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
Sky is steadily expanding its output of scripted content – now almost at the same volume as HBO’s. It is an attempt to strengthen the Sky brand in a more competitive market, the ultimate prize being exclusive association with ‘iconic’ content
So far so good: in the UK most originals deliver higher audiences than average and than US imports. Emergence of an iconic hit may be just a matter of time. Sky’s Italian productions are closer to the domestic hit status, but harder to sell to British viewers
The challenge for Sky is to stay in the global series budget race through US co-production and sales without compromising editorial sharpness. Continental European platforms increase Sky’s financial clout, but will require distinct content
The sale of the i, the innovative 2011 launch by the Independent, inevitably led to its parent’s death in print form and pushes two media experiments into the marketplace
ESI Media becomes the first publisher to switch a traditional national news brand into a digital-only service, while Johnston Press has developed a new local-national platform to compete with Trinity Mirror
Content publishers will increasingly experiment with vertical models and membership models for a range of services including access to some content as the challenges of the digital advertising market begin to mount
By fully acquiring Local World, Trinity Mirror has bought scale advantage in the local media marketplace, and accelerated a much needed growth story for digital assets.
The medium term outlook for local media continues to look stormy, underlining the importance of investment in technology and new platforms for publishing, journalism and marketing, essential for longer term sustainability.
Consolidation is needed to drive a more cost-effective investment phase as the transition to digital continues apace, provided the competition authorities do not interfere.
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BBC proposals for local media set out on 7 September offer solutions to an alleged market failure, without much evidence, contained in February’s Future of News report.
There is no dispute that local commercial print and online media operations have suffered heavy revenue losses since their peak a decade ago – the industry is, however, still profitable, innovation and online growth are helping to stabilise the top-line, and new enterprises are emerging.
Local media publishers prefer a turbo-charged BBC policy of linking to their sites to the proposal for a local media digital hub fed by publishers and 100 BBC journalists.
In Italy, pay coverage of the Champions League shifted from Sky to Mediaset Premium this season. Alongside a new Serie A contract, this adds an extra €300 million to Mediaset Premium’s cost base
The first results indicate that Mediaset is unlikely to meet its subscriber growth target. On current trends we expect cumulative EBIT losses of over €400 million by 2018
Mounting losses may force Mediaset to close or sell Premium, but fear of Sky may slow decision-making. Sky was probably right not to overbid for the Champions League and the savings should more than offset minor subscriber losses
UK advertising is having a bumper year – some of the strongest growth for two decades – but print is receiving none of this upside. The year started soft then plummeted in the weeks immediately before and since the General Election, with increasingly serious implications for the sector
A reasonably steady UK economy and explosive TV and digital spend evidence a structural decline for print media display, though specific factors also point to some cyclical effects
We forecast a slowing of the rate of decline in H2 2015 and 2016, but we believe sooner or later the industry will have to work closely with agencies and brands to establish new terms of engagement for print media
News Corp’s original bid for full ownership of BSkyB was withdrawn because of the phone hacking scandal. It was never blocked by regulators. Had it not been for the scandal, the bid would almost certainly have been approved.
With the phone hacking scandal fallout largely over and the election of a friendly government, the climate is now much more favourable to a renewed bid. With undertakings, we believe it would be approved by regulators.
The increasingly global scale of TV and film distribution means the commercial case for the bid is, if anything, stronger now than in 2010. The questions are simply whether the right price can be agreed, and how high up it is on James Murdoch’s list of priorities.