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
The UK’s choice of policy for rebalancing the relationships between news publishers and tech platforms is on the agenda of the CMA’s Digital Markets Unit for 2025. The UK is expected to steer clear of the pitfalls of Canada’s news bargaining regime, which led Meta to block news, crashing referrals.
In the UK, Google’s relationships with news publishers are much deeper than referrals, including advertising and market-specific voluntary arrangements that support a robust supply of journalism, and dovetail with the industry’s focus on technology (including AI) and distribution.
The rise of generative AI has also ignited the news industry’s focus on monetising the use of its content in LLMs. AI products could threaten the prominence, usage and positive public perceptions of journalism—this might require progress in journalism’s online infrastructure, supported by public policy.
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.
Big news publishers are pursuing licensing deals with AI companies, chiefly OpenAI. Not all publishers will see a substantial return; while some news may be important for training AI models, not all publisher content will be
Litigation is a threat point when negotiations stall (see the New York Times), but the copyright status of Large Language Models (LLMs) is uncertain. In the UK, there has been no government intervention (on copyright or otherwise) that could facilitate licensing
Publishers’ bargaining position is strongest when it comes to up-to-date material that could be important in powering some AI consumer products. They should seek deals to support their journalism, while bearing in mind the risk that new products may get between them and their readers
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.
The quest for sustainability in the UK national news industry is gaining ground, thanks to digital growth offsetting relentless print decline. The challenge of the print-to-digital transition has not faded, however, amidst the oncoming cliff-edge for print.
Nationals choosing the path of the walled garden on digital have out-performed those in pursuit of the ad-supported mass-market audience, whose ad yield per user is being compressed by more efficient scale platforms and the end of tracking technology.
Despite the challenges facing the news industry, the beacon of light shone by professional journalism has never been more important to humanity, to combat disinformation and misinformation on the internet, which Gen AI tools will only exacerbate.
Service revenue growth was broadly flat this quarter as some unwinding of price increases was compensated by a pickup in roaming revenues.
Vodafone has made some progress on its turnaround plan: it has sold its ailing Spanish unit; is rumoured to be in talks about a deal in Italy; and its German business is (just) back to growth (for now).
We expect muted guidance for 2024 with lower prospective price increases for most, inflated cost bases, and continued consolidation uncertainty.
In a reform of the competition regime for digital markets, by 2025 the UK will have conduct regimes for platforms including Google, Meta and Apple, overseen by the Digital Markets Unit.
Nested within could be a ‘fair bargaining’ regime for platforms and news groups, following Australia and Canada, whose lessons could be valuable to preserve platforms’ incentives to serve news. In Canada, platforms are refusing to pay to serve news links to their users, and plan to exit this form of content.
Financial transfers to UK news groups by platforms is among the new UK regime’s aims, but is unlikely to make up for the declining revenue trend of local news provision whose sustainability is most at risk.
Traditional local media are seen by an impressive 40 million people a month, a popularity we normally associate with tech platforms, albeit consumer spend, time spent and advertising yield are low, but growing
Encouraging market innovations are sending a strong signal and building industry confidence. New foundations for consumer relevance and growth are being meticulously crafted
A sustainable future will require publisher collaboration and a support framework from government, technology gatekeepers, investors and the public itself to accelerate momentum—with a prize not just for financial stakeholders but for citizens and the functioning of democracy
The sale of the Telegraph Media Group (TMG) gets a boost from its 2022 Trading Statement, including steadily rising profits, and visibility for 2023 subscriptions
TMG has built out its digital reader revenues, rapidly closing on one million subscriptions—setting the business on a more sustainable path
The sale of TMG and The Spectator will reach its highest valuation if appetite to own these assets sharpens and widens the range of buyers that will bid