Cable & Wireless annual results ending 31st March 2006

Q2 results were something of a mixed bag. Headline growth was solid thanks to 1&1 onboarding, and whilst underlying trends in Germany for both revenue and EBITDA were still firmly negative, the former stabilised and the latter improved.

Tightening of EBITDA guidance in Europe is welcome, implying a flat headline performance and an underlying EBITDA decline of no more than 4%, with the potential for better, we believe.

VodafoneThree synergies and cloud reselling should take over the growth mantle when the 1&1 boost fades, facilitating some limited capacity for dividend growth.

Disney’s streaming business grew healthily, with Q4 YoY revenue growth (+8%) outpacing Q3 (+6%). Cinema had another tough quarter, although the full year ended well ahead 

Disney's progress on new platforms—in particular its efforts on Fortnite and the launch of ESPN's new app—increases the pressure on its US linear operation: it may not yet be moribund but has declining relevance to the rest of the business

In the UK, Disney+ continues to be challenged by its engagement levels—e.g. top new shows, a major driver, are relatively less likely to cut through its user base—but there appears to be a disconnect between lower usage and churn

Comcast/Sky is in preliminary discussions to acquire ITV’s broadcast and streaming operations. With a larger audience footprint, better tech and a broader range of British content, the rationale is that the merged entity would be better placed to compete with global streaming giants.

The belief will be that the downward momentum of both parties will be slowed, and the offering is more likely to be a primary viewing choice. There is a danger that ITV may lose some of its unique identity.

The deal will need to clear regulatory hurdles including concerns on media plurality. The harder test will be convincing the CMA that the relevant advertising market is wider than just broadcasters.