Consumer expenditure on recorded music continued its decline in 2014 by about 6% to $18 billion, as purchasing of download-to-own (DTO) albums and singles passed its peak in 2013, adding to the ongoing decline in total sales of CDs that started a decade ago Streaming is now the only growth story left for the industry, and it has a global footprint, being embraced by developed and emerging markets alike, unlike purchasing The US phenomenon of rapidly rising revenues from ad-supported audio streaming services such as Pandora and music video streaming on YouTube is quite unique as other markets currently lack the potential for online advertising

News has entered a new phase, defined by the disruptive forces of mobile, social media and video, effecting rapid changes in consumption and the underlying economics for news businesses: the level of change and innovation is rewiring the structure and financial models for news more quickly than many news providers are able to respond. While charging for news looks to be a successful route for some brands, we note that the scale of charging for the industry is substantially smaller than in print. Apart from this, three models are gathering traction: selling audience engagement; selling news services; and selling news to businesses. Each of these options involves very different strategies and opposing objectives which can only be pursued at the same time by those with the deepest pockets. Everyone else has to choose.

Sky plc, the coming together of BSkyB, Sky Deutschland and Sky Italia, has enjoyed an excellent start, as adjusted H1 2015 figures delivered a 5% increase in revenues versus a 3% increase in costs, resulting in EBITDA growth of 7% and with free cash flow up by 25%

The strong financial results were accompanied by strong subscriber growth figures, especially in the operations covering Austria, Germany, Ireland and the UK, while all markets showed large reductions in churn, reinforcing confidence in the strategic approach of Sky plc

It is too early to assess Sky’s delivery of its target group synergies. Individually, the former BSkyB and Sky Deutschland markets may be showing much stronger subscriber and product growth, but they also look to be more exposed to risk over football rights, while Sky Italia has more going for it than may appear at first sight

Speculation has arisen about a possible acquisition by Sky of Mediaset Premium, the DTT competitor to Sky Italia. The unprofitable platform faces a 50% cost increase this summer due to the start of new football broadcast contracts

Getting rid of competition would allow Sky to raise prices, but also burden it with the new contracts. At best, if it kept the Premium subscribers on DTT to limit churn, Sky would have a small revenue upside

But the regulatory risk looks substantial, including mandated third-party access to the platform and wholesale of content. On balance, we believe that it would be better for Sky to let the situation play out

Customer movement between operators shows susceptibility to dynamism in branding; O2 are picking up the majority of EE churners as customers move to the new “cool brand” while EE pull in Vodafone churners tempted by the new “best network”. O2 have the lowest churn though the lion’s share move to Vodafone and H3G churners are more evenly picked up by the other three

Customer perceptions of own operator network quality are high among the big 3 with no less than 75% of customers reporting theirs is the best network. O2 is the best regarded while H3G is the least best regarded highlighting a stark contrast between the (prospective) merging parties

Consumers report little interest in quad play and indeed operators in the both fixed and mobile markets have publicly confirmed the same from other market research. However the arrival of converged players in the form of a merged BT/EE or Vodafone re-entering the fixed space will see operators seeking to change this

In this presentation we highlight Mediaset's star position among European FTA broadcasters, enjoying the highest share of its national advertising market (and profit margin), stable throughout digitalisation and secure for the future

Mediaset Premium, the pay-as-you-go and subscription DTT service, grew customers rapidly up to 2010, leveraging both DTT expansion and the appetite for low cost football and film programming. This hampered subscriber recruitment at satellite pay-TV operator Sky Italia, which relaunched its sales in 2010 on heavy programming in programming, set-top boxes and marketing

Sky Italia's subscriber base may be just above that of Mediaset Premium, but Sky's ARPU is 8x that of Mediaset premium, underlining the greater efficiency of the monthly subscription bundle in relation to PAYG pay-TV. Sky Italia is profitable while Mediaset Premium might just reach breakeven in 2010

National newspaper advertising revenues should be up 6-8% year-on-year in 2010, with ‘popular’ titles in particular attracting display ads from national retailer brands

Local and regional press advertising revenues will fall by about 6% year-on-year, mainly on the continued decline of recruitment classifieds

Publishers are exploring more efficient printing, new digital models, and staking a claim on e-commerce

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

European mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally

GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern

Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero

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