

Commenting on news of 21CN, BT's long-awaited flagship modernisation project (Plaudits for Verwaayen’s success), The Financial Times reminded its readers that the £10bn plan is meant to replace 17 increasingly out of date fixed line networks with a single platform carrying phone and broadband services with download speeds of up to 24 megabits per second – three times faster than currently available.  However, Ian Watt explained that BT’s update reveals its plans are running a year behind schedule.

Asked how realistic he found BT's claim that "it would roll out next generation broadband to 10m homes and businesses by April 2009", Ian said that BT had indicated in 2006 that it would achieve this 10m milestone, equivalent to half of the population, by March 2008.

Commenting on the strategic alliance formed between Best Buy and Carphone Warehouse (Carphone to focus on broadband after Best Buy deal), Reuters speculated on the opportunity for Carphone Warehouse following the $2.1bn sales of its retail unit. "Its plans could ultimately result in a demerger and the possible sale of Carphone's telecom arm to the likes of Telefonica or Vodafone... it is now seen as the front runner to acquire the UK broadband unit of Italian group Tiscali  which is up for sale", claimed Reuters.

Ian Watt was asked for his view. He said: "Tiscali is the last major acquisition opportunity... Tiscali itself acquired Pipex which had previously consolidated small (Internet Service Providers). The top four providers are now accounting for something around 80 percent of subscribers and the only guys left are niche players."

In an article which revealed the thinking behind the launch of Freesat (Freesat satellite launch signals HD intent of BBC and ITV), the Daily Telegraph explained the significance of the new free-to-air satellite service, with the advent of HD broadcasting, comparing its introduction to the transition from black and white to colour TV.

Asked for his view, Toby Syfret said: "Freesat is very important to the armoury of the public service broadcasters because it could allow them greater control of their destiny as regards HD, without having to deal through Sky. HD is attractive because people are getting bigger and bigger TV sets, and the bigger they get, the more noticeable the quality difference between HD and non-HD."

He added: "On a 44-inch screen, the quality difference is going to be very clear and the high quality is what people will come to expect..."That relatively high percentage for Sky shows switchover is a big opportunity for a satellite platform and Sky is the only one offering it at present. Freesat is important for the independent future of public service broadcasting if it wants to have a presence that is not wholly dependent on Sky."

Highlighting the vacuum at Five, the UK’s smallest terrestrial broadcaster, as it looks forward to a year without a CEO (Five to endure a long wait for Dawn), the Financial Times revealed the sting in the tail of Dawn Airey's appointment.

When asked for his view, Toby Syfret noted: “It is not a good time to be without a chief executive. There are a lot of important issues coming up for Five, such as whether they can become involved in Kangaroo and the beauty parade for high-definition TV spectrum".

Commenting on the terse official statement from ITV which made reference to the fact Ms Airey would be “taking an extended period of gardening leave”, Toby Syfret observed: “Judging from the tone of the press release, they did not leave on the best of terms and I can’t see any particular reason why Michael Grade would want to release her early.”

Following the news of the departure of Ben Verwaayen, the FT marked the succession of Ian Livingston as new chief executive of BT (Livingston picks up the BT mantle). Ian Watt was asked for his view on the appointment. He said that Mr Livingston may find it particularly challenging to get to grips with the 21CN project, which is central to future cost reductions. He added that BT had encountered problems with technology for the project, and highlighted how it involves complex software as well as hardware.

Announcing BSkyB's decision to challenge the Competition Commission's recommendation that it should sell most of its stake in ITV (BSkyB to appeal over ITV ruling), the FT explained that BSkyB is targeting its appeal at the Competition Commission rather than at the government, and will take its case to the Competition Appeals Tribunal before the end of the week, thus prolonging the uncertainty over ITV’s shares. A person close to the company was quoted saying: “We think the Competition Commission got it wrong at every key step leading to this decision.”

Chris Goodall was interviewed for the article. He said: “On this occasion we think Sky has a small, but not negligible, chance of success.”

Commenting on the restructuring plan conceived by GCap Media (GCap plans fail to knock out Global), the FT emphasised the radical and realistic set of measures announced by Fru Hazlitt, GCap's chief executive. Ms Hazlitt stated that "DAB is not an economically viable platform for the company", and announced that GCap will sell for £1 its 63 per cent stake in Digital One, the transmission multiplex, to its partner Arqiva and instead concentrate on FM and broadband.

The FT reported that her plans were roundly criticised by Charles Allen, chairman of Global Radio who said: "There needed to be pretty significant growth plans, so we were surprised not to see a strategy for growth outlined in the presentation. It seemed not to answer the question of 'If DAB is not your digital strategy, what is?'."

Grant Goddard was asked for his view. He said: "I think Global may still need to raise their offer, but not by as much as we might have been thinking last week."

In an article which featured the unintended consequences of the public broadcasting policy of President Sarkozy (France Televisions to go ad-free, Sarkozy's plan faces funding doubts), Variety explained that the presidential desire to scrap advertising on public channels would require a compensating increase in the licence fee paid by commercial broadcasters and new media platforms. 

Announcing that GCap Media had secured a “put up or shut up” notice from the Takeover Panel, ordering Global Radio to announce a new offer by 5th March or walk away for at least six months (Global given deadline on GCap offer), the Financial Times speculated on the options available to Fru Hazlitt, GCap's new chief executive, commenting that she "may abandon the policy of limiting the number of advertisements aired on London’s Capital FM, sell some stations or cut its exposure to the disappointing digital audio broadcasting format".

Grant Goddard was asked for his view. He said: “I think Fru faces an immensely challenging task to come up with a strategy in a relatively short period of time which will need to demonstrate the company can be turned around after years of neglect.” He added, however, that Global was unlikely to be put off by Thursday’s audience figures. “Global needs consolidation desperately”, he said.

Commenting on the trans-Atlantic market for original TV programmes (UK remake should be arresting viewing), the FT found that "Reality, or non-scripted formats, from Britain made by US outposts of UK production companies have ... done particularly well over the past few years in the US, where the tradition of 'variety television' died long ago".

The FT revealed that, in the US, "imported television programmes have tended to be remade, keeping the basic scenarios and situations but with American characters and a new script as US audiences have struggled with the British sense of humour and feel more comfortable with US storylines". Claire Enders was asked for her view. She said: “If you want a ratings hit, you need to make a programme relevant to the audience.”

In further comment on the fact that few television groups apart from the BBC have the financial power to back such projects in the UK, she added: “Original programming is very expensive.”

Commenting on the plans announced by Kevin Russell, CEO of 3, the UK's smallest mobile operator, to combine its mast network with T-mobile (3's number one is taking a calculated risk), the Daily Telegraph revealed that the network-sharing arrangement would be announced within weeks and could cut the cost of running 3's network by more than 20 per cent.

Asked by the Daily Telegraph for his view, James Barford said that he had been impressed by Russell's strategy so far. "He strikes me as being a very feet-on-the-ground, get-the-basics-right manager, which is exactly what 3 needs", he said.  But Barford is sceptical that the business can become truly profitable. "The company may break even at Ebitda by the end of the year. But to cover the costs of the D and the A – depreciation of the value of the network and the annualised cost of the licence – would require an Ebitda margin of 30 per cent" he added.

Pre-empting the UK launch of the Apple iPhone by O2, The Times attempted to get behind the hype (Will the Apple iPhone be Googled?), and claimed that "the phone's principal drawbacks are the touch-screen keyboard and the price. At £269 each, plus the commitment of a minimum £35-a-month contract lasting 18 months, the iPhone costs head and shoulders more than everything else on sale at the moment".

James Barford was asked for his opinion: “We see this pricing as limiting the iPhone’s appeal to Apple aficionados and wealthy fashion victims who are looking to upgrade their iPod”, he said.

Announcing the appointment of Tom Alexander, a founder and former chief executive of Virgin Mobile, as chief executive of Orange UK's mobile and broadband operations (Orange shakes up UK business), the FT commented: "One key risk for Mr Alexander would be if he were to spend too little time focused on Orange UK's mobile business, which is the main source of revenue and profit, and too much on its fixed-line broadband operations". James Barford was asked for his view. He said: "Reinvigorating Orange's marketing will be a top priority, and Tom has proved his credentials in this area." The article also quoted research published by Enders Analysis which showed that, over the past year, Orange UK's mobile revenue growth has fallen behind rivals Vodafone, O2 and T-Mobile.

Posing the question, Can a ‘practical Antipodean’ put Virgin Media on a secure footing? the Times noted that Neil Berkett, interim CEO of Virgin Media, is reluctant to compete head on with BSkyB, and ultimately will concede defeat in this arena while aiming to attract a “middle-tier” of customers. "Instead of distinguishing itself as the 'quadruple play' operator offering broadband, television, fixed-line and mobile phone under one roof, broadband is to become Virgin Media’s new focal product", the article inferred. The Times interviewed Claire Enders. She believes Mr Berkett is good news. She said: “If Neil Berkett had said he wanted to step up to battle it out with Sky on football rights I would feel sick". She added: “Broadband is the only area of the company where there is a lot of positive feedback from customers".

Following Radiohead's announcement that it would sell its new album In Rainbows directly from its official website, for as much or as little as fans want to pay (Nine Inch Nails follow Radiohead and dump label), the Daily Telegraph asked Alice Enders for her view. She said: "It is certainly a feature of the internet age, when you think that physical music retailing is in decline and music sold over the internet is rising sharply. On the other hand, if you are an unknown you require marketing." Alice added: "The economic benefits are going to be mixed. It costs a lot of money to run transaction websites." She explained that for the average download costing 99 pence, between 10 and 20 pence is recovered by credit card companies.

The Daily Telegraph suggested that bands are abandoning record companies because of the prevalence of the 360 degree contract which obliges artists to remit all their output - including live performances and merchandising. Previously the revenue from these activities were an artist's primary means of income as royalties earned from CD sales are so meagre.

Alice Enders explained that many record companies are dropping their artists, rather than the other way around: "There are a lot of musicians that don't have a choice any more than go direct to the customer."

Following Ofcom's announcement that it would hold an industry-wide consultation into the impact of BSkyB's launch of its Picnic channel, the Financial Times revealed that the planned pay-TV service is opposed not only by BT Vision, but also by Setanta Sports, Top Up TV and Virgin Media (Ofcom guarded on BSkyB's Picnic move). Highlighting the concerns of BSkyB's competitors, the FT explained: Each offers services over or on top of the Freeview platform and fears Sky’s dominance of pay-TV could spread from satellite broadcasting to digital terrestrial television.

However, the article pointed out that Ofcom has made no recommendation and remains “completely open minded”. Furthermore, the regulator noted that Picnic would increase the choice of pay-TV services on digital terrestrial television, and concluded that there were three possible outcomes: either it could require that BSkyB should sell its content wholesale to rivals, as with cable; or it could insist that the service work with others’ set-top boxes and vice-versa; or it could force BSkyB’s to retail its channels indirectly through a third party.

Interviewed by the FT, Toby Syfret explained that Ofcom's decision on BSkyB’s DTT plans would be more significant. “This is something which has implications for the whole future of pay-TV in this country,” he said, adding that BSkyB had moved to pre-empt some concerns by providing details of the new service, which would replace Sky News, Sky Sports News and Sky Three on Freeview with Sky Sports One, Sky One and one Sky Movies channel for an undisclosed price.

Paraphrasing the popular view that Competition Commission's judgement of last year’s stock market raid on ITV by BSkyB was either a "witchhunt against Rupert Murdoch or an essential safeguard against anti-competitive concentration of media assets" (BSkyB ruling may be a hollow victory), the FT concluded that the Commission "did not find evidence to support arguments put forward by BSkyB’s rivals that the satellite broadcaster’s influence over ITV posed a threat to the integrity of its news output. Nor was it concerned about the impact on the advertising market".

Toby Syfret was asked for his view. “Richard Branson may be pleased, delighted at the verdict but in a way it’s a hollow victory,” he said.

Remarking on the success of Freeview in spearheading the switchover from analogue to digital broadcasting (North leads digital revolution), the Times questioned the long-term success of the Freeview proposition. First, the service is unable to offer broadcasts in high definition (HD); second, BSkyB, in which News Corp, ultimate owner of The Sunday Times, has a 39% stake, is attempting to withdraw the three channels it makes available on Freeview and replace them with pay-TV channels. BSkyB’s request is being considered by Ofcom.

The Times argued that Freeview is at a clear disadvantage: It does not broadcast any HD channels and will not be able to do so until after digital switchover in 2012 because it does not have the VCR amnesty band. Even after the analogue signal is turned off, and bandwidth freed up, the government has indicated it should be auctioned to the highest bidder. Some think the main terrestrial broadcasters have no automatic right to the extra capacity. Toby Syfret was interviewed for the article. “Do they [public-service broadcasters] get it by divine right, and will there be strings attached?” he asked.

Anticipating the seasonal rush for new mobile phones at Christmas, the FT speculated on the impact of the iPhone on consumer preferences (iPhone leaves its rivals hanging on). Reiterating Apple's forecast to sell 3m iPhones in Europe by the end of 2008, the FT cautioned that Apple could struggle to meet its European sales targets because of the iPhone’s high price and lack of a high-speed 3G connection to the internet. Additionally, in its approach to European operators, Apple may need to reconsider its unsubsidised and revenue-sharing proposition: European consumers are used to getting their mobile phones free or at a sharp discount because operators heavily subsidise all handsets for customers on contracts.

The article drew on a report published by Enders Analysis (iPhone in the UK: over here, overhyped and overpriced) which emphasised that the pricing point of the iPhone will limit its appeal to “Apple aficionados and wealthy fashion victims”. Furthermore, the report pointed out that, for the price of the iPhone, consumers in the UK could buy Apple’s new iPod Touch, which has all the features of the iPhone bar the phone, for £200, get a free N95 with many operators “and still have money left over for a trendy new shirt”.

Raising the prospect of T-Mobile bidding for 3, its loss-making rival (T-Mobile considers network sharing plan with rival 3), the FT explained that mobile operators are pursuing network sharing as an "opportunity to cut costs, given that fierce competition... is resulting in them cutting their tariffs with consumers". The article continued: "In 2005, 3 made a pre-tax loss of £1.4bn... Hopes of breaking even at the operating profit level have been hit by a decision by Ofcom... to require a 45 per cent cut in how much 3 charges for connecting calls to its network".

James Barford was asked for his view. He said: "This deal, if concluded, would leave T-Mobile as the most obvious potential buyer of 3."

Highlighting the increasing importance for broadcasters to make content available online (Broadcasters switch on to downloading picture,) the Financial Times concluded: "All are chasing the promise of a fast-growing market". Pointing out that online advertising, which underpins many of the broadband initiatives, is particularly strong in the UK, the FT estimated that the download-to-own part of the UK online video market alone will expand from £14.8m this year to reach £65m by 2011. However, the article also cited research to show that "such models will not take off fast enough to replace traditional television in the way that downloads have threatened the music CD. Several analysts also warned that the UK is trailing in making use of such new distribution", added the FT.

Quoting from a report published by Enders Analysis (BBC iPlayer: forever niche?), the article reiterated our view that PC-based video services “will remain niche in the short to medium term... The TV is the locus of family entertainment and the PC cannot replicate its appeal”. While free content would serve a brand-building purpose for broadcasters, the report concluded that “pay services are likely to have narrow appeal” because of the availability of pirated material and free substitutes, such as personal video recorders.

Citing research by Enders Analysis which predicts that by 2009 global music sales will be half their level at the peak of the CD boom, down from $45bn in 1997 to $23bn (HMV chief has to face the music and dance), the FT speculated on the demise of music retailing in the UK. At HMV, the article predicted, "CDs are expected to fall to 25 per cent of the sales mix in three years’ time, down from 36 per cent today, as the group tries to ride with the trend... only Virgin Megastores remains as a serious national rival and its last accounts show it making a loss". So could HMV be the last to survive, the FT asked? “I think we will be", answered the CEO, Simon Fox.

Reporting from the opening of HMV's first 'new generation' store (Last track plays as record stores go full circle), the FT columnist Jonathan Guthrie felt chastened by the experience. "There were fireworks. There was a rock band. There was even a cute dog. And underpinning all the razzmatazz was the sense of a historic business clutching at straws", he wrote. Following a period of heavy price deflation triggered by competition between supermarkets and traditional retailers, Guthrie continued, sales of CD albums, the key product category for music retailers, have fallen by around 7m to 58m in the first half of this year. "Record labels are struggling against stiff odds to convert illegal downloads into legitimate purchases", he concluded. Alice Enders was asked for her view: "There is a culture of gratuity among the young, fostered by the internet," she said.

Thursday, September 13, 2007

The Wall Street Journal reported on the growing trend for news papers to develop international readership online (UK Newspapers Eye Global Online Readers For Ad Revenue). All is not what it seems, as the article revealed: "Despite this promising new marketplace and the importance of offsetting declines in domestic circulation and advertising revenue, turning this audience into advertising revenue is proving elusive". Douglas McCabe was interviewed for the article. He said: "Several of the U.K.'s largest newspapers now have an online readership, much of it overseas, which is 20 times their domestic hard copy circulation." He added: "But in most cases it's unlikely to generate more than 10% of their revenues."

McCabe's view that overseas online advertising revenue is less than 10% of total advertising revenue, was challenged by Tom Turcan, general manager for digital operations at The Guardian, although he declined to provide a specific figure. Although he believed that The Guardian is attracting more genuinely 'global' online advertisers, he admitted: "We don't get as much (yield) from our overseas readers (online) as we do from domestic ones".

However, the WSJ interviewed other advertising specialists and analysts who concurred with Douglas McCabe that "there are structural reasons why advertising yields from overseas, online readers are currently lower than domestic counterparts". The article included an interview with Robert Horler, managing director of online advertising planner, Diffiniti: "A handful of U.K. newspapers, including The Times, The Guardian and the Financial Times can all genuinely say they are global newspapers," he said, "But if you look at how much advertising inventory they are getting from overseas, the answer is they aren't really delivering yet. Yields from the U.K. tend to be much higher."

Speculating on the arrival of a further iteration of Apple's market leading MP3 player (Sixth generation iPod anticipated), The Guardian interviewed Ben Rumley. Owing to the shared use of so many features, he said it would be an interesting test for Apple to see how the iPod can be developed as a product without cannibalising iPhone sales: "The iPhone's big widescreen makes the old video iPods look out of date, so it seems likely there will be some move in that direction." He added: "Apple always like to surprise people - last year they came up with the new Shuffle and no-one expected that."

Reporting on the competition between BSky B, Setanta and other pay-TV broadcasters for live sports audiences (On-screen battle kicks-off as new season starts), the FT commented: "Success is critical for Setanta to establish itself as a lasting rival to Sky Sports, which won 92 live games, and to justify the £392m it spent on Premiership rights. But this season will be of equal importance to other companies battling it out in an increasingly vicious pay-television market... Football rights have become central to Virgin Media’s attempts to revive its rebranded cable platform, BT Group’s efforts to ramp up its fledgling TV offering, BT Vision, and the ongoing debate about how much of a threat Freeview’s digital terrestrial television service represents to rivals."

Ian Watt was asked for his view: “We question whether the Setanta deal will do much more than help Virgin Media to tread water”, he said.

According to the Independent on Sunday, "some of the largest broadband providers in the UK are threatening to 'pull the plug' from the BBC's new iPlayer unless the corporation contributes to the cost of streaming its videos over the internet". Exposing the technical constraints on network capacity (Internet groups warn BBC over iPlayer plans: ISPs fear that introduction of web broadcasts will overload their networks as users download 'catch-up' TV), IOS quoted a spokesman at BT who said: "It is certainly a live debate between ISPs and the BBC. If the BBC gets the numbers it wants for iPlayer then network capacity could become an issue."

Ian Maude was asked for his view. He said: "No broadcaster has rights clearance to distribute all its broadcast content over the internet. The BBC, for example, holds the rights for in-house produced programming, as well as catch-up TV and series stacking rights for independently produced programming from the UK, but few internet rights for acquired content, such as feature films and sports events." He added: "At launch, around 60 per cent of the BBC's weekly TV schedule will be available via the iPlayer. However, we anticipate that the strong affiliation of viewers with the broadcaster brands will drive usage of their catch-up TV services, despite less than comprehensive availability of programming."

Highlighting the exodus of Virgin Media's subscribers (Branson sees market going ‘yo-yo for a while’), the FT interviewed Sir Richard Branson hours after the company reported second-quarter results showing losses in customers and market share in each of its four businesses, leaving underlying revenues from its core consumer cable business down 4 per cent. The article revealed that only 125,000 of the media group's 4.7m customers had signed up for its much-vaunted 'quadruple play' of pay-TV, broadband, mobile and fixed-line telephony. Asked to comment on Virgin Media's boast that it was maintaining a vital competitive advantage by selling all four services, Claire Enders said: ”They should stop marketing the quadruple play. It’s wasting their marketing dollars.”

Also interviewed for the article, Steve Burch, chief executive of Virgin Media, said the results showed ”encouraging broadband and mobile contract growth, a resilient performance by our TV business and signs that our fixed-line telephony business is starting to react to renewed management focus”. However, statistics compiled by Enders Analysis showed Virgin’s former market leadership in broadband assailed by the rapid rise of BSkyB. Virgin secured 14 per cent of new broadband customers in the second quarter of 2006, Enders Analysis calculated, but by the same period this year that figure had fallen to 10 per cent.

In an article entitled Virgin Media loses 40,000 customers to Sky, The Independent revealed that the group had lost customers in all four media businesses. The article concluded that the losses have hit Virgin Media's ARPU as the bulk of its departing users are high-spending 'triple play' consumers that had utilised its broadband, telephony and TV services.

The Independent interviewed Neil Burkett, chief operating officer of Virgin Media, who said he was "quietly confident" that the slide in customer numbers had ceased and that the disagreement with Sky had not damaged the Virgin brand. He said that the "storm of the second quarter" had blown over and that the vast majority of customer defections in both television and telephony had occurred early in the quarter.

Burkett challenged a recent research report compiled by Enders Analysis that suggested the company's 'quad-play' model - based on the assumption that consumers want to source broadband, television, fixed-line and mobile telecoms services from one supplier - was failing. He called the research "premature" and said: "It's going very well. The upside in the short-to-medium term is substantial."

Heralding the dismantling of the Virgin Media as a converged communications provider (Why has Virgin Mobile fallen from grace?), The Independent quoted the Enders Analysis report, Virgin Mobile price increases, which argued that recent changes to the quad-play pricing could reduce take-up of the package to "a trickle", and represented "another nail in the coffin for the fixed-mobile convergence bandwagon".

Marking the milestone passed by Apple as its online store achieved 10% of US total recorded music sales (iTunes Store rings up 3 billionth song), Ars Technica commented that the continued success of iTunes reflects growing consumer interest in legal music downloads. Underlining the rapid rate of change in the music market, the article quoted research published by Enders Analysis, which predicts a decline in sales of physical media from $45 billion in 1997 to $23 billion in 2009.

Covering the launch of the trial version of the iPlayer (iPlayer too niche, says report), the Guardian featured a report published by Enders Analysis (BBC iPlayer: forever niche?) which was published to coincide with the launch of BBC's new broadband TV service. Enders Analysis had cited comScore data showing that Channel 4's 4oD broadband TV website had 450,000 unique visitors in June, but predicted that the number actually using the application would be "far smaller". The report had also warned that technology issues, such as current standard 2MB broadband speeds, would mean that many viewers would be frustrated by download times of TV shows. The Guardian noted that the report had argued that it is likely that Freeview households - without personal video recorders and TV video on demand services but with broadband connections - will drive demand for broadcasters' internet video services: "We consider download as mainly appropriate for appointment viewing, not impulse viewing, making it a closer substitute for the DVD experience than for TV".

In an article which ranged widely over the future of the Virgin empire (Branson faces juggling test over his empire), Sir Richard told the paper: "The Virgin group is in its most successful period in the 40 years I've been in business... I'd like to be seen as the world's most respected brand." Yet while Virgin is bigger and more ambitious than at any point in its history, it also faces a raft of operational and strategic challenges, the FT added.

Asking if Virgin had bitten off more than it can chew, the FT reminded its readers that Virgin Media has become embroiled in an expensive and acrimonious battle with BSkyB in the UK pay-TV market. BSkyB has doubled its marketing spending as a result. Moreover, "Virgin may also have unwittingly provoked BSkyB and Carphone Warehouse into attacking the so-called 'double and triple-play' markets for combined phone, television and internet services that it previously had to itself ".

Claire Enders was also interviewed for the article. She said that the slide in the dollar over the past 18 months would mean that Sir Richard will not make a profit on his investment in Virgin Media unless the company is sold for more than $32 a share. But she added that Virgin has lost far fewer customers to BSkyB than some had predicted. She said: "There's no doubt that [Sir Richard's] luck, innovation and chutzpah have been a valuable addition to Virgin Media."

The FT concluded that the risk for Virgin is that a setback in any one part of the business has the potential to damage the brand and consumer confidence elsewhere. Claire, however, came to Sir Richard's defence: "To say that people won't take Virgin Atlantic because they are disgruntled Virgin Media customers is a bit of stretch," she said.

Commenting on the deal announced between Setanta, the Irish broadcaster and Virgin Media to carry content from six of its channels, including 46 live English Premiership games, on its cable network (Virgin Media to air Setanta’s football coverage), the FT reported that "analysts believe Virgin Media will be paying Setanta between £2 and £2.50 per subscriber per month. Setanta, which paid £392m when it bought a third of the live rights to Premiership games in 2006, is eager to raise its subscriber base from about 250,000 to the target of 1m it set for 2008".

Claire Enders was interviewed for the article. She said: “Breakeven or better from this investment will take at least a year or 18 months, but it is a good riposte to Sky in customer terms.”

Following a valedictory interview with the outgoing chairman of BT, Sir Christopher Bland, the FT broke the news that BT is considering the case for an ultra-fast broadband network that could deliver internet download speeds of up to 50 megabits per second (BT looks at ultra-fast broadband). The article revealed that the telco will offer broadband speeds of up to 24mbps from next year, as it rolls out a £10bn 'backbone' network and introduces technology known as ADSL2+. Sir Christopher said BT’s thinking had advanced “quite far” on the case for fibre to the kerb “That is the more likely development going forward," he said. However, he questioned whether “most consumers” would need broadband speeds of more than 16 or 24 mbps - but accepted some businesses might do.

BT was criticised by the Broadband Stakeholder Group, however, which claimed in April that the BT network would be too slow to meet the demands of the most demanding households and businesses by 2012. The FT found evidence to support this claim and cited research published by Enders Analysis, which estimates that less than a third of households will enjoy broadband speeds of more than 20mbps with BT’s ADSL2+ technology. This is partly because broadband speeds are dependent on the length of copper landlines running from BT phone exchanges to homes, the article concluded.

Having interviewed Ralph Bernard , chief executive of GCap (GCap considers digitally tuning out), the Financial Times concluded that the owner of Capital Radio may have to pull out of digital radio if it does not see faster growth in the technology and get a commitment from regulators to switch off analogue signals. The FT reminded its readers that having secured the first digital radio multiplex, GCap has invested more than any other UK commercial broadcaster in digital audio broadcasting (DAB) technology. Grant Goddard was also interviewed for the article. He said: “Financially, digital radio has added significantly to the problems of the commercial radio sector. Already, half of all analogue stations lose money or make an annual profit of less than £100,000, and digital radio has incurred significant investment costs while not yet proving profitable for any channel operator or multiplex owner.”

Reporting on the news that a Channel 4-led consortium had won the contest for the UK's new national digital radio licence (Channel 4 to take on BBC in DAB battles), the Financial Times suggested that the Ofcom-run auction should be seen as a critical point in the UK radio industry's shift from analogue broadcasting to digital. The FT claimed, furthermore, that by winning the contest the consortium would give a shot in the arm for digital audio broadcasting (DAB) and provide stronger competition to the BBC. However, Grant Goddard, who was interviewed for the article, questioned Channel 4's chances of success, saying several of its proposed formats had already failed in analogue radio. He said: "The commercial sector's track record in the speech format, which is offered by only 1 per cent of licensed stations, is hardly inspiring."

Reporting on the bid for Virgin Media by the private equity firm, Carlyle Group (Virgin Media, British Cable Service, Gets Takeover Offer), the New York Times sought the view of Ian Watt. He said: “Virgin Media has been somewhat mismanaged at a strategic level for some time... Taking it private would enable new owners to take a longer-term view and allow for a restructuring without immediate pressure of increasing customer numbers.”

Speaking at a conference on the future of the regional press in the UK (Service of regional press makes local TV plans 'unnecessary' - media expert), Claire Enders told delegates that, in spite of a tough climate, the local press continued to meet the expectations of local communities both for local news and locally-driven information. "There is no market failure that the current players aren't addressing" she said. "I think I first started hearing about the death of the regional newspaper in 1994 and 13 years later the medium is still doing pretty well." She added that there was a "dramatic growth" in regional press websites, and there was still a vibrant picture in terms of local media consumption.

Following the story that eBay had abruptly terminated its advertising contracts with Google (Auction website eBay has pulled its US advertising from search engine giant and adversary Google), BBC News asked Ian Maude to explain eBay's precipitate action. He said that eBay was disappointed by Google's plans to host a rival function in an attempt to build market share for its Google Checkout payments service, which was launched in the US last year and became available in the UK in April. "It was a clever-dick marketing tactic from Google that has gone wrong" he said. "eBay is the dominant player in the online payments market with PayPal and they have reacted very badly to the stunt, feeling that Google is trying to park their tanks on their lawn."

He added that eventually this battle will be resolved: "There certainly will be other conflicts as the industry consolidates in areas such as digital advertising."

Raising the prospect of a takeover battle for EMI (Terra Firma Agrees to Buy EMI for 2.4 Billion Pounds), Bloomberg interviewed Claire Enders. She said: "The company is totally in play. They are hoping a bidding war erupts.''

Speculating on the compounding effects of intensifying competition in converged media (Virgin Media feeling the effects of BSkyB withdrawing channels), the Sunday Herald asked the question: "just how much trouble is Virgin Media in and how much of an additional threat does BT Vision pose?" Ian Watt was asked for his view. He played down the risk, saying: "BT Vision is primarily a tool of BT to hold on to its premium customers to reduce the churn of its existing customers."

Commenting on Virgin Media's loss of critical market share (BT turns up heat on Virgin Media - The phone giant’s entry into broadband TV is the latest blow for Branson’s baby), the Sunday Times concluded that "BT’s arrival in the pay-TV market underlines the extent to which the convergence between telecoms and television is finally becoming a reality". A number of analysts were interviewed for the article. One said: “The business fundamentals remain under intense pressure. Telephony decline is set to continue due to uncompetitive price offering. TV is suffering from lack of content and competition from Sky. Broadband growth is declining in a fragmented market approaching saturation.” Claire Enders was asked for her view. She said: “Who would have thought that the market would move away from free because Carphone messed it up? People are happy to pay for something that works. It’s just the best thing that’s ever happened to BT.”

The Financial Times revealed that BT hopes to recruit "hundreds of thousands" of users for BT Vision, its fledgling television service, by the end of March 2008 (BT aiming high with fledging television service). Although it launched its TV service in December last year, BT has signed up fewer than 10,000 subscribers. Analysts interviewed for the article doubted that this ambition is feasible, and "would probably necessitate BT cutting the costs of the TV service through its intentions to provide a self-installation deal". Ian Maude was asked for his opinion. He said that the target of having hundreds of thousands of BT Vision users by March 31 was a "tough ask". He added that it was important for BT to introduce a self-installation version of BT Vision, without the £60 charge, because Freeview personal video recorders cost £130, with prices likely to fall.

Underlining the plight of Virgin Media (Branson magic fails to rub off on Virgin Media), the Financial Times found that the company's market share was under attack in all its key activities: cable TV, Broadband, and mobile telephony. "The cable company's £25m marketing campaign has failed," reported the FT. "Customer numbers fell for the sixth consecutive quarter: the figures indicated a company facing challenges on all fronts." Ian Watt was interviewed for the article. He said that, although the figures were "not good news, it's not meltdown yet". While the cable group can continue to take costs out and increase cash flow, the main challenge was to actually increase the customer base, he added

Reporting on the Thomson Corporation's bid for Reuters (Canadians Mount Bid For Reuters), The Sunday Times commented: "The two companies’ products... look complementary... Thomson sells cheaper information systems, while Reuters offers more expensive products that are relied on by investment banks. And ,while Reuters has a long-established strength in foreign-exchange markets, Tradeweb has given Thomson the edge in fixed-income, a fast-growing area in recent years". Claire Enders was asked for her view. She said: “The companies have a very similar range of operations. There are significant cost efficiencies to exploit.”

Commenting on the BBC's announcement that it will launch its iPlayer on-demand service in November (BBC given go-ahead to launch iPlayer), The Financial Times reported that the Corporation believes "the iPlayer catch-up service will account for 7.5 per cent of all BBC television consumption by 2011, with another 3.8 per cent accounted for by 'simulcasts' - simultaneous online broadcasts of its schedule". Putting the BBC's claim into perspective, the article acknowledged a report published in March by Enders Analysis (BBC iPlayer [2007-19e]) which predicted the iPlayer would generate about 8 per cent of BBC viewing by 2011 and which indicates that the BBC's forecast was "over-optimistic".

Commenting on the arrival of Internet TV (Will the click of a mouse bring TV to its knees? Faster broadband connections, greater availability of programmes and films on the web and the arrival of video search engines look set to unleash a viewing revolution), the Sunday Herald indicated that services such as Tioti, Blinkx and Joost "will revolutionise the way we watch television, and render traditional channels irrelevant as on-demand becomes the main type of viewing". Interviewed for the article, Ian Maude explained that even though a service like Tioti might have the potential to become a "nice little business", it is "unlikely to move beyond the niche market because of the power of the main players". He believes Google and Yahoo will corner this area sooner or later. Asked about viewers' preferences, Ian Maude predicted that the older generation will stay wedded to scheduled television and that internet programming will steadily grow alongside it. He pointed to research that shows that viewers with all options first look on the big five channels for what to watch, then on multichannel, before finally turning to pay-per-view or on-demand. "Channel-based television from the BBC, Channel 4 and Sky is going to be around for a very long time," he says.
Also interviewed for the article, Claire Enders was dismissive of the role of specialist search engines for sourcing TV programmes: "What do you want a search engine for? I don't see why you wouldn't go straight to whoever's going to offer you that programme," she said.

Devoting substantial coverage to the declining sales of CDs (Consumers turn volume down on CD sales and Record labels dance to tune of the internet), the Financial Times quoted extensively from Recorded Music and Music Publishing [2007-29], published by Enders Analysis. Forecasting that, by 2009, overall music sales will be half their level at the peak of the CD boom, this report predicted that global music sales will fall to $23bn in 2009, down 16 per cent from last year and far below the peak of $45bn in 1997. The FT focused on the report's attribution of the effects of digital technology and the consequence of enabling consumers to store large quantities of music on computers, and to cherry-pick tracks, rather than buying albums.

Although the report predicted that CD sales will start stabilising in 2010 when penetration of MP3 players such as the iPod is expected to reach saturation, the FT paraphrased Enders Analysis's concern that the lifespan of any hit album is now shorter and, as a result, revenues from blockbusters are no longer covering the labels' costs and other commercial failures, and quoted the inescapable conclusion: "The labels' business model is at a very uncomfortable juncture."

Reporting on the joint announcement by EMI and Apple to suspend Digital Rights Management (DRM), the Financial Times found evidence to support the belief that EMI's decision to drop DRM would make an acquisition by Warner more difficult (EMI move seen as poison pill against Warner). Alice Enders was asked for her opinion. She said that, theoretically, consumers paying more for a high-quality DRM-free track should push up the wholesale price, and therefore EMI's revenues.

Commenting on the European Commission's case against the recorded music industry (Apple, music companies pass song buck) the Financial Times exposed the range of prices that consumers must pay for downloading music in different European countries, concluding that the problem, according to the regulator, is not the price differential but the arrangement between Apple and the record companies that bars European consumers from shopping around for best prices. Alice Enders was asked for her view. She made the point that Apple needs to account for the royalties on a country-by-country basis. This would become almost impossible if, for example, a UK resident bought a track from iTunes in Germany. "The difference in VAT also complicates matters for consumers wanting to cross borders to buy goods", she added.

Reporting on the acquisition of the UK wireless network division of National Grid Plc by Macquarie Communications Infrastructure Group for £2.5 billion (Macquarie to Buy National Grid's UK Wireless Unit), Bloomberg asked Grant Goddard for his view. He said: "There are huge economies of scale to be achieved. Both companies have sites across the UK, so they can make huge cost savings by combining the two units.''

Commenting on the translocation of classified advertising away from conventional media (Advertising looks to online future), the Sunday Times revealed that the volume of online advertising grew by 41% in the UK last year while TV advertising revenues shrank by 4.7%, radio by 5.2% and press classified by 7.8%. Asked for her view, Claire Enders said: “We don’t believe that display advertising as we know it will be kaput in 2010. It’s not going to happen. We’ve had five years of really fierce experimentation online. But there’s very little emotional response to online display. It’s still viewed as an experimental medium.” She pointed to the difficulties that web firms, including Yahoo, MSN and AOL, have had in persuading their users to accept 'prerolls' — short ads that run before, and finance, the video clip they wish to see. That difficulty suggests there is still plenty of life in the 30-second commercial, and in display advertising in newspapers. Claire emphasised that there is little scope for traditional media to be complacent - she expects that the revenues for television, radio and newspapers will each fall by about 5% this year, and will fall again next year: "The proliferation of new digital radio and television channels will continue to cut slices from the advertising cake."

Commenting on figures published by the Internet Advertising Bureau, which revealed that £2bn was spent last year on online advertising (Google extends UK online ad lead), The Guardian indicated that Google achieved an overall market share of 43%, but had earned 75% of the £1.2bn spent on paid-for search - up from 63% in 2005. Asked to comment on this dominant position, Ian Maude said: "Google has not just invented a better mousetrap, it's created a whole new marketing industry and is now reaping the rewards". He added: "Search goes beyond sales, with many advertisers also using it for branding so there's plenty of growth potential still. At this rate Google is on track to overtake ITV1 in terms of advertising revenue within two years, and the UK's biggest media owner by ad spend within five or six years."

The Sunday Telegraph reported that Virgin Media is claiming early victory in its battle with BSkyB, revealing that just 100 customers a day have cancelled subscriptions since Sky One was withdrawn from the cable service (Virgin takes lead in its war with Sky). According to the article, analysts estimate that in order to cover the £60m a year in lost revenue from carriage fees and ad sales, Sky will need to sign up 150,000 extra subscribers. Toby Syfret was asked for his opinion. He said that if Virgin wanted to ensure its commercial survival, it would have to invest in better content and customer service. But he added that Sir Richard Branson's brand had so far come out of the battle unscathed. "Virgin are painting themselves as the bullied party. I don't think the loss of those channels will do them immense harm. A lot of people will view Sky as aggressive."

Reporting on Virgin Media's Q4 results (Virgin Media Loss Widens After Costs From Purchases) Bloomberg focused on the cable operator's steeply rising costs of integration and widening losses. Asked for his view, Ian Watt warned: "The integration is about taking costs down. The project is on track but there may be costs from the Sky battle.''

Following the rancorous negotiations over a carriage deal between Virgin Media and BSkyB (Virgin Media may lose basic Sky channels in new row), Reuters commented: "With the current deal about to expire, the two groups entered into talks to agree a new deal but according to Virgin Media, BSkyB demanded a carriage fee "more than double" the existing arrangement". Interviewed for the article, Toby Syfret explained that Virgin would now be looking to find new content that will differentiate itself from other platforms. He also said that prices for on-demand content could rise as all groups look to boost their TV offering.

Reporting widely on the 3GSM conference in Barcelona (Pushing the right button: mobiles get a move on. But who will benefit as high speeds persuade more of us to use our handsets for music, video and the web?), The Independent sensed an air of deja vu and quoted Rudi Gröger, chief executive of O2 in Germany, who said that "everything that can be said about convergence has been said before". According to the article a further note of despondency was sounded by Arun Sarin, the chief executive of Vodafone, who told delegates: "Adjacent industries are moving into this industry. It's time for us to stop talking and deliver. As an industry, it takes a long time to get things done. We need to move faster or others will eat our lunch."

James Barford suggested that the rush by operators to sign up new media partners is a way of making the mobile internet more attractive to consumers. "Rather than saying 'you can do internet searches from your mobile', they are now saying, 'you can Google from your mobile.'" He added: "Likewise, rather than trying to say to customers 'you can upload video on to the internet', Vodafone is saying 'you can YouTube on your mobile'. It is a sensible move to brand these applications in this way." James Barford also maintained that content owners and mobile operators are still at loggerheads over rolling out new services. "The operators are saying they should pay less for the content, and the content owners want to pay less for connectivity", he explained.

Commenting on the plight of the recorded music industry (Broken in America EMI's American business is in crisis and its top performer is in rehab), Claire Enders said: “There is no hope... CD sales will have halved by 2010. Virgin, HMV, all the multiples in the US, they’re reallocating space. They’re all selling mobile phones now. The total retailing space that will be lost in 2006 and 2007 is something of the order of 20%. EMI doesn’t actually understand the change which is going on, which is very, very rapid.” She added: "As more people carry their music around with them, the demand for 'best ofs' and compilations is diminished. People are no longer buying any compilations, they are making their own.”

Commenting on the launch of Virgin Media (Gorilla warfare), Scotland-On-Sunday suggested that behind this week's launch is the belief that the ever-popular Virgin brand will add some much-needed glamour to NTL, which has earned a reputation for poor customer service. Asked for his opinion, Ian Watt said he believed the 'Branson-effect' will benefit NTL but is unsure that there is substantial demand for 'quad-play'. He added "There are a number of values associated with the Virgin brand which includes fun and being young at heart. That's what they are looking to do [with the rebranding]. That's becoming increasingly important because the market is so competitive." But he warned: "We don't feel customers have a huge latent demand for quad-play."

Devoting its Focus investigation to the future of ITV under a board led by Michael Grade (Enter the celebrity chairman), The Sunday Times examined the causes of the broadcaster's decline: "Despite the wave of optimism flowing through the corridors of ITV", the article explained, "nobody is under any illusion that the company is suddenly out of the woods. ITV’s big problem is the fragmentation of the television audience in a multi-channel world. ITV1’s share of total viewing this year will be about 20%, or about half the level it managed in 1992."

Asked for her view, Claire Enders said: “I very strongly suspect that the financial performance of ITV will not improve. In fact, it will worsen, first because the television market is so bad and is not going to get any better and, second, because ITV is going to be spending more with declining (sales). There are people who believe that there is some magic formula that can be applied, so that ITV can start to grow again in 2009. I find that a struggle to get my mind round."

Addressing claims that Michael Grade will seek a quick fix by unleashing new talent, Claire Enders cautioned that commissioning new shows takes time: “All the programmes to be shown in 2007 have been made, pretty much. It will take years for the positive effects to come through.”

Commenting on the launch of BT Vision, BT's new broadband TV service (New entrant must fight for a questionable middle market), The Times suggested: "BT hopes to scoop up those customers who are unwilling to fork out on a monthly subscription to satellite or cable for premium content but want more choice than is available through simple Freeview".

Asked for his view, Ian Maude was not convinced: “We believe that there are not enough people in this middle market to really make BT a big player in the digital television market space." He added: “If you are really into television, there is satellite or cable. If you are not, there is a question mark about whether you will cough up for another service when you get Freeview for a one-off £30.”

Following the surprise defection to ITV of BBC chairman Michael Grade (Grade defects to ITV in blow to BBC), the Financial Times suggested that the "signing of Mr Grade... is expected to be regarded as a coup for ITV". Claire Enders was asked for her reaction. She said: “This is very good for ITV. They’ve appointed someone of real stature.”

Speculating on the broader ambition that led BSkyB to acquire nearly one fifth of ITV (The battle for ITV, the Murdoch factor. BSkyB's sudden pounce on ITV was a triumph of raw power, but what does it mean in the longer term?) the Economist asked its readers, does BSkyB have a purpose beyond blocking NTL? The article suggested that BSkyB's ultimate aim is to tempt the vast majority of households into paying for television, as in America, rather than settling for the free kind.

The Economist went on to claim that BSKyB might now be able to nudge ITV towards the pay world, which would make free television less attractive. Both BSkyB and ITV are shareholders in Freeview... whose popularity has meant that many people who might have become customers of BSkyB have stayed with free TV. BSkyB would doubtless like more say in how Freeview develops in future

Analysts interviewed for the article reckoned that BSkyB's seeming fear of a strengthened NTL sends a worrying signal to Mr Murdoch's own investors. After all, the market has also become more competitive for BSkyB and it is growing more slowly than it did in the 1990s, suggested the Economist. Approached for her view, Claire Enders argued that such an interpretation is ridiculous. She said: “This is the brilliant, iconoclastic move of a company to say ‘we're powerful and we're going to decide what happens to ITV'.”

Assessing NTL's room for manoeuvre in its planned acquisition of ITV, the Guardian claimed that NTL's grand dreams of a merger with ITV may well have run out of steam, with analysts predicting the cable group will struggle to come up with a higher offer for the broadcaster (NTL unlikely to bag ITV, say analysts). Claire Enders was asked for her view: "We do not believe that it is possible for NTL to mount a stronger bid at circa 20 or more pence more per share for reasons of financing, before considering other factors, such as Sky's intentions and agenda", she said.

Covering the fallout from BSkyB's unexpected acquisition of 17.9% of ITV stock (Branson fury at Sky stake in ITV), The Sunday Times interviewed Sir Richard's spokesman, who said: “Sky has taken a stake in ITV in order to prevent a transformational deal that would have increased competition in the UK. This is a blatant breach, if not of the broadcasting legislation, then of the Enterprise Act.”

The article sought further criticism of Sky's tactics, quoting City sources which suggested that BSkyB’s move had the potential to anger both its own shareholders and those of ITV. By taking such a large stake, BSkyB could prevent ITV’s investors selling their shares on the same favourable terms that were achieved by Fidelity.

Claire Enders was asked for her view. She said that NTL would have to pay 20% more than it had intended if it was going to secure ITV. “Sky has established a new valuation for ITV, which is terrific for Sir Peter Burt."

The Sunday Times believed that BSkyB would be dismissive of the 'anti-competition' argument advanced by Branson. “There’s a reason that the 20% [ownership] limit was set by the Communications Act, presumably thoughtfully,” a City source was quoted. “NTL was trying to reduce competition by buying ITV completely. How do you argue that having ITV gain a shareholder [Sky] that can’t control it and isn’t seeking board representation would be worse for competition? I would have thought that was, by definition, better.”

The article concluded that, even if NTL decides not to bid, the uncertainty over ITV’s future looks set to rumble on for months. One possibility is that Sky may seek to use its position to facilitate its own entry into free-to-air broadcasting in Britain. One suggestion is that it may look for an asset swap with RTL, taking ownership of Five in exchange for RTL acquiring its stake in ITV.

Speculating on the take-up of internet enabled mobile services (Free international calls lure mobile phone users to connect on the move), the Times reported that British mobile phone users will be able to make free international calls from next month after a ground breaking deal between 3 and Skype, the world’s biggest internet telephone company with almost 4 million customers in the UK.

The article claimed that the deal with Skype is part of a wider service by 3, under which users will pay an as yet undisclosed monthly subscription to gain unlimited access to some of the internet’s best known brands. Other offerings under the deal include access to users’ home PCs and televisions from their mobiles. It marks part of a last-ditch attempt by Britain’s mobile operators to encourage users to tap into lucrative data services and turn 3G into a mass-market product.

The Times reported that analysts remained sceptical that services such as that offered by 3 would transform the fortunes of mobile operators and prompt the wide-scale take-up of 3G services. James Barford was asked for his view. “On the positive side, it is good that the mobile phone operators are finally admitting that the internet players are better at designing these products for consumers than they are" he explained. "However, similar services have not encouraged mass take-up. This is at best still a long-term game”, he added.

Speculating on the motives that led NTL to make an offer for ITV (Here's looking at you: In spite of all its difficulties, ITV has plenty of suitors), The Economist commented that it is hard to see, at first glance, why anyone might want to buy ITV. Asked for his opinion, Ian Watt explained that, although its recent efforts have not been inspiring, ITV's advertising revenues, at £1.6 billion, are still big enough to allow it to engage in the expensive business of developing new programmes. “Buying the company is rather like walking past a department store, admiring the Belgian chocolates, and then buying the entire shop to get at them", he joked.

Reporting on the proposed takeover of ITV (ITV shareholders tell cable company to 'forget takeover' without £5bn cash: Investors say they won't swap stake for shares in NTL), The Independent on Sunday warned that NTL's plans to make a cash-and-share offer for ITV would take its debt to over £8bn. Toby Syfret was asked for his view - he believed NTL should focus on its own business: "'New' NTL has a lot on its plate. Its cable subscriber base has started to decline. The company is in the midst of a huge project to merge Telewest with 'old' NTL and reduce costs" he said.

Ian Watt was quoted in an article published by Bloomberg (Cable & Wireless First-Half Net Falls 65%; Sales Rise). Asked to comment on the Cable &Wireless recovery plan - focused on high-margin clients and overseas growth to spur sales - he remarked that the company's integration with Europe has gone "relatively well". He also said that although the restructuring is advancing, the headcount needs to be reduced further. He believed that C&W's international business is going "reasonably well", while the wholesale business needs more big customers.

In an article which examined the candidates for the position of new chief executive of ITV (Who's got the X factor?), The Sunday Times suggested that, although Andy Duncan and Dawn Airey have been touted as contenders, "... the broadcaster is looking for someone with technological vision rather than media know-how". Claire Enders was asked for her view. She said, “Stephen Carter is the top candidate — we all know that. He’s Burt’s top choice.” She went on to say that Carter was “in two minds” about the ITV job. “There’s little point in taking the job if private equity companies are going to come in and make a bid. It would be better to work with private equity and take a slice of equity, rather than take a job with a sitting duck.”

The Sunday Times reported on the Post Office's plans to relaunch its telecoms offer (HomePhone service aims for million mark). Commenting on the disappointing news that the Post Office had secured only 260,000 customers since launching its service last year, the paper claimed that analysts are sceptical the PO will meet its self-imposed target of securing a million customers by 2007. Indeed, competition has become even more fierce, warned the article, as well-resourced players such as Carphone Warehouse, BSkyB and Orange are making aggressive pitches for customers with 'bundled' packages of communications services involving 'free' broadband. Ian Watt was asked for his view: he said that although the group had enjoyed good 'traction' in its early phases with its existing customers, its strategy going forward was unclear. “It has made good progress through shrewd marketing to its customers, but it is difficult to see where it goes from here,” he added.

The New York Times followed up the news that Carphone Warehouse had acquired AOL's UK internet access business (AOL to Focus on Ad Revenue in Europe). The deal, worth £370 million in cash, is due to be completed on 31st December 2006 whereupon AOL will continue to provide branding for the AOL access business and ‘audience’ services (the portal and associated content). Furthermore, AOL will also manage online advertising sales for the combined CPW/AOL broadband customer base through a revenue-sharing agreement. AOL is attempting to transform itself from a business supported largely by subscriber fees to one financed primarily by advertising, explained the New York Times and it quoted Jonathan F. Miller, chief executive of AOL who said “The natural and appropriate price of a larger footprint is that you have to share”.

In selling the access businesses in Britain, France and Germany, the article explained, AOL is pocketing nearly $2 billion but losing control over its primary source of international revenue, and it went on to quote a research note written jointly by Ian Watt, Ian Maude and Adam Rumley: Enders Analysis, a research firm in London, estimates that advertising will generate only about £75 million ($141.2 million) in revenue at AOL in Britain this year, out of more than £400 million ($753.6 million) in overall sales at the British unit.

The article commented further that, although Jonathan Miller declined to say what share of ad revenue would go to AOL’s partners, under the sale agreements, the Enders analysts estimated it at 40 percent in the Carphone deal.

In the light of Mr. Miller's reticence, the New York Times exposed further challenges for AOL in Europe: of the 31.4 million European AOL visitors... only about a third were customers of the company’s access services in Britain, France and Germany, the article continued, thus suggesting that AOL is already attracting considerable traffic from the broader Web: “Their challenge will be to continue to grow their audience and the engagement with that audience to drive page views that can then be monetized” (Bob Ivins, managing director of ComScore Europe).

Such caution was reiterated by the Enders team, who further claimed in their note that around 50%, or 1.05 million, of AOL's UK subscribers currently take Sky’s satellite pay TV offer: CPW's purchase brings with it more than just the usual integration issues, they commented. Furthermore, BSkyB is actively discouraging its pay TV users from signing up with CPW for telephony and broadband, and has launched a service which is highly competitive with CPW’s. The outcome of the battle between CPW and BSkyB for AOL’s Sky households will depend on the weight customers place on these factors and on the relative efficiency with which both players execute, wrote Enders Analysis. To date, both have damaged their credibility through their inability to meet demand promptly. To Q2, CPW admits to having lost 78,000 applicants, 12.5% of the total, although some of these would have been rejected for technical reasons.

Although not reported by the New York Times, the Enders analysts believe that, if Sky executes well, it is quite possible that half a million or so current AOL subscribers could migrate to BSkyB by the end of 2007, particularly if they feel more comfortable retaining their BT line for telephony, rather than taking the plunge with CPW’s bundled offer. However, even if CPW loses half a million subscribers to Sky and grows its ‘organic’ broadband base, according to our own estimate of 1.5 million broadband subscribers (rather than guidance of at least 1.75 million), AOL should still enable it to double this to 3.1 million by March 2007. By our estimates this should be more than Sky and almost as much as NTL and BT, enough to remain reasonably competitive in terms of scale.

The FT analysed the impact of Carphone Warehouse's acquisition of AOL UK's internet access business (Carphone is catapulted into the big league). Asked for his view on Carphone's overnight arrival as No.3 broadband supplier in the UK, overtaking Tiscali, Pipex and Orange, Ian Watt said: "Carphone, without the acquisition of AOL's UK internet access business, risk looking sub-scale. They would be part of a second tier of internet service providers if Sky hits its target of 3m broadband customers." However, the article highlighted the gamble taken by Carphone and claimed that the AOL deal would multiply the compamy's risks, leading to a loss of £70m in 2007. "Carphone's customer base is almost quadrupled - but so is their exposure to potential losses" said Ian Watt.

Commenting on news that mobile operator Hutchison had attacked the “poor quality” of the British subsidiary 3's customer base (Tough call for phone firm 3 as customers quit), the Sunday Times served up the humble pie and revealed that the latest figures "suggest that customer losses at 3 UK were until recently running at a rate of more than 50% a year, and even higher among low-spending pre-pay customers". According to the article, "One internal source suggested that 40% or more of 3’s pre-pay customers were dormant, and made no use of their expensive 3G handsets". The article further claimed that the results "are an embarrassment for Bob Fuller, 3’s chief executive, since they call into question the tactics used in a desperate dash for growth in 2004". Apparently, "3 has spent hundreds of millions of pounds to subsidise the cost of 3G phones, but few of the customers it attracted have stayed with the business".

James Barford of Enders Analysis, who has repeatedly warned of high churn, said it was “very gratifying” to see Hutchison’s admission of the problems. “I’d argued that churn was heading towards 60%,” he said. “I was surprised it was so close already.”

Commenting on the likely market reaction to BT's proposed broadband TV offering (BT Makes a Bet on Broadband TV Firm Seeks Loyalty, Inroads Into Market For Paid Services), the Wall Street Journal explained that BT Vision intends to attract customers in the UK. "...BT is already looking to move to digital TV before the analog TV transmission switch-off in 2012". The article claimed that BT was responding to "...a fundamental shift in its business model... but now needs to retain and increase its customer base and get more revenue from additional services..." The WSJ added that BT would be offering a hybrid of the UK's fastest-selling digital TV service, Freeview, and also pay-per-view videos over broadband, "...targeting the roughly 50% of the 25 million or so UK households that aren't already signed up to subscription services from BSkyB, NTL and others".

However, the article interviewed several analysts who queried BT's ability to make inroads into the competitive UK pay-TV market. Ian Maude (Enders Analysis Senior Media Analyst) was noticeably less confident about BT's plan, and instead forecast that the UK TV-over-broadband market, currently in 50,000 homes through Video Network's HomeChoice service, will increase to only 500,000 households by 2015. "At most", predicted Ian Maude, " BT Vision will attract only 800,000 customers by 2010, leaving it lagging behind its digital TV competitors". He concluded: "The main reason for the pessimism is the strength of other digital TV platforms, all of which can deliver broadcast programming far more cheaply than DSL".

Commenting on mounting competition in the market for residential broadband services, The Scotsman revealed that the Post Office would soon announce its offering (Post Office set to join broadband bandwagon). The article emphasised that, with the launch of HomePhone which uses Cable & Wireless's network, the Post Office already offers the cheapest fixed-line rental on the high street, with call charges 20 per cent lower than BT, and is now signing up 5,000 customers a day. Ian Watt was asked to comment on this development. He said: "A move into broadband would make more sense than just offering telephony alone because it is extremely difficult in the long term now to proceed in the marketplace by providing just one fixed-line service."

Addressing the uncertainty of ITV's broadcast strategy (The message to ITV is loud and clear: get your programming right), Toby Syfret commented: "ITV also needs to do more to establish a more level playing field between it and the BBC. There are many instances of where ITV is at a clear disadvantage and they could have made more noise about this. One example is how ITV is obliged to put its schedule out far in advance of the BBC. This has allowed the BBC to put programmes directly competing with ITV's schedule". He added: "One of the biggest problems is the contract right renewal mechanism or CRR. This has to go. It allows advertisers to take the same share of ITV airtime for less cash in direct proportion to ITV's reduced audience share". Overall Toby Syfret claimed: "The CRR is not the only problem, but it is difficult to see ITV having a stable future with it still in place... With audience figures declining, it is not just damaging ITV's revenue, it is distorting the whole market… it seems to be having a deflationary effect on all ad revenues..."

Speculating on the future landscape of the fixed-line telecoms market (Big operators to vie for fixed-line services), the FT concluded that four or five big companies will grip the fixed-line residential market in the same way O2, Orange, T-Mobile and Vodafone dominate mobile phone services.

Ian Watt was asked for his view. "Big profit is only available through large-scale operations", he said. Furthermore, he expected BT, NTL, Carphone Warehouse and British Sky Broadcasting to be the main players in the fixed-line residential market within the next two years, adding that Orange might also have a significant role: "We are looking at a relatively small number of very large providers."

Following the recent publication of its regular survey of UK handset users, (UK Mobile Consumer Trends), Enders Analysis was widely quoted by ZDNet (Vodafone admits video-calling is a flop). Highlighting the Enders conclusion that,in just one quarter, sales of 3G phones had plummeted from 20 per cent of all handsets bought to 12 per cent, ZDNet interviewed Vodafone and was told: "That is definitely an overestimate... The share has dipped as we've rebalanced investment across our customer base. We're now perhaps seeing lower ARPU from lower ARPU customers, so the kind of commercial investment we were making into customers is no longer justified". ZDNet concluded "In practice, this means that Vodafone is no longer willing to put as much of its own cash into offsetting the price of each 3G handset it sells. Heavy subsidies don't make financial sense if people are simply not paying for enough extra services to justify it".

Furthermore, the Enders report had asserted that Vodafone had suffered financially from its "obsessive over-engagement in 3G", and gave 3G handsets equal store-space to non-3G devices. Indeed, the report insisted there was still no evidence that people were primarily interested in anything other than voice and text services, and claimed that 76 per cent of all phone users surveyed said they were not at all interested in mobile TV. In its defence, Vodafone admitted "Video calling is not a service that is used by a lot of people... But more than 50 per cent of people who buy a 3G phone in our UK stores are taking a mobile TV package, and most are adopting the [premium] £10 package".

Meanwhile, ZDNet contacted 3 - the only major UK mobile operator to focus entirely on 3G phones and services - which disputed the analysis of survey results published in the Enders report. Indeed, 3 maintained that its downloadable music and mobile TV services were popular with its subscribers. "Uptake is phenomenal and growing day by day", a spokesperson told ZDNet UK. "We're even rivalling traditional music suppliers. We're second only to iTunes in terms of downloads... and the World Cup really put mobile TV on the map." "What [the Enders] report reflects is a lack of maturity in the other operators in terms of their progress with 3G", said the spokesperson, who also claimed that "some incumbent operators" had found it could "suit their commercial model to keep some of their users on old technology" - a possible reference to the high data costs associated with GPRS.

Following the recent publication of its regular survey of UK handset users (UK Mobile Consumer Trends), The Sunday Times concluded: "Vodafone appears to have finally accepted what its critics have long told it: the revenue uplift from putting fancy 3G phones in its customers’ hands does not justify the cost" (Vodafone heeds critics and goes cool on 3G). The article continued: "Along with the rest of the mobile industry, Vodafone had hoped that 3G mobile networks would encourage customers to spend more money on services such as browsing the internet, downloading music and watching video clips. However, less than two years since launching these services, Vodafone has discovered the incremental revenue they generate does not justify the hefty subsidies it has to offer on expensive 3G handsets. It has recently cut the level of subsidies it offers retailers, causing a sharp fall in the proportion of 3G phones it is selling".

James Barford, author of the Enders report, estimated that sales of 3G phones have “plummeted... from 20% of all handset sales in the prior quarter to just 12%”. Although Vodafone would not confirm the size of the fall, a spokesman said the Enders assessment was “reasonably accurate" and added, “3G is being de-emphasised... You’re seeing a commercial evaluation”.

While Vodafone said it had seen some revenue uplift from early adopters, and it is still promoting services such as mobile television and music downloads, 3G networks will increasingly be used to offer cheaper voice calls to win market share from landline companies such as BT.

Claire Enders said Vodafone’s rethink on 3G was “the first good news we’ve had in a long time”. It showed Arun Sarin, the group’s chief executive, was prepared to listen to his critics, she said.

Recording the suprise resignation of another Vodafone key executive (Vodafone’s Europe head departs), the Financial Times commented, "The unexpected departure of Mr, Morrow came as Vodafone conceded that trading in core European markets remained challenging, with price erosion, regulatory pressures and increasing competition keeping a tight lid on earnings growth from the region. In the three months to June 30, revenue growth in Europe rose just 1.3 per cent, compared to 13.9 per cent for the rest of the world". James Barford was asked for his view, “It’s not brilliant timing but it’s not the worst thing that could happen to Vodafone” he said.

In an article which claimed that, "Analysts and investors are cooling on the idea of a British Sky Broadcasting bid for AOL UK" (BSkyB bid for AOL UK unpopular with analysts), the Financial Times speculated that "the satellite broadcaster's planned £400m investment in broadband has made it less necessary and less attractive to buy another internet service provider". The paper interviewed Claire Enders, who concluded that the broadband investment plans "will substantially reduce the incentive for Sky to buy AOL UK". She revealed that up to half of AOL UK's 1.2m customers also subscribed to Sky's pay-TV packages.

Signalling the arrival of increased competition in the pricing of broadband services (Broadband price war set to intensify) the FT forecast that 70% of UK households will have broadband internet access by 2010, and concluded: the opportunities in broadband are enormous and provision has accelerated rapidly because of the investment necessary to supply people with "free broadband". The article revealed that Carphone Warehouse expects to sustain operating losses of £50m in its broadband business during 2006-07, while BSkyB may sustain operating losses in its broadband business for the next three years, before making a profit in 2009-10. Charles Dunstone, CEO of Carphone Warehouse, expressed fears about the future battle between broadband providers and admitted he may not be able to sustain his price war once the market is saturated. "My next worry is in four years' time when there is no natural growth left in the marketplace through penetration, how do you... stop yourself just getting into a round of everybody trying to steal each other's customers." Ian Watt was asked for his view on the outlook for broadband providers. He said he believed the increased profit margins derived from local loop unbundling will disappear in the next few years because of more aggressive pricing by BT and NTL.

Speculating that "Sky is gambling that consumers will want to sign up to a complete package of telecoms and entertainment services" (Who holds the broadband trumps?), the Sunday Telegraph claimed that "no one is quite sure that such demand really exists... The only fly in the ointment is that so far there is no clear evidence that consumers are remotely interested in the idea". The article made extensive use of an interview with Ian Watt who claimed that "a converged broadband/mobile package is an expensive distraction for any operator that indulges in it". Indeed, "it cost Orange £17 per month per customer to provide 'free' broadband", and it would mean that any such offer "will probably hit the profits the company makes from its top mobile customers, even if it does reduce churn". Furthermore, he added, " ... less than 20 per cent of Orange's mobile customers in the UK are in fact the billpayers for household broadband, meaning that cross-selling opportunities are reduced in it".

Ian Watt explained that mobile networks are now diversifying into broadband simply because they do not want to appear to be standing still. He said: "The risk of sitting back and doing nothing as a one-product company is that you risk being like the frog in a pan of water that sits there calmly as the water gets hotter and hotter... Orange is going into broadband because its parent France Telecom wants it to go into broadband. O2 is going into broadband because Orange is going into broadband". In short, according to Ian Watt, it is the economics of the companies involved that is driving the move into broadband rather than any obvious consumer demand for bundled services. "Companies with weaker brands, such as Pipex, are more exposed", he concluded.

Predicting that Sky will sink up to £200m in broadband services before reaching break-even (BSkyB facing £200m spend), the Financial Times sought the view of Ian Watt, who forecast that Sky's total exposure could be as high as £300m. The article reported that Rupert Murdoch, chairman of Sky, told analysts in Australia last month that the launch could have a "significant" impact on profit. Commenting on the pricing of Sky's new broadband package, the FT reported the views of several analysts who expected Sky to offer a free broadband service to its premium subscribers, who take its Sky+ personal video recorders, high-definition equipment or its full sports and movies packages. Ian Watt expects Sky to charge existing subscribers a more competitively priced £10-per-month offer. He did not expect Sky to follow Carphone Warehouse's marketing strategy of offering 'free' broadband in its bundle of services.

Commenting on the $30 billion merger of Nokia and Siemens (Telecoms industry rings consolidation changes), The Sunday Herald posed the question: "But who emerges as the winner from the pairing, Nokia or Siemens?" Ian Watt was asked for his opinion: “Nokia may seem like its got a lot going for it at the moment but the global market for mobile phones is reaching saturation point,” he said. "We’ll probably end up with a few very large global players which are particularly good at handling the project management challenges of being a large supplier to companies like BT. Others, such as Nortel and Cisco will be left more exposed.” He added: “There will also be a small number of far more specialised players who will be able to be more innovative. The successful ones will be acquired by the bigger companies.”

In an article which questioned ITV's ability to deliver its strategic goals (ITV seeks to win back viewers), The Financial Times reminded its readers that "despite large audiences for the World Cup, advertising revenues for July are expected to be down 23 to 25 per cent... In August, the figures are expected to be about 17 per cent below last year". The article concluded that "ITV's chief executive has been under pressure to prove that he could produce growth at what many still see as a diminishing asset", and observed that "This week's strategy presentation needed to demonstrate to investors that Britain's biggest commercial broadcaster could find growth again, despite the challenges of fragmenting audiences and advertising spending... designed to drive home two points: that there is more to ITV than its troubled core channel, which has been losing market share since Channel 4 launched; and that there is more to ITV than Mr Allen, a figure who still divides investors". Toby Syfret was asked for his view . He said: "For years, ITV1 has been like a sandcastle. The outer defences were being washed away by the tide but the peak remained intact. Now, the outer defences have gone and gradually the centre is breaking."

Commenting on the merger of Nokia and Siemens (Talk is cheaper for merger partners), the FT observed: "Consolidation has raised the carriers’ purchasing power when buying network infrastructure. Some of the equipment manufacturers are responding through their own wave of consolidation to drive down prices through economies of scale". Ian Watt explained the significance of the merger: “The key point with equipment is there are huge economies of scale available, so there is a strong incentive to consolidate,” he said.

Commenting on the announcement by Vodafone of a new bundled telephony product, Mobile Plus, to be trialled in Germany (Sarin tries to mobilise Vodafone investors), The Financial Times expressed the concerns of investors: "Telecommunications companies are desperately trying to get to grips with the dizzying pace of change affecting their industry. Vodafone is having to cope with fierce competition, regulatory pressures and new technologies such as voice over internet protocol, or VoIP, and wireless fidelity, or WiFi." Asked for his opinion, James Barford questioned the logic of Vodafone offering high-speed internet access over landlines. He said most major European markets were already well served by existing broadband providers: “My concern with the broadband effort is that it will distract the company.”

Highlighting difficulties faced by mobile operators (Vodafone to slash overheads by 20% after record losses), The Sunday Times observed that, after 20 years of growth, the mobile market is near saturation, and many analysts expect prices to fall sharply because of increased regulation and pressure from internet-based telephony. New video and entertainment services, made possible by 3G networks, have yet to deliver on their promise.

Reflecting on Vodafone's decision to write-down £28 billion worth of its assets, Claire Enders commented, “The company is just too far engaged in 3G to pull back. It over-reacted to 3G. It’s proving very difficult to make money out of data services.”

In an article that queried the logic and sustainability of the mobile operator, 3's business model (Mobile music is a hit for 3 but calls to City fall on deaf ears), The Sunday Times raised an unwelcome spectre: "Even now, despite all the problems, it is hard to believe that the promise of the mobile internet — ubiquitous access to all the information and entertainment you want, whenever you want it — will fail to find a market. The risk is that this vision will not be built on 3G, but on wifi or some other wireless technology."

That such a tenuous grasp of market reality should be betrayed by a company seemingly heedless of the losses sustained by investment in 3G was ruthlessly exposed by the article: "Hutchison Whampoa had hoped to float 3 UK this year, but shelved its plans after failing to find buyers willing to pay a full price for 3 Italia, a bigger and more profitable business. It is thought Hutchison Whampoa wanted €15 billion (£10.2 billion); it struggled to find investors willing to pay €9 billion. It is a substantial business, but, apart from the billions spent on its 3G licence and its network, 3 has run up a bill of many hundreds of millions of pounds subsidising the cost of expensive handsets. In figures recently filed at Companies House, 3 UK disclosed a loss for 2004 of £1.5 billion. The loss would have been £360m higher, but for two accounting changes — one relating to its treatment of handset subsidies, the other doubling the assumed life of its network. Hutchison Whampoa does not separate out the UK business in its more recent 2005 results, but it is clear that 3 incurred another heavy loss. Internationally, the 3 business as a whole last year lost HK$26.9 billion (£1.8 billion) before interest costs."

Enders Analysis, described in the article as 3’s harshest critic, contends that even these huge losses do not tell the whole story. James Barford was asked for his view. He maintained that the youth of 3’s business and its rapid growth disguises the scale of churn which is running at more than 50%, a sign of dissatisfaction with call quality, customer service, or some other problem.

Speculating on the outcome of a merger between EMI and Warner Music (Music libraries face sale), the Financial Times suggested that a sale of publishing assets could be used to help finance a deal. Pointing to research published by Enders Analysis which demonstrated that, together, EMI and Warner Music are the largest music publishers by revenue with a combined global share of about 31 per cent, the article predicted that it would be more likely that Warner's assets would be sold if EMI ends up controlling the board of a merged group.

Expressing its doubts on the fairness of the Premier League's auction of football broadcasting rights (Sky runs away with the Premiership), The Sunday Telegraph reminded its readers that Sky has enjoyed a mutually advantageous 15-year relationship with the Premier League. The renaissance of English football has largely been paid for with Sky's cash. Toby Syfret was asked to comment on the bidding process. He said: "It is not clear why the Premier League had to close the bidding for three packages after the first round. The main result of doing so is that Sky is now in a very strong position to get what it wants from the remaining three packages. With three safely in the bag and knowing what it cost to win them, Sky has an advantage over its rivals for the three remaining packages.".

Forecasting one of the largest losses ever made by a British private company (Phone group 3 likely to reveal loss of £1.5bn), The Sunday Times predicted that Hutchison Whampoa's British subsidiary, 3, will report a loss of close to £1.5 billion when it files its 2004 results and warned: "The deluge of red ink reflects the heavy costs of 3 challenging the more established network operators Vodafone, O2, Orange and T-Mobile, and puts a question mark over Hutchison’s original plans to float the company". Specifically, the article rounded on 3's unfulfilled plans such as the flotation of its Italian mobile phone business, 3 Italia, shelved earlier in the year. James Barford was asked for his view. He said that the recent disappointing results and 'broken promises' made it less likely that Hutchison would be able to float its Italian business. Hutchison had hoped to float 3 Italia early this year, and then to follow that with a flotation of 3 UK. However, it had to shelve the Italian flotation when it became clear that investors were not prepared to accept its valuation of the business, originally well in excess of €10 billion (£6.9 billion). Furthermore, James Barford pointed out that 3 had failed to deliver on three 'promises' that it made last August. Second-half customer numbers were lower, not higher, than in the first half of 2005 and the cost of acquiring customers increased rather than fell. 3 did not achieve its aim of being profitable on an underlying month-by-month basis during the second half, he added.

Overall, James Barford noted, the 3 group as a whole “lost €1.1 billion (£760m) in the second half of the year, on revenues of €2.2 billion, a rather frightening minus 49% Ebitda margin. Add in capital expenditure, and the second-half cash burn amounts to €1.8 billion. The company is clearly nowhere near profitability, on an underlying basis or otherwise.” 3 UK had become less aggressive about acquiring customers in recent months, and had increased some tariffs. “It’s likely that they could go into a slow-death situation, where they plod on for months and years, with a lower cash burn but little growth,” he concluded.

Predicting that Carphone Warehouse would unleash a broadband price war by offering 'free' high-speed internet access so long as people sign up to its landline telephone service (Carphone unleashes broadband price war), the Financial Times suggested that increased competition could spark consolidation among smaller broadband providers or a painful shake-out in the industry. Ian Watt, senior telecoms analyst at Enders Analysis, was asked for his view. “There are going to be a lot of smaller players who are just going to die on their feet”, he said.

Dissecting the takeover of Virgin Mobile by NTL (Fabulous four-play: NTL's takeover of Virgin Mobile could give the cable company a much-needed edge over its competitors. But do customers really want convergence?), the Guardian questioned the feasibility of the merger. The article asked: Will grafting on the Virgin name and adding mobile be enough to win customers from BT and BskyB? According to Enders Analysis, selling quadruple-play contracts is a hard task, as shown by the lacklustre response to a recent marketing push along the same lines by US telecoms and mobile firm Verizon. The four-play concept is "pretty suspect", Enders reckons. "Mobile and fixed purchasing decisions tend to be unrelated - a customer buys NTL services when they move house or wish to upgrade their TV and/or broadband service. A new mobile is bought typically when the old one is perceived to be obsolete. Persuading a customer to bring these decisions together is difficult in practice, particularly given the high proportion of pre-pay users in the Virgin Mobile customer base," the consultancy said.

Commenting on Vodafone's wide ranging reorganisation (Vodafone makes a U-turn on strategy), the FT claimed that the mobile operator has had to reappraise its sole focus on wireless technology and is now pursuing a strategy adopted by rivals such as France Télécom, the owner of Orange, creating three business units, including a division responsible for finding revenues from new 'converged' services emerging from internet technology. This has led to speculation that Vodafone could make acquisitions of fixed-line operators such as BT, although the company played down the idea, signalling instead that it would take a more 'infrastructure-lite' approach by using access arrangements, alliances and partnerships. James Barford was asked for his view. He said: "They’re all doing it because it looks good on a strategy slide, but consumers are not interested in those type of converged services. Mobile and fixed-line buying habits are different", he warned.

Following the broadcaster's rejection of the revised bid from Greg Dyke's private equity consortium of Apax Partners, Blackstone Group and Goldman Sachs (What's next in ITV's programme?), the Sunday Telegraph leant heavily on research published by Enders Analysis underlying the collapse of advertising revenue. Figures supplied by Toby Syfret, media analyst, suggests that ITV1's weighted share of commercial impacts (SOCI), a key indicator of the number of people watching commercials, will fall by between 5 and 10 per cent this year if current trends continue.

The bid for ITV by a private equity consortium met with some scepticism, according to the Financial Times (Dyke's bid for ITV is in need of 'sweetening'). ITV is understood to have told the consortium, before talks collapsed, that it could only support the proposal if it guaranteed a cash exit for those shareholders who were unwilling to remain investors alongside the consortium. Claire Enders was asked for her view. She said: "In its current form, I think there is no chance of this going through. There is, I suspect, a misunderstanding among the bidders as to exactly how much concern there is about the management of ITV and a misunderstanding of the attractions of Greg Dyke to the financial community.".

Claire Enders was asked for her view on the boardroom controversy following the publication of an open letter written by Sir Christopher Gent, justifying his resignation as honorary life president of Vodafone (Gent’s departure fails to clear the air at Vodafone) and denying rumours suggesting he had interfered with the direction of the company's strategy. In welcoming Sir Christopher’s departure and the move by Arun Sarin, the chief executive, to tighten his grip on the company, she said: “This will allow the company to move forward to address the issues that need to be addressed.”.

Following the removal of Vodafone's marketing director, and mounting speculation on the future direction of the company's marketing strategy, James Barford was asked to comment on the consequent threat to Vodafone's market share (Firm’s woes are signal for rivals to make up ground). He said: “Vodafone has been aggressive recently on acquiring subscribers as it concentrates on 3G. It would be sensible if the new marketing plan puts the focus more on pushing-up voice and text revenues rather than grabbing customers. While the market shares of the various mobile operators are not about to change overnight, it could ease the pressure for rivals.”.

Interviewed by the Sunday Times (Focus: Has this man bitten off more than he can chew?), telecoms analyst Ian Watt commented on the sudden departure of C&W's CEO Francesco Caio and the company's ill-judged forecast of future earnings that wiped £700m from its its market value. He said “It was pretty hair-raising. They have a way of explaining things that scares the hell out of people. Bulldog is burning cash as it expands. Short term it sounded absolutely horrendous.”

In an article published by the Sunday Telegraph (Poor reception? It must be Vodafone), James Barford was asked for his views on Vodafone's stagnating fortunes, and particularly the threat posed by its leading competitor, O2. He said: "In Europe Vodafone is facing slower growth and weaker margins. That is not a good combination. They are blaming external factors but there are internal factors as well. O2 operates in two of Vodafone's major European markets and it seems to be doing very well." In drawing attention to Vodafone's problems in Europe, James claimed that "Vodafone's needlessly aggressive subscriber market share approach, and its expensive obsession with 3G" were fundamental causes.

In an article by Paul Durman published on 8th January 2006 (Bond hears Vodafone gripes), which highlighted the concern of investors worried by the weak performance of Vodafone’s shares since Arun Sarin took over as CEO, Enders Analysis was singled out for its stated belief that Vodafone will struggle to turn round its Japanese subsidiary and stabilise its falling profit margins as it seeks to move its customers on to 'third generation' handsets. With 11m customers still on the old PDC network, this could cost more than £2 billion, in addition to the £1 billion a year Vodafone is spending on improving its 3G network.

Recent research by Enders Analysis into Europe’s leading brand advertisers’ attitudes towards the internet was cited by various newspapers. The Financial Times (Broadband’s advance helps web to net £1bn of advertising) reported: “According to another survey by Enders Analysis for the European Interactive Advertising Association, more than 80 per cent of large corporate advertisers noted the importance of the internet as part of their overall advertising strategy”. The FT article refers to our finding that, although the internet is now used to achieve a broad range of marketing objectives, the growth in internet ad spend as a proportion of the total is still relatively modest. Marketing Week (Online increasingly important to European Advertisers’ – Study) agreed with our conclusion that, although rising broadband penetration is making the internet more attractive as a branding medium, it is search which is capturing much of the increase in spend. Also quoting from our analysis (Branded content favoured by advertisers), New Media Age noted that a perceived lack of sophisticated market research tools and measures is holding back more rapid exploitation of the medium by leading advertisers.

Financial Times, 10 October 2005
New Media Age, 6 October 2005
Marketing Week, 5 October 2005

Claire Enders was cited in an article by Andrew Murray-Watson (Sky declares war on cable firms with Easynet takeover), stating: "A takeover of a broadband provider is Sky declaring nuclear war on the cable companies." She said such a takeover would "future proof" Sky against the long-term prospect of TV being broadcast over the internet. The next generation of its Sky Plus personal video recorder will have a broadband connection.

Claire Enders was quoted in an article on the NTL takeover of Telewest (Multi-channel, multi-problem). The article cited the views of Simon Duffy, future head of the new merged cable operator, on the possible strategies that could be adopted to compete more effectively against leading satellite pay-TV operator BSkyB and also Freeview, the free-to-air digital terrestrial TV platform. Commenting on the issue, Claire Enders suggested that, rather than tearing chunks out of each other, Sky and NTL should unite in the face of the challenge from Freeview. To that end, Claire said it would not be bad for NTL if Duffy agrees to sell a stake in Flextech to British Sky Broadcasting, the owner of Sky.

Claire Enders was quoted in an article on BSkyB (Satellite group falls under the radar). The article, by media correspondant Emiko Terazano, concerned the new priorities being set by BSkyB management. BSkyB says it is shifting its focus from short-term operating issues such as churn and average revenue per user to profit margins growth and cash flow. This probably reflects strategy at News Corp, say analysts. “News Corp needs BSkyB to be a dividend machine. They’re really not interested in growth for growth’s sake”, says Claire Enders of Enders Analysis, the media research group.

The article BBC to subsidise transition to digital TV referred to the Government's plans to subsidise the transition to digital TV for the more vulnerable segments of the population - the elderly, the disabled and the poor - in order for the analogue switch-off date of 2012 to be met. The article cited the Enders Analysis estimate of £865 million for associated costs (Freeview set-top boxes, assistance with installation, aerial upgrades) including marketing.

The conclusions of our report, UK Mobile Consumer Trends [2005-09], were highlighted in a Sunday Times article Mobile phone numbers just don’t ring true, which reported: “A survey commissioned by Enders Analysis, a research firm, found the proportion of adults with a mobile is wildly at odds with figures reported by Vodafone, Orange, O2, T-Mobile and other operators.” James Barford, our mobile analyst, commented that “millions of phones are abandoned in drawers and essentially unused. Some are retained on company books because they occasionally receive a text message or a 'wrong number' call. …the number of these 'barely active' phones has grown sharply in the past year because of the accelerated pace of handset upgrades.”

The article also highlights the report’s conclusion of customer loyalty problems at 3. James commented “These findings suggested that the customer-service problems that accompanied 3’s launch had not gone”. The article also reported: “Enders estimates that underlying customer 'churn' at 3 is running at more than 60% — much higher than at its rivals. Its report stated: “Churn at this level will both delay their break-even profitability by many years and choke off their rapid subscriber growth as their gross additions replace churned customers rather than increase the base.””

James Barford, our head of mobile telecoms research, was cited in the cover story of the May 2005 edition of the trade publication Total Telecom. In an article entitled No frills, which examined the threat posed to existing mobile network operators by MVNOs, James commented: “EasyMobile's 15 pence a minute standard rate (from June) will only be around 10% cheaper than its competitor Virgin Mobile for users spending less than £10 a month. Their standard prices will offer only minor savings and do not even appear cheap given that other operators can boast lower headline rates”. James was also quoted as saying “EasyMobile could struggle to succeed in Europe's larger markets with the same low-cost model that worked for Telmore in Denmark. Like easyMobile, Telmore adopted a SIM-only offer and encouraged users to manage their accounts over the Internet. The company achieved a 10% market share in four years. Telmore launched with a much clearer pricing advantage (helped by mandated low airtime and termination rates)... and it gained a consumer champion image in a consumerist culture. This situation is unlikely to be repeated in any of the larger European markets." The article also included a chart showing a price comparison of Virgin and Easy mobile sourced to Enders Analysis.

Chris Goodall’s analysis of the costs of analogue switch-off was covered in the Financial Times of 12th February. Chris commented that the old and vulnerable would pay a disproportionate share, and that as yet the government had not properly quantified the costs.

Attending the 2005 Oxford Media Convention to speak on the subject of Digital Switchover, Enders Analysis Principal Chris Goodall was widely quoted in an article entitled "Poor will bear brunt of Blair's digital revolution". Chris described the forced switchover to digital - now expected to take place in 2012 - as "an illiberal policy" that would cost far more than the government had admitted, hitting the poor and vulnerable. In particular, he believed that the price of the broadcasting revolution would rise to almost £7bn over the course of the next 20 years and that some £3.5bn of the cost (would be) attributable to consumers' electricity bills because of the increased energy demands of set-top boxes. In his presentation, Chris revealed that many of the set-top boxes are not compliant with the European Union energy codes and consume far more electricity than viewers might expect. Furthermore, Chris explained that people living in flats would also be hit hard by the need to upgrade television aerials when the government turns off the analogue broadcasting network: the cost of installing or upgrading aerials for households that presently have inadequate devices for digital reception would be £865m. He added that about 1% of homes may not be able to receive digital television unless satellite aerials were supplied, and around 12% would require new aerials.

In an article which queried the ambition of the Post Office to compete in fixed line telephone services - City dismisses the Post Office as a phone operator - Ian Watt, our fixed line analyst commented, “Though players like Carphone have managed to accrue large numbers of customers within that kind of timeframe it has the advantage of proven telecoms experience and specialist, motivated staff. The residential fixed line market is very crowded and, as far better retailers like Tesco have tried and found it difficult to achieve traction, the Post Office will struggle.”

Following the publication of our report, Hutchison 3G - Predicting the Fall [2004-43], James Barford, our mobile telecoms analyst, found a further outlet for his viewpoint in an article entitled: Are the figures adding up for 3? Hutchison is trying to groom its 3G company for a float, which maintained that Enders Analysis, the independent telecoms research company, argues that Hutchison will have to spend a further 'eye-watering' €19bn (£13bn) to get 3 in a cashflow break-even position - where the company is generating enough cash to be self-funding - by 2012. James commented: "We doubt the IPO will be successful. The most likely outcome in our view is that 3 continues on its current course through most of 2005 at least. But as churn [customer turnover] kicks in and it becomes clear that a vast amount of further cash is still required to drive 3 in the UK and Italy to a 15 to 20 per cent market share, we believe the company will act to preserve cash and that it will become less aggressive in subscriber acquisition. This is likely to condemn the operation to a slow death."

James Barford, our mobile telecoms analyst, was cited on the prospects for MMO2 in Sunday Telegraph article entitled MMO2 is not a feeble creature waiting to be gobbled up any more. James said: "MMO2 has been good at targeting specific customer segments, where perhaps it was weak before. You have to give management credit for that, even though it can't be done forever."

The report on LLU in the UK II, by Ian Watt and Alice Enders, was cited by Simon Duffy, CEO of NTL, as follows:
"If all of you want to understand this [LLU] a bit better, for those of you who don't already subscribe to the service by Enders Analysis I recommend that you get it, because yesterday they put out a very good article on precisely this subject - about local loop economics."

Creative Business, the FT’s media and telecoms supplement, carried an article by Chris Goodall on 10th August 2004. In the article, Chris looked at Ofcom’s performance over the first months of its existence and praised the regulator for its professionalism and hard work.

In the wake of the BBC's announcement that it would close five websites considered as too commercial, a number of news sources cited Chris Goodall's independent analysis of the impact of the BBC's Internet operations on commercial sites. Chris found that the BBC-commissioned KPMG report (Performance against Consent) had vastly underestimated these costs. His figures suggest that the BBC costs between £15 million and £25 million in lost advertising and makes it difficult for online subscriptions to develop.

The research done by Alice Enders on the reasons behind the steep fall in BT's share of the retail DSL market was cited by BBC Online. Alice noted the regulatory shackles on BT as the principal reason why it was unable to compete on price against other ISPs. The Guardian Online also picked up on the story after BT's retail price declines (30th June).

Les Echos carried an article on the 27th of May on Fastweb, the Italian company that is the leading unbundler in Europe, citing François Godard. He noted that Telecom Italia preferred to face the service-based competition from Fastweb rather than a slew of altnets offering cut-price DSL connections, which is the situation in France.

Creative Business, the FT’s media and communications supplement, carried an article in its 11th May edition about our regular handset survey. The article, written by Chris Goodall, commented on Nokia’s failure to keep the loyalty of young fashion-conscious consumers.

Fortune Magazine quoted us in its May 12th edition in its article on the music industry. "All the chickens are coming home to roost at the same time," says media analyst Claire Enders. "This industry has never been faced with such cataclysmic conditions before. It has no roadmap on how to cope with them." Enders Analysis believes that chickens coming home to roost probably do not need a roadmap, but otherwise sees the accuracy of Fortune’s comment.

The UK’s Sunday Times credited Enders Analysis data in an article on camera phones. The 26th January 2003 edition gives figures for camera phone sales in Britain and includes data on consumers’ intentions to purchase. The numbers were taken from UK Handset Sales (Ref 2002-60).

Claire Enders was featured on the BBC TV programme on EMI Music on November 27th. She spoke about the reasons why EMI decided to buy Virgin Records. During the nineties, Claire worked for the Chief Executive and Finance Director of EMI on business strategy and corporate development.

The Financial Times of November 26th carried an article by Professor Paul Klemperer, the auction theorist behind the UK government's 3G auctions. Chris Goodall and James Barford of Enders Analysis provided Professor Klemperer with the data on the loss of market value by large telecoms companies since the auction contained in the article.

The British Museum's Jade Galleries are reopening after refurbishment on 12th November 2002. Enders Analysis is pleased to have financially supported the work through its programme of charitable giving. Most Enders Analysis donations are made to smaller artistic and musical charities in the Edinburgh and Fife areas, where the company has its administrative base, but the refurbishment of the Jade galleries represented an exceptional opportunity to support public access to a truly unique collection of Chinese art.

Enders Analysis was quoted in the Financial Times on the subject of games playing via digital TV. 'Inside Track', a regular feature of the newspaper, quoted a figure from one our 2001 reports on the levels of participation in simple games. (27th October 2002)