Fiscal FY 2009 closed on a very strong note, with record Sky+ HD additions contributing to Q4 net growth of 124,000, the highest Q4 increase since 2003, and opening up the opportunity for a large increase in TV operating margins after absorption of the initial subscriber acquisition costs

In assessing the medium-term outlook, the Ofcom pay-TV investigation appears unlikely to have a material impact on Sky earnings, even if Ofcom pushes through its premium wholesale proposals, while the advertising downturn may work to Sky’s benefit in developing its competitive strengths in programme origination outside sports

Results for the telecoms business again displayed strong volume growth in a difficult market. The business has now turned EBITDA-positive and is expected to generate a quarterly operating profit during FY 2011. However, original guidance for IRR remains challenging

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

The distribution business experienced modest growth in connections and revenue, easily outpacing European market handset growth of -15%, as the company continues to build market share

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

There is a reasonable chance that, by the middle of 2010, Ofcom will introduce regulations concerning the availability and pricing of wholesale premium movie and sports content, as outlined in its third pay-TV consultation released on 26th June 2009

The Ofcom wholesale remedy proposals are likely to provide rival retailers to Sky with modest benefits in new customer acquisition and customer retention in the first three years, whilst opening up the prospect of wider competition as the broadband infrastructure develops

The complexity of the wholesale pricing issues being addressed by Ofcom may yet stand in the way of achieving an effective “must offer” wholesale remedy

The Digital Britain report’s proposed fixed line levy to fund rural NGA may well never become law, but if implemented, could end up being absorbed by the service providers, with a disproportionately negative impact on TalkTalk Group

The proposed Universal Service Commitment for broadband at 2 Mbit/s looks of limited attraction to potential bidders, but could increase the addressable market for retail broadband by about one million households

The proposed spectrum solution is a sensible compromise which ensures a roughly even playing field between mobile operators over the longer term. There is however still some way to go to implement it, with mid-2010 the best case timetable for the main auction of new spectrum, with this continued delay benefitting the incumbent mobile operators

Ofcom’s recent statement on LLU pricing has increased the amount which BT Openreach can charge unbundlers for full LLU over the next two years by about 8% overall

We estimate the changes will raise BT group EBITDA by less than 1% over the two years to March 2011

TalkTalk Group’s recent retail price increase is more than enough to offset the impact of Ofcom’s ruling on its annual EBITDA to March 2010, but the ruling could still take 5% off annual EBITDA to March 2011

Sky has yet to start mass migration to MPF and is more exposed to increases in the price of ancillary services, but less exposed to those for MPF rental. Sky’s annual residential telecoms EBITDA to March 2011 could be 10% lower, but this could be reduced if management takes the opportunity to increase the price of retail line rental

Carphone Warehouse’s distribution business had a slightly mixed year, with strong volumes and revenue mitigated by a sharp drop in margins and profit, with margin being sacrificed for market share

Given the very poor recession-hit market for handsets, Carphone Warehouse’s market share gains have been dramatic, so the sacrifice was at least not in vain

Although TalkTalk Group missed much of its guidance to March 2009, we now view new guidance as achievable, with the main risks related to the integration of Tiscali UK

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

Against current annual losses in the order of £100 million, Setanta has the whole of June in which to attract the necessary investment that will allow it to continue. The alternative is closure

As complementary supplier of premium sports channels to Sky, Setanta has been more vulnerable to recessionary pressures, but it is not in the interest of any of its existing competitors/business associates for it to cease operations

There is a chance of survival, but it requires swapping the current retail/wholesale model for a wholesale only model as a start, with the possibility of further reductions in the costs of its sports rights

The OFT has delivered its verdict on ITV’s request for a review and modification of the CRR remedy that the Competition Commission imposed as a condition of the Carlton/Granada merger in 2003

In delivering its verdict, the OFT has chosen to sit on the fence. After recognising both the merits of the ITV case and the continuing concerns of the advertising community it reiterated earlier recommendations for minor changes in keeping with the times, but otherwise left it to the CC to decide what changes to make

The complexity of the CRR remedy and the polarised views of parties involved, as well as the burden of decision-making transferred to the CC, merely confirm the view that any significant modification to CRR will be a long time in coming, and almost certainly long after the start of the 2010 trading season, as previously suggested by ITV