Publications

Format: Feb 2018
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Sector(s) Datesort ascending
UK consumer e-commerce trends

Our first report on UK consumer e-commerce covers the largest e-tailing market in Europe. Although the share of e-commerce in UK retail sales is just below 10%, the influence of online is much wider, including reducing shop trips (along with superstore and mall development), which rising fuel costs are bound to intensify as a trend. In the context of the consumer recession that started in Q4 2010, bargain-hunting online has again become a more important driver of consumer interest in consumer e-commerce. Retail sales value and volume data reveal that online retailers are delivering low prices to consumers, in contrast to offline retailing, where consumers face price inflation. As e-commerce grows its share of mind in a converged internet experience, the pressure on offline retailing will intensify, driving out weaker retailers; we think superstore and mall retailing will fare better than the high street, as consistent with a single trip to access a larger choice of goods/outlets (London being the exception). In electricals, the leading online category in the UK (ahead of food and clothing), specialist retailers are suffering the most from the consumer recession and the pressure of online on prices and margins.

Internet, Media 20 July 2011
The regulation of news

The uncovering of criminal behaviour at one newspaper (so far) has led to a much broader review of how the press is regulated, seeking to put a stop to dishonest and unethical behaviour, legal or illegal, and touching on ownership, ethics and on the freedom of the press in general

However, much of investigative journalism relies on activities that are certainly dishonest and arguably open to prosecution: any new code and enforcement will need to rely on judgement and selectivity, not prescription

Statutory, compulsory, enforceable regulation of the press will risk running into the sand in a world in which casual chat between friends is viewable by millions on social networks and celebrity gossip is sent to pixel in Los Angeles or São Paulo, not Wapping

  • News Corp
  • Guardian Media Group
  • DMGT
Media 20 July 2011
UK residential high speed broadband outlook: leading the horse to water

BT’s plans to deploy next generation access, combined with state-aided rural broadband projects, look set to give almost three quarters of UK households access to high speed broadband by 2016

New wireless technology is a feasible substitute for wireline for some low-end users and in specific areas, but we do not expect it to have a major impact on high speed broadband deployment

BT Retail and Virgin Media will in effect move significant numbers of their customers onto high speed broadband, but without significant price reductions we believe that, even by 2016, consumers’ reluctance to pay more will result in two-thirds of households remaining on lower speed options

  • Virgin Media
  • TalkTalk
  • Sky
  • Orange
  • O2
  • BT
  • EE
Fixed Line, Telecoms, Internet, Media 19 July 2011
Lessons on media mergers from other countries

There is currently no international consensus on what constitutes plurality, how it might be achieved, or how it can be empirically measured

It has become critical for the interested parties in the UK to make the concept of media plurality operational. We believe that a solid methodology is required

The US, Italy and Germany offer lessons for the UK in terms of the quantification of media plurality

Media 14 July 2011
Google UK Q2 2011 results: better than expected

Google’s UK revenues rose to £597 million in Q2 2011, up 19% year-on-year, taking H1 2011 revenue to £1,037 million, up 16% year-on-year, surpassing our April forecast on better than expected growth in spend by small advertisers

Google’s global revenues were up 32% year-on-year, and CEO Larry Page impressed with his focus on key opportunities and threats; Google+, the company’s newly launched set of social applications, is off to a strong start

Our 2011 growth forecast for Google’s UK revenue is raised to 15% year-on-year, lifting this year’s UK internet ad spend forecast to £4,520 million, up 12% year-on-year

Media, Internet 14 July 2011
Apple, Android and tablet market share

Apple has now sold 25m iPads since launch, worth $15bn, and will probably sell 40-50m in 2011. Competing tablets have sold perhaps 2-3m in total so far and will not be competitive with the iPad until 2012 at the earliest

Android phones are now far outselling iPhones, but benefit from a narrower user experience gap and from selling at a half of the price. Android tablets must compete with the iPad at the same or higher price points, a far harder task. We believe it is possible the iPad will retain a 50%+ share

Media companies have veered from euphoria to outrage when contemplating the iPad and its autocratic creator. Android offers them little chance of either in the near future

  • Google
  • Apple
Mobile, Telecoms, Technology, Media 13 July 2011
Mail and Mirror to gain share as World ends

The closure of the News of the World will see Sunday national press circulation decline by nearly 1.8 million copies per week, taking it to little more than half its level in 2000

All titles will gain market share of circulation as a result, and we anticipate additional market share gains for the Mail on Sunday and Sunday Mirror, to more than 30% and nearly 20%, respectively

In the context of the decision to withdraw the bid for BSkyB, News Corp will consider all its options, either expanding its presence through a Sun on Sunday, or retreating altogether from the UK newspaper market

  • Sky
  • News Corp
Media 12 July 2011
Update on BSkyB forecasts

All the recent attention to BSkyB has had to do with the proposed News Corporation takeover and its impact on the share price. For the BSkyB business itself, we think the troubles of News International have so far had very little effect, as there is nothing to link the pay-TV operator Sky directly with the News of the World, the epicentre of the current judicial and political storm. Nothing, that is, apart from the Murdoch factor, which certainly seemed to do no harm to sales of the final News of the World edition on Sunday 10 July which topped 4.5 million.

In our view a bigger concern for BSkyB is the impact of the current squeeze on consumer spending. This may best explain the press release of 8 July, which announced both the launch of Sky Go as an added TV Anywhere extra to Sky customers at no extra cost to their existing packages and the freezing of package prices until 31 August 2012.

  • Sky
  • News Corp
Fixed Line, Telecoms, TV, Media 11 July 2011
What does ‘fit and proper’ mean?

Ofcom is entitled to consider whether News Corp is ‘fit and proper’ to own BSkyB’s channels, not the company itself

Precedent suggests that Ofcom will only be able to conclude that News Corp is unfit if the acquiring company’s directors are found guilty of a serious criminal offence. Suspicions, allegations and mistrust are absolutely not enough

We believe that Ofcom will only be able to assess whether News Corp is ‘fit and proper’ to own Sky channels after the transaction is concluded

  • Sky
  • News Corp
Fixed Line, Telecoms, TV, Media 6 July 2011
Recorded Music and Music Publishing 2011

This report provides our annual assessment and forecasts for recorded music sales and music publishing revenues, which engage all four of the ‘majors’ – Universal Music Group (UMG), EMI, Sony and Warner Music Group (WMG). In the context of the ongoing physical-to-digital transition of music consumption, retailing and buying, documented in the report, we estimate a 10% decline in recorded music sales to $18.4 billion in 2010, the sixth consecutive year of decline. We also project further overall declines in our forecast period to 2015. The recorded music sales decline has fed into music publisher revenues via mechanicals, and will continue to do so. In addition, the recession of 2008-09 continues to feed through to music publisher revenues via the lagged distribution of royalties. Thus, for 2010, we estimate that the global total fell by 3.1% in 2010 to $5.6 billion, and project an overall return to modest growth in 2012. Together, our analysis of recorded music and music publishing provides an industry-level context to evaluate the likely development of the majors themselves, bearing in mind that shifts in market share and currency movements will continue to differentiate their relative performances.

  • Vivendi
  • Apple
Music and Radio, Media 30 June 2011
The proposed acquisition of BSkyB: the process from now on

We expect Jeremy Hunt to announce the fine details of the proposal to give editorial independence to Sky News within the next few days. After a perfunctory further consultation, the regulatory barriers to the purchase of BSkyB by News Corp will be cleared in July

News Corp will need to reach agreement with BSkyB over price and only then can proceed with its proposal for a ‘scheme of agreement’ to take over the company. We expect the purchase to be concluded by about the middle of October if BSkyB cooperates, but early in 2012 if News Corp is forced to use a takeover bid

News Corp can acquire BSkyB while any judicial review of Mr Hunt’s decision is taking place but it runs the very small risk of having to unwind the transaction

  • Sky
  • News Corp
TV, Media 27 June 2011
Football auction unsettles Canal+

France’s Canal+ has won the rights to show two Ligue 1 games a week from 2012 to 2016 for €420 million per year. A surprise (and skilful) bid by Qatar’s Al Jazeera won two lower profile games for €90 million per year

We believe Al Jazeera could, at best, reach EBITDA break even by the end of the four year licence. Merging with CFoot and Orange sport would help

No bidders met the reserve price for the package of lower tier six games, but Canal+ would be well advised to bid in order to avoid the strategic risk of leaving competitors with most Ligue 1 games. Without this package, Canal+ faces limited subscriber and ARPU erosion balanced by €45 million savings on the current licence

  • Canal Plus
TV, Media 27 June 2011
News Corp proposed takeover of BSkyB

In the attached note we present our analysis of BSkyB revenue and cost trends over the five years 2006 - 2010 and our forecasts to 2015

More than a year has passed since News Corp proposed to buy the 61% of BSkyB that it did not already own. With clearance of the proposed transaction now imminent, this note examins the strategic value of the BSkyB acquisition to News Corp. In examining the business prospects of BSkyB it concludes the business is embarked on a high growth trajectory in revenues and operating profits over the next three to four years, putting BSkyB in a good position to face more challenging competitive conditions in the future

  • Sky
  • News Corp
Fixed Line, Telecoms, TV, Media 26 June 2011
UK broadband and telephony trends: spring 2011

In this presentation we show our analysis of trends in UK broadband and telephony to March 2011, based on the published results of the major service providers. This quarter’s edition includes an updated outlook for broadband market subscribers and market shares to 2015.

Highlights in the quarter included broadband market growth moving back into line with consumer confidence, continuing strong broadband subscriber growth at both BT Retail and Sky, greater stability in the proportion of the market served by BT Wholesale and a significant price increase at O2. We project that, by the end of 2015, about 21 million households will subscribe to fixed broadband, and that Sky’s market share will exceed that of TalkTalk Group to rival that of Virgin Media.

  • Virgin Media
  • TalkTalk
  • Sky
  • Orange
  • O2
  • BT
  • EE
Fixed Line, Telecoms 15 June 2011
European internet advertising: display on top

Internet advertising grew 15% YoY to €17.7 billion across Western and Central & Eastern Europe in 2010, according to provisional figures from IAB Europe

As in the US, growth in display, increasingly powered by social media, outpaced that of search, with display accounting for 33% of spend (up 3 ppts YoY)

We have updated our forecasts for 5 key markets – UK, Germany, France, Italy and Spain – and now project aggregated growth of 10% in 2011 and 13% in 2012

  • Facebook
Internet, Media 14 June 2011
Mobile user survey 2011: More smartphones, more usage of smartphones

The most dramatic observation from our survey is the surge in mobile data service usage: 48% of UK mobile users now use a data service at least once a month, up from just 30% last year. This increase is substantially all from the increased number of internet-centric smartphones (i.e. iPhone, BlackBerry and Android handsets) in the base

The internet-centric smartphones themselves had substantially no reduction in data usage penetration rates (all at 90%+) despite their volumes surging, with users from all age and socio-economic groups using them for data services. Data service usage penetration on a daily basis actually increased for Android and BlackBerry handsets

This supports our view that it is the nature of these handsets in terms of their ease-of-use for data services that is driving overall usage, and that overall data usage will continue to surge as they continue to diffuse through the subscriber base

  • Vodafone
  • Virgin Media
  • T-Mobile
  • Orange
  • O2
  • Nokia
  • Hutchison 3G
  • Google
  • Carphone Warehouse
  • EE
  • Apple
Mobile, Telecoms 14 June 2011
Sunshine to showers: TV 2011 advertising update

We have revised our central case forecasts of total year-on-year NAR (Net Advertising Revenue) growth in 2011 from 5% to 1%, as the advertising outlook has progressively worsened since mid April

2011 is marked by a further round of consolidation in airtime sales and a number of noteworthy channel and programming changes

Channel 4 Sales, and above all its flagship Channel 4, appears the most challenged of the leading market players, while we expect the ITV group to continue to outperform the NAR market in the rest of 2011 and 2012

  • Sky
  • ITV
  • Five
  • Channel 4
TV, Media 2 June 2011
The Hargreaves Report: tilts at windmills

The Hargreaves review of UK intellectual property law proposes to introduce a “limited private copying” exception to legalise existing recopying across devices

The proposed Digital Copyright Exchange (DCE) is a good idea, but industry reticence to financing and using a DCE is a challenge

Practical solutions to licensing digital content-based services should be the focus of Coalition efforts to spur innovation and economic growth

  • Google
Music and Radio, Internet, Media 30 May 2011
Cable & Wireless Worldwide full year results 2010/11

C&W Worldwide’s performance over the year to March was weak, with the most meaningful metrics showing positive but very low growth

The sharp decline in the mid-market business appears to be over, but price pressure and accelerating loss of ‘traditional’ voice revenue is preventing further progress

Guidance for the year to March 2012 is uninspiring. Beyond that, growing momentum in cloud services and the overseas businesses should generate more significant progress, but organic growth looks set to remain modest

  • Cable & Wireless
Fixed Line, Telecoms 25 May 2011
Mobile revenue growth and outlook Q1 2011

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.

  • Vodafone
  • Virgin Media
  • Telefonica
  • T-Mobile
  • SFR
  • Orange
  • O2
  • Nokia
  • Hutchison 3G
  • Google
  • France Telecom
  • BT
  • EE
  • Apple
Mobile, Telecoms 25 May 2011

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