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Karen Egan, at Enders Analysis, said: “Openreach, like the other established players, are suffering line losses as a consequence of the alt-net fibre goldrush, and TalkTalk customer declines.
“It makes things tough for now but the free cashflow recovery story is not at risk and the line losses should moderate as the alt-nets no longer have the funding to expand their networks.”
Openreach, which operates a nationwide broadband network and sells access to other providers, accounts for about 30% of BT’s sales. Pressure from a new crop of challenger fiber optic providers, known as alt-nets, are hurting some older providers, Enders Analysis analyst Karen Egan said.
“Openreach is suffering losses to the alt-nets in the same way that the rest of its established peers are,” she said. “It’s tough for now, but those losses will naturally deplete as the alt-net funding market has dried up.”
Advertising has outgrown the UK's wider economy by 20 percentage points since 2000 thanks to online and advertisers in export markets, especially China, targeting sales in the import-dependent UK market.
If current trends held to 2030, advertising would reach 1.7% of UK GDP, over 50% higher than 2019—we believe this to be the least likely scenario as the UK already sustains higher ad intensity than major markets.
The next recession could be the moment when online ads growth corrects and then reverts to low single-digit growth in line with the economy. A 'soft landing' is also possible, while a surprise outperformance would require more drastic structural shifts.
2024 was a stabilising year after a troubling 2023— Channel 4's revenue was up 1% and it ended the year with a much smaller deficit, although aided by a drop in both overall and original content spend.
Facing slightly uncertain conditions, the broadcaster continues to be over-exposed to the advertising market —91% of revenues—meaning its thoughtful move into production and acquisition is necessary and should be supported.
Channel 4’s presence in streaming continues to grow but struggles to mask the continued drop of 16-34 viewing share. Online success owed much to the increasing influence of foreign library content—this commanded increased spend in 2024.
“KKR wants to send a message that scale will bring higher margins,” says François Godard, a senior media analyst at Enders Analysis. “The M&A scene will continue to be dynamic, so we can expect Mediawan to keep growing.” The company refinanced last year, raising a €500 million loan and a €225 million revolving credit facility, which analysts say will fund acquisitions. D’Arvieu says Mediawan is unlikely to embark on a shopping “frenzy”, but will instead target partners that share the same “artistic vision as us”.
Pay TV gets the word out, too, with Sky’s coverage undoubtedly excellent, their funds having helped orchestrate England’s World Cup wins and more. The media research firm Enders Analysis reported last year that “young viewers now consume nearly half of their sports through Sky … which refutes the widely held view that young people don’t watch sport behind a paywall”.
“Is Sky facing a slow death? No,” says Claire Enders, the founder of Enders Analysis. “They have survived 13 years against the likes of Neftlix spending enormous amounts of money and it is not like their model has been unseated, it has just had to change.
“It has been an incredibly tough market, and there are more TV options than ever before, and Sky is investing very heavily in a number of strategies to reduce dependency on content now on streaming services.
“You can say they have been through the worst already and come out the other side, the business has stabilised and is being set up for the very long term.”
As Enders Analysis’ senior research analyst Jamie MacEwan put it, direct response is over 60% of online ad spend, and focusing on the technology and partnerships to cater to this demand is a recurring theme across ad platforms. Pinterest’s own efforts, which span improvements to its visual search capabilities as well as launching its own AI-campaign tool Performance+, are starting to bear fruit.
