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Enders Analysis provides a subscription research service covering the media, entertainment, mobile and fixed telecommunications industries in Europe, with a special focus on new technologies and media.

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Rigorous Fearless Independent

The letter is free to access by clicking through the title.

Quality news media is a public good, and in the extraordinary circumstances of COVID-19 the sustainability of information and news provision should be ensured at all costs

COVID-19 has given new urgency to protect the supply of local and national news. News media, perhaps particularly local news media, is a critical information service for a vulnerable population, many of whom are confined at home. In the context of the findings of the Cairncross Review, the pandemic is intensifying rather than abating the sector's decade-long commercial crisis due to a clutch of inter-related structural changes.  

Many recent initiatives – including the Cairncross Review itself, the Nesta Future News fund and the Public Interest News Foundation – rightly focused on a framework for developing long-term sustainable models for news media. Government needs to shift the focus to managing an emergency; not just for our country’s health, but our citizen’s provision of quality news and information. Right now, we need to mobilize Government funding to make quality news a public service.

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When we look back at consumer expenditure on pay-TV and alternative entertainment options during past economic downturns across major countries, we find a broad confirmation of the industry’s comparative resilience.

Also found are variations between services sold through annual contracts and cancel-anytime rivals, a negative impact on big-ticket products, and opportunities for substitutional services.

Unique features in the current crisis include the suspension of sport broadcasts and an SVOD-rich offering which widens consumer options. If hardship persists, incumbents like Sky could face tougher times than during the financial crisis.

Jamie is impressed with the design of the app and, in particular, its Turnstyle tech which optimises content for both vertical and horizontal viewing. But it is not perfect. “The inability to multitask could be a problem for on-the-go users, if they can’t keep audio playing when they have to switch between apps.”

He added “It’s big-budget, traditional programming but in a mobile-only context. It’s not competing for the television set. Whether users stick is another matter. Being new and mobile-first might be its differentiator for the moment, but without hits that could ultimately count for little.”

COVID-19 has sent online news surging, with publishers experiencing massive traffic uplift, as trusted news sources become increasingly important.

But the industry is still heavily reliant on print revenues, and we are seeing supply chains come under extreme pressure as core readers self-isolate and retail giants close or de-prioritise news media. Advertising—including categories like retail and travel—has collapsed.

In face of existential threats to the sector, we have written to DCMS to mobilise Government funding to sustain news provision and journalism.

Tom said that while the pandemic had driven an upsurge in daytime TV viewing in the UK, especially around news, families are watching primarily on the big-screen TV, while Quibi is available only on mobile. “I don’t see the evidence for [demand for] this gap” between YouTube-style short clips and traditional TV shows.

He added “People have done short-form services before, but not at this level or quality. Quibi is trying to do something quite different. They won’t know whether it works for some time . . . and by then they’ve already thrown away hundreds of millions of dollars worth of investment in content.”

COVID-19 has led to an unprecedented decline in advertiser demand for TV, and while the steepest drop has occurred, broadcasters will feel the impact over a long period of time.

Programming costs are being cut or deferred, but it is not possible—or even sensible—to reduce total programming budgets significantly in the mid-term due to existing contractual commitments.

Increased government support in the form of advertising spend, a loosening of Channel 4's programming obligations—the lifeblood of the independent production sector—and revisions to existing measures (to capture a greater proportion of freelancers) will be required to ensure a flourishing, vibrant sector for the future.

James said “They have to agree player wage reductions; that has to occur. But if the agreed temporary wage reductions are not adequate, there could be problems.”

He added “If the reductions aren’t sufficient but they are in other big football clubs and other big leagues in the world, then the only other option to avert bankruptcy for many Premier League clubs will be to sell their players,” 

European mobile service revenue growth improved by 1ppt to -1.2% primarily as a consequence of diminished competitive intensity in France. Trends elsewhere were largely flat.

The mobile sector is playing an important role in tackling COVID-19 and is likely to be relatively resilient in the short term with a broadly neutral financial impact. Longer term it will be exposed to the fortunes of the economy.

There are reasons to believe that the improvement in trends evidenced in the last quarter may continue as churn reduction takes the heat out of some markets, cuts to intra-EU calls annualises out and for most countries, end-of-contract notifications will only begin to impact in 2021.