The digital transition is almost complete in France, five years after the launch of DTT. After undergoing an audience share decline, TF1's share is stabilising. In contrast, M6 improved its audience share during the transition. Both groups are likely to remain dominant in the FTA TV market, thanks to the partial withdrawal of public TV from advertising sales

The advertising recovery in 2010 was strong. Thanks to its diversification, M6 is less exposed to the cycle than TF1, which is rebounding more strongly. M6 is also structurally more profitable

Pay-TV platform growth has stalled, with subscription decline at Canal+ somewhat balanced by growth of low cost packages of IPTV providers. Canal+ will benefit from the withdrawal of Orange from premium TV and a new distribution deal with Orange. Combined with the roll out of new set-tops with PVRs, we are moderately optimistic on Canal+ prospects

Facebook Messaging adds email, IM and SMS to Facebook messages. Some portion of the social network’s 600+ million users will switch to Facebook for an all in one text-based communications service

Switchers to Facebook Messaging in the US will reduce the display ad revenues of traditional portals, like Yahoo! and Microsoft, which use such tools to drive traffic

Less affected is Google. Some Gmail users will switch, but Google’s core business model is selling search advertising, where it is not challenged by Facebook (yet)

Ofcom’s decision not to investigate Project Canvas under the Competition Act removes one more regulatory obstacle to the launch of the broadband connected TV service with the brand name YouView

It looks increasingly as if the YouView launch will experience further delay, with autumn 2011 looking steadily more likely as disputes continue over the satisfactoriness of the technical specifications released by YouView for meeting manufacturer needs

Although backed by powerful broadcast and ISP interests, YouView faces stiff challenges to achieving widespread adoption among ‘Freeverse’ homes, with much depending on YouView’s ability both to deliver consistent product quality and to get its message across

We forecast UK online advertising to grow by 8% CAGR to £5.1 billion by 2014, representing approx. 33% of total advertising spend, overtaking press

Search is the main growth engine, which we predict will reach £3.1 billion in 2014, due to its appeal and value to advertisers as a sales and lead generation tool

Growth in spend on social media and video networks will push online display to just over £1 billion by 2014; whilst classifieds will grow to £840 million

The bounce back in H1 2010 advertising revenues (18% up over H1 2009), combined with extra cost savings, turned last year’s £72 million loss into this year’s £71 million profit; but could not disguise the need for transformation of a business overly dependent on an advertising model in long-term structural decline

The management’s five year goal of reducing the advertising revenue share (now 74%) to 50% echoes previous targets and the ability of the new team to deliver the goal will depend first and foremost on a revitalised ITV content production business

The agreement with Sky to launch HD versions of ITV2, ITV3 and ITV4 to Sky+ HD subscribers marks ITV’s first return to pay-TV since the collapse of the ITV Digital venture in 2002. This should not be seen as an about turn in ITV’s commitment to free-to-air broadcasting, but rather as a one off win-win opportunity for ITV and Sky

Subject to BBC Trust approval, Canvas looks almost certain to launch in spring 2011 after the OFT decided that it did not have the jurisdiction to review Canvas under the merger provisions of the Enterprise Act 2002. The OFT decision does not rule out complaints on other grounds, but the chances of persuading the regulators look very small

The launch of Canvas promises to strengthen significantly the free-to-air digital terrestrial platform, otherwise very limited compared with satellite and cable platforms in terms of bandwidth, but mass adoption poses numerous challenges and it is open to question whether Canvas will ever extend to more than half the DTT base

In the long term, it is hard not to see Canvas as an interim step in the growing convergence between the TV screen and the internet, raising the question of how successfully its PSB TV-centric approach can adapt to the coming challenges of the full blown digital age

Facebook CEO Mark Zuckerberg has set out a vision of the social network as the hub of a personalised internet based on real identities and connections – the so called ‘Social Graph’, with Facebook providing the infrastructure

Simplified tools for apps and new social plug-ins for third party sites will increase Facebook’s influence both on and off the core platform, but raise some privacy concerns

These initiatives should help to drive Facebook’s user growth and engagement and ultimately improve monetisation, which we estimate on a per user basis is now more than half that of Microsoft’s online properties

A hung Parliament now appears the most likely outcome of the UK general election on 6 May, giving the Liberal Democrats influence, in terms of votes and seats, over the next government

Because the Lib Dems are ideologically closer to Labour than to the Conservatives, we anticipate their influence will favour the policy and regulatory status quo in media and telecommunications in relation to the proposals made by the Conservatives

This influence would be strongest in a coalition of Labour and the Liberal Democrats, but also would persist in a Conservative minority government, reducing the likelihood of a new legislative framework for media as proposed by the Conservatives

The outlook for ad-supported UK media businesses is brighter in the short term than in the medium term, irrespective of who wins the election, since fiscal tightening is inevitable early in the next parliamentWe expect the Conservatives, should they win, to favour commercial media (Sky, ITV) over the BBC in general and in particular in the upcoming negotiations on the licence fee settlement post 2013Super-fast broadband networks enjoy cross-party support, but Labour’s 50 pence landline tax was blocked by the Conservatives, who prefer to use a small portion of the BBC licence fee

Internet advertising rose 4.2% YoY in 2009 on a like-for-like basis in the UK, according to IABUK/PwC, due to growth in search, with classified and display down; however, previously unreported spend, including Facebook, pushed the total to £3.54 billion

Last year, for the first time, Google accounted for over half of spend (versus one third in the US) and 12% of UK ad revenue, a market presence that is significantly larger than in the US

Including Facebook, now No.1 for display, and increased spend on search, our 2010 growth forecast is 11%, pushing total spend to £3.82 billion or 25% of UK advertising