The Court of Appeal has judged that the Competition Appeal Tribunal erred in law in its rejection of the Ofcom Wholesale Must Offer remedy for premium sports by failing to deal adequately with all of Ofcom’s competition concerns but agreed with the Competition Appeal Tribunal that Ofcom had acted within its regulatory powers Sky’s appeal against the 2010 Ofcom decision will therefore be re-heard at the Competition Appeal Tribunal and we believe the likelihood is that the Wholesale Must Offer remedy will be approved, while the jurisdiction issue may yet have some life if Sky takes its appeal to the Supreme Court The seven year old pay-TV saga is far from over as major changes have occurred in the last four years. Irrespective of the progress of the Competition Appeal Tribunal review, we think it will have little bearing on the outcome of the Premier League auction in light of the strategic objectives of Sky and BT
In 2013 Sky focused on recruiting ‘quality’ subscribers: net additions fell but ARPU growth accelerated and most new customers have signed up to two-year contracts, which will lead to a reduction in churn
Now Sky is moving its focus back to subscriber growth. It aims at 400-450,000 net adds this year, including the migration of wholesale DTAG customers – a target we find realistic. The €70-90 million EBITDA guidance may be conservative
Without any direct competitor, Sky is rightly enhancing its all-in-one premium appeal. This supports ARPU growth and increases its distinctiveness compared to other providers, including the expected Netflix launch in Germany
Operating profits took a dip in H1 2014 as Sky absorbed the £110 million hike in Premier League (PL) football rights, saw marketing spend rise as a result of strong product growth and invested £40 million in its connected TV services
Growth has stayed positive across the range of TV and home communications products, while the new User Interface due to launch in the next few months promises to unlock significant incremental revenues as well as underline the quality of Sky offerings in movies and entertainment
Sky has no time to lose in building on its strengths in content, service quality and customer loyalty as the next PL auction looms towards the end of calendar 2014/first half of 2015, but the strategy appears sound with strong revenue and upside potential
Watching traditional linear TV has shown a sharp decline among younger adults over the last two to three years and the question is how far it has to go before bottoming out. This report explores the causes and presents our forecasts up to 2020
We see the main causes of this as the growth of online connectivity associated with the proliferation of screens via smartphones and tablets, the increasing functionality of these other screens, the increasing population of connected TV sets and the growing volume of long and short form content that can be accessed over the internet
Examination of current “connectivity” trends suggests that 2013 will prove the peak year of decline. Thereafter we expect trends to stabilise over the next three or four years without fundamental change to the linear TV landscape
Explosive growth in take-up of smartphones and tablets means that the effective size of the internet will increase by several multiples within the next few years. This transformation in scale comes with a major change in character and operating dynamics, creating new opportunities and revenue streams.
Twitter is unique amongst social apps: it gives new users a blank canvas in which they can (and must) create their own social network reflecting their own interests, hence building an ‘Interest Graph’, but onboarding new users remains a challenge.
Revenue at Twitter is now on a $600 million annual run-rate, scaling rapidly since the introduction of ‘native ads’, and seems set for further growth: the key question is whether it can achieve breakout user growth and mass market scale.
Non-subscribers can download this report in full - alongside all our other coverage of the BBC during the Charter Review process - from the 'BBC Charter Review' page of our site.
The Charter Review of the BBC officially opened with the Culture, Media and Sport Committee’s inquiry into the Future of the BBC asking the question “What should the BBC be for and what should be the purpose of public service broadcasting?” The only obvious answer is that the BBC and public service broadcasting should be for the people of Britain, and the BBC rates highly on different measures of public and audience engagement. The BBC plays an irreplaceable role in the supply of PSB programming that UK audiences appreciate, most importantly news, where the BBC accounts for 70% of TV news time and for 22% of online news time in 2013.
The stress on 21st Century Fox’s Italian pay-TV platform is easing as the worst recession of any G8 country is expected to end in 2014, and competitive pressure from Mediaset is weakening
Sky is sticking to a long term strategy, investing in the (unrivalled) quality of its offering and sustaining high recruitment costs. The subscriber base seems to have levelled off, revenues are stable, but profits have collapsed. Management plans cost cuts to raise profitability by 2016
The upcoming auction for the 2015-18 football rights could see Sky gaining more exclusivity at a higher cost, which it would have to recoup mostly by rising prices. The key potential upside resides in an Italian economic upturn – which is only conceivable in a few years
Richard Desmond’s appointment of Barclays to explore the sale of the Channel 5 Group in 2013 has fuelled speculation over prospective purchasers should Northern & Shell be intent on selling this asset
The reported target of at least £700 million, seven times the £103.5 million paid by Northern & Shell to RTL three years ago, reflects a strong performance in 2013, but needs to be against several distinctive factors, including Channel 5’s near total reliance on advertising and the cross-promotional benefits it gains from the Northern & Shell print publications
Regulatory and strategic considerations suggest that neither ITV nor the pay-TV platform operators, Sky and BT, are likely to emerge as serious bidders and that an overseas group from the US is the most likely outcome if a sale is to take place
The UK national press remains a ‘big beast’ in UK media, selling 7.2 million copies every day, supplemented by 1.6 million free newspapers; however, the decades long decline in print circulation and advertising has accelerated once again with the take off of smartphones and tablets.
Print still accounts for the vast majority of the nationals’ income, though revenue continues to fall due to declining copy sales and the structural shift of classified ads to the internet; there is also growing evidence that display advertising is declining by more than volume losses in some categories.
Digital is gathering momentum due to acceleration in digital advertising and a shift to pay models. In the UK, where print subscription levels are low, and home delivery lower still, publishers face the obvious challenges of digital transition and migration from a newsstand economy to a consumer relationship mindset.