Publications

Format: Sep 2016
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Sector(s) Datesort ascending
Further pain at Johnston Press

Johnston Press results for 2008 (calendar year) all too eloquently illustrate accelerating local media advertising decline, with property advertising down 10% in Q1 and 55% in Q4

Write-downs have forced Johnston to record losses of £429 million in the year and there is a very real threat that the publisher will breach its borrowing covenants in June 2009, or by the end of the year

While digital is highlighted as the only growth area for the group, we remain concerned that many local publishers are effectively accelerating their own decline by ‘doing too much too well’ in terms of digital news provision at the expense of the quality of their newspapers

Media, Press 13 March 2009
The Digital Dividend: made for mobile

Ofcom has reallocated its Digital Dividend spectrum, allowing the UK to fit in with plans for harmonised usage of the spectrum across Europe, resulting in most of the spectrum being made ‘mobile friendly’, and a little left for digital TV services

The revised plans provide a much improved platform for mobile services in a very attractive spectrum band, with European harmonisation providing the potential for standardised (i.e. cheap) equipment and handsets

On the downside, there will still be insufficient quantity of spectrum to satisfy demand from the mobile operators, with five operators chasing three decent blocks of spectrum, so the auction is likely to be very competitive

Telecoms, Mobile 12 March 2009
Canal+ FY 2008 results

Vivendi’s Canal+ Group overshot its 2008 EBITA target, despite sluggish subscription growth, delivering to shareholders some of the promised post-merger gains from “synergies” with TPS

For 2009, Vivendi has issued cautious revenue and EBITA guidance that, on current trends, will easily be met. However, management has now recognised that initial targets for 2010 will be “hard to reach” – as we have already warned

In the medium term, a further downside risk for Canal+ Group is the likely loss of exclusivity for the distribution of themed channels, which could be the outcome of the anti-trust investigation of CanalSat, with a ruling expected in 2009

  • Canal Plus
Media, TV, Non-UK Media 11 March 2009
Ofcom's statement on Next Generation Access: green light, red ink?

Ofcom’s statement on Next Generation Access (NGA) gives BT the maximum possible incentive to invest by allowing a high degree of pricing freedom and some short cuts to reduce implementation costs

But Ofcom cannot guarantee that BT will make a return from NGA, only the existence of an opportunity to make one

Ofcom’s statement is certainly positive for BT, but we remain sceptical of the business case for BT NGA, particularly given the low price of all-copper based offers and Virgin Media’s roll-out of 50 Mbit/s broadband

  • Vodafone
  • O2
  • BT
Telecoms, Fixed Line 6 March 2009
ITV NAR crunch point: ITV FY 2008 results

ITV has switched from a turnaround to a survival strategy focused on preserving its core broadcast and content production business. The switch comes against a backdrop of plunging total TV NAR (net advertising revenues) due to the devastating mix of severe recession and major structural decline in the TV advertising medium

ITV plans to cut programme budgets outside regional news by £65 million in 2009 versus 2008 and rising to £135 million by 2011, raising the spectre of a downward spiral in programme budgets, audiences and NAR

We expect the eventual programme budget cuts to be at least double those already planned, given the scale of the unprecedented advertising crisis. Despite this, ITV may just squeeze through without getting sucked into the spiral, but it will be close

  • ITV
Media, TV 6 March 2009
NGA in Spain

This research on next generation access in Spain continues our series of reports on NGA in the Continent

In relation to incumbents in other European markets, Telefónica’s NGA has one of the more aggressive deployment agendas, aiming to cover 40% of homes with FTTB/VDSL by end-2009 (and some FTTH). Its NGA-based Trio Futura retail offers launched in January 2009 after final regulatory clearance. Conditions for Telefónica's NGA in Spain are propitious because retail broadband prices are relatively high and bandwidth commands a premium

 

 

 

  • Telefonica
Telecoms, Fixed Line, Non-UK Telecoms 4 March 2009
Virgin Media Q4 2008 results: one step forward, one step back

VMed’s Q4 results were mixed, with consumer cable revenue remaining stable but cable net adds dropping significantly and opex performance hit by rising energy costs

Group OCF was stable thanks to improvements at Virgin Mobile and Content

We expect performance to prove relatively resilient in 2009, though not to the extent of generating significant growth in underlying annual cash flow

  • Virgin Media
TV, Media, Telecoms, Fixed Line 2 March 2009
Canvas offers future path for 'Free TV'

Project Canvas is the BBC/ITV/BT backed proposal for next generation Freeview and Freesat services that embraces IPTV reception, new EPG, home storage and HDTV applications

Setting up Canvas as a not-for-profit consortium and making it non-exclusive to content providers should avoid the competition issues which killed Kangaroo, but many questions remain and technical and regulatory delays could push back the launch to 2011

We do not expect Canvas to make a major difference to non-linear viewing of audiovisual content – its importance lies much more in future-proofing the ‘Free TV’ viewing experience on the terrestrial and satellite platforms

  • BT
  • BBC
  • ITV
Media, TV, Internet 27 February 2009
On-demand music streaming from Spotify

Project Canvas is the BBC/ITV/BT backed proposal for next generation Freeview and Freesat services that embraces IPTV reception, new EPG, home storage and HDTV applications

Setting up Canvas as a not-for-profit consortium and making it non-exclusive to content providers should avoid the competition issues which killed Kangaroo, but many questions remain and technical and regulatory delays could push back the launch to 2011

We do not expect Canvas to make a major difference to non-linear viewing of audiovisual content – its importance lies much more in future-proofing the ‘Free TV’ viewing experience on the terrestrial and satellite platforms

Media, Music and Radio 26 February 2009
Local media and the OFT review of the merger regime

The Office of Fair Trading (OFT) has confirmed it is to follow up on Lord Carter's interim Digital Britain report by launching a full consultation on the local and regional media ownership regime, with a call for "views from interested stakeholders" on the key issues for the review of the merger regime to be submitted by 28th February

Although the OFT’s announcement notes the “pressures” on local and regional media, the evidence points to a local media sector in steep decline, a trend which the UK’s recession will only exacerbate

Local media will need to consolidate further in the near future if jobs and the supply of local media to communities are to be preserved in a period of declining revenues, and the merger regime (which applies to all UK specific mergers) is a barrier to this consolidation and places a disproportionate burden on local media

Media, Press 23 February 2009
More red than black and white

Recent ABC declines in consumer magazines are not indicative of the accelerated declines experienced in the past 12 weeks

All print media is engulfed in a ‘perfect storm’ of falling consumption, collapsing advertising, and some rising costs

Print advertising will fall by as much as 30% for some print sectors in 2009, pushing previously profitable businesses to the edge

Media, Press 20 February 2009
BT FY 2008-09 Q3 results: another mighty wave is looming

As announced in the January trading update, BT’s Q3 results were hit by poor cost control at Global Services and the identification of some ‘toxic’ contracts. Performance elsewhere continued to be reasonable but helped by a spike at Openreach and non-core business

With a further ‘one-off’ charge against GS EBITDA in Q4 a virtual certainty, we continue to expect problems at Global Services to combine with recessionary pressures and stalling broadband growth to constrain performance well into 2010

A large pension deficit at the actuarial valuation in May looks inevitable. The Digital Britain initiative could pave the way for legitimate government and regulatory support

  • BT
Telecoms, Fixed Line 17 February 2009
UK spectrum withdrawal 2: Ofcom still wants it back

Ofcom has come up with a new 900MHz spectrum refarming/redistribution proposal, in which only 5MHz of spectrum is taken from Vodafone and O2, as opposed to the 15MHz it previously proposed

We still think that disrupting the voice and text services of existing customers in order to extend the availability of little-used 3G data services makes little sense, and that rearranging a small amount of intensively used spectrum when a far larger amount of unused spectrum is about to become available makes even less sense

Should Vodafone and O2 continue to oppose having their spectrum taken away, as appears likely, the delays to new spectrum auctions are likely to continue

  • Vodafone
  • O2
Telecoms, Mobile 17 February 2009
BT Retail residential telephony price changes: rebalancing act

BT Retail is putting through another round of residential price changes, trading further aggressive cuts in call plans in return for 12 month contracts, increases in line rental and some volume-related call charges

The £1 line rental increase is in line with our expectations and could trigger a round of increases by other players following Ofcom’s forthcoming statement on Openreach’s wholesale price ceilings

The price changes should help BT Retail to both defend its residential customer base and conserve ARPU. However, some further loss of residential market share looks inevitable

  • BT
Telecoms, Fixed Line 11 February 2009
European mobile market consolidation

The planned merger of Vodafone and H3G in Australia has raised the question of what consolidation could occur in Europe, although a direct analogy is not appropriate because Vodafone is much weaker in Australia (#3 operator) than it is in the larger European countries, and so would face much more regulatory scrutiny in Europe

The only merger opportunities in the top five markets which would have a similar or lower theoretical impact on competition (and hence would theoretically be as easily approved) in the top five European countries would be T-Mobile and H3G in the UK, Wind and H3G in Italy, and any operator with Yoigo in Spain

There are massive cost savings to be had from in-market consolidation, with network, marketing and general administration costs all fully overlapping between operators. The non-merging players would also enjoy a period of less competitive intensity, which may last indefinitely

  • Vodafone
  • T-Mobile
  • Hutchison 3G
Telecoms, Mobile, Non-UK Telecoms 11 February 2009
Touchscreen Smartphones: the rise of the iClones?

The iPhone has inspired all the major Smartphone makers to launch touchscreen models, and dramatically improve the usability of their interfaces. The iPhone itself remains the most easily usable touchscreen handset in our view, although at the cost of speed of use and adaptability

Unfortunately, the characteristics that make these handsets easier to surf the internet with – large screens and/or QWERTY keyboards – are just the characteristics that are unlikely to trickle down into mass market handset models, meaning that the impact on mobile data usage is limited

We continue to believe that web browsing is unlikely to be popular on mass market handsets for the foreseeable future, but usage of web services can be popularised by more of a widget approach, which the cheap but smart INQ1 handset demonstrates well

  • Apple
Mobile, Telecoms 10 February 2009
Sky Five Setanta One

The Premier League has succeeded in obtaining a 4.4% increase in live televised rights payments from £1,706 million to £1,782 million for the next three year contract commencing with the 2010/11 football season

The big surprise was that Sky bid more than last time round (by an estimated factor of circa 7.5% for its current four packages), while Setanta bid roughly 20% less for its two packages, thereby losing one to Sky

The highly contrasting bidding approaches appear to reflect completely different mindsets, with the not yet viable Setanta focused on the economic value of the PL rights, and Sky taken up with demonstrating long-term commitment to the PL

  • Sky
Media, TV 10 February 2009
Channel 4 future funding challenge

The essential conclusion of Ofcom’s Second Public Service Broadcasting Review is that the present commercial PSB model is unsustainable in the digital age. The Ofcom solution of fixing on Channel 4 as the “alternative, commercial PSB voice”, while freeing up the Channel 3 and 5 licensees from most of their PSB obligations, still leaves a major funding gap

A particularly attractive solution is some kind of synergy-generating merger/JV/partnership, but difficult to achieve in practice. The attached note examines the main issues that we may expect to arise with the existing proposals

  • Channel 4
  • BBC
  • ITV
Media, TV 6 February 2009
Web TV: Kangaroo is dead, long live Marquee

Kangaroo – the proposed BBC Worldwide/ITV/Channel 4 video-on-demand (VOD) service – has been terminated by the Competition Commission (CC) due to fears that it could control the wholesale and retail supply of UK TV VOD

In our view the CC decision is a lucky escape for all three shareholders since it will save them from investing potentially tens of millions in an ill-advised venture which could have become a bottomless money pit when they can least afford it

Near term ITV and Channel 4 will refocus their internet strategies around their own portals and online syndication deals, but these are unlikely to deliver significant revenue; Marquee – the BBC’s proposition to open up iPlayer to other PSB broadcasters – could help, with the advantage of being very low cost

  • BBC
  • Channel 4
  • ITV
Media, TV, Internet 5 February 2009
Vodafone Q3 Interim Management Statement: slowing less quickly

Vodafone’s December quarter KPIs showed only slightly worse underlying European revenue growth compared to last quarter, with another plummet in growth in Spain moderated by improving figures in Germany

In the context of GDP growth across its markets being considerably worse, this is a relatively good performance, with its market share loss likely to prove less severe than last quarter

However, its growth is still very substantially worse than earlier in the year, even compared to GDP, and with GDP declines set to worsen through 2009, and termination rate cuts to bite again in the second half of 2009, growth is likely to decline further

  • Vodafone
Telecoms, Mobile, Non-UK Telecoms 4 February 2009

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