Publications

Format: Jun 2019
Sector(s) Datesort ascending
Disney gets the final piece of Hulu

Disney announced that it would acquire Comcast’s 33% share of Hulu in a put/call agreement that can be enacted by either party from January 2024, while taking full operational control of the vehicle immediately

Under the agreement Disney will pay Comcast a minimum of $9 billion for its current stake, provided Comcast fulfils agreed capital calls, which going forward would be just over $500 million/year

Disney secured the continued licensing of NBCUniversal content for Hulu, contributing about 30% of Hulu’s library, but Comcast can loosen obligations to Hulu for the launch of its own SVOD service in 2020

  • 21st Century Fox
  • Comcast
  • Sky
  • Walt Disney
Non-UK Media, Media, TV 15 May 2019
Facebook doubles down on advertising

After the most challenging period in its history since 2012, Facebook has been able to stabilise its fundamental metrics and announce a major product overhaul

Despite talk of a business model pivot, Facebook’s focus remains on advertising, whose growth will remain concentrated in developed markets

News publishers wishing to stay relevant on the upgraded product set need to target exclusive layers of social interaction, with groups particularly important

  • Apple
  • Facebook
  • Google
Media, Technology 9 May 2019
Sky Q1 2019 results: weak ARPU hits bottom line

Sky made a surprisingly weak start to 2019, with revenue growth decelerating to 1.9% (the first time below 4% since the European businesses merged in 2015), due to weaker ARPU trends

However, Sky expects improvement to follow, blaming one-off factors in the quarter. The ARPU weakness drove EBITDA down 11.3%, but this should bounce back across the rest of 2019 as football rights costs turn from a drag to a positive

Comcast highlighted collaborations with Sky across tech, advertising, content distribution and even news, stating it is on track to achieve the anticipated $500 million in annual synergies over the next couple of years

  • Sky
  • Sky Deutschland
  • Sky Italia
Media, Telecoms, TV 8 May 2019
Online media monetisation: When free costs too much

The commercial challenges for media online are well-documented: online advertising pays for utilities such as search and social networking many times over, but not for media beyond user-generated content and low-investment journalism

There are also costs from a user perspective: wasted time, harmful content created to attract views, and the collection, sale, use and frequent leakage to criminals of personal data

Different sectors have found varying success with alternatives: games, video and music are attracting user payments, driving the paid online economy up 15.5% to £8.2 billion in 2018

Media 1 May 2019
Disney+ and Hulu - a flexible pitch to consumers

Disney now controls third-party content aggregator Hulu, which has 25 million subscribers in the US. Ramped up by Fox content, Hulu’s operating losses are expected to peak in FY2019 at $1.5 billion, with profits by FY2023 or FY2024 

Serving only Disney content, Disney+ launches in the US at the low price of $6.99/month this November, and in 2020 in Europe and Asia Pacific in 2021, aiming to reach the challenging goal of 60-90 million subscribers in five years

ESPN+, Hulu, Disney+ combined could contribute 13% of Disney’s revenues by 2024, which does not intend to disturb existing channels and windows for catalogue and new content, aside from withdrawing content from Netflix

  • 21st Century Fox
  • Walt Disney
Media, Telecoms 30 April 2019
The new lifespan of TV content: wearing out more quickly

The economic model of TV production relies upon a vibrant market for back catalogue content; programming that has traditionally driven the desirability of many linear channels and slots

New release strategies, along with the hyper-concentrated viewing encouraged by video-on-demand and the round-the-clock availability of shows calls the longevity of the value of content into question

Our analysis suggests that programmes that previously would be leisurely distributed through broadcast could now feasibly be “worn out” more quickly. This could have ramifications for the whole sector, with more content investment required “upfront” and new financial and distribution models required

  • Amazon
  • BBC
  • Channel 4
  • ITV
  • Netflix
Media, TV, UK Media 29 April 2019
Out of home: opportunities and threats crowd the doorway

Out of Home (OOH) is bucking the trend in UK traditional media and continues to grow, driven by the digitisation of inventory as the paper estate recedes

Digital OOH now accounts for 50% of total OOH ad spend. Soon digitisation will slow, as much OOH inventory cannot be converted from posters to digital screens; sustained growth will require a different form of change

The industry is amidst structural shift – driven by consolidation and automation – which could be wholly positive, but a lack of cooperation between major players risks stifling innovation and the medium’s growth

  • Google
Media, Technology 23 April 2019
5G to change the shape of UK mobile

The capacity boost with 5G will be more important than any speed or latency uplift. We estimate a 7-fold increase in mobile capacity in the UK and 13x+ for O2 and H3G

We view fixed mobile substitution products as quite niche although the number of mobile-only households is likely to creep up. mmWave would have the capacity to substitute for fixed but has many hurdles to overcome

Capacity-constraints have tempered competition of late and their removal risks an increase in intensity, especially as H3G views itself as sub-scale – good for policy makers but another challenge to add to the industry’s woes
 

  • BT
  • EE
  • Huawei
  • Hutchison 3G
  • O2
  • Vodafone
Telecoms 16 April 2019
Google and game streaming: double or quits

Google’s Stadia promises the most credible game streaming service yet, but building a subscription bundle of top titles would require an all-out bet in the sector

Google is building its own game studios – to win over others it must overcome a troubled history in gaming, mitigating risks to developer business models and creative integrity

Games are much more technically demanding to stream than video, presenting an advantage to Google, Microsoft and Amazon – and a boost to telecoms network demand, welcomed by operators

  • Amazon
  • Google
  • Microsoft
  • Sony
  • YouTube
Media, Technology, Telecoms 11 April 2019
The North heads south: European mobile in Q4 2018

European mobile service revenue growth dropped to -1.3% – its lowest level in three years – particularly disappointing as growth should be bouncing back post-EU roaming tariff cuts

Having enjoyed relatively favourable dynamics in 2018, the UK and Germany are facing marked changes in momentum from here

Regulation limiting intra-EU call prices could hit hard – up to 6% of revenues and 20% of EBITDA in the UK, although other EU countries may be less exposed due to lower tariffs currently

  • BT
  • Huawei
  • Hutchison 3G
  • Iliad
  • O2
  • T-Mobile
  • Telefonica
Non-UK Telecoms, Telecoms 4 April 2019
Apple’s showtime: everybody gets a service, partners get pennies

Apple is strengthening its household model by doubling down on family-friendly content subscriptions and payments

The model is reliant on hard bargains with mainly US partners, which risks sacrificing potential scale for a short-term boost in margin dollars

The new services offer glimpses of novel concepts, but stop short of taking risks to truly differentiate—a problem in TV, where Apple’s distribution advantage is slimmer than Oprah would have it

  • Apple
Media, Technology, Telecoms, TV 3 April 2019
BBC Studios and Discovery: a new SVOD and the UKTV split

The split of UKTV has been announced with the lifestyle channels going to Discovery, while the balance, along with the UKTV brand and VOD service, retained by the BBC, costing BBC Studios £173 million

In the same release, a new, global Discovery SVOD “powered” by BBC natural history and factual programming was announced, backed by a ten-year content partnership

The deal is a positive step for the BBC, which safeguards against flaky brand attribution internationally and the potential loss of revenues from Netflix, which is becoming more choosy when acquiring content

  • BBC
  • Discovery
Media, TV, UK Media 2 April 2019
Media and Telecoms 2019 & Beyond Conference Part 2 – Panel Transcripts

Part 2 of our Conference Report provides edited transcripts of the panel discussions.  

Video highlights of these sessions are available on the conference website. 
 
This invitation-only conference was a highly informative and stimulating day, seeing over 450 senior attendees come together to hear some of the world’s leading media and communications executives describe and debate the forces shaping their businesses. The conference featured thought-provoking discussion panels focused on the disruptive impact of digital video, media strategies for news publishers and the key trends in telecoms.

Media, Telecoms 29 March 2019
Media & Telecoms 2019 & Beyond conference Part 1 – Speaker Transcripts

On 7 March 2019 Enders Analysis co-hosted the annual Media & Telecoms 2019 & Beyond conference with Deloitte, sponsored by Afiniti, Barclays, and Linklaters. 

Back again for his third year running, former Channel 4 Chief Executive David Abraham chaired the conference.

With a stellar speaker line up, this invitation-only conference was a highly informative and stimulating day. The conference saw over 450 senior attendees come together to hear some of the world’s leading media and communications executives describe and debate the forces shaping their businesses.  

This report provides edited transcripts of the keynote speaker presentations.

Media, Telecoms 29 March 2019
UK broadband, telephony and pay TV trends Q4 2018 - High speed accelerates, but pricing under pressure

Market revenue growth accelerated to 3% in Q4, but it might never reach this level again, being helped by a never-to-be-repeated BT overlapping price rise

With price rises becoming more challenging in general, and superfast pricing under pressure in particular, maintaining/increasing ARPUs is becoming more difficult despite superfast volumes surging

Openreach’s ultrafast roll-out has accelerated, challenging Virgin Media and bringing the prospect of further price premia, but perhaps too late to be of significant benefit in 2019

  • BT
  • Sky
  • TalkTalk
  • Virgin Media
  • Vodafone
Media, Telecoms 28 March 2019
UK mobile market Q4 2018: Headwinds gathering for 2019

Following record growth last quarter, the UK mobile market took a step down to just 0.9% growth in the quarter to December on the back of increasing pressure in the business market and the impact of out-of-bundle limits

2019 looks set to be a tough year for the sector with: a series of potentially painful regulatory hits; markedly lower price rises than last year; and early signs of a degree of creeping competitive intensity

We view 5G as a much-needed means of expanding capacity in the sector with upsides from M2M and IoT likely to remain relatively small

  • BT
  • EE
  • Huawei
  • Hutchison 3G
  • O2
  • Vodafone
Telecoms 26 March 2019
BritBox’s muted arrival: ITV FY 2018 results

After the heights that Love Island and the World Cup took ITV to in H1, the broadcaster held on over the tougher last few months of 2018 to see growth in ad revenue (0.8%) and total viewing (linear and VOD, 3%)

However, it was the announcement of the subscription video service BritBox—with the discussions around the “strategic partnership” with the BBC in its concluding phase—that garnered most interest

ITV’s investment in the service is modest when compared to its global competitors—up to £25 million in 2019, £40 million in 2020 and declining thereafter—but it is a prudent low-risk entry into what is an expanding but difficult market

  • BBC
  • ITV
Media, Telecoms, TV, UK Media 18 March 2019
UK online advertising: Brexit year forecast and trends

UK online advertising spend continued its double-digit growth in 2018, up 11% to reach nearly £13bn in annual spend or 58% of the total advertising market, but a no-deal consumer downturn could nearly stop growth this year

Google, Facebook, Amazon, professional services firms and the largest marketing cloud companies are the biggest winners, while content media, media agencies and independent advertising technology firms languish 

Self-regulation has improved as pressure mounts on advertising technology firms, but interventions by both privacy and competition authorities are now inevitable

  • Amazon
  • Facebook
  • Google
Media 15 March 2019
Virgin Media: proceeding with caution as speed advantage comes under fire

After strong underlying 2018 results, the more subdued outlook for 2019 is an important shift, driven by regulatory pressure on mobile, higher programming costs, one-offs and softening demand

Lightning is continuing to drive market share gains in new build areas, and should provide a 2ppt tailwind to revenue growth in 2019, but enhanced visibility on the economics of rollout suggests that its conservative approach is a wise one

In existing build areas, Virgin Media is facing-off pricing pressure from TalkTalk on high speed, and potentially from BT on even higher ultrafast speeds, with it moderating pricing and launching a market-beating 500Mbps product in Spring 2019 in response

  • BT
  • Liberty Global
  • TalkTalk
  • Virgin Media
Telecoms 14 March 2019
Huawei and 5G: Identifying the risks

Governments and operators have come under increasing pressure to exclude Huawei’s 5G equipment from national networks, with justifications usually kept vague and wide-ranging rather than specific, and no evidence provided

Given the role of Huawei’s 5G equipment in the network and the extent of existing testing and checking, realistic security risks that apply to Huawei and not to all other equipment suppliers are hard to conceive

The risks of any ban are however very real; with Huawei one of only three global-scale telecoms equipment suppliers, and the preferred early choice for 5G radio equipment in the UK, removing this choice will massively increase costs and delay roll-outs of cutting-edge connectivity

  • BT
  • Nokia
  • O2
Media, Telecoms 7 March 2019

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