In 2003, the Competition Commission imposed the CRR remedy as a condition of the proposed merger of Carlton and Granada to allay advertiser fears that the new ITV plc would use its market power to leverage higher airtime prices on ITV1 CRR made it possible to stop the ITV1 premium from rising and yet the ITV1 premium has risen almost without a blip since 2003. This note asks why The answer it seems has less to do with the negotiating muscle of ITV Sales than with the enduring USP and relative inelasticity of demand for ITV1 airtime and demand elasticity for the rest, while CRR has become increasingly irrelevant

German unbundlers are in decline, unable to match cable for price or bandwidth, or to invest in new fibre networks. Vodafone, the second largest unbundler, must choose between consolidating and divesting Merging with Kabel Deutschland would deliver fixed line synergies – with high execution risks. But, based on the French and Spanish experiences, we doubt that a quad play strategy (synonymous with a price war) would generate value Mobile operators’ fixed line ventures are also in decline elsewhere in Europe, but cable is not always to blame, with pure play fixed line altnets also tending to outperform them, suggesting that genuine cross-selling advantages are marginal at best

Highlights of 2012, which saw double digit EBITA growth for the third year running, included ITV outperformance of the advertising market, strong organic growth in ITV Studios and a large increase in Online, Pay & Interactive revenues The outlook for 2013 suggests that EBITA could see double digit growth for the fourth year running. This is due to a number of factors that may include the bonus of extra NAR as BT launches BT Sport in the summer, arguably the biggest TV media event in recent years For the longer term, two key challenges in the Broadcast & Online sector are the retention of the ITV main channel audience share in an increasingly converged digital landscape and ITV’s ability to grow its online presence and drive new revenue streams

The development of the Digital Britain infrastructure, introduction of tablets, increasing connectivity of TV sets and launch of on demand OTT services over the internet have greatly intensified interest in connected viewing and its impact on the traditional broadcast model No single source of audience measurement for viewing of long- and short- form video content across all screens yet exists, though current market data suggest that connected viewing occupies a c. 8.5% share of total viewing across all screens By 2020, we project the connected viewing share of total viewing across all screens will reach 20%, with tablets being the primary drivers of growth, in part incremental and in part substitutional to viewing to the TV set, where we expect the connected viewing share to remain under 5%

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

In this short presentation we show our analysis of trends in UK broadband and telephony to September 2010, based on the published results of the major service providers and Ofcom telephony data. We include our own estimates where reported data is incomplete. This quarter’s edition includes a revision to some historical trends resulting from our own interpretation of BT’s recent adjustment to the volume of unbundled lines.

Highlights in the quarter included exceptionally strong growth in broadband net additions at Sky and the resumption of the long term rate of decline in broadband market growth by volume.

European mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally

GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern

Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero

Vivendi is close to being in a cash position to buy out minority shareholdings in SFR and Canal+, shedding the image of a ‘conglomerate’ of partly owned and diverse assets, which has weighed on valuation Acquiring Vodafone’s 44% stake in SFR (now only a question of price) would allow Vivendi to rebrand itself as a telecoms story, serving France, with Maroc Télécom and mainly Brazil’s GVT supplying the upside To fully acquire Canal+, Vivendi’s offer will need to consider Lagardère’s option of floating its 20% stake. Owning 100% of Canal+ and SFR opens the narrative of a ‘French media/telecoms champion’ – which we find less credible

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

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