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Sector(s) Datesort ascending
VOD edges forward

This report sets out our views about current trends and the longer term potential of Video on Demand (VOD) services in a world of converged TV and PC applications

Contrary to views expressed in the Digital Britain Final Report, we think that the non-linear on demand world will develop very slowly, with VOD applications unlikely to achieve more than 5% share of total TV viewing in ten years‟ time

We project that VOD use will achieve 2% of total TV viewing by 2013, some £300 million in total pay revenues and a little over £100 million in spot advertising revenues

Internet, Media 15 July 2009
UK mobile user survey 2009: iPhones, femtocells, predators and the recession

This report contains the 2009 edition of our annual review of UK mobile user trends, based on a survey of 1,000 adults

We look at handset ownership, replacement trends, handset manufacturer choice, network operator choice, 3G handset ownership, usage of existing services such as photo-messaging and the mobile internet and, finally, interest in new services such as mobile TV, datacardsand femtocells

  • O2
Telecoms, Mobile 15 July 2009
Mobile market consolidation in the UK: value creative, but for whom?

Vodafone (and others) are reported to be interested in acquiring T-Mobile in the UK, but any such merger would be likely to face significant barriers from regulatory authorities

This achievement would be moderated by ‘integration leakage’, i.e. increased churn caused by customers leaving who were initially attracted by an aspect of one of the operators that disappears after integration, but the net result should still be positive for the JV

The remaining UK operators will benefit both from this churn and the reduction in competitive intensity associated with five players dropping to four. While all the operators may win, UK consumers might lose, with regulatory clearance thus still far from certain


  • Vodafone
  • T-Mobile
Telecoms, Mobile 4 July 2009
UK Internet Trends

Driven by growing broadband connectivity, the internet continues to gain share of media consumption and advertising at the expense of traditional media, hit by the double whammy of substitution to online and deepening recession

In the near-term, the recession will be the dominant factor across many business sectors. The enclosed presentation highlights key online trends in the UK and our current forecasts for internet advertising in 2009 and 2010

Media, Internet, Telecoms, Fixed Line 30 June 2009
Ofcom pay-TV consultation: end of round three

There is a reasonable chance that, by the middle of 2010, Ofcom will introduce regulations concerning the availability and pricing of wholesale premium movie and sports content, as outlined in its third pay-TV consultation released on 26th June 2009

The Ofcom wholesale remedy proposals are likely to provide rival retailers to Sky with modest benefits in new customer acquisition and customer retention in the first three years, whilst opening up the prospect of wider competition as the broadband infrastructure develops

The complexity of the wholesale pricing issues being addressed by Ofcom may yet stand in the way of achieving an effective “must offer” wholesale remedy

  • Sky
Media, TV 28 June 2009
OFT approach to local and regional newspaper mergers

To coincide with the Digital Britain Report, the Office of Fair Trading (OFT) released its report on local media merger rules, confirming their application to newspaper consolidation although, perhaps significantly, it will ask Ofcom for “views... arising from its understanding of media markets”

Costs of compliance with the merger regime will remain a very significant barrier to consolidation of newspapers, especially for local newspaper titles serving small catchment areas, and we anticipate no appetite for engaging with the OFT

If local newspapers cannot consolidate further in the near future, the recession and ongoing structural shift to the internet will force title closures and job losses and also weaken local economies. The supply of local media to communities will be impaired to the detriment of democracy and plurality

Media, Press 17 June 2009
Digital Britain Report: anti-piracy measures

Digital Britain Report’s “Universal Service Commitment” will make high speed broadband ubiquitously available, thus potentially boosting the adoption of illegal file-sharing by UK internet users. However, the government’s goal is to achieve a 70-80% reduction of illegal file-sharing activity

Media, Telecoms 17 June 2009
UK broadband and telephony market Q1 2009

UK broadband market growth continues to slow, with net additions more than halving year-on-year to 284,300 and annualised market growth in single figures

Telecoms, Fixed Line 16 June 2009
Setanta at bay

A last minute rescue proposition has postponed the threat of Setanta entering into administration by at least another week, subject to meeting its revised payment schedule of sums owing to the Premier League

The profound commercial difficulties experienced by Setanta highlight the weakness of EU efforts to ensure competition in the sale of live televised rights to top UK domestic football and underline the inflated rights costs that would face any other complementary premium pay-TV sports supplier

Setanta’s survival hinges on its ability to negotiate further cuts in its rights payments and persuade investors that it can become profitable by making the necessary revisions to its retail/wholesale business model


TV, Media 16 June 2009
Digital Britain Final Report: implications for UK telecoms

The Digital Britain report’s proposed fixed line levy to fund rural NGA may well never become law, but if implemented, could end up being absorbed by the service providers, with a disproportionately negative impact on TalkTalk Group

The proposed Universal Service Commitment for broadband at 2 Mbit/s looks of limited attraction to potential bidders, but could increase the addressable market for retail broadband by about one million households

The proposed spectrum solution is a sensible compromise which ensures a roughly even playing field between mobile operators over the longer term. There is however still some way to go to implement it, with mid-2010 the best case timetable for the main auction of new spectrum, with this continued delay benefitting the incumbent mobile operators

  • TalkTalk
Telecoms, Mobile, Fixed Line 15 June 2009
Prisa-Mediapro football deal clears Digital+ sale

Under recession-induced financial stress, rival Spanish media groups Prisa and Mediapro have settled a three year battle over football rights, giving Digital+ secure access to domestic football for three seasons

A separate tentative deal to merge their TV assets still faces considerable hurdles if it is to be finalised by the end of June. Prisa needs to raise cash and may still dispose of Digital+ or bring new investors in the merged entity

Although Digital+ is unrivalled on the premium segment of the pay market, we doubt the economic gloom, plus strong competition from IPTV, cable and terrestrial TV, leaves much room for subscriber expansion

Media, TV, Non-UK Media 14 June 2009
Ofcom statement on LLU pricing: gently does it

Ofcom’s recent statement on LLU pricing has increased the amount which BT Openreach can charge unbundlers for full LLU over the next two years by about 8% overall

We estimate the changes will raise BT group EBITDA by less than 1% over the two years to March 2011

TalkTalk Group’s recent retail price increase is more than enough to offset the impact of Ofcom’s ruling on its annual EBITDA to March 2010, but the ruling could still take 5% off annual EBITDA to March 2011

Sky has yet to start mass migration to MPF and is more exposed to increases in the price of ancillary services, but less exposed to those for MPF rental. Sky’s annual residential telecoms EBITDA to March 2011 could be 10% lower, but this could be reduced if management takes the opportunity to increase the price of retail line rental

  • Sky
  • TalkTalk
Telecoms, Fixed Line 13 June 2009
Carphone Warehouse 2008/09 FY results

Carphone Warehouse’s distribution business had a slightly mixed year, with strong volumes and revenue mitigated by a sharp drop in margins and profit, with margin being sacrificed for market share

Given the very poor recession-hit market for handsets, Carphone Warehouse’s market share gains have been dramatic, so the sacrifice was at least not in vain

Although TalkTalk Group missed much of its guidance to March 2009, we now view new guidance as achievable, with the main risks related to the integration of Tiscali UK

  • TalkTalk
  • Carphone Warehouse
Telecoms, Mobile, Fixed Line, Non-UK Telecoms 6 June 2009
Sky leads race for Virgin Media's VMtv

According to press reports, Sky has lodged a bid of about £160 million for the VMtv content arm of Virgin Media (VMed), estimated to be 50-60% higher than other offers in the latest and final round of the bidding contest

At TalkTalk Group (TTG) net broadband additions for the quarter were relatively strong, given likely market growth, probably due at least in part to reduced subscriber loss at AOL UK

In our view cut-price business broadband, rather than IPTV, offers the best prospect of profitable revenue growth in fixed line

  • Virgin Media
  • Sky
Media 4 June 2009
Mobile revenue growth to March 2009 and outlook

In the following 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

Telecoms, Mobile, Non-UK Telecoms 3 June 2009
Recorded Music and Music Publishing

Steep declines in CD sales in major recorded music markets continued in 2009 as we had forecast last year (Recorded Music and Music Publishing [2008-39])

Sales of recorded music continue to be decimated by physical and online piracy, plus the disintermediation of the album purchase by the digital purchase of ‘cherry-picked’ tracks

A further knock-on effect on CD sales is the reduction in retailers’ shelf space devoted to music, including as a result of the bankruptcies of major chains (Circuit City, Woolworths and Zavvi) – what we have called the ‘perfect storm’ for the CD

  • Apple
Media, Music and Radio 2 June 2009
Setanta: sink, float or swim?

Against current annual losses in the order of £100 million, Setanta has the whole of June in which to attract the necessary investment that will allow it to continue. The alternative is closure

As complementary supplier of premium sports channels to Sky, Setanta has been more vulnerable to recessionary pressures, but it is not in the interest of any of its existing competitors/business associates for it to cease operations

There is a chance of survival, but it requires swapping the current retail/wholesale model for a wholesale only model as a start, with the possibility of further reductions in the costs of its sports rights

  • Sky
Media, TV 27 May 2009
OFT recommendations and CRR - little comfort for ITV

The OFT has delivered its verdict on ITV’s request for a review and modification of the CRR remedy that the Competition Commission imposed as a condition of the Carlton/Granada merger in 2003

In delivering its verdict, the OFT has chosen to sit on the fence. After recognising both the merits of the ITV case and the continuing concerns of the advertising community it reiterated earlier recommendations for minor changes in keeping with the times, but otherwise left it to the CC to decide what changes to make

The complexity of the CRR remedy and the polarised views of parties involved, as well as the burden of decision-making transferred to the CC, merely confirm the view that any significant modification to CRR will be a long time in coming, and almost certainly long after the start of the 2010 trading season, as previously suggested by ITV

  • ITV
Media, TV 27 May 2009
Will consumers pay for online news?

Newspaper publishers are about to enter a series of ‘online payment’ trials to help bolster disappointing online advertising performance that alone will be unable to support full scale newsrooms

Publishers are on the back foot, however: they have been giving away their content for free for almost a decade, and their core content does not have the unequivocal unique attributes of a football match, a movie or a pop song

While there are a variety of options for management to explore, in aggregate they will never match the print model, and so news is destined to shrink as a commercial enterprise for newspaper publishers

Media, Press, Internet 25 May 2009
Cable & Wireless full year results to March 2009: strong cost control

The UK and international businesses (now ‘Worldwide’ and ‘CWI’) are both continuing to perform well, despite weak revenue growth, thanks to strong cost control. Worldwide is now generating cash organically for the first time in memory

Performance at the newly-acquired Thus has been slightly below expectations, mostly due to increased customer churn. The sale of the ‘mid-market’ part of the business is a possibility

The market was disappointed by guidance for the new financial year. In our view it is both acceptable and achievable

  • Cable & Wireless
Telecoms, Mobile, Fixed Line, Non-UK Telecoms 20 May 2009