The sale of the Telegraph Media Group (TMG) gets a boost from its 2022 Trading Statement, including steadily rising profits, and visibility for 2023 subscriptions
TMG has built out its digital reader revenues, rapidly closing on one million subscriptions—setting the business on a more sustainable path
The sale of TMG and The Spectator will reach its highest valuation if appetite to own these assets sharpens and widens the range of buyers that will bid
Vodafone and H3G have finally announced their long-trailed merger plans, with weaker-than-expected financials and the focus squarely on the superiority of a combined network.
We view the hailed synergy estimates of £700m per year as achievable but the merged entity will need to deliver other positive financial filips to get returns above its cost of capital.
The approval case for the merger is that: it makes the operators a stronger competitive force; prices won't rise; a combined network will be superior, and that the status quo is unsustainable in any case.
VMO2 had a subdued Q1, with EBITDA growth only just positive—this was pre-warned due to tougher comparables and the mid-teens price rise not due to take effect until April/May.
KPIs were mixed: fixed was fairly strong and mobile was slightly weak, with there being realistic hope that the former is a trend and the latter a blip, although more work is required to fully turn around fixed.
Guidance for mid-single-digit EBITDA growth for 2023 has been maintained. This now excludes the nexfibre construction margin benefit, thus is in a sense an upgrade, and still looks eminently achievable.
Headline inflation-busting price increases of 14% mask effective increases averaging a sub-inflation 8%, due to their limited scope across the customer base and over time.
The high headline increases have led to attacks from political and consumer groups, we would argue unfairly, and may yet drive reputational damage.
Looking forward, inflationary increases may be banned, but we would expect higher fixed increases to replace them, and micro-regulating pricing structures does tend to result in unintended consequences.
Broadcaster decline accelerated in 2022, with record drops in reach and time spent. This was primarily driven by the lightest and youngest viewers leaving broadcast television while over-65s also reduced their viewing for the first time.
Loss of lighter viewers threatens the future viewing base of broadcasters and relevance to a new generation. Further, broadcaster status as the home of mass audiences becomes compromised.
However, retention of lighter viewers is not yet a lost cause. They are amongst the heaviest Netflix viewers, and the very lightest are spending more time in front of the TV set than previously—suggesting enduring appetite for TV-like content.
Microsoft’s planned acquisition of Activision Blizzard is in trouble. US, UK, and European regulators may make the deal impossible for Microsoft—and a disaster for Activision and the wider industry.
Sony’s late improvement in PlayStation 5 sales is only just enough to reach its target numbers for the year. It needs a more dynamic approach to a rapidly changing industry, and a less dogmatic message to consumers and regulators.
Netflix Games is more than a trial—it’s on track to become a major games platform.
Telcos are pressing the EU to force big tech to make a ‘fair contribution’ to their network costs, although this has drawn opposition from telecoms regulators, who rightly fear risks to the wider ecosystem
There are valid concerns to address however, with content providers not currently incentivised to deliver traffic efficiently, and telcos constrained by net neutrality rules from doing anything about it, resulting in unnecessary costs and service degradation
However, there may be better ways to address these, through reforming the implementation of existing rules to encourage more efficient content delivery, and allowing the telcos to provide enhanced delivery routes of their own, with Ofcom’s approach in the UK a step in this direction, but perhaps not a step far enough
The post-pandemic recovery has lifted vacancies to a high of 1.27 million, at critical levels in hospitality and health—sectors impacted by the exodus of EU workers. We expect recruitment advertising for private sector roles to have risen 13% in 2022 to £746 million (noting base effects from lockdown in H1 2021), and will decline c.4% in 2023.
LinkedIn dominates recruitment advertising directed at professionals, leveraging its free global networking service. Indeed anchors the other end of the skills spectrum, which is low value and high volume, aggregating openings to create a scale proposition for jobseekers, using technology to target and match them with employers.
Specialists are surviving Indeed’s technology-driven business model by relying on human expertise and ancillary HR services to differentiate. Agencies continue to specialise in supplying workers to large employers for temporary positions. News publishers have retained a small but dwindling slice of recruitment advertising.
Magazine publishers are at different stages of a transformation cycle, but a variety of external and industry factors are massively accelerating change.
Often described as the transition from page to screen, in reality transformation is a deeper redefinition of each brand’s community and purpose, and the use-case benefits it delivers.
Online advertising is evolving into a space where trusted consumer media can exploit their advantages of community engagement and premium context, rather than indiscriminate traffic.
Cost-of-living pressures and tougher fixed competition drove VMO2’s revenues (just) back into negative territory this quarter.
Synergy benefits, however, delivered impressive EBITDA growth (+5%) with more to come as the Virgin Mobile MVNO shifts on-network next quarter.
We struggle to foresee convergence becoming the company’s next growth driver as trailed by the CEO, but the mobile outlook is fairly robust and there are steps that can be taken to shore up the pressurised fixed business.