After the dispute with Vivendi, Mediaset Premium faces mounting losses with no buyer in sight and increasing tension within the controlling shareholder family

Sky has managed to resume growth despite the loss of the Champions League (CL), mostly thanks to strong advertising sales

Next year, both CL and domestic Serie A, will auction the 2018-21 broadcasting rights. Sky will be in a position to substantially increase its range of exclusive football coverage

FY 2016 has been an excellent year, with all three Sky markets showing improved performance as Sky delivered 7% revenue growth (5% after adjusting for 2016 being a 53-week year) and 12% increase in operating profit

The success reflects Sky’s commitment to product and service innovation and diversification in an increasingly fragmented marketplace combined with tight control of back office costs and focus on synergies

As a measure of its success, Sky has set new cost synergy targets of £400 million annual run-rate by FY 2020 and is aiming for continuing middle to high single digit growth in revenues, which should let it comfortably absorb the rising costs of Premier League and Bundesliga live televised rights under the next contracts

Music publishing revenues are trending up in a broad sustainable manner across the US, Europe and Japan, underpinned by longstanding music rights regimes

Purchasing is down and streaming taking off, driving a mechanical to performance transition, with direct licensing of Anglo-American repertoire in Europe as in the US

Public performance revenues collected by PROs are also rising as live music grows, general business conditions improve, while TV audiences remain resilient

Vivendi is to acquire the main pay-TV division of Italy’s Mediaset in an all-share transaction, creating a ‘strategic alliance’ between the two groups. Each partner will own a 3.5% stake in the other. The deal is positive for Mediaset but the benefits for Vivendi can only accrue long term

Mediaset Premium claims two million subscribers and recorded €640 million revenue in 2015. However, EBIT losses amounted to €115 million and are likely to more than double through 2016 and beyond. The deal has no discernible impact on Premium’s bigger rival Sky

Vivendi and Mediaset will also jointly operate a ‘global’ online video platform and collectively develop content production and distribution. The pair’s respective assets are sizeable but domestically focused with little demonstrable international synergy

European mobile service revenue growth was flat at -0.8%, while underlying country movements were somewhat more dramatic. The key highlights were Italy returning to positive growth driven by pricing stability, and France showing worsening growth decline for the first time in over two years impacted by challenger telco pricing cuts

An assessment of these challenger telcos highlights a somewhat precarious position, as continued price aggression yields diminishing incremental gains, and they all remain some way from gaining the scale to achieve profitability

The only incentive for challengers to remain aggressive is as an encouragement for their competitors to buy them; increasing regulatory hurdles to consolidation would remove even this incentive, leaving price increases as their only rational route to profitability

European mobile service revenue growth improved by 0.5ppts to -7.2% in Q2 2014, but all of this and more was driven by a reduced regulatory impact; underlying growth has been stuck at around 6% for the last four quarters, with progress in some areas consistently being countered by further pricing pressure

Industry consolidation has progressed to some extent, but would have had little impact in the quarter. Further in-country mobile/mobile mergers are more than likely but uncertainty driven by the changing European Commission may be delaying decisions to move forward

The UK example shows that consolidation is not necessary for market repair, but in the present environment the smaller operators in continental Europe have every incentive to be as disruptive as possible to encourage their acquisition, so further mergers cannot come soon enough

European mobile service revenue growth again disappointed in Q4, dropping slightly from -8.9% to -9.1%, with underlying revenue growth dropping a little further from -6.0% to -6.3%, again reaching a record low

There had been hopes that improved GDP growth would drive a volume rebound, that price declines would start to annualise out, and that declining out-of-bundle usage would wane in its impact as this usage declined. In the event, ongoing price competition from smaller operators, MVNOs and quad play offerings, combined with surging use of OTT communications platforms, have dominated trends

In the medium term, the development of 4G and Vodafone’s Project Spring may bring some much needed network differentiation back to the market, allowing pricing power to return to the larger operators. However, it will be 2015-2016 before these factors come into play: in the short term, the main source of optimism is consolidation

The French Professional Football League (LFP) is to auction its 2016-20 broadcasting rights next month, one year earlier than expected. The anticipated auction (and short notice) increases pressure on rival LFP broadcasters – a failure to renew their existing rights deals would unsettle their position for over two years

Due to uncertainty over the future ownership of Canal+ and the political background of Al Jazeera’s beIN Sports we believe that both would prefer to maintain the status quo: the top two weekly games on Canal+ and the other eight on beIN Sports

The LFP rights are precisely packaged to prevent this, and to force the two to compete at least for one lot. As the market leader Canal+ has more to lose, while beIN Sports could sustain its current complementary positioning with fewer games

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

Advancing its free-to-air TV project, France’s Canal+ is to buy Bolloré TV’s national channels for €465 million to gain (scarce) licences for FTA terrestrial broadcast

Canal+ plans to leverage its library of original programming to attract upscale audiences, neglected by commercial rivals

However, the Vivendi investment case of a 9% return on capital is built on incompatible assumptions about profit margins and market share – to grow the latter in a mature market, a channel needs to sacrifice the former