This report examines Ofcom's proposal that independently funded news consortia (IFNCs) assume the provision of regional TV news, occupying the regional news time slots vacated by the Channel 3 licensees

IFNCs are to be composed of commercial news organisations (television producers, newspaper groups, radio stations or websites), and will operate as private commercial/publicly funded hybrid models of regional news gathering and provision, alongside the BBC and commercial news organisations

DCMS has invited tenders for three IFNC pilots covering Channel 3 regions in Northern England and the Borders, Scotland and Wales, to be awarded in May 2010 with operations to commence by summer 2010.

The impending Competition Commission announcement of its provisional decision concerning the Contract Rights Renewal (CRR) remedy is expected to make little change beyond extending CRR to cover variants of ITV1, such as ITV1 +1 and ITV1 HD

Extending CRR to cover ITV1 variants should benefit ITV NAR (Net Advertising Revenue) by improving ITV1’s overall audience share, but does nothing to ease the deflationary pressures now gripping the TV advertising medium, where CRR works hand in hand with the requirement on the commercial PSB channels to sell 100% of their advertising inventories

The current goings on underline the dichotomy between competition and public broadcasting policy objectives

T-Mobile and Orange’s plan to merge their UK businesses into a JV would create the UK’s largest mobile operator by some margin, and the enormous planned synergies of £545m per annum are actually quite unaggressive given the cost overlap

This achievement would be moderated by ‘integration leakage’, i.e. increased churn caused by customers leaving who were initially attracted by an aspect of one of the operators that disappears after integration, but the net result should still be positive for the JV

The remaining UK operators will benefit both from this churn and the reduction in competitive intensity associated with five players dropping to four. While all the operators may win, UK consumers might lose, with regulatory clearance thus still far from certain

ITV reported a pre-tax loss of £14 million in H1 2009 as the advertising recession took a grip, with total TV NAR down an estimated 17% against H1 2008, while ITV family NAR fell year on year by 15%

Although visibility over future advertising spend is restricted to a couple of months, we expect significant further decline in total TV NAR over the remainder of 2009 and 2010, before recovery starts in 2011/12

Cost savings, debt-restructuring and disposal of non-core assets, including Friends Reunited and SDN, should see ITV through the worst and we expect it to benefit later on from regulatory changes to its core advertising business

Vodafone (and others) are reported to be interested in acquiring T-Mobile in the UK, but any such merger would be likely to face significant barriers from regulatory authorities

This achievement would be moderated by ‘integration leakage’, i.e. increased churn caused by customers leaving who were initially attracted by an aspect of one of the operators that disappears after integration, but the net result should still be positive for the JV

The remaining UK operators will benefit both from this churn and the reduction in competitive intensity associated with five players dropping to four. While all the operators may win, UK consumers might lose, with regulatory clearance thus still far from certain

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

ITV plc outperformance in a TV advertising market that is expected to fall by 17% in H1 2009 (ITV Family down 16%) may simply reflect frontloading of budgets, with audience trends suggesting that ITV plc will be slightly down on the market average across the full year

In the continuing absence of voluntary cooperation between ISPs and rights holders, yet another consultation is being launched, but this time, the pressure on ISPs is being increased by the proposal to give Ofcom powers to reduce unlawful file-sharing, including “technical measures” (e.g. traffic shaping) if needed

With another lengthy consultation process ahead, and then a legislative phase, it is too early to judge the commercial implications on the ISPs or whether the creative industries will claw back sales from reduced unlawful file-sharing

ITV has switched from a turnaround to a survival strategy focused on preserving its core broadcast and content production business. The switch comes against a backdrop of plunging total TV NAR (net advertising revenues) due to the devastating mix of severe recession and major structural decline in the TV advertising medium

ITV plans to cut programme budgets outside regional news by £65 million in 2009 versus 2008 and rising to £135 million by 2011, raising the spectre of a downward spiral in programme budgets, audiences and NAR

We expect the eventual programme budget cuts to be at least double those already planned, given the scale of the unprecedented advertising crisis. Despite this, ITV may just squeeze through without getting sucked into the spiral, but it will be close

Project Canvas is the BBC/ITV/BT backed proposal for next generation Freeview and Freesat services that embraces IPTV reception, new EPG, home storage and HDTV applications

Setting up Canvas as a not-for-profit consortium and making it non-exclusive to content providers should avoid the competition issues which killed Kangaroo, but many questions remain and technical and regulatory delays could push back the launch to 2011

We do not expect Canvas to make a major difference to non-linear viewing of audiovisual content – its importance lies much more in future-proofing the ‘Free TV’ viewing experience on the terrestrial and satellite platforms

The planned merger of Vodafone and H3G in Australia has raised the question of what consolidation could occur in Europe, although a direct analogy is not appropriate because Vodafone is much weaker in Australia (#3 operator) than it is in the larger European countries, and so would face much more regulatory scrutiny in Europe

The only merger opportunities in the top five markets which would have a similar or lower theoretical impact on competition (and hence would theoretically be as easily approved) in the top five European countries would be T-Mobile and H3G in the UK, Wind and H3G in Italy, and any operator with Yoigo in Spain

There are massive cost savings to be had from in-market consolidation, with network, marketing and general administration costs all fully overlapping between operators. The non-merging players would also enjoy a period of less competitive intensity, which may last indefinitely