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Karen Egan, at telecoms research group Enders Analysis, said: “Equity shareholders will be asking for some pain on the debt side of the equation in return for the £900m of equity injection, even if that pain isn’t in the form of an official write-down of the debt stack.”
The European contest has achieved success online by expanding the cultural relevance of existing entertainment intellectual property. It remains to be seen whether Eurovision Asia can “drive comparable engagement for a sister brand that does not carry the same heritage and audience buy-in,” says Ben Woods, head of creator economy at Enders Analysis.
Claire Enders, founder and chief executive of Enders Analysis, said the idea of a tie-up between BBC Studios and Channel 4 was "a perennial that flowered every so often".
Although BBC Studios could end up as the ultimate home for Channel 4, Priya Dogra, who became Channel 4 CEO in March, had already taken steps to improve its financial footing, such as winning Skydance-owned Channel 5's advertising sales business, Enders said.
"We're very far from a situation where Channel 4 is a failing firm," Enders added.
The push gives platforms an incentive to control both sides of the equation: media buying and the creative feeding it. As Enders Analysis senior research analyst Jamie MacEwan said, “This is absolutely about ad platforms who have invested heavily in AI using it to solve their own problems.”
“The more creative is automated within the platform’s systems, the greater the scope for them to introduce format innovations and optimize performance across placement and creative,” MacEwan said.
Opus said its interest in the consumer business “remains unchanged”.
However, Enders Analysis described BT as a “buyer of last resort” and warned the ramifications of a TalkTalk collapse would have been “very serious”.
Its analysts wrote: “Some of BT’s competitors may well protest but unless they actually make an alternative offer for the company, the failing firm theory is proven.”
With Paramount Skydance's acquisition of Warner Bros. Discovery (WBD) closing today, attention will turn to the financial future of the combined entity
Its financial future comes down to three things: how much cash the business generates, what prior claims exist on that cash, and whether what remains can pay debt down faster than linear TV shrinks
The bull case rests on linear decline attenuating, as $6bn of synergies and greater streaming scale lift earnings; otherwise cash generation alone is unlikely to deliver the headline deleveraging targets
“It’s probably the least bad deal for BT, because they were going to take some pain anyway,” said Karen Egan, head of telecoms at Enders Analysis. “They were going to lose wholesale revenues for a few months [and] they were going to have a bad debt for Openreach.”
“There’s now a question mark over whether BT is going to be able to stabilise that customer base,” Egan said. “I would say stabilising is a big challenge and they’re probably not going to be able to immediately.”
“BT’s a big group — they can find £50m, £100m down the back of the sofa here and there … You don’t have to cut that many costs in order to get [TalkTalk] to almost break even on an operating cashflow basis”, said Egan at Enders Analysis.
BT is buying TalkTalk as a buyer of last resort, given the chaos that would ensue with a disorderly shut down, and will face a regulatory clearance process that reflects this.
The acquisition will cost BT c.£400 million this financial year, and will be hard to
manage given the ongoing subscriber decline, with limited longer-term upside.
Damage limitation appears to be the main driver.
There is a limited impact on the rest of the market, with some opportunity to pick up
business, limited risk for CityFibre despite it supplying TalkTalk, but less choice for
some types of smaller broadband competitors.
With entry-level broadband prices in the UK standing between £20 and £25, an £11 surcharge would represent an increase of more than 50pc for some customers.
James Barford, at Enders Analysis, describes this as “quite a dramatic increase if you’re trying to spend as little money as possible”.
It’s not just young people, though. Older people who are marginal broadband users may choose to ditch their contracts and make do without.
Moreover, any decline in broadband take-up would result in what Barford brands a “doom loop”.