UK broadband subscriber growth continued to decline in Q4 2008 year-on-year. We expect declining growth throughout 2009, with the growth rate remaining positive, but in single figures
We expect VMed to use the upgrading of its 2 Mbit/s broadband base to 10 Mbit/s as the basis for a de facto price increase
The resulting increase in revenue could be substantial, although growth in subsequent years is likely to be reduced by lower gross additions
We continue to expect cash flow performance in 2009 to be resilient but unspectacular. However, the prospects for double digit growth in subsequent years to 2012 are beginning to look more promising
VMed’s Q4 results were mixed, with consumer cable revenue remaining stable but cable net adds dropping significantly and opex performance hit by rising energy costs
Group OCF was stable thanks to improvements at Virgin Mobile and Content
We expect performance to prove relatively resilient in 2009, though not to the extent of generating significant growth in underlying annual cash flow
Ending a simmering commercial dispute, Vivendi’s Canal+ has agreed to distribute its packages to France Télécom’s Orange TV satellite customers, allowing Orange to relaunch its DTH platform (targeting 4 million customers off the DSL TV footprint) after its dismal ‘do-it-alone’ first six months
Canal+ recruitments will benefit from the resumption of active marketing for its packages over Orange TV platforms, after a poor year for subscriber growth
Canal+ catch-up TV will now be available to all Orange Canal+ DSL TV subscribers, as it is to those on Free, where it is very popular, plus Orange satellite subscribers, thus giving Orange back the leadership position on IPTV in France
ITV has agreed to provide 7 day catch-up and archive content to Virgin Media’s TV customers. By closing the last major gap in its VOD offering, Virgin Media can better exploit VOD as a differentiator with Sky, thereby assisting customer retention
ITV also stands to gain from the circa £5-10 million per annum that it could receive for distribution of its catch-up content and the addition of 500 hours of top archive content to TV Choice, Virgin Media’s subscription VOD service. There appears no corresponding downside risk to ITV advertising revenues
The announcement highlights the future role of Kangaroo, the proposed BBC/ITV/Channel 4 joint venture, in supplying archive material to complete Virgin Media’s VOD line up, and the remedies the Competition Commission is considering to protect wholesale VOD customers
Telecoms subscriber growth has improved sharply but this has been achieved at the expense of ARPU growth; revenue continues to decline
Apparent weaknesses in its Q3 2007 results notwithstanding, Premiere has a good chance of meeting its FY 2007 guidance targets of €1 billion in revenues and €80-100 million in EBITDA after recovering marketing rights to live televised domestic football
Uncertainties over football rights from September 2009 remain and doubts persist about long-term growth in a market where 95% of homes receive 30+ free-to-air (FTA) domestic TV channels. Even with News Corporation’s extra know-how, climbing from 3.53 million (end of Q3 2007) to 4 million direct subscribers will take some push, while 5 million looks a distant dream
Ofcom’s consultation document on Next Generation Access indicates a desire to avoid regulatory impediments to investment, not to force BT to act
Further consolidation could lie ahead for the UK commercial radio sector. EMAP is expected to offer its radio assets for sale and Scottish Media Group plans to divest Virgin Radio. The battleground is competition for listeners drawn by the BBC's increasingly popular national radio networks. This report however examines past consolidation, which produced substantial cost savings, without noticeably improving the commercial sector's fortunes. In our view, for consolidation to succeed in this regard, much greater attention will need to be paid to improving content
The loss of Sky basic channels, strong competition and a maturing broadband market have combined to weaken Virgin Media’s top line results sufficiently to cause cash flow to decline
Virgin Media has recently upped its mobile prices both within the ‘quad-play’ and on the Virgin Mobile standard prepay product