Format: Sep 2016
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Sector(s) Datesort ascending shutdown could cost $2-4bn to 2015


Google is almost certain to close its China site,, foregoing much of the revenue and potential upside from the world’s largest internet population and fifth biggest market for internet advertising has performed reasonably well to date, taking about 20% of spend on paid search compared to c65% for market leader Baidu. We would expect Google’s future performance to improve but not to displace Baidu

We estimate the revenue foregone over 2010-15 from closing to be between $2-4bn or 8.5-17% of FY2009 revenue, but it could be far higher if the Renminbi were to appreciate substantially versus the dollar


  • Google
Internet, Media, Non-UK Media 22 March 2010
Conservative proposals to tackle CRR

The proposal by the Conservatives to remove or to moderate Contract Rights Renewal if elected would put ministers back into the thick of competition issues

The Conservatives strongly supported the move to make the competition authorities independent of government in Enterprise Act 2002, and should this stance be reconsidered, the regulatory landscape for business would acquire a political dimension, to the detriment of UK business generally

CRR is a side issue and the Conservatives could be better advised to examine closely the marketplace for TV advertising sales in order to make it more transparent and thus work better for the industry as a whole

  • ITV
Media, TV 19 March 2010
Kabel Deutschland IPO

Kabel Deutschland, being floated on 22 March, has a credible track record of profitable growth and some upside potential to lure investors

Rising broadband and telephony take-up should more than offset basic cable TV erosion, delivering a CAGR of 7% in revenues, and a threefold rise in cash flow to €578 million by FY2015, according to our model

Downside risks include Kabel Deutschland’s high debt and the intense competition for the triple play customer being waged by Deutsche Telekom

Fixed Line, Telecoms, Non-UK Telecoms 19 March 2010
UK broadband and telephony trends to December 2009: broadband bounce


There were approximately 18.4 million fixed broadband lines in the UK at the end of Q4 2009 including those used by small and medium enterprises (SMEs)

Subscriber growth over the past year has continued to drop but the rate of decline has slowed to the lowest ever. Year-on-year subscriber growth in Q4 was 5.7%, only slightly down on Q3

Looking at net additions, Q4 saw the strongest sequential growth in percentage terms since the early days of UK broadband, with growth of 54% compared to 10% in Q4 2008. The leap in Q4 2009 was from a relatively low base, but even in absolute terms, the sequential increase in net adds of 111k was the highest since Q3 2004


  • Virgin Media
  • TalkTalk
  • Sky
  • Orange
  • O2
  • BT
Fixed Line, Telecoms 18 March 2010
Canal+ thinking positive

Vivendi’s pay-TV unit Canal+ posted flat revenues in 2009, as international growth balanced domestic erosion

Driven mainly by growth internationally, we anticipate recovery to annual revenue growth barely above 2% by 2012, with a slightly deteriorating EBITA margin

Canal+ could do better if it invests in the latest generation of set-tops and, possibly, free to air television

  • Canal Plus
Media, TV, Non-UK Media 16 March 2010
Mobile revenue growth and outlook Q4 2009: a corner is turned

In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

Mobile, Telecoms, Non-UK Telecoms 15 March 2010
Virgin Media’s rural NGA trials

Virgin Media has indicated that ‘non-traditional’ modes of build-out could bring a further one million households within the cable footprint

The company has not yet revised its existing plans to reach an additional half a million homes by 2012, but an upward revision is looking increasingly likely, possibly to two million by 2017

Should VMed make such a revision, the impact on both VMed and other players would be modest

  • Virgin Media
Media, TV 12 March 2010
Challenging future for internet TV aggregators

Hulu’s postponed UK launch, and the inability of SeeSaw and MSN to get carriage deals with the BBC and ITV, underscore the difficulty for internet TV aggregators of acquiring mainstream content

In-stream video advertising is nascent – we estimate it was worth just over 1% of UK TV ad spend last year – giving major channel operators/rights holders little incentive to syndicate their programming to online services

The future for ad-funded internet aggregators continues to look highly challenging, aside from YouTube, due to its audience scale and Google’s deep pockets

  • ITV
  • Google
  • BBC
Media, TV, Internet 12 March 2010
Can Sky deliver a German pay-TV turnaround?

The News Corp management has given Sky Deutschland a full and costly revamp in 2009, leading to a steep year on year increase in negative EBITDA of around €200 million

Underlying trends of improvement in net subscriber additions, ARPU growth and churn reduction, assisted by its HD offer, suggest that Sky management will get close to, if not actually meet, its 2011 breakeven target

However, there are significant downside risks in the historically tough German pay-TV market, and robust profitable growth beyond 2012 presents a real challenge

  • Sky
  • News Corp
Media, TV, Non-UK Media 11 March 2010
French fixed line 2009 corporate results


Despite the recession, in 2009 the French broadband market added 1.8 million connections to reach 19.6 million, but we expect the deceleration in growth to persist in 2010

Orange’s leading position weakened further in Q4 2009, despite retail price cuts, and we expect a further decline in market share in 2010, impacting FT’s top-line

SFR was the star performer of 2009, although its Ebitda margin has improved slightly. Iliad remains the ‘best in class’ in terms of profitability, but must address high churn at Alice. Bouygues’ fixed line début was an impressive splash – at a cost


  • SFR
  • Orange
  • Iliad
  • France Telecom
Non-UK Telecoms, Fixed Line, Telecoms 8 March 2010
Mobile media goes beyond the iPhone

Mobile content is moving to the centre of strategies for online
media. At MWC, the world’s biggest mobile conference, Google announced it now develops
all products ‘mobile first’ and Facebook reported a quarter of its 400m users access
the service through mobile

Three years after the iPhone 
launched, the handset industry is catching up, adding decent user interfaces
and mobile apps to colour touch screens and taking easy access to mobile content
beyond the iPhone

Beyond the self-selecting early adopter iPhone base, we found
real evidence of companies already successfully providing mobile content to much
wider segments of the population


  • Google
  • Facebook
  • Apple
Media, Internet, Telecoms, Mobile 5 March 2010
ITV FY 2009 results – Preparing for transformation

ITV survived the worst recession and advertising downturn in its history thanks to market outperformance, cost cutting and other measures that delivered a full year profit of £25 million despite a 7% decline in total revenues, largely the result of a £134 million drop in its core advertising revenues

With the worst of the recession past, the focus of the incoming management is on revival and sustainable earnings growth through a transformation that will make ITV increasingly less reliant on at best stable broadcast advertising revenues in the digital age

Announcement of the transformation strategy awaits the conclusion of the ongoing internal review. We are slightly more optimistic about the TV advertising outlook over the next five years and see some upside potential from possible changes in the airtime rules, whilst the key to revival rests with the future coordination of ITV’s content and multichannel interests

  • ITV
TV, Media 5 March 2010
IFNCs and the politics of local news provision

The IFNC process remains on track, but the pilot contracts may not be signed off this side of the general election – if Labour wins the election, this will not be material to the pilots or the wider IFNC project in the Digital Economy Bill

Given their opposition to IFNCs, we expect a win for the Conservatives would halt the pilot negotiations – as well as the wider IFNC project

The Conservative plan appears to be the creation of a network of local media companies. We are sceptical that such LMCs would be commercially viable

  • ITV
TV, Media, Press 5 March 2010
UK quarterly internet trends

The internet continues to gain share of media consumption and advertising at the expense of traditional media in the UK. This report highlights key online trends in the UK and our current forecasts for internet advertising in 2010 (we will address mobile advertising separately)

  • Facebook
  • Google
Media, Internet 5 March 2010
Apple: The power of music

Apple’s hardware-driven strategy for music recently passed two major milestones, with 10 billion paid track downloads and 250 million iPods sold

In 2009, Apple ‘returned’ to record labels and publishers roughly $1.9 billion, while generating gross profits in the region of $3.2 billion from the sale of iPods and music

Of wider significance to Apple is the music strategy’s contribution to building a mass market brand and expanding its customer base, helping to drive adoption of their computers and, more recently, the iPhone

  • Apple
Music and Radio, Media 3 March 2010
Virgin Media Q4 2009 results: continuing strong performance and positive outlook


VMed’s Q4 results were again strong; the May 2009 price increases continued to lift revenue and operating cash flow, as expected

There are continuing grounds for optimism, including further price hikes, cost reduction and modest turnarounds at Mobile and Business

There was no news regarding content M&A, but a sale some time this year appears likely and should have a significant positive impact on the company’s financial position


  • Virgin Media
Fixed Line, Telecoms, TV, Media 26 February 2010
European digital television platforms update

The switchover to digital television is well advanced in Europe – it is already completed in The Netherlands, Sweden and Germany (but not on cable) and will be over in all other large markets by 2012

This report presents a cross-country comparative assessment of TV platforms switching over and the emergence and adoption of new digital platforms, such as DTT, IPTV and free digital satellite

Media, TV, Non-UK Media 17 February 2010
BT FY 2009/10 Q3 results: recovery continuing, but longer term outlook uncertain

BT’s Q3 results and improved guidance for the year to March 2010 showed the current turnaround is well on track. But revenue continued to decline and improvements were concentrated at Global Services, the results for which were flattered by the dire prior year comparable

The UK business’s long term prospects also depend on successful deployment of next generation access, but this is over two years away

The results were overshadowed by the Pensions Regulator initially expressing ‘substantial concern’ over some features of the pension deficit valuation and recovery plan that the company has agreed with the trustees. Clarity on this is also some way off

  • BT
Telecoms, Fixed Line 15 February 2010
Trinity purchase could signal consolidation phase

Trinity Mirror (TM) has acquired Guardian Media Group’s (GMG) regional media business for £7.4 million cash, also releasing GMG from a £37.4 million liability print contract

The deal is the first significant consolidation play since the cyclical downturn that started in 2008 helped reduce local newspaper advertising by about 35% or £1 billion. TM is understood to have beaten private equity to the deal, signalling that consolidation activity in local media may be starting to warm up

While the price tag appears small for a business that generated £94.5 million in FY 2009, its operating profit had fallen to £0.5 million, and TM should be able to realise measurable local synergies and cost savings

  • Guardian Media Group
Press, Media 11 February 2010
UK Next Generation Access and the Conservative policy for ‘nationwide superfast broadband’

The Conservative policy for broadband involves replacing
Labour’s proposed line rental tax with a portion of the TV licence fee, together with measures to encourage passive access to BT’s network and the use of alternative infrastructure

The policy sounds negative for BT, equivocal for VMed and
positive for Sky and TTG, but is unlikely to have a significant direct impact in the near term in the event of a Conservative government

We view as more significant the likely indirect impact on
Ofcom’s upcoming access market reviews. In the longer term, the development of alternative infrastructure could be significant, such as that already being deployed by Fibrecity in partnership with the water companies

  • BT
Fixed Line, Telecoms 10 February 2010