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Tom said “A minority of people have been annoyed by the [BBC’s] reduced coverage. The BBC made a pragmatic move. If they had carried dozens of simultaneous streams it would be costly, but the reality is not many people would have watched them, particularly with the time-zone issue. Of course the BBC would want to have everything, but times have changed.”
BT’s revenue growth bounced back by 3ppts in Q1, and EBITDA growth surged into positive territory for the first time since 2018, enjoying significant bounceback as it lapped the start of the pandemic.
Some aspects of the bounce are temporary, but some business lines are yet to recover at all, and there are positive signs of an underlying return to sustainable growth across much of BT.
Openreach’s momentum continues to grow with much more to come, and VMO2’s switch to full fibre reduces a long-term upside but introduces no significant new downside in our view.
ITV’s H1 advertising revenues were up 29% YoY—and up 2% compared to 2019—to £866 million, with the Euros and an improving market ushering in the biggest June ever for the broadcaster. Studios revenues rose 26% (to £798 million), which was 5% better than 2019
ITV’s new deal with Sky provides clarity around the relationship between the two companies, with ITV soon able to dynamically serve ads on both downloaded content and linear channels (but apparently not via Sky Adsmart) on Sky Q. By the end of 2022, the full ITV Hub app will be available on Sky Q
BritBox—which was not part of the Sky deal—has shown muted growth in the UK (adding 55k in H1 to 555k subscribers), while over the same period, international subscriptions lifted 18% (to 2 million)
Vodafone’s growth this quarter was a touch disappointing; the annualistion of the COVID hit was a clear boost but no evidence of any tailwinds. The 1.1% growth in the European markets should be the real focus for investors.
We see some evidence of positive initiatives from Vodafone such as its new EVO tariffs in the UK but it still has much to prove on operating momentum, especially in Germany.
There are signs that Vodafone is slow-pedalling in some markets and with demanding EBITDA targets and with leverage still finely balanced, we expect this focus on profitability to continue. The UK may be a special case.
Epic Games, maker of mega-hit Fortnite, sued Apple over alleged antitrust violations around App Store rules and Apple’s 30% tax on in-app transactions. A decision could come soon, though it will be contested on appeal.
The implications of the case could be far-reaching, as Apple and other tech companies like Google design their platforms to extract high-margin revenue from the transactions they facilitate, including news subscriptions: a five-year basic in-app subscription to The Times costs £885, of which Apple takes £158.
It comes in the context of a flurry of debate and decisions around tech antitrust and consumer protection: new laws may ultimately be needed, but regulators in the US and UK are proving they can be creative with their existing tools.
Tom said "The BBC shares the TV rights to the Six Nations rugby with ITV and co-produces dramas with the American streaming services - that is what it has to do now."
He added "The BBC is not getting any more money, but the cost [of acquiring rights and making programmes] is getting more expensive. It can only deliver less when the income from the [157.50] annual licence fee is the same."
Francois said “Nothing catastrophic, but it's a return to reality. It is obvious that growth was going to slow down after last year's boom. Demand is not infinitely expandable: in the United States, Netflix is already very present while in Europe, the potential is lower. The whole question is whether they can still invest so heavily in content in the future, given this slower growth."
He added "Netflix seems to have reached the saturation of its market in the United States", adds Eric Haggstrom, analyst at eMarketer, quoted by AFP, noting that "Netflix has lost significant market share against Disney."
