Sky made a surprisingly weak start to 2019, with revenue growth decelerating to 1.9% (the first time below 4% since the European businesses merged in 2015), due to weaker ARPU trends.

However, Sky expects improvement to follow, blaming one-off factors in the quarter. The ARPU weakness drove EBITDA down 11.3%, but this should bounce back across the rest of 2019 as football rights costs turn from a drag to a positive.

Comcast highlighted collaborations with Sky across tech, advertising, content distribution and even news, stating it is on track to achieve the anticipated $500 million in annual synergies over the next couple of years.

Google’s Stadia promises the most credible game streaming service yet, but building a subscription bundle of top titles would require an all-out bet in the sector

Google is building its own game studios – to win over others it must overcome a troubled history in gaming, mitigating risks to developer business models and creative integrity

Games are much more technically demanding to stream than video, presenting an advantage to Google, Microsoft and Amazon – and a boost to telecoms network demand, welcomed by operators

On 7 March 2019 Enders Analysis co-hosted the annual Media & Telecoms 2019 & Beyond conference with Deloitte, sponsored by Afiniti, Barclays, and Linklaters. 

Back again for his third year running, former Channel 4 Chief Executive David Abraham chaired the conference.

With a stellar speaker line up, this invitation-only conference was a highly informative and stimulating day. The conference saw over 450 senior attendees come together to hear some of the world’s leading media and communications executives describe and debate the forces shaping their businesses.  

This report provides edited transcripts of the keynote speaker presentations.

Market revenue growth accelerated to 3% in Q4, but it might never reach this level again, being helped by a never-to-be-repeated BT overlapping price rise

With price rises becoming more challenging in general, and superfast pricing under pressure in particular, maintaining/increasing ARPUs is becoming more difficult despite superfast volumes surging

Openreach’s ultrafast roll-out has accelerated, challenging Virgin Media and bringing the prospect of further price premia, but perhaps too late to be of significant benefit in 2019

After strong underlying 2018 results, the more subdued outlook for 2019 is an important shift, driven by regulatory pressure on mobile, higher programming costs, one-offs and softening demand

Lightning is continuing to drive market share gains in new build areas, and should provide a 2ppt tailwind to revenue growth in 2019, but enhanced visibility on the economics of rollout suggests that its conservative approach is a wise one

In existing build areas, Virgin Media is facing-off pricing pressure from TalkTalk on high speed, and potentially from BT on even higher ultrafast speeds, with it moderating pricing and launching a market-beating 500Mbps product in Spring 2019 in response

Consumers have more shopping options than ever, forcing businesses to expand how and when they offer services. Online giants Amazon and Alibaba are adding physical retail to extend their routes to market

Omnichannel provides consumers an enhanced, seamless brand experience from research and discovery to purchase, delivery and after-sales, and allows businesses to react to changing consumer preferences more flexibly

Next is an omnichannel success story, introducing 48-hour home delivery in 1988 and online sales in 1999. Its market-leading fashion ecommerce business offers lessons on the future of retail

BTGS’s strategic plan seems like a sensible move in a very challenging market but it heralds its transition to a new operating model where its competitive advantage is largely eroded, its addressable market squeezed and it is arguably sub-scale

Although hybrid infrastructure and revenues from transition to cloud-based IT will provide something of a cushion, guidance and consensus forecasts are too optimistic in our view – cost-cutting plans are therefore likely deficient

Longer term, with IT services increasingly easy for corporates to manage themselves, diminished appetite for hybrid networks and global giants such as Amazon, Microsoft and Google squeezing out the middle-man, the space that BTGS occupies is likely to be considerably smaller

BT’s Q3 results were a little mixed, with mobile particularly weak, but the company remains on track to meet/exceed its (fairly conservative) guidance for the current year, and hit (modest) consensus expectations for 2019/20

Openreach was very weak at the headline level (-9%), but stripping out an accounting effect and internal revenue the division grew by 2% by our estimates despite significant price cuts, and full fibre roll-out is progressing well

While Openreach should accelerate this year, Consumer will be hit by a price rise holiday and slowing mobile, with investors likely having to wait for existing sports rights contracts to play out to see significant profitability improvement

TalkTalk is delivering on its subscriber and revenue growth targets but is straining to get there. Price rises such as a £4 ‘TV access fee’ look increasingly risky

Whilst migrating to discounted high-speed helps to deliver top-line growth, margins are c. 40% lower; an unwelcome dent to already negative cashflow and stressed leverage

Both TalkTalk’s focus on revenue growth in a tight market and fibre rollout plans look increasingly unaffordable; a more modest ambition of stable revenues might allow a healthier business model to unfold
 

The volume of retail sales (excluding fuel) rose 2.6% for the year 2018, thanks to improved consumer sentiment on the back of the Royal Wedding, FIFA World Cup and warmer weather. With no special events in 2019, the environment for retailing will be bleaker, with or without no-deal Brexit

December retail sales volumes rose 1.7% year-on-year, less than half the pace of November, as consumers shifted spend to Black Friday/Cyber Monday. We predict the trend will amplify in 2019, as consumers increasingly target their spending on discounted products, with direct implications for the timing and nature of advertising

The value of retail sales (excluding fuel) was up 4% in 2018 as a whole, masking the tale of woe on the high street. Offline sales fell 1%, while online sales boomed, growing 14% in value, a structural trend for 2019