Further sharp year-on-year declines in viewing share by the leading commercial PSB channels, ITV1 and Channel 4, in Q1 2012 run contrary to the general stabilisation of viewing trends as Digital Switchover nears completion

The Channel 4 decline is more easily explained by exceptional factors, while closer examination of NAR trends suggest that ITV Family NAR has performed less well in recent quarters than results releases suggest

Once past Digital Switchover, digital convergence trends appear less of a threat towards the future stability of ITV and Channel 4 family viewing trends than the competitive threat from Sky as it raises its investment in UK programme origination

US music publishers have reached agreement on rolling over the mechanical royalties due on sales of digital and physical music formats for 2013-17

The expanded scope of the statute to cover ‘scan and match’ cloud locker services, such as Apple’s iTunes Match, provides incremental revenues to music publishers; the unlicensed ‘storage’ cloud locker services are not concerned

ASCAP’s agreement on US radio performance royalties will however reduce music publisher revenues

In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request.

Mobile operators, services and handset makers are diverging – they all come to the MWC but have increasingly little to say to each other as their businesses move in very different directions

In the context of -5% European mobile revenue growth, the MNOs at the MWC were a sober bunch, focusing on industrial services, defensive moves around messaging, and a (not unreasonable) plea to regulators for some relief

As competition in Android intensifies between hundreds of black plastic rectangles, the picture for OEMs looks tough but Google’s failure to make Android work well for developers may also start to bite, leaving an opening for Nokia and Windows Phone

Sky Italia’s strategy of selling low-priced satellite packages and HD set-top boxes has sharply reduced profitability, but helped subscriber growth

Escalating per user costs of football rights in a PAYG model has dissolved the profitability of Mediaset Premium, with no real upside visible

Sky Italia and Mediaset Premium both face the strong headwinds of the long consumer recession in Italy

The launch of the fourth mobile network operator in France has so far met with dramatic success, gaining around 1.5 million subscribers in the first month, driven by rock-bottom pricing and a clever mass media PR campaign

Its tariffs are, however, so low that it is very hard to see how they are sustainable in the longer term. In the short term, Free’s economics are boosted by asymmetric voice and text termination rates that result in other operators’ customers effectively subsidising Free subscribers by €5 to €10 a month

This arbitrage is very likely to disappear over the next two years, but Free Mobile can increase its prices when this occurs. Its challenge will be to acquire a critical mass of subscribers before this point, and to retain them thereafter

With the economy drifting sideways, we have set our centre case forecasts at 0-1% average annual growth in TV NAR and assigned a low probability to a repeat of the hyper-cyclical downturn of 2008/9

Comparative international data show a pervasive long term weakness in display advertising trends across the developed world, while emerging markets in Asia, Latin America and Central/Eastern Europe take an increasing share of global budgets

With digital switchover near completion, channel viewing shares across the main commercial groups should stabilise, but internet advertising, especially online video, will exert a negative structural downward pressure on TV NAR over the next three years at least

The launch of Netflix in the UK and Ireland has ignited the debate on the threat from over-the-top video to pay-TV services from Sky, Virgin Media and BT

Unlike in the US, Netflix’s UK prospects and those of competitors such as Lovefilm, are fundamentally limited, given the availability of low priced pay-TV with strong on-demand components included for free

The impact of Netflix on the UK pay-TV industry is therefore likely to be even smaller than the (hard to discern) effect it has had in the US

In this presentation we highlight Mediaset's star position among European FTA broadcasters, enjoying the highest share of its national advertising market (and profit margin), stable throughout digitalisation and secure for the future

Mediaset Premium, the pay-as-you-go and subscription DTT service, grew customers rapidly up to 2010, leveraging both DTT expansion and the appetite for low cost football and film programming. This hampered subscriber recruitment at satellite pay-TV operator Sky Italia, which relaunched its sales in 2010 on heavy programming in programming, set-top boxes and marketing

Sky Italia's subscriber base may be just above that of Mediaset Premium, but Sky's ARPU is 8x that of Mediaset premium, underlining the greater efficiency of the monthly subscription bundle in relation to PAYG pay-TV. Sky Italia is profitable while Mediaset Premium might just reach breakeven in 2010

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