The BBC Trust has given its provisional approval to the BBC Executive’s proposals for Project Canvas, the JV between the BBC and five partners that aims to enable DTT homes with broadband connections to access IPTV content on their TV sets

Canvas promises to enrich greatly the DTT platform; however, it is likely to encounter fierce opposition during the coming consultation from equipment manufacturers and the pay-TV platform operators, Sky and Virgin Media, especially in relation to its attempts to prescribe the user experience (UX)

We think that the BBC Trust will give its final approval, subject to the conditions specified in its provisional statement, but further delays seem likely and we do not expect Canvas devices to appear in the shops before 2011

This report examines Ofcom's proposal that independently funded news consortia (IFNCs) assume the provision of regional TV news, occupying the regional news time slots vacated by the Channel 3 licensees

IFNCs are to be composed of commercial news organisations (television producers, newspaper groups, radio stations or websites), and will operate as private commercial/publicly funded hybrid models of regional news gathering and provision, alongside the BBC and commercial news organisations

DCMS has invited tenders for three IFNC pilots covering Channel 3 regions in Northern England and the Borders, Scotland and Wales, to be awarded in May 2010 with operations to commence by summer 2010.

Annual market growth is dropping in line with our predictions over the past two years, despite some significant quarterly blips.We continue to project growth in 2009 to be significant, but much lower than in the past, with net additions of 1 million

We expect annual net additions in 2010 to drop by another 20% to 800,000 as the market becomes ever more saturated

We project 19.8 million broadband households by 2014 and have slightly increased our projections from 2010 to take into account the likely impact of higher growth in the number of households as recently predicted by the Office for National Statistics (ONS)

VMed’s Q3 results were strong, with the impact of the May price increases feeding through almost directly into growth in revenue and cash flow. Cable volume performance was solid, given difficult market conditions and the focus on higher value customers

VMed’s plans for HD are becoming increasingly important. In this regard, the outcome of Ofcom’s pay-TV investigation could prove crucial

The cost reduction programme is delivering ahead of expectations, and we remain optimistic that revenue growth will continue, in combination with reductions in operating costs, to generate further significant growth in cash flow

The impending Competition Commission announcement of its provisional decision concerning the Contract Rights Renewal (CRR) remedy is expected to make little change beyond extending CRR to cover variants of ITV1, such as ITV1 +1 and ITV1 HD

Extending CRR to cover ITV1 variants should benefit ITV NAR (Net Advertising Revenue) by improving ITV1’s overall audience share, but does nothing to ease the deflationary pressures now gripping the TV advertising medium, where CRR works hand in hand with the requirement on the commercial PSB channels to sell 100% of their advertising inventories

The current goings on underline the dichotomy between competition and public broadcasting policy objectives

This report looks at the UK broadband and telephony market up to Q2 2009. The key trend is that the steep reduction in UK broadband net additions continued in Q2 2009, to 176,100

VMed’s Q2 results were again mixed but, on balance, encouraging, with the impact of the May price increases feeding through into revenue growth

Cable volume performance was poor but, with the exception of broadband, no worse than expected, and is not expected to deteriorate further relative to the market

We remain optimistic that management will succeed in combining revenue growth with reductions in operating costs to generate sustained growth in cash flow from autumn 2009

ITV reported a pre-tax loss of £14 million in H1 2009 as the advertising recession took a grip, with total TV NAR down an estimated 17% against H1 2008, while ITV family NAR fell year on year by 15%

Although visibility over future advertising spend is restricted to a couple of months, we expect significant further decline in total TV NAR over the remainder of 2009 and 2010, before recovery starts in 2011/12

Cost savings, debt-restructuring and disposal of non-core assets, including Friends Reunited and SDN, should see ITV through the worst and we expect it to benefit later on from regulatory changes to its core advertising business

The BBC Executive has fleshed out many details of Project Canvas in response to questions raised by the BBC Trust: Canvas being the proposed joint venture between the BBC, BT, ITV and Five that aims to solve the challenge of realising the seamless convergence of linear broadcast TV and internet video to the TV screen in the living room

For Project Canvas to succeed, it is likely, in spite of its merits, to have to address competition concerns in the areas of company structure, stifling innovation and editorial controls over who gets to participate

Stifling innovation – whether to do with creative restrictions, marginalisation of competing players or undue prominence given to the traditional public service broadcasting (PSB) model – appears the most problematic issue facing Project Canvas, whose success will depend on its ability to convince the rest of the industry that it is stimulating, not stifling innovation

According to press reports, Sky has lodged a bid of about £160 million for the VMtv content arm of Virgin Media (VMed), estimated to be 50-60% higher than other offers in the latest and final round of the bidding contest

At TalkTalk Group (TTG) net broadband additions for the quarter were relatively strong, given likely market growth, probably due at least in part to reduced subscriber loss at AOL UK

In our view cut-price business broadband, rather than IPTV, offers the best prospect of profitable revenue growth in fixed line