Rapid diffusion of AI products is pressuring all media sectors to take a radical approach to content and IP management (beyond tried and trusted online strategies).

2026 will be a bumper year of AI spend by big tech. Capex growth may moderate in 2027 but with an enduring cumulative impact as AI agents approach the mainstream.

Broadcasters are ramping up activity on YouTube, and as the rules of tech platform distribution change, the industry works to solve content licensing for AI.

Broadband market revenue growth slightly worsened in Q4 to -1.4% as volume and ARPU pressures persist.

The altnet outlook remains highly uncertain with multiple developments pointing in different directions.

Continued market decline into 2026 is likely, with a coherent (and sustainable) altnet future likely to take some time to emerge.

ITV’s total revenue (£4.1 billion) was flat year-on-year, with growth from Studios balancing a drop from Media & Entertainment: advertising revenue ended 2025 down 5%.

Studios not only grew revenue (£2.1 billion, +5%) but was almost as profitable as the record-breaking 2024, with adjusted EBITA of £297 million. The domestic business remains strong, but US production is looking tough.

Overall engagement continues to fall (-5%) and although there is sizeable reach to be found on YouTube, viewing levels and completion rates markedly trail linear and ITVX.

Axel Springer has leapt in to acquire the Telegraph, offering £575 million all-cash, and upending DMGT's £500 million bid, amidst the ongoing PIIN process.

Securing the Telegraph realises Axel Springer's long cherished ambition to own a "flagship" British asset.

The Telegraph would gain something no previous owner could offer: existing US newsroom scale.

The cultural and social relevance of European broadcasting is in danger of being diluted.

Increasing pressure over the commercial free-to-air model threatens high-reach news delivery.

In-market mergers among European broadcasters may be necessary to reach the critical size to sustain high-quality, content-driven platforms.

Major labels have announced a slew of AI deals designed to shape nascent technology on their own terms, and so avoid repeating the mistakes of the early streaming era.

AI music startups will relaunch their services this year enforcing labels’ red lines on copyrighted music. The music industry’s material impact on AI products is in stark contrast to video and news industry engagement.

Google’s decade-long interest in AI music is moving into action with the launch of Lyria 3 and the acquisition of ProducerAI as a leading exponent of advanced, AI-enabled music creation—YouTube remains a sleeping giant.

VMO2 ended 2025 on a slowing note, with broadband still being hit by altnets and mobile impacted by negative publicity surrounding an October pricing change.

Guidance for 2026 at 3-5% declines for proforma service revenue and EBITDA looks bleak, driven by current momentum and various built-in technical factors, including wholesale payments to nexfibre.

We are not convinced that the agreed nexfibre /Netomnia deal is in any sense a panacea for VMO2’s issues, but there are other green shoots that could help the company back to growth beyond 2026.

Disney’s decision to license to OpenAI’s Sora is necessary to regain agency in a consumer ecosystem dominated by rampant unlicensed IP usage. The deal reflects an ongoing pattern of opportunistic, equity-driven deals by Disney in high-profile technology categories.

Movie and TV content owners’ ability to replicate similar deals to protect their IP assets is limited by vague engagement pathways and opaque or non-existent revenue sharing models combined with dealmaking constraints at AI operators, some of which are developed in China.

Even within the parameters of a deal, the ongoing risk of a public display of malfunctioning guardrails with licensed IP is real, as it is on non-licensed models. In-house AI expertise and stronger copyright compliance will require additional investment to ensure slippery usage is minimised.
 

VMO2/nexfibre has agreed to buy Netomnia, in a complex multi-party deal involving additional wholesale deal components between VMO2 and nexfibre which will leave nexfibre wholesaling 8 million premises to VMO2, or c.40% of VMO2’s overall footprint.

The purchasers are hopeful of an easy regulatory clearance, but we fear the process may be more protracted given the high overlap and removal of a major competitor.

The impact on VMO2 and other incumbent players is prima facie positive, given that it takes out a major subscriber gainer, but we fear that it will be structurally unhelpful, with the high price encouraging other altnets to continue to disrupt in the hope of a similar take-out.
 

Growing BVOD usage in 2025 was unable to offset declining broadcast viewing, whilst YouTube continued its advance on the TV set and SVOD engagement growth was driven by older viewers.

Households are increasingly shifting towards IP-delivered video, whether through IP-only devices, or more likely hybrid UK TV platforms.

Young people’s viewing to SVOD services is less volatile across the year and throughout the day than YouTube and broadcasters—the latter of which is more likely to be shared with other people.