Publications

Format: Apr 2015
Sector(s) Datesort ascending
Media & Telecoms: 2015 & Beyond slides

Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides the accompanying slides for some of the presentations.

Videos of the presentations are available on the conference website.

  • BBC
  • Bertelsmann
  • BT
  • ITV
  • Liberty Global
  • NBC Universal
  • O2
  • Sky
  • TalkTalk
  • Telefonica
  • Trinity Mirror
  • Vivendi
Fixed Line, Non-UK Media, Non-UK Telecoms, Internet, Media, Mobile, Non UK Media, Technology, Telecoms, TV, UK Media 27 April 2015
Media & Telecoms: 2015 & Beyond

Enders Analysis co-hosted its annual conference, in conjunction with BNP Paribas and Deloitte, in London on 17 March 2015. The event featured talks from 13 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. This report provides edited transcripts from some of the talks, and you will find accompanying slides for many of the presentations here.

Videos of the presentations are available on the conference website.

  • BBC
  • Bertelsmann
  • BT
  • ITV
  • Liberty Global
  • NBC Universal
  • O2
  • Sky
  • TalkTalk
  • Telefonica
  • Trinity Mirror
  • Vivendi
Fixed Line, Non-UK Media, Non-UK Telecoms, Internet, Media, Mobile, Non UK Media, Technology, Telecoms, TV, UK Media 27 April 2015
Sky plc off to a good start - Q3 2015 results

Sky plc has produced a strong first quarter across its three markets in terms of subscriber growth, record low churn and continuing firm control over costs, which has contributed to a 5% increase in revenues and 20% increase in operating profit over the first nine months of fiscal 2015

As expected, practically all the retail customer growth in Q3 occurred in the UK & Ireland and in Germany & Austria. Nevertheless, the results were also positive in Italy, as it registered the highest net customer increase in 3 years and record low churn

It is still too early to judge the success of the Sky plc strategy in terms of synergies, innovation and content origination. Whilst the potential appears great, the imminence of the next Bundesliga auction is a reminder that the issue of sports rights inflation is unlikely to disappear even after the latest PL auction

  • Sky
  • Sky Deutschland
  • Sky Italia
Fixed Line, Media, Telecoms, TV 24 April 2015
GE 2015 update: Election and government outcomes

There are still two and a half weeks of the campaign to go before polling day, but postal votes are already being sent out to voters and many have already made up their minds. We believe there is now a small range of likely seat outcomes, and therefore possible governments.

Our central case sees the two main parties almost level on seats, resulting in a Labour minority government dependent on the support of the SNP and its allies (the Greens and Plaid Cymru). Slightly different outcomes are also possible, depending on the final size of the swing from the Conservatives to Labour in England and Wales, over which there is still considerable uncertainty. If Labour does worse than we expect, it could require the votes of the Lib Dems as well as the SNP; if it does better, it could require only Lib Dem votes.

The upside case for the Conservatives is now that they win enough seats to make a minority government dependent on the support of the Lib Dems, DUP and UKIP possible. We think that scenario is now unlikely, but even if it were to occur, we think it would be very challenging to both knit those parties together and persuade the parliamentary Conservative party that its interests are best served by doing so. For these reasons, we think a government led by the Conservatives can now be all but ruled out.

Media, Public Policy, Technology, Telecoms 20 April 2015
Free-to-air TV business models

Prospects for European free-to-air commercial broadcasters are clouded by a weak advertising recovery, decline in TV set viewing by younger age groups and increased competition from pay-TV and international operators

Growth opportunities are nevertheless to be found in fine tuning families of channels to sustain audience shares, increased production of differentiating original content, wider HD and catch-up programmes distribution and smart pay-TV developments – broadcasters must focus on strengthening the quality gap between the TV set experience and online entertainment

ITV has shown the greatest increase in profitability, benefitting from its global production strategy. RTL and ProSiebenSat.1 have a modest upside from carriage fees for HD channels but production and pay-TV initiatives have yet to pay off. TF1 and M6 have withdrawn from pay-TV and face regulatory obstacles to launching channels and production investments. Mediaset in Italy should benefit from the ad market stabilising, but risks large pay-TV losses. In Spain, Mediaset and Atresmedia enjoy an ad boom

  • Canal Plus
  • Channel 4
  • Five
  • ITV
  • Sky
  • Sky Deutschland
  • Sky Italia
  • Telefonica
  • Vivendi
Media, Non UK Media, TV 20 April 2015
Local media: new structures emerging

Local newspaper circulation continues to decline precipitously, while decline in some categories of print advertising has slowed marginally.

Digital traffic exploded in 2014, however, substantially outperforming the market generally, resulting in signs of stabilisation across print and digital in some marketing categories, notably recruitment and pockets of display.

Industry leaders have moved beyond cost-cutting and are no longer reproducing their print products online: local platform solutions, and strategic technology and business partnerships, mean fundamentally different companies are emerging in local media.

Internet, Media, Press 16 April 2015
European mobile in Q4 2014: The recovery continues

European mobile service revenue growth improved for a fourth consecutive quarter jumping 1.7ppts to -2.7%, the slowest rate of decline in over three years. Easing declines in France, Italy and Spain largely drove the improvement but a full recovery in these markets is still some way away given that all of their growth rates remain below -5%. The UK, and now Germany, are experiencing positive mobile service revenue growth although their improvements in the quarter were more modest

Three announced consolidation transactions have yet to be approved by the regulators although none of these deals are likely to offer much market repair, being either of the wrong kind of deal or being in markets that are growing. Consolidation targets remain in France, Italy and Spain which offer clearer routes to market recovery as seen in Germany where the consolidation of O2/E-Plus has already led to positive rhetoric on medium term market growth prospects

Network investment continues with 4G roll-outs at or over 70% population coverage in all markets and targets being accelerated, supporting long term optimism in the sector. Strong data traffic growth coupled with the growing importance of data to service revenue give a clear focus for operators on value-adding network quality investment, although the impact of pricing competition in some markets could weigh on the ability to capitalise on these trends in the medium term

  • EE
  • Hutchison 3G
  • Iliad
  • Orange
  • SFR
  • T-Mobile
  • Telefonica
  • Vodafone
Telecoms 13 April 2015
Radio – set for a digital future?

Radio’s transition from analogue to digital has been slow, with no switchover date yet in sight 16 years after Digital Audio Broadcasting’s (DAB) commercial launch

Recent initiatives intended to boost DAB are welcome, but most will not be transformatory as they offer little new to the consumer

However, the award of the second national commercial multiplex to Sound Digital with the launch of new, compelling content in 2016 could finally give radio listeners the reason to upgrade and make a case for switchover

Music and Radio, Media 30 March 2015
BT Mobile goes fourth

BT announced this week its fourth launch of consumer mobile, following three failures since it split from O2 in 2001

The product is SIM-only, low-end priced and lacks any ‘convergent’ features as yet, but is well structured to target those likely to take a BT mobile service in our view

While its ambitions may be modest, take-up may well be higher than its over-ambitious over-complicated predecessors, as well as giving BT experience in cross-selling mobile prior to its EE acquisition

  • BT
Mobile, Telecoms 26 March 2015
UK quarterly internet trends Q4 2014

During 2014, the PC finally lost its crown as the main device for accessing the internet: for the first time, aggregate usage on mobile devices accounted for more than half of all time spent online.

Two thirds of people now have a smartphone, which is becoming the main method for getting online, while tablet penetration appears to be flattening out and the PC internet audience is in decline.

Mobile monetisation still lags that of the PC but the gap is shrinking: smartphones and tablets generated 40% of e-retail sales in Q4 and across the year ads on mobile devices represented a quarter of internet search and display advertising with further strong growth ahead.

Telecoms, Technology, Internet, Media 24 March 2015
Auto Trader IPO: driving home advantage

Auto Trader’s long-touted IPO has valued the car sales platform at £2.4bn, 17x EBITDA, matching Zoopla multiples but substantially lower than Rightmove’s 23x Auto Trader is both the most successful print to digital transition – and has also built the widest moat of any specialist classified service – that we have seen, and not just in the UK The near term market for used cars in the UK looks quite buoyant. However, some signs of slowdown in Auto Trader usage and slower longer term growth in the used car market provides some uncertainty further out

Internet, Press, Media 23 March 2015
Apple Watch: the next must-have device?

Apple has provided more details on its smartwatch range, on sale from April, priced between $350-$17,000 to appeal to a wide range of would-be buyers and initially focusing on enhancing the iPhone through added convenience.

The Watch is likely to develop quickly in the next few years, and has the potential to become an indispensable tool for managing payments, health data and identity, as well as controlling other connected devices.

The company is laying the foundations for Watch to become a must-have device, but the case is still to be made and ultimately its success depends on a number of key groups and factors outside Apple’s control.

  • Apple
Mobile, Telecoms, Technology, Internet, Media 16 March 2015
GE 2015 update Scotland’s 57 SNP seats

Scotland could produce up to 57 SNP MPs (of a total of 59 seats in Scotland), up from 6 in 2010: from “How many seats to the SNP?”, the question now is “Which Scottish seats won’t the SNP win?”

Labour’s losses in Scotland could be more than offset by Con-to-Lab and Lib-to-Lab swings in England, leading to our estimate that Labour and the Conservatives will each garner ~270 seats, well short of the practical majority of 322 seats, producing a hung Parliament as the initial outcome of GE2015

A possible scenario for the emergence of a working government is a Labour minority government sustained by the SNP votes through a ‘confidence and supply’ agreement for major votes and issue-by-issue on other votes, a weak form of government

Media, Technology, Telecoms 12 March 2015
Football and the wider game

Although Sky’s bids might be seen as putting its majority ownership of PL rights beyond reach at the next auction in 2018, the contest between Sky and BT is by no means over, raising the question of further inflation of premium sports content as other rights come up for renewal

Sport may have lost much of the importance it once had in generating profits from pay-TV platforms; however, the record bids by Sky leave no doubt as to the continuing importance of premium sports, and especially PL football, in terms of building and retaining overall scale

Through placing less inflated bids than Sky and not winning any extra packages, BT has put itself in a more flexible position with regard to future strategic options, which includes (VULA permitting) competing for televised rights to other premium sports besides football

  • Virgin Media
  • Sky
  • BT
Telecoms, TV, Media 9 March 2015
PL auction over, regulatory questions remain

The record £1,712 million to be spent yearly on live TV rights to the PL from 2016/17, about equal to the entire BBC TV programming budget, has hammered home the continuing importance of premium sports, especially PL football, in cementing scale in pay-TV

Several regulatory processes are still in play that could influence market developments over the next few years. We expect Ofcom’s WMO remedy to continue in close to its present form, while the VULA margin squeeze sets significant restraints on BT Sport over rights payments

Although the Virgin Media complaint to Ofcom has raised genuine competition concerns over the design of the PL auction, which the regulator is investigating, we see little opportunity for significant intervention

  • Virgin Media
  • Sky
  • BT
TV, Media 6 March 2015
UK broadband, telephony and pay TV trends Q4 2014: Growth, investment and competition

The UK residential communications sector continues to be in rude health, with revenue growth in Q4 accelerating by 1ppt to 5.7%, the strongest it has been for years, with all of the operators enjoying an improvement. Volumes were strong, and ARPU even stronger, with the latter driving most of the revenue growth progress, driven by firm pricing and high speed broadband adoption

Growing revenues and profits in an industry tends to encourage both investment and competition, and this is certainly the case in the fixed telecoms market, as BT announced plans for higher speed services using G.fast and Virgin Media announced a 4 million premises network expansion. The timings suggest that Virgin Media will keep its edge; given historic trends and its network capabilities we expect it to be offering superior speeds to G.fast by the time G.fast hits the mass market

In competitive terms the biggest short term threat is EE, which is growing its broadband base at 15%, and may accelerate further in 2015. Its success appear to stem not so much from the raw appeal of ‘quad play’ bundling as improved performance in the mechanics of cross-selling from physical shops. EE itself may be less of a threat if its planned merger with BT is completed, but Vodafone is launching broadband services in the spring, and H3G/O2 may yet be encouraged into the market

  • Virgin Media
  • TalkTalk
  • Sky
  • BT
  • EE
Fixed Line, Telecoms 27 February 2015
Context is queen: the value of media environment

New evidence suggests brand owners and agencies have considerably different perceptions of how the digital marketing marketplace is performing.

The timing of these findings is critical, as digital display growth in the UK is far more advanced than in any major advertising market.

One of the perceived risks of a relatively narrow measurement provision is that media context is being diluted, with long term implications for the value of marketing inventory across all media.

Technology, Internet, Media 24 February 2015
Virgin Media Q4 2014 results: Growing and building

Virgin Media’s Q4 results were strong across all measures, with household, RGU and all product net adds accelerating, revenue accelerating, and OCF growth

As demand for high speed broadband grows, Virgin Media is benefiting by offering the fastest top speeds and by being the cheapest provider for speeds over 30Mbps

The company has announced a £3bn investment to extend its network by 4m premises, which may win it an extra 6% share of the broadband market at the expense of BT, Sky and TalkTalk

  • Virgin Media
Fixed Line, Telecoms 20 February 2015
Global recorded music 2015: Purchasing past its peak

Consumer expenditure on recorded music continued its decline in 2014 by about 6% to $18 billion, as purchasing of download-to-own (DTO) albums and singles passed its peak in 2013, adding to the ongoing decline in total sales of CDs that started a decade ago

Streaming is now the only growth story left for the industry, and it has a global footprint, being embraced by developed and emerging markets alike, unlike purchasing

The US phenomenon of rapidly rising revenues from ad-supported audio streaming services such as Pandora and music video streaming on YouTube is quite unique as other markets currently lack the potential for online advertising

  • Google
  • Vivendi
  • Apple
Technology, Media 18 February 2015
New phase for news trends

News has entered a new phase, defined by the disruptive forces of mobile, social media and video, effecting rapid changes in consumption and the underlying economics for news businesses: the level of change and innovation is rewiring the structure and financial models for news more quickly than many news providers are able to respond.

While charging for news looks to be a successful route for some brands, we note that the scale of charging for the industry is substantially smaller than in print. Apart from this, three models are gathering traction: selling audience engagement; selling news services; and selling news to businesses.

Each of these options involves very different strategies and opposing objectives which can only be pursued at the same time by those with the deepest pockets. Everyone else has to choose.

  • News Corp
  • DMGT
Internet, Press, Media 16 February 2015

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