Beyond the short-term impact of the COVID crisis, the value of football rights in Europe is heading down.
Lower competitive intensity in the broadcasting market is the main reason, and looks unlikely to be reversed.
The leagues must consider long-term initiatives to broaden demand—cash fixes risk worsening their structural problems.
Market revenue growth improved to -2%, after the sport-affected -6% last quarter, but was still low by historic standards.
Backbook pricing pressure is still hitting the market, and this will not improve until 2021 at the earliest.
Demand however looks strong; broadband adoption has re-accelerated, and the early signs of ultrafast adoption are encouraging.
Advertising demand has risen, with total ad revenue down just 7% in Q3, and Q4 expected to be slightly up—this means ITV will be down just over 10% across 2020.
COVID-19 has accelerated viewing shifts, along with corporate restructuring across the entire sector to try and keep up. ITV is no exception, although the creation of its new Media and Entertainment Division may be less revolutionary than it could appear.
Studios revenue was down 19% for nine months to September but 85% of paused productions are now completed or underway, with nothing major still stalled. However, the added costs of COVID-19 protocols are material and will linger.
BT’s revenue growth remained very suppressed in the September quarter at -7%, with a limited COVID-19 recovery chocked off by seasonal roaming effects and regulator-inspired pricing forbearance.
EBITDA growth did improve to -3% from -7% last quarter, mainly due to short-term cost actions and the early impact of its longer-term cost program, and the company has upgraded its short- and longer-term EBITDA targets.
The company is also optimistic on a longer-term return to underlying revenue growth, helped by a return to regular existing customer price increases and the impact of full fibre, but not until 2023, with a few bumps in the road before then.
Channel 4’s 2019 results were solid but unsurprisingly, greater interest is in how the broadcaster has fared in 2020, and what this might mean for its future.
Despite very grim early forecasts, Channel 4 has seen advertisers rush back, with ad revenue likely to only be down 8-10% YoY. Compared to the estimates of −25% to −40% at the height of the pandemic, this is almost cause for elation.
2021 will arrive with a tough comparator in Q1, however COVID-19 has materially accelerated Channel 4’s transition to digital through shifts in viewing behaviour, an existential project that the broadcaster hopes will be supported by changes to its commitments as a result of the upcoming PSB review.
In this report, we examine the completion rates of every scripted series since 2018 across all the major UK broadcast channels.
Comparing scripted programmes across different channels by overall viewing is difficult as these numbers are affected by promotion, prominence, competition, the quality of online player UIs and availability.
The rate that series are completed—viewing of the final episode as a proportion of the first episode—eliminates these and allows comparison.
STV now has a clear pathway to reduce its reliance on linear advertising by investing in production, while pushing the transition to digital forward with a UK-wide footprint.
To that end, STV Player has some momentum and recent production company acquisitions, increasing external commissions and PSB Out of London quotas should ensure STV Studios returns to growth in 2021.
Such development is imperative: COVID-19 has accelerated structural change in viewing habits meaning now that content must not only be great, but available widely and immersed in a smooth user experience just to have a chance.
Market revenue fell 6% in Q1 2020, largely due to lack of sports revenue (which will bounce back), but backbook pricing woes also hit.
Broadband volume growth accelerated though, and may accelerate further as supply constraints ease.
The increase in working-from-home may also enhance demand for ultrafast, the best hope for a return to industry revenue growth.
BT’s June quarter results were predictably hit by COVID-19, with revenue and EBITDA dropping by 7%, but less predictably most of the hit was on mobile and business customer revenue, with consumer fixed resilient despite the suspension of sport.
BT’s full year guidance is cautious, with a 7% EBITDA decline at the mid-point, with much of this caution around further hits to its business revenue as government support is withdrawn.
BT’s full year guidance is cautious, with a 7% EBITDA decline at the mid-point, with much of this caution around further hits to its business revenue as government support is withdrawn.
ITV’s ad revenues were down 43% in Q2 (and H1 down 21%), with the broadcaster noting that July was ‘only’ down 23% YoY, with August “markedly better” again
With most production stalled because of lockdown, Studios was down 23% in Q2 (17% in H1). Production is returning to scale (although hopes for quality scripted should be tentative) but there will be a payment and delivery lag that continues to hit future quarters for both sides of the business
Overhanging this improvement, however, are the structural viewing shifts that have been instigated by the pandemic—streaming services have experienced much greater uplifts and we foresee them grabbing a greater proportion of the viewing pie. Locally, modest BritBox is unlikely to help