The UK continues to lead the EU5 in take-up and consumption of video-on-demand services, with close cultural alignment and a historic williness to pay for TV content making it a receptive home for US SVODs

Netflix dominates in most markets, benefiting from high-profile US imports and big-budget local productions. Local SVODs are struggling, with those operated by FTA broadcasters facing considerable challenges

Collaboration between local broadcasters and pay-TV platforms is essential if they are to hold at bay the threat of Netflix and co., with an increasingly favourable regulatory environment opening the door for unprecedented collaboration

After losing money for 13 years fighting Sky, Mediaset has given up. The two have agreed to wholesale channels to each other, and Sky gained the option to take over the infrastructure of terrestrial pay platform Mediaset Premium, in a deal designed to pass antitrust muster

The main strategic upside for Sky resides in eventual access to content from Italian FTA channels, allowing it to become the country’s ‘universal’ platform. Meanwhile, Mediaset may find it easier to resolve its dispute with France’s Vivendi now that the broadcaster has got rid of its main cash drain

Sky remains the only major potential buyer of the 2018-21 Serie A rights, to be sold on 21 April. However, due to the league’s unrealistic expectations and the faulty platform-based auction design, the auction may be aborted for a third time, raising the risk that heavily indebted clubs resort to short-term fixes
 

Linear TV's decline continued into 2018, with an overall drop of 3% across the first 12 weeks YOY. However, overall TV set usage remained flat at 4 hours/day, as time spent on unmatched activities—which includes Netflix, Amazon and YouTube—continues to rise.

Within the ever-shrinking pie of consolidated viewing to the TV set, share of viewing (SOV) to the ten largest channels remains broadly flat. Across the whole of 2017 and the start of 2018 the best performer has been ITV (main channel).

Several big-name digital channels are showing surprising signs of recent decline, including UKTV’s Drama and Viacom’s 5USA. It is too early to tell if these declines are a blip or a trend. However, they reflect stalling growth from the long tail of digital channels in aggregate. 

Sky H1 results were very solid, maintaining 5% revenue growth and 10% EBITDA growth, with Sky continuing to support a widening product portfolio and more expensive core products with strong cost control and execution

Subscriber volume growth was a little weak at the margin, but this will be helped by all-IP products expanding the economically addressable base in new, and existing, markets 

There remain questions on content, with the outlook for premium football rights uncertain in the UK and Italy, and investment in Originals questionable given a mixed track record, but certainly with upside

The Italian league, unhappy with broadcasters’ bids of €830m, are now holding talks with Spain’s Mediapro, who has offered €950m and would produce a channel to wholesale to all platforms

Mediapro’s bid faces challenging economics given the low potential for an OTT strategy and Sky’s exclusive possession of a sufficiently monetisable subscriber base

Ultimately, we expect Sky to continue its full coverage and to increase its outlay only if it gains more exclusive fixtures

Results of the league’s new call for tender for its 2018-21 broadcasting rights will be unveiled on 22 January. The platform-based packaging was reviewed after last year’s aborted auction, apparently to accommodate loss-making Mediaset Premium, the participation of which remains nevertheless uncertain

Sky could keep its current satellite and internet coverage without increasing its outlay. We expect no major Telecom Italia (TI) or GAFA bid

Serie A seeks an unrealistic €1.05 billion per year (up 24%). If the auction results fall short, it hopes to sell rights to financial investors or, in a last resort, to launch its own channel – both ideas smacking of recklessness

News Corp will split publishing out of its business by creating a company to include newspapers in the US, UK and Australia as well as book publisher HarperCollins News Corp revenue growth has for some time been driven by explosive growth in cable network programming revenues, with slower revenue growth in film, TV, satellite TV and publishing The structural decline of print-based businesses is the main reason cited for the split. However, the Dow Jones and WSJ, both serving a B2B market, will be at the heart of the new publishing company’s value

Sky Italia’s strategy of selling low-priced satellite packages and HD set-top boxes has sharply reduced profitability, but helped subscriber growth

Escalating per user costs of football rights in a PAYG model has dissolved the profitability of Mediaset Premium, with no real upside visible

Sky Italia and Mediaset Premium both face the strong headwinds of the long consumer recession in Italy