News Corp’s bid for the shares it does not own in BSkyB is unlikely to generate much concern at the OFT because newspapers and TV will be seen as being in separate markets

But, separately, the Secretary of State for Business, Vince Cable, is entitled to make a ‘public interest’ intervention that requires the plurality issue to be assessed alongside the competition investigation over the next few weeks

We think that there is a strong case that the transaction does raise substantial issues of ‘plurality’ as defined in the Court of Appeal judgment on the purchase of ITV shares by BSkyB in 2006.1 Whether the new Secretary of State has the stomach for a fight with the company must be open to substantial doubt

C&W Worldwide’s first set of annual results since demerger were flattered by the inclusion of a full year of Thus

Nonetheless, management has continued to execute well despite difficult market conditions. Excellent cost control generated another year of strong underlying cash flow growth, albeit from a low base

Looking ahead there are grounds for continuing optimism, despite minimal guidance, although the rate of cash flow growth is set to drop, as cost reduction becomes progressively more challenging

Facebook CEO Mark Zuckerberg has set out a vision of the social network as the hub of a personalised internet based on real identities and connections – the so called ‘Social Graph’, with Facebook providing the infrastructure

Simplified tools for apps and new social plug-ins for third party sites will increase Facebook’s influence both on and off the core platform, but raise some privacy concerns

These initiatives should help to drive Facebook’s user growth and engagement and ultimately improve monetisation, which we estimate on a per user basis is now more than half that of Microsoft’s online properties

Internet advertising rose 4.2% YoY in 2009 on a like-for-like basis in the UK, according to IABUK/PwC, due to growth in search, with classified and display down; however, previously unreported spend, including Facebook, pushed the total to £3.54 billion

Last year, for the first time, Google accounted for over half of spend (versus one third in the US) and 12% of UK ad revenue, a market presence that is significantly larger than in the US

Including Facebook, now No.1 for display, and increased spend on search, our 2010 growth forecast is 11%, pushing total spend to £3.82 billion or 25% of UK advertising

The News Corp management has given Sky Deutschland a full and costly revamp in 2009, leading to a steep year on year increase in negative EBITDA of around €200 million

Underlying trends of improvement in net subscriber additions, ARPU growth and churn reduction, assisted by its HD offer, suggest that Sky management will get close to, if not actually meet, its 2011 breakeven target

However, there are significant downside risks in the historically tough German pay-TV market, and robust profitable growth beyond 2012 presents a real challenge

Mobile content is moving to the centre of strategies for online
media. At MWC, the world’s biggest mobile conference, Google announced it now develops
all products ‘mobile first’ and Facebook reported a quarter of its 400m users access
the service through mobile

Three years after the iPhone 
launched, the handset industry is catching up, adding decent user interfaces
and mobile apps to colour touch screens and taking easy access to mobile content
beyond the iPhone

Beyond the self-selecting early adopter iPhone base, we found
real evidence of companies already successfully providing mobile content to much
wider segments of the population

The internet continues to gain share of media consumption and advertising at the expense of traditional media in the UK. This report highlights key online trends in the UK and our current forecasts for internet advertising in 2010 (we will address mobile advertising separately)

Recent news flow – including Google UK’s Q4 2009 results and reports of facebook’s rapid revenue growth – points to a better than expected recovery in internet advertising. On a like-for-like basis, we estimate that online ad spend grew 2.2% last year to £3,425 million or 23.5% share of total advertising

We have raised our 2010 UK forecasts and now predict that Google’s UK gross revenue will grow 12.5% YoY, helping to drive online advertising spend up 7.6% to £3,685 million (excluding sites currently not reported by IABUK/PwC)

The economy remains an issue, with the potential impact of tax rises and cuts in Government spending in H2 threatening the already anaemic recovery. In our view, the balance of risk is still on the downside