With the European Commission’s decision to block the H3G/O2 merger annulled and with new H3G management sounding a very pro-consolidation tone, the prospect of mobile operators going from four to three in the UK seems to be back on the cards.

Both H3G/Vodafone and H3G/O2/Virgin Media combinations seem possible although each has its own complexity—existing network sharing arrangements being one of them.

With 5G delays and mounting costs following the decision to ban Huawei, consolidation is increasingly feeling like the most viable option for H3G whose returns are already too low and falling rapidly.

With a lack of live sport, the lockdown weighed on incumbent pay-TV platforms’ subscriptions. SVOD providers leveraged their cheap positioning—Netflix and Amazon Prime Video now rank above other subscription services in Europe, and Disney+ had a successful launch.

Incumbents—Sky, Canal+, Movistar+—all pursue a twin-track strategy. They are positioning themselves as gatekeepers thanks to service bundles, while redirecting resources away from sports towards original series.

European productions are increasingly garnering audiences outside of their home markets, regardless of the production language. Netflix is a major conduit for European exports, due to personalisation of the interface and high-quality dubbing.

Despite numerous examples of critical acclaim for BBC Three programming over the last couple of years, the evidence suggests that its audience has collapsed since the closure of its linear TV channel in 2016.

Annual viewing minutes of BBC Three programming are down by more than 70% compared to its last year of linear TV broadcasting, and weekly reach amongst its target demographic of 16-34s has fallen by c. 70%—a loss far greater than those of other TV channels.

More difficult to assess are the effects of the shift in content strategy. Comedy programming, for example, proportionally shrank in terms of the total volume available while receiving a greater share of consumption, in direct contrast to factual content’s fate. 

Market revenue fell 6% in Q1 2020, largely due to lack of sports revenue (which will bounce back), but backbook pricing woes also hit.

Broadband volume growth accelerated though, and may accelerate further as supply constraints ease.

The increase in working-from-home may also enhance demand for ultrafast, the best hope for a return to industry revenue growth.

BT’s June quarter results were predictably hit by COVID-19, with revenue and EBITDA dropping by 7%, but less predictably most of the hit was on mobile and business customer revenue, with consumer fixed resilient despite the suspension of sport.

BT’s full year guidance is cautious, with a 7% EBITDA decline at the mid-point, with much of this caution around further hits to its business revenue as government support is withdrawn.

BT’s full year guidance is cautious, with a 7% EBITDA decline at the mid-point, with much of this caution around further hits to its business revenue as government support is withdrawn.

The COVID-19 crisis and suspension of sport has hit Sky hard, with Q2 revenue falling 12.9% year-on-year, and EBITDA (while flat for now) expected to fall 60% in H2 as the rights costs from a condensed schedule hit the bottom line

Underlying trends are hard to discern amidst massive disruption, but the UK remains strong, and increasingly less dependent on sport, with continental Europe a work in progress to repeat this model

Longer-term initiatives continue, with new branded channel launches in the UK, broadband launched in Italy, and scope for further moves in Germany provided by significant sports rights cost savings following recent auctions

ITV’s ad revenues were down 43% in Q2 (and H1 down 21%), with the broadcaster noting that July was ‘only’ down 23% YoY, with August “markedly better” again

With most production stalled because of lockdown, Studios was down 23% in Q2 (17% in H1). Production is returning to scale (although hopes for quality scripted should be tentative) but there will be a payment and delivery lag that continues to hit future quarters for both sides of the business

Overhanging this improvement, however, are the structural viewing shifts that have been instigated by the pandemic—streaming services have experienced much greater uplifts and we foresee them grabbing a greater proportion of the viewing pie. Locally, modest BritBox is unlikely to help

Even with lockdown tailwinds, there are dampeners for the SVOD boom. The 27 May US launch of direct-to-consumer video service HBO Max did not save its parent company Home Box Office from a 5% year-on-year decrease in revenues in Q2 2020

Mid-term problems include confusing brand positioning for the service and uncertainty surrounding platform carriage—it remains unavailable via Roku or Amazon Fire TV products. Reported viewing trends seem positive but little original programming has cut through yet, while the production shutdown will affect nascent services more than those with established identities

This content push is costly and HBO's profitability may soon be gone. Quarterly operating income shrank 80% to $113 million thanks to a 33% jump in content costs due to the Max expansion

TalkTalk started its new financial year with revenue growth declining to -8% in Q1, although this is partly lockdown-related, and costs have also declined as churn plummeted.

While backbook pricing continues to be a challenge, new customer pricing continues to firm, which makes its expectation of stable/growing EBITDA for FY2020/21 possible albeit still difficult.

The company expects to launch full fibre products from Openreach imminently, and from CityFibre before the end of the year, with the adoption and eventual economics of these crucial to its medium and long-term future.

The Betting and Gaming Council (BGC) which represents 90% of the UK’s betting and gaming industry (but not the National Lottery/other lotteries) announced its withdrawal of all TV and radio advertising for casino, slots and bingo during lockdown.

This follows its ‘whistle-to-whistle’ TV ban on sports advertising last year. However, as betting and gaming move increasingly online, so has industry marketing—but no budget has been pulled from social media or online.

While the initiatives create positive press, they provide further harm to broadcasters and hasten migration of budgets online, where there is a relative lack of stringent advertising regulation.