The number of people willing to pay for online news now roughly matches print paid circulation, and will soon be substantially greater, with publishers increasingly demonstrating that their strategies are influencing industry outcomes

Our thesis is that subscriptions work in some cases, but that a more systematic reader-first approach benefits all cases, recalibrating management focus to media’s core purpose

Effectively implementing such an approach is a more radical, transformative development than is sometimes assumed. The winners will deploy sophisticated, bespoke audience acquisition and retention funnels and undergo detailed appraisals of the trade-offs necessary for optimal user experiences

Market revenue growth dipped to around zero in Q1, with fierce competition on new customer pricing the major factor

All four of the big operators now suffer from declining ARPU, with existing customer price rises increasingly hard to land given falling prices for new customers

The rapid move to superfast is not helping as much as it should; the operators will hope that they fare better with the move to ultrafast

Q1 results evidenced the downturn that Virgin Media had flagged in February. Consumer cable weakened sharply to just 1% growth vs 3%+ historically, partly thanks to ‘increased promotions in response to market dynamics’

Monetising Virgin’s speed advantage is becoming more challenging. Competition is hotting up for high-speed broadband in particular, fuelled by Openreach targets for smaller players and BT’s full fibre and G.fast rollouts

The company faces two vital strategic decisions – whether to wholesale BT’s fibre products outside its footprint, and whether to allow wholesale access to its own network. The former is likely to have the most legs and offers an alternative to further Lightning extension

Market revenue growth accelerated to 3% in Q4, but it might never reach this level again, being helped by a never-to-be-repeated BT overlapping price rise

With price rises becoming more challenging in general, and superfast pricing under pressure in particular, maintaining/increasing ARPUs is becoming more difficult despite superfast volumes surging

Openreach’s ultrafast roll-out has accelerated, challenging Virgin Media and bringing the prospect of further price premia, but perhaps too late to be of significant benefit in 2019

After strong underlying 2018 results, the more subdued outlook for 2019 is an important shift, driven by regulatory pressure on mobile, higher programming costs, one-offs and softening demand

Lightning is continuing to drive market share gains in new build areas, and should provide a 2ppt tailwind to revenue growth in 2019, but enhanced visibility on the economics of rollout suggests that its conservative approach is a wise one

In existing build areas, Virgin Media is facing-off pricing pressure from TalkTalk on high speed, and potentially from BT on even higher ultrafast speeds, with it moderating pricing and launching a market-beating 500Mbps product in Spring 2019 in response

UK residential communications revenue growth bounced up in Q3 as we had predicted, on the back of continuing solid volume growth and improved ARPU growth driven by a series of price increases impacting in the quarter

The overall revenue growth of 6% was supported by some one-off factors, such as overlapping price increases and the launch of BT Sport Europe, but we believe that growth at this level will be sustained for the next two quarters at least

Looking forward, the impact of TalkTalk’s cyber-attack is uncertain in the detail, but it will clearly slow TalkTalk, benefit some of the others and may temporarily impact market volumes. Another area of competitive uncertainty is the impact of Virgin Media’s network extension as it gathers momentum into 2016, with all of the others likely to lose significant share in Virgin’s expanded areas

Virgin Media had its strongest quarter for three years in broadband net adds market share – a robust performance in a competitive environment and very much in line with recent strong performances at both Sky and BT

Group revenue growth improved 1ppt, or 3ppts adjusting for distortions, driven by accelerating growth in all operating divisions although higher content and hardware input costs offset the benefit to margins

The Project Lightning network expansion program continues, targeting 250k new premises by the end of 2015, with a discernible impact to subscriber and revenue growth likely to be apparent from the start of 2016

While volume growth remained robust in Q2, UK residential communications revenue growth did dip again during the quarter, to 3.6% from 4.5% in the previous quarter and 5%-6% for much of 2014

However, this largely related to the timing of price increases, with there being a host of headline and effective increases due before the end of the year. The combined effect of those announced so far is sufficient to push market growth back up to the 5%-6% range for both of the next two quarters

Looking ahead, the actual launch of BT Sport Europe in Q3 may have further impact, but a modest pre-launch effect suggests that this will not be dramatic. BT will be hoping that it at least drives an acceleration of growth in its TV base, given that it is still free for these users

UK advertising is having a bumper year – some of the strongest growth for two decades – but print is receiving none of this upside. The year started soft then plummeted in the weeks immediately before and since the General Election, with increasingly serious implications for the sector

A reasonably steady UK economy and explosive TV and digital spend evidence a structural decline for print media display, though specific factors also point to some cyclical effects

We forecast a slowing of the rate of decline in H2 2015 and 2016, but we believe sooner or later the industry will have to work closely with agencies and brands to establish new terms of engagement for print media

Virgin Media’s subscriber figures bounced back in Q2 after a weak Q1, and consumer revenue growth also improved to a respectable 3% despite continued headwinds from VAT changes

The UK broadband market remains tough, and BT Sport Europe’s launch in Q3 will not make it any easier, but Virgin Media’s access to this and all other sports channels means that it should be able to remain above the fray

The network extension program is likely to give further growth impetus from 2016, and the company is laying the groundwork for network speed upgrades which will maintain its speed advantage for at least the medium term