After several years of preparation Sky’s AdSmart launched in August and is on schedule to be offered to all advertisers in January/February 2014 after beta trials involving some 50 advertisers in the second half of 2013 AdSmart is all about addressable and low waste targeted segmentation on the Sky pay-TV satellite platform, which for the first time in UK TV history allows national channels to offer highly localised, targeted advertising AdSmart promises to grow significantly the TV advertising ecosystem, though success in realising the full revenue potential of AdSmart, possibly in the order of several hundred million pounds per annum, will depend on Sky’s ability to handle various challenges on the way, with regional press and direct mail most at risk
France’s Canal+ faces an increasingly challenging domestic market, due to IPTV expansion, competition from Al-Jazeera’s beIN Sport and the threat of a Netflix launch – on top of sluggish consumer demand in a dull economy
Inflated promotional activity has brought rising churn and failed to stop subscriber base erosion, while denting profitability. Headline revenue growth comes from international channels, film production and FTA TV
Anxious to avoid interference from its owner Vivendi, Canal+ has followed a conservative investment policy that may have undermined growth. The spin-off of SFR and possible dissolution of the conglomerate would leave Canal+ free to contemplate more aggressive moves, in IPTV, set-top boxes and possibly through acquisitions
The Vivendi empire is shrinking in revenues, cash flow and also in debt: Activision Blizzard and Maroc Télécom were sold in 2013, SFR will be spun off
We expect SFR’s topline revenue decline to halt in H1 2014, ending the pain from the disruptive launch of Free Mobile in 2012. With SFR and Bouygues Telecom intending to conclude a network-sharing agreement outside urban areas by the end of 2013, SFR should have a more positive story to tell investors when it comes to the Paris stock market in late 2014
With SFR spun off, Vivendi 3.0 will own just Canal+, Universal Music Group (UMG) and GVT (telecoms operator in Brazil), three companies without visible synergies. The end point appears to be the full dissolution of the Vivendi conglomerate
BT has doubled the price of the live ECL/EEL rights to £900m in order to outbid Sky and ITV and become the sole owner from 2015/16 to 2017/18 BT can easily absorb these extra costs through cost savings in other parts of its business, but the direct revenue returns through subscription charges and advertising on BT Sport are expected to fall far below the annual rights payments of £300m BT’s Euro victory is not a game changer in itself, but eyes are now firmly fixed on the next auction in about 18 months time of live PL rights, which could prove to be an inflationary bloodbath for all market participants
Virgin Media had a very solid quarter, with cable households returning to growth, cable revenue up 4%, underlying group revenue up 2%, and underlying OCF up 3% despite extra content costs weighing
Subscriber net adds were not as strong as last year, when DSL competitors were weakened by supply constraints, but there is little sign of a substantial impact from BT Sport or TalkTalk and BT’s YouView-based TV offerings
BT’s foray into sport has however had an effect on profitability, as it has with BT itself and Sky, with Virgin Media’s premium content costs rising from both BT and Sky
BT’s subscriber and revenue results continued to show strong progress, with its consumer business gathering momentum even excluding the direct impact of BT Sport
BT Sport had a discernible impact, but this was modest given the spend levels involved. However, the negative impact will only improve from this point, with BT sounding cautious about bidding for new rights
Fibre growth has at last started to accelerate at BT’s competitors, with the potential wholesale revenue from this truly game-changing for BT
2014 will be a tough year for Sky as it strives to improve the connectivity across its base while facing the challenge of BT in premium sports. 2014 has started well in terms of product growth and BT Sport has had no discernible impact on Sky broadband take-up and little, if any, impact on acquisition and retention discounts offered to new and existing Sky customers. With eyes focused on the impending auction of European Champions League pay-TV rights, we think BT has every incentive to push the price up, but not actually to win them.
For the BBC’s DG Tony Hall, “Where next?” primarily means more digital, expanding its iPlayer internet TV and radio application and offering greater personalisation
These moves form part of a wider strategy to ensure BBC services and programming can be delivered seamlessly across devices in the most relevant form, whilst maintaining access and appeal to all age groups
Reaction from commercial rivals and commentators has been muted, likely saving powder for the soon-to-begin battle over the BBC’s scope and funding from 2017, when the current Royal Charter expires
The advertising market appears more confident than at any time since the downturn of 2008/9 and we expect positive economic conditions to last until the next general election due in 2015
This encouraging outlook for the UK economy underpins our advertising expenditure forecast of CAGR 4.2% for 2013-2015
Internet advertising will increasingly dominate while television (CAGR 2%) and other media will see modest growth with the exception of print, still in sharp decline though less severely than feared a few months ago
Although it is early days, BARB audience data already supply useful insights into the potential impact of BT Sport on the acquisition and retention of BT broadband customers and take-up of BT Infinity
Now entering its third month the very heavily publicised BT Sport has made a relatively good start in Sky households compared with its predecessors Setanta and ESPN, but less of a difference in DTT households, where getting BT Sport on BT TV is not straightforward
However, BT is still very much the junior player in a duopolistic mature market for premium sport, which we do not expect to grow significantly even if the premium sport is being given away