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Media analyst Claire Enders said talks were “very complicated at present”, adding that, as each organisation takes its own approach, a single commercial arrangement for media groups was unlikely and could be counter productive.
Enders added: “Chatbots won’t be credible tools if they are literally trained primarily on the sewers of misogyny and racism that make up most of open, accessible text.”
For companies with progressive values, the context of where their advertisements appear matters greatly, and this context includes other advertisers in the space, according to Jamie MacEwan, the senior media analyst at Enders Analysis.
“I could see this being a sell to advertisers with high standards for context who prioritize publications that walk the walk and build a strong connection with their readers based on shared values,” MacEwan said.
Market revenue growth turned (slightly) negative in Q1 2023, driven by weak demand and the waning of 2022 price boosts.
Next quarter will benefit from the high 2023 existing customer price increase, but this effect will wane across the year, and go into reverse next year due to lower inflation.
Other factors are mixed, with new-customer pricing tentatively rising, many smaller ISPs struggling, but altnet gains still likely to get worse before they get better.
Karen Egan of Enders Analysis, however, believes there are good reasons to allow the merger: "The negative financial spiral of [Three] and, to a lesser extent, Vodafone, indicates that the market is too crowded. Compared to 2015, the revenues of mobile operators , in real value, are down 20%," she underlines.
Karen Egan, an analyst at Enders Analysis, added the regulator had been “rather hawkish” in recent months, pointing to its decision to block Microsoft’s $69bn (£54bn) takeover of Call of Duty video games maker Activision.
Sky has withstood the consumer crisis better than its telco peers, but owners Comcast are stepping up pressure nevertheless.
No buyer for its German unit has yet emerged. In Italy, the outcome of the ongoing Serie A rights auction will shape that company’s growth prospects.
Looking forward, Sky has built a solid content supply line and is likely to strengthen further from the deflation following the end of the SVOD bubble.
Karen Egan, head of mobile at Enders Analysis, said: “They are certainly making a strong case for merger approval, focusing on the benefits of the quality of a combined network, and wanting to emphasise that they will continue to offer a range of tariffs, including social tariffs.
“We think that there is a very strong case for approval with traffic up tenfold since the last mobile merger was proposed and revenues down by 5 per cent over the same time. The economics of sub-scale nationwide operators is not viable any more. Whether the CMA will be convinced is another thing. It is going to be a long and tortuous road to approval, taking around 12 to 18 months.”
Vodafone and H3G have finally announced their long-trailed merger plans, with weaker-than-expected financials and the focus squarely on the superiority of a combined network.
We view the hailed synergy estimates of £700m per year as achievable but the merged entity will need to deliver other positive financial filips to get returns above its cost of capital.
The approval case for the merger is that: it makes the operators a stronger competitive force; prices won't rise; a combined network will be superior, and that the status quo is unsustainable in any case.
