The COVID-19 crisis and suspension of sport has hit Sky hard, with Q2 revenue falling 12.9% year-on-year, and EBITDA (while flat for now) expected to fall 60% in H2 as the rights costs from a condensed schedule hit the bottom line

Underlying trends are hard to discern amidst massive disruption, but the UK remains strong, and increasingly less dependent on sport, with continental Europe a work in progress to repeat this model

Longer-term initiatives continue, with new branded channel launches in the UK, broadband launched in Italy, and scope for further moves in Germany provided by significant sports rights cost savings following recent auctions

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

In March 2019, the UK government consulted on a wider TV advertising ban until 9pm for food and drink high in fat, salt, and sugar (HFSS), to combat childhood obesity. The government may shortly publish the results more than one year later.

TV and TV advertising are not the cause of children being overweight or obese (O+O). Policy change in this area should inform and educate parents and young children, as they have in Leeds and Amsterdam.

With 64% of the UK population being O+O, obesity is a complex societal issue requiring a multifaceted approach. The evidence from existing rules, and plummeting TV viewing amongst children, says that further restrictions on TV advertising will be ineffective in curbing the rise of obesity in the UK.

Over the past few months we have outlined the evolving challenges that the pandemic has presented broadcasters—from plummeting ad revenues and production stoppages, to increasing SVOD viewing share

Now, however, is the time to shift thinking towards what can be taken forward from this time. There are strategies that were launched through necessity that will provide continued value beyond this period

The opportunity to reduce cost bases, leverage the greater reach of online services, forge better relationships with advertisers and better understand operational needs and limits presents the potential for more nimble, streetwise businesses

Admissions and box office revenues in 2020 will be the lowest in over three decades. The pandemic forced the closure of theatres, putting pressure on cinema to a degree unlike ever before.

The reasonable success of the straight-to-TVOD releases under lockdown has some studios suggesting TVOD distribution will live alongside theatrical in the future. However, simultaneous releases are unacceptable for cinemas and TVOD’s sub-optimal financial reality means theatrical release will remain essential for most films.

TVOD distribution will temporarily play an expanded role, while SVOD will pursue its climb up the distribution chain and big studios will assert their increased power to negotiate more favourable terms with cinema owners.

Press reports suggest that the restrictions on Huawei equipment may morph into a full ban, with new installations stopping soon and existing equipment to be removed by 2029.

The direct ‘tear-out’ and replacement costs for mobile would be very high at up to £2bn, and there would be significant disruption to 5G roll-outs as operators’ focus moves to replacing what they already have as opposed to pushing into new coverage areas.

Previous rules applied to fixed line broadband networks with as much force as mobile; having to replace Huawei broadband kit would almost certainly delay the move to ‘full fibre’, for no good reason even according to the government’s own report.

 

 

European mobile service revenue growth strengthened very slightly to -0.3% this quarter but, with many positive and negative factors at play, it would be wrong to conclude that we evidenced a convincing improvement in momentum.

Most operators have reiterated their financial guidance in spite of COVID-19 but there is caution from Vodafone and those exposed to sports rights (BT and Telefonica).

The outlook benefits from continued lockdown measures (reducing churn and spin-down) and the annualisation of some financial drags from the middle of next quarter. However, competition in Spain remains intense and the sector is exposed to any economic downturn.

Even with lockdown continuing and competition for time still almost non-existent, linear viewing is heading back towards 2019 levels after its big, early boost

The inevitable fatigue around COVID-19 news, along with the growing staleness of the TV schedule caused by content supply struggles, are behind the decline

Unmatched TV set use, made up predominantly of streaming and gaming, has held onto much of its growth, not affected by many of the challenges that linear schedules face. This trend will inform future viewing patterns

The slow recovery in UK mobile continued this quarter with a 1ppt improvement in service revenue trends.

In spite of operator guidance to the negative, the sector is likely to remain relatively resilient in the face of COVID-19 in the short term, with its various impacts affecting operators differently depending on their business mix.

The outlook is relatively robust with the impact of some regulatory initiatives muted by lockdown measures and the annualization of some financial drags from the middle of next quarter.
 

In the past five decades, women have acquired an unparalleled financial autonomy by participating in higher education, joining the workforce and becoming entrepreneurs, despite still present barriers.

Nevertheless, the portrayal of women in films, TV programmes, and even more so, advertising campaigns, continues to channel stereotypes of times long gone, leading to a dearth of role models for girls.

Companies that commit to diversity internally are in a stronger position to recognise clichés and innovate in their activities and messaging—only companies that walk the talk will convince.