Format: Oct 2016
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Sector(s) Datesort ascending
Frenzied innovation: the iPad and print publishers

The iPad is a beautiful device that offers new ways to consume and interact with content. It takes ideas that have been discussed for decades and turns them into a (fairly) practical consumer product

The iPad poses huge challenges for print publishers, since it
has the potential both to unlock the benefits of digital for them, but also to remove
the last remaining advantages of their physical products

However, the iPad costs at least $500 and is hard to see as essential
for anyone. While there is real money to be made here, it will take a long time
to match the scale that comes from 10m people buying a newspaper every day in the

  • Apple
Press, Media, Internet 13 April 2010
Winners and losers of the May 2010 general election
The outlook for ad-supported UK media businesses is brighter in the short term than in the medium term, irrespective of who wins the election, since fiscal tightening is inevitable early in the next parliament
We expect the Conservatives, should they win, to favour commercial media (Sky, ITV) over the BBC in general and in particular in the upcoming negotiations on the licence fee settlement post 2013
Super-fast broadband networks enjoy cross-party support, but Labour’s 50 pence landline tax was blocked by the Conservatives, who prefer to use a small portion of the BBC licence fee
  • Sky
  • ITV
  • BBC
Media 8 April 2010
UK TV NAR bouncing back

After falling 16% across 2008 and 2009, UK TV NAR (net advertising revenue) looks like it will grow 10% year on year in 2010, amidst continued lack of visibility over the UK’s post election economic outlook


Ofcom’s consultation on the rules governing advertising proposes to scrap the withholding of advertising rule that applies to commercial analogue PSB channels, along with the conditional selling rule that applies to all broadcasters – neither action will have any short term material effect

Ahead of Ofcom is the different airtime quota and distribution rules that apply to commercial analogue PSB over other channels. Equalisation will favour the commercial PSB groups, but views diverge on where to equalise, up or down


TV, Media 8 April 2010
UK mobile termination rates: terminated

Ofcom is proposing to cut the UK mobile termination rate from 4.3ppm in 2010/11 to 0.5ppm in 2014/15. While a steep cut was expected, the extent is a surprise

The direct impact on the mobile operators is severe: a 13% impact on revenue over four years, and a 10% impact on EBITDA. While some of this may be mitigated by selective price increases, we expect the bulk to be taken on the nose

This is bad news for most UK mobile operators, but good news for the fixed operators and H3G. It also sets a worrying precedent for regulators across Europe, with the UK once again at the vanguard of low MTR setting


Mobile, Telecoms 5 April 2010
Iliad withstands new competitive pressures

France’s altnet Iliad again delivered stronger than expected profit and cash flow growth in 2009 on the back of continued strong results at the Free brand and a positive contribution from the Alice brand

These results demonstrate the continued pull of Free for the triple play customer despite intensifying competition, including from cable, making the low cost, low churn business model sustainable

By 2012, we expect fixed line profitability to increase and deliver enough cash flow to finance the launch of the Free Mobile project

  • Iliad
Non-UK Telecoms, Fixed Line, Telecoms 31 March 2010
Internet advertising: movin’ on up

Internet advertising rose 4.2% YoY in 2009 on a like-for-like basis in the UK, according to IABUK/PwC, due to growth in search, with classified and display down; however, previously unreported spend, including Facebook, pushed the total to £3.54 billion

Last year, for the first time, Google accounted for over half of spend (versus one third in the US) and 12% of UK ad revenue, a market presence that is significantly larger than in the US

Including Facebook, now No.1 for display, and increased spend on search, our 2010 growth forecast is 11%, pushing total spend to £3.82 billion or 25% of UK advertising

  • Google
  • Facebook
Media, Internet 30 March 2010
H3G 2009 full year results: steadily loss-making

H3G Group organic service revenue growth was just 0.2% in Europe in 2009, with EBITDA now roughly breakeven and cashflow remaining firmly stuck in negative territory, and lower subscriber net adds driving most of the EBITDA improvement

H3G UK is outperforming the UK market, but only just, and remains loss-making. Its prospects for 2011 are good, with its network share roll-out likely to have been completed and lower termination rates likely to be implemented, and the Orange/T-Mobile merger could provide significant long term benefits, but it will still require significant investment to gain scale

H3G Australia is now a sound business after the merger with Vodafone Australia, but all of the European businesses are sub-scale, with significant further investment and/or M&A activity required to reach sustainable profitability

  • Hutchison 3G
Mobile, Telecoms 30 March 2010
Lebedev scoops The Independent

After a year of speculation, Alexander Lebedev will be paid £9.25 million by Independent News & Media to take the loss-making Independent and Independent on Sunday off its hands

The new owner’s biggest challenges will be scale and positioning, reasons alone why we believe the publisher is likely to radically restructure and rethink its approach to distribution

Assuming Lebedev switches to free (at least in London), it will throw the quality newspaper market into further turmoil just as News International is preparing consumers to pay for access to The Times from June 2010

Press, Media 26 March 2010
Ofcom review of the wholesale local access market: small paper avalanche; nobody hurt

Ofcom’s consultation document on the UK wholesale local access market proposes a number of additional remedies for fixed access network operators with significant market power, but looks unlikely to have a major impact on the ability of either BT or competing players to make money from next generation access

The consultation is one element in a subtle power struggle between BT and the major competing service providers over the terms under which Openreach provides wholesale NGA products

In our view, who makes what from NGA continues to depend primarily on end user demand, which remains uncertain, and itself partly dependent on the outcome of the pay TV review and successful implementation of the ‘Canvas’ IPTV standard

  • BT
Media, Internet, Telecoms, Fixed Line 26 March 2010
Sky Picnic future awaits Ofcom pay-TV conclusions

Ofcom’s long awaited final statement on its pay-TV investigation will include its decision over Sky’s Picnic proposal

We expect Ofcom to greenlight Sky’s Picnic subject to ancillary conditions aimed at preventing the DTT pay-TV platform tipping towards Sky, and giving other DTT pay-TV retailers the chance to establish successful competing businesses

It is not at all certain whether Ofcom will have addressed the concerns of competing pay-TV retailers fully to their satisfaction via the soon to be announced ancillary conditions, while Sky has other routes to the DTT market besides Picnic

  • Sky
TV, Media 26 March 2010 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