The UK national press remains a ‘big beast’ in UK media, selling 7.2 million copies every day, supplemented by 1.6 million free newspapers; however, the decades long decline in print circulation and advertising has accelerated once again with the take off of smartphones and tablets.

Print still accounts for the vast majority of the nationals’ income, though revenue continues to fall due to declining copy sales and the structural shift of classified ads to the internet; there is also growing evidence that display advertising is declining by more than volume losses in some categories.

Digital is gathering momentum due to acceleration in digital advertising and a shift to pay models. In the UK, where print subscription levels are low, and home delivery lower still, publishers face the obvious challenges of digital transition and migration from a newsstand economy to a consumer relationship mindset.

2013 has seen yet another year of strong growth in consumer adoption of mobile devices and screens adding to the challenges facing traditional media. Press and radio have long been affected, but television is now starting to feel the heat

BT and Sky’s contest for premium pay-TV sports rights has intensified. August saw the launch of BT Sport, while BT’s acquisition of the European football rights in November was a clear statement of intent, spending half of Channel 4’s total programming budget on approx. 200 hours of content

The UK has seen buoyant advertising growth of around 4% in 2013, with similar growth expected in 2014, in the context of the strongest economic recovery in Europe

In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

The UK residential communications sector again had a strong quarter for revenue growth, with reported growth from the top four operators at 5%, or around 4% excluding the one-off impact of extra BT Sport related revenues

Unfortunately cost growth was even stronger, with margins dropping at three of the four largest operators. The aggressive launch of BT Sport has driven up content costs, marketing costs or both for all of the operators

The main issue going forward will continue to be actual and potential disruption relating to BT Sport. Content and marketing costs have likely been set at a new higher level, with further increases possible up to and following mid-2015, when the next Premier League auction is due and BT takes over the Champions League rights

Virgin Media had a very solid quarter, with cable households returning to growth, cable revenue up 4%, underlying group revenue up 2%, and underlying OCF up 3% despite extra content costs weighing

Subscriber net adds were not as strong as last year, when DSL competitors were weakened by supply constraints, but there is little sign of a substantial impact from BT Sport or TalkTalk and BT’s YouView-based TV offerings

BT’s foray into sport has however had an effect on profitability, as it has with BT itself and Sky, with Virgin Media’s premium content costs rising from both BT and Sky

On 30 October, two days after criminal trials for alleged phone hacking begin, the Privy Council will finally seal a Royal Charter to set up regulation of the press. The end of this drawn-out process might be thought near

Several major publishers are planning to boycott the system by setting up their own regulator, which will not meet the Charter’s standards. In recent days, Conservative ministers have said the press is ‘free’ to take that route

The Recognition Panel set up by Parliament’s Royal Charter may not report on the system’s success or (more likely) failure until the autumn after the 2015 election. Whether to have a showdown with publishers who reject the Royal Charter is a decision being put off by everyone

In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request

Virgin Media and Netflix have agreed on a ground breaking trial that blurs the traditional distinction between pay-TV platforms and OTT services by permitting TiVo customers direct access to Netflix via their set-top boxes The deal promises to benefit both parties as Netflix enhances the Virgin Media content offer to its TiVo customers with minimal risks of cord-shaving, while availability on Virgin Media TiVo offers Netflix the prospect of incremental subscription growth The question is whether other pay-TV platforms will follow suit, including Sky with its competitive interests in film rights acquisition, but where the Netflix value to UK viewers is increasingly seen to lie in its TV content

UK residential communications revenue growth was again strong in Q2 2013 at 4% supported by strong unit volume growth (despite seasonal factors in the quarter) and firming ARPU, helped by firm pricing and high speed broadband take up

High speed broadband adoption continued apace at BT and Virgin Media, but much more slowly at the other operators. This may start to change in the second half of the year, as Sky and TalkTalk market the product more aggressively, and a wires-only self-install version becomes available

Overall the market outlook remains very healthy, with two potential areas of market disruption – BT Sport and regulated pricing – looking like they will resolve without prompting a damaging price war

On 28 June, News Corporation split into two companies:
• 21st Century Fox will consist of the TV and entertainment assets: Cable Network Programming, Fox Filmed Entertainment, Television, Sky Italia, its 55% stake in Sky Deutschland and its 39% stake in BSkyB.
• New News Corp will consist of the publishing assets (Dow Jones, The Sun and Times/Sunday Times, the New York Post, News America Marketing Group, the Australian newspapers and Harper Collins), as well as Fox Sports Australia, the digital education business Amplify, a 61.6% stake in digital property business REA Group Limited and a 50% stake in Australian pay-TV operator Foxtel.

The split partly reflects industry trends. Over the last five years, a number of media conglomerates, including McGraw-Hill and Time Warner, have separated low growth, low multiple publishing assets from higher growth parts of the businesses in order to optimise valuations and management focus.

This report provides a breakdown of the divisions within the two new companies and analyses their growth prospects.