BSkyB’s Sky Europe project has added a new layer of interest in results of its Continental sister platforms. Sky Italia is almost profitable but with meagre growth prospects, while Sky Deutschland is loss-making but with significant expansion potential

In Germany Sky’s underlying subscriber growth trend is improving while churn is at a historical low. But ARPU growth has stalled, leading us to expect slower revenue growth in fiscal 2015. The latter would be consistent with Sky’s guidance for subscribers and EBITDA

Despite a double dip recession and erosion of its subscriber base, Sky Italia has improved profitability in fiscal 2014. Lower churn points to a possible return to growth – if the economy stabilises

2014 saw a fall in profits as BSkyB absorbed the £217 million step-up in the annual cost of PL rights and invested £60-70 million in accelerating growth in its connected offerings, but with strong underlying revenue growth pointing to a resurgence of profits in 2015

The annual results release was over-shadowed by the news of BSkyB’s proposal to create Sky Europe through the acquisition of 21C’s shares in Sky Deutschland and Sky Italia, where it sees great opportunities for revenue growth and cost synergies

Taking on a large increase in debt to finance the acquisitions when the next PL auction is about to strike sends out the message that BSkyB management is confident about the state of its business, has a clear view about the value of PL rights, and will not be side-tracked from the pursuit of its broader strategic objectives

TalkTalk’s June quarter results revealed solid subscriber trends, with broadband, fibre, line rental and TV net adds all either matching or slightly improving upon the previous quarter

Revenue growth dipped down on the previous quarter (3% vs. 5%), but the price increases in May/June have yet to have a full quarter’s effect, and the company remains confident in its full year guidance of at least 4%

Churn dropped again on the previous quarter, and the company makes a strong case that its triple play strategy should reduce it further, but the big test will be whether it can continue the trend over the rest of the financial year

European mobile service revenue growth improved to -7.6% in Q1 2014 from -9.0% in the previous quarter, but most of the improvement came from a drop in the regulated MTR cut impact, with underlying growth only improving 0.2ppts

This is in spite of continued improvements in GDP growth and the highest level of consumer confidence in six years, confirming that the often-blamed economic conditions actually have been having little impact on the market, with competitive intensity the real cause

For this very reason, the approval by the EC of in-market mergers in Germany and Ireland has been warmly welcomed by the industry and investors. Our view is that market repair is dependent on a change of attitude of the incumbents towards long term investment and away from chasing short term subscriber share via price discounting; consolidation may well help with this, but it is neither necessary nor sufficient

After a three-week long “messy and opaque” high drama auction Sky retained its broadcast rights for all Italy’s Serie A games for 2015-18 with a negligible 1% price increase.

Its rival Mediaset managed to keep hold of the top fixtures, but its coverage shrinks by 18% whilst paying 35% more. A deal earlier this year for the Champions’ League rights will add considerably to Mediaset’s total costs.

In the stagnating Italian economy, Sky may manage a return to more comfortable profitability. Mediaset’s pay-TV business model looks much more challenging, even if a new investor were to be lured in.

Ofcom’s fibre margin squeeze test’s initial indicative assessment concludes that BT’s current wholesale/retail pricing is ‘close to the boundary’ of creating a squeeze on its competitors

While BT can take comfort that it is at least close to passing the test, its DSL competitors (Sky, TalkTalk et al) can take comfort that BT cannot make life materially more difficult for them without failing it

Crucially, the costs of BT Sport are included in the test, so BT is now heavily dis-incentivised from further aggressive bids for sports rights, which is positive news for the prospective cashflows of both Sky and indeed BT itself

Market revenue growth in the UK residential communications sector was surprisingly robust in Q1 2014, rising a touch to over 5% (or around 4% excluding the direct impact of BT Sport) from just under 5% the previous quarter, despite facing a number of headwinds

Revenue growth at the top four operators has converged to around 4% for all, which marks a major long term turnaround for BT and TalkTalk, who back in 2012 were both experiencing firmly declining revenue well below market growth, and have since done much to stabilise their subscriber bases and sustain ARPU growth

Looking forward, we expect that BT will continue to do well in the June quarter given Sky’s continued focus on TV products, but thereafter its focus may change, and whether BT's recent competitive boost from fibre will continue growing is uncertain. Having said this, any likely market share shifts are relatively minor in the context of the market, with the general theme likely to remain that the rising tide is lifting all boats

Strong growth in the UK economy has created a very positive short term outlook for display advertising, with TV Net Advertising Revenues (NAR) expected to increase by 5% in 2014.

That bright prospect is nonetheless overshadowed by online video advertising, where 2014 is expected to add almost £200 million to the estimated £300 million spent in 2013. YouTube is leading the way, but the TV broadcasters also stand to benefit.

All the indicators point to yet more rapid growth in online video advertising over the next three to five years. So far it has had little apparent impact on TV NAR, but this should change from 2015 as TV and online video become more closely meshed.

Sky and TalkTalk are rolling out fibre in a small part of York, using a model that they could potentially extend to cover 10-15% of UK households

The economics of greenfield fibre build are still terrible in general, with even building in cherry-picked areas very hard to justify under current conditions, although the economics will improve over time as demand for speed increases

Moreover, once it is built it is built, and BT loses the wholesale revenue forever. Taking the hint and offering more reasonable wholesale fibre pricing may not be a bad option if Sky and TalkTalk persist

Amazon has entered the increasingly crowded digital entertainment TV device marketplace, one which could be strategically more important for the ecommerce giant than tech rivals Apple and Google

The frictionless integration of entertainment and ecommerce on TV represents a bigger consumer milestone than competitor services are offering, and Amazon’s brand has huge appeal, though at present it has less market traction for streaming than it does for other products

Content owners and broadcasters remain the real TV gatekeepers, with integration of TV and digital a service-level pipe dream for now, and so Amazon will likely have to accept being one of many, rather than the runaway winner as it is in books