Service revenue growth dropped off by 2.7ppts this quarter, and into negative territory, as operators in all markets suffered weaker growth
Operators in France and the UK implemented price increases this quarter but re-contracting absorbed any positive revenue impact. In Italy, regulatory intervention thwarted operator plans to raise prices
Increasing competitive intensity in France and Germany comes at a time when operators can ill-afford ARPU dilution and high churn
A subscription funding model would be antithetical to the BBC’s public service mission, necessarily ending universality of access and undermining its breadth of content.
Options like separating out “public service” content from other programming would result in a decline in news consumption, while the subscription model would risk sustainability and encourage short-term thinking.
Further, there are technical roadblocks to executing this model, meaning that it is not feasible until long after the end of the current Charter in 2027.
Service revenue growth was broadly flat at 1.7% as improvements in Germany offset weaknesses in Italy.
The impact of price increases has been mixed, with subscriber losses dulling their upside, and the mixed picture looks set to continue into Q2.
The market continues to be challenging with elevated competition at the low end, pressure from some regulators to increase network coverage, and a somewhat soft EBITDA outlook.
Recently many countries, particularly in Europe, have moved away from funding their public service broadcasters via a licence fee.
Three main models have been adopted in its place: a state grant system, a ring-fenced income tax, and a premises levy—nowhere has chosen to fund PSBs solely by subscription or advertising.
Outcomes vary: Germany shows that a successful transition relies on years of deliberation and consensus, whilst Italy and France underline the perils of insecure funding arrangements.
This report is free to access
The UK charity sector’s role in sustaining the fabric of communities is increasingly important as poverty spreads during the worst cost-of living crisis since the 1970s, at the same time as donations are weaker and costs are rising.
Media play a crucial role in raising the awareness, engagement and donations to charities by individuals, the bedrock of income. Selected case studies of TV, radio and the press show how charities leverage their unique qualities to engage audiences across the UK.
We highlight Gordon Brown’s landmark anti-poverty community-based Multibank initiative, which gifts essentials to those most in need, and has vital support from Sky, the Financial Times and News UK.
The BBC plans to launch four new digital music stations as extensions of Radio 1, Radio 2 and Radio 3 and enhance 5 Sports Extra, all subject to regulatory approval.
Commercial radio is flourishing due to continuous innovation, while in stark contrast the BBC has experienced large audience losses, especially among the young.
The BBC should be able to launch new services— subject to competition assessments—while Ofcom should consider the impact of the total station regardless of whether delivery is broadcast or online.
Service revenue took a dip in Q4 to 1.5% as a waning price rise impact in the UK combined with the loss of positive one-offs in Germany.
We expect growth to slow further through 2024 as many operators implement lower index-linked price rises which are also coming under increasing regulatory scrutiny.
Vodafone has made progress on its turnaround plan—striking deals for its Italian and Spanish units—but it is not yet out of the woods, with ongoing challenges in Germany and approval still uncertain in the UK.
Radio listening is strong, but with a dramatic decline among the under-24s. Smart speakers will accelerate the trend and while the draft Media Bill’s intervention is helpful, it is not the cure.
The commercial sector is thriving through the launch of digital-only stations and major players taking advantage of deregulation. The issue of attracting a new generation is pressing.
The once-dominant BBC has a loyal older following. Hampered by regulation, it is difficult to see how younger audiences will develop an affinity with its audio offering.
Service revenue growth almost doubled this quarter to 2.4% aided by price rises in the UK, Spain, and France, but remains well below inflation-levels.
The revenue boost from in-contract price rises will ultimately disappear as customers recontract, dampening the EBITDA outlook as costs continue to rise.
Operators are looking to other strategies to strengthen their positions, including edging up new-customer pricing, M&A, and attracting wholesale MVNO business.
Vodafone's headline revenue growth of +3.7% is actually a small decline once Rest of World exchange depreciation is accounted for. Europe, however, delivered an improving revenue trend to +0.4%, as signalled at Vodafone's FY results announcement.
The mix and operating trends are less positive, with growth driven by low-margin B2B, and subscriber losses accelerating in German fixed. Investors will be weighing up whether these results are green shoots of a recovery or another false dawn.
Although the company may reach its guided EBITDA on assumed exchange rates, it looks set to fall short in euro terms, which has implications for FCF and dividend cover.