The DCMS has published the government’s response to its consultation on the balance of payments between television platforms and public service broadcasters, the so-called issue of retransmission fees

One sure outcome is that Section 73 of the Copyright, Designs and Patent Act (CPDA) 1988, which has hitherto protected cable operators (i.e. Virgin Media) from having to pay retransmission fees, is outmoded and will go

But, we now have a disconnect. The government has stated unequivocally that it expects the continuation of no net carriage payments between the licensed PSBs and the platform operators and may consider legislative changes to ensure this. And yet ITV sees the government response as a welcome first step towards their introduction

Cinema, TV and VOD services share in the same ratings regime in the UK, giving parents confidence they can discern content unsuitable for their children.

Risks to children of being exposed to unsuitable content and advertising multiply on the 'open' internet. 

Parental controls supplied by ISPs are key to filtering content and sites, although a unified approach is better 

The award of the match packages in the 2017-21 domestic football rights auction in Germany is probably optimal for Sky (within the “no single buyer” constraint): it will broadcast about eight out of nine weekly fixtures including the top picks, while Eurosport’s package is complementary to Sky’s rather than substitutional

Sky will, however, pay a hefty price, with the new contract costing 80% more than the current one – although the new Bundesliga rights value is not out of line with other Continental leagues

We expect Sky’s German operations to briefly break even in fiscal 2017 before falling back into losses with a return to profit if other costs are kept under control. Management has made a bold statement of self-confidence: building scale is the priority

UK residential communications market revenue growth dipped down 2ppts to 4% in Q1 2016, due in roughly equal measure to slowing broadband growth, some one-off benefits in the previous quarter dropping out, and generally weak ARPU likely caused by promotional introductory price discounting

Virgin Media was the only major operator to buck the market trend and accelerate broadband growth, helped by its network extension Project Lightning, and this impact will grow throughout 2016, with the remaining operators squeezed between this and the slowing market

Growth in the rest of the year will be impacted by pricing decisions yet to be made, and slowing volumes could well drive market revenue growth below 4% during the year, but we do not expect it to drop very much below this

• The Commission proposes to require VOD services to implement a 20% share of EU works in catalogues, which Netflix already largely meets
• More impactful is the EU’s proposal for OTT SVOD services to provide access to the home service when subscribers travel in the EU, benefitting the UK’s 14 million subscribers
• TV broadcasters, which observe a 50% EU works threshold in their linear programming served on TV platforms and online players, will be able to opt-in to portability

Virgin Media broadband net adds of 70k were the highest in 6 years, with record market net adds share of 35% in a slowing broadband market, and the strongest consumer cable revenue growth in over a year. Project Lightning roll-out and strong marketing were the key drivers and are expected to continue over the year
 
Recent momentum has been largely dual play driven but TV investments, including exclusive on demand content, and a software upgrade and refreshed set top box to be launched in H2 2016, should help with ongoing TV net losses particularly as cost pressures mount from wholesale sports content

Project Lightning updates informed that of the 4m total premises budgeted for network expansion to 2020, at least 25% of these will be connected via FTTP, signalling increased infrastructure competition with Openreach whose G.fast roll-out plans potentially diminish the current cable network speed advantage (though further cable upgrades are both possible and would recover this)

At present, Sky exclusively holds all pay-TV domestic live rights to Germany’s top football league. The 2017-2021 rights auction will conclude in early June. It contains a new soft ‘no single buyer’ clause referring solely to online rights

Sky’s real threat comes from potential bids for the main TV packages by deep-pocketed telecom or digital platforms. This could see Sky losing games and shouldering significant cost increases

We think Sky’s German operations will break even by fiscal 2017. Beyond this, profitability is heavily dependent on the auction’s outcome. If it were to retain all live rights, Sky could afford to increase Bundesliga costs by up to 40% over the four-year period. Anything beyond this would lead to Sky making losses

Enders Analysis co-hosted its annual conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 8 March 2016. The event featured talks from 22 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette. 

This document contains slides presented by Andrew Griffith, Group CFO and Managing Director of Consumer Businesses at Sky, and Tom Mockridge, CEO of Virgin Media.

Edited transcripts of the presentations and panels from the conference are available here.

Videos of the presentations are available on the conference website.

Enders Analysis co-hosted its annual conference in conjunction with Deloitte, Moelis & Company, Linklaters and LionTree, in London on 8 March 2016. The event featured talks from 22 of the most influential figures in media and telecoms, and was chaired by Sir Peter Bazalgette.

This report provides edited transcripts of the talks, and you will find accompanying slides for some of the presentations here.

Videos of the presentations are available on the conference website.

The UK residential communications market maintained strong growth of 6% in Q4, helped by overlapping price increases at BT and TalkTalk, albeit mitigated by weaker volume growth as a result of the TalkTalk cyber-attack

This strong growth level benefits from multiple factors, including continually growing broadband adoption, broadband ARPU being boosted by the shift to superfast, price increases across line rental, calls and premium pay TV, and additional pay TV adoption at the lower end

We expect a modest dip in market revenue growth moving into 2016 as various one-off boosts drop out, but the underlying drivers of growth are sufficiently diversified to give us confidence that further downside is limited