Newspaper publishers are about to enter a series of ‘online payment’ trials to help bolster disappointing online advertising performance that alone will be unable to support full scale newsrooms

Publishers are on the back foot, however: they have been giving away their content for free for almost a decade, and their core content does not have the unequivocal unique attributes of a football match, a movie or a pop song

While there are a variety of options for management to explore, in aggregate they will never match the print model, and so news is destined to shrink as a commercial enterprise for newspaper publishers

The UK and international businesses (now ‘Worldwide’ and ‘CWI’) are both continuing to perform well, despite weak revenue growth, thanks to strong cost control. Worldwide is now generating cash organically for the first time in memory

Performance at the newly-acquired Thus has been slightly below expectations, mostly due to increased customer churn. The sale of the ‘mid-market’ part of the business is a possibility

The market was disappointed by guidance for the new financial year. In our view it is both acceptable and achievable

Vodafone’s European revenue growth dipped sharply in the March 2009 quarter to -3.3% from -1.4% in the previous quarter, due to a combination of recessionary impact and continuing underperformance of the market

EBITDA margins also declined by 2ppts, with falling handset subsidies more than compensated for by a sharp rise in general operating expenses, despite cost cutting efforts

Implied guidance for Vodafone Europe in 2009/10 of an organic 4-5% drop in revenue and 2ppt dip in EBITDA margin is bleak but realistic, with even these figures at risk if either the economy does not start to recover or the company cannot keep general operating expenses flat

BT’s Q4 results contained a bombshell £1.3 billion write-down at Global Services to correct previous under-reporting of costs on two contracts, believed to be with the NHS and Reuters. Underlying EBITDA at Global Services also dropped sharply for the second quarter running

Annual pension contributions are to increase sharply, as expected, albeit to a level sustainable by the business. Performance at other divisions continues to be reasonable, given the economic environment

The company’s plans to cut costs have some credibility, but are expensive and will take time to implement. There is little prospect of meaningful recovery in cash flow until 2010

ITV plc outperformance in a TV advertising market that is expected to fall by 17% in H1 2009 (ITV Family down 16%) may simply reflect frontloading of budgets, with audience trends suggesting that ITV plc will be slightly down on the market average across the full year

In the continuing absence of voluntary cooperation between ISPs and rights holders, yet another consultation is being launched, but this time, the pressure on ISPs is being increased by the proposal to give Ofcom powers to reduce unlawful file-sharing, including “technical measures” (e.g. traffic shaping) if needed

With another lengthy consultation process ahead, and then a legislative phase, it is too early to judge the commercial implications on the ISPs or whether the creative industries will claw back sales from reduced unlawful file-sharing

Gloomy trading updates from both Johnston Press and Trinity Mirror, and news that Johnston has abandoned its sale of Irish titles, have choked the optimism that swelled both publishers’ valuations during the bull weeks of early Q2 2009

Some comfort was taken from the nascent ‘advertising stability’ that has left recruitment and property categories down about 50% year on year. However, the potential for spend levels on recruitment and property to stay depressed, even when the economy recovers as the structural shift to online continues, could be devastating to the economics of publishing

Circulation revenues are also appearing vulnerable, as print consumption decline appears to be accelerating, pushing total publisher revenues into a faster downward spiral

Carphone Warehouse’s acquisition of Tiscali UK makes TalkTalk Group the second largest UK ISP and the largest in terms of residential broadband subscribers, just as market growth begins to stall

The company’s synergy target looks readily achievable, although integration challenges are significant and could make the acquired customer base difficult to stabilise

Nonetheless, TalkTalk Group now seems set to dominate the ‘value’ end of the UK residential telecoms market

Channel 4 broke even in 2008 despite a 5% fall in total TV NAR (net advertising revenues), through a combination of outperforming the market and £25 million in programme budget cuts. Its annual report also underlined its credentials as the alternative PSB voice, based on market research conducted over the year

The crunch time is likely to come in 2009 and 2010. Although financially better placed in many ways than ITV, and more flexible over committed programme spend, the recession threatens Channel 4 with a cumulative annual net deficit of around £150 million in 2010 without further action

Financial pressures facing Channel 4 highlight the need for urgent government action, in the absence of which much depends on the outcome of Virgin Media’s efforts to sell its content assets and the ultimate willingness of BBC Worldwide to engage in a JV with Channel 4. Consolidation would help even if it did not solve all of Channel 4’s pressing financial concerns

VMed’s Q1 results were again mixed, with declining group revenue and OCF margin but improving performance at Virgin Mobile and continuing strength in TV

The core cable business is facing a return to negative customer growth due to a combination of seasonality and stalling demand for broadband

But de facto price increases in broadband, TV and mobile should boost financial performance from the autumn; we expect this to be combined with reduced opex to generate significant cash flow growth from 2010

Another strong quarter of pay-TV subscriber growth, marked by record Sky+ HD sales, indicated continued resistance to recessionary pressures, supported by flat costs other than those associated with accelerated HD take-up

Results for the telecoms business again displayed strong volume growth in an increasingly difficult market. But original guidance for broadband subscribers, breakeven and standalone IRR looks challenging

Although the recession may yet take its toll on subscriber growth, the final outcome could work to Sky’s advantage due to the severe revenue losses being experienced by the free-to-air advertising sector. Constraints imposed by regulatory intervention remain a possibility, but unlikely to make a material difference over the next two to three years