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.
Our research is independent and evidence-based, covering all sides of the market: consumers, leading companies, industry trends, forecasts and public policy & regulation. A complete list of our research can be found here.
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.
Karen Egan, head on mobile at Enders Analysis, said the companies were "certainly making a strong case for merger approval".
However, getting there "is going to be a long and tortuous road", she said and could take up to 18 months.
Ms Egan added that the "CMA's hawkish approach to mergers of late is not encouraging", after the competition watchdog blocked UK approval for Microsoft's proposed $69bn takeover of Call of Duty-owner Activision Blizzard.
François Godard, at Enders Analysis, does not see this as a change in Netflix's strategy. “It is above all experimental. I doubt that the group will start betting hundreds of millions in sports, when it has other less risky growth engines in its offer with advertising, in subscriptions linked to the end of password sharing, in games… he explains. This is very different from the case of Amazon, which seeks regular programs to retain its customers and encourage them to consume on the e-commerce site."
Piracy of live video feeds—chiefly sports—is growing due to illegal subscription ‘IPTV’ services delivered to TV sets.
Consumers discover illegal feeds through search engines and social media, and subscribe through global payment systems.
Anti-piracy activity is focused on feed disruption. There is little attention paid to credit card and online payment facilitators who need to do more.
“Berlusconi really went into politics to defend his media interests and establish Mediaset as the dominant operator in Italy,” said Enders’ Godard. “You would have to call that a success from a broadcasting and a lobbying point of view. Private broadcasting exploded in the 1970s without any legal framework, and he was brave in buying companies and being the best of the entrepreneurs. Then, when the state threatened to establish legal order, he managed to move into power and protect Mediaset.”
Consolidation has been the name of the game in the recent past, but Godard believes the group ultimately has struggled with the global transition to digital, instead relying more heavily on advertising while rivals diversify.
“They made some really good commercial decisions with their converged products,” said Karen Egan, an analyst at Enders. “But the big strategic question mark — and I think the question mark’s getting bigger every day — is Nexfibre.” She said it would have to speed up its build up from about 100,000 homes a quarter to 300,000 if it is to hit that target without a deal.