The linear TV broadcast industry has kept its oligopolistic structure remarkably intact over the last 50 years against a background of much technological innovation and re-regulation, but now faces a new wave of innovation that promises growth of non-linear at the expense of linear True disruption can only occur by solving the device challenge of developing on a mass scale new, compelling and innovative ways to access content, but so far non-linear has achieved a very small share of total viewing while linear viewing levels are as high as ever Although non-linear viewing may become substantial, it is unlikely to result in fundamental change in the distribution value in the industry
The broadcast and online success of the London Olympics and Paralympics, though never in doubt, was beyond expectations.
Despite the large growth in mobile devices and rise in social media, audience data underlined the importance of live viewing on the TV set in the living room.
Although commercial audiences (other than Channel 4) took a battering, the Olympics/Paralympics was a blip and unlikely to harm budgets across the full year or have significant knock-on consequences in 2013.
France’s Orange Sport closed last month after France Télécom declined to bid for a renewal of its four-year licence to broadcast Ligue 1 football. The future of its sister film channel, Orange Cinéma Séries, remains unclear.
The strategic aim for Orange Sport was confused from the start – standalone profit centre or loss leader, fully fledged alternative to Canal+ or add-on to it.
Orange’s premium TV project was a failure: we estimate its cumulative losses at €1.2 billion, while Orange’s broadband market share and retail price premium shrank during the four years of its operation. But it did arguably strengthen Orange’s hand in carriage negotiations with Canal+.
YouView, the hybrid DTT/IPTV service backed by the public service broadcasters, is here, but with an initial retail box price of £300 it will be heavily dependent on the subsidies offered by ISP distributors BT and TalkTalk The TV market has evolved since YouView’s conception in 2008, with many other internet-enabled options now available; its managed and integrated approach gives it some advantages but doesn’t make it a ‘must have’ We expect YouView to mainly appeal to Freeview and BT Vision upgraders and project take-up between 1-3 million TV homes by 2015, though if the product improves and pricing falls dramatically it could see faster growth
The London Olympics promise to be a major success for both the free-to-air broadcast licensees and the leading pay-TV platforms as a result of co-operative deals being forged between them
Recent distribution agreements with Sky provide the BBC and Eurosport with a massively bigger window to showcase their credentials in in-depth sports coverage and new technologies, especially 3D
For Sky, and assuming VMed in due course, there exist a number of potential indirect commercial benefits, as the message is sent out loud and clear that there is no better place to go for London Olympics free-to-air coverage than the pay-TV platforms
Qatar’s Al Jazeera will launch its French pay-TV channel by this summer, showing weekly Ligue 1 and Champions League games, but it has yet to disclose a business plan and distribution deals
The new channel is a complement to Canal+, which broadcasts the most attractive games. Al Jazeera would need to obtain distribution on the Canal+ platform
Even if such a deal were to be struck, Al Jazeera would struggle to break even
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
BBCW is selling its portfolio of magazines. This is the first major disposal of the UK magazine marketplace since Emap sold its consumer magazines division to Bauer in December 2007, valuing the portfolio at 1.8x pro forma revenue, but we expect a lower valuation given the downgrading of the magazine marketplace
Our analysis of the portfolio suggests a mixed bag of relatively resilient adult-focused titles, while Radio Times is a significant cash cow with medium term potential from a more aggressive commercial owner. Our principal concern resides in the viability of the children’s magazine portfolio, where titles are tied to Cbeebies programming, with relatively short life cycles
Bauer is a probable favourite to buy the portfolio, assuming it is picked up by a trade buyer. A post-acquisition process of disposal of non-core assets could provide other trade players with the opportunity to scoop titles that fit well in their portfolios
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
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