Speculation has arisen about a possible acquisition by Sky of Mediaset Premium, the DTT competitor to Sky Italia. The unprofitable platform faces a 50% cost increase this summer due to the start of new football broadcast contracts

Getting rid of competition would allow Sky to raise prices, but also burden it with the new contracts. At best, if it kept the Premium subscribers on DTT to limit churn, Sky would have a small revenue upside

But the regulatory risk looks substantial, including mandated third-party access to the platform and wholesale of content. On balance, we believe that it would be better for Sky to let the situation play out

Customer movement between operators shows susceptibility to dynamism in branding; O2 are picking up the majority of EE churners as customers move to the new “cool brand” while EE pull in Vodafone churners tempted by the new “best network”. O2 have the lowest churn though the lion’s share move to Vodafone and H3G churners are more evenly picked up by the other three

Customer perceptions of own operator network quality are high among the big 3 with no less than 75% of customers reporting theirs is the best network. O2 is the best regarded while H3G is the least best regarded highlighting a stark contrast between the (prospective) merging parties

Consumers report little interest in quad play and indeed operators in the both fixed and mobile markets have publicly confirmed the same from other market research. However the arrival of converged players in the form of a merged BT/EE or Vodafone re-entering the fixed space will see operators seeking to change this

The posited deal merging H3G and O2 would create a new largest UK mobile operator with 40% market share, with massive synergy benefits available from cutting overlapping network and operations costs

Regulatory hurdles would be very significant, and the remedies required may well counteract the benefits of reduced network operator competition, as they will be designed to do

For Vodafone and EE, the impact will be mixed; a potentially aggressive competitor is removed, but their preferred positioning as being the best mobile networks is under threat

In marked contrast to its Q3 2014 results release, Netflix reported a strong Q4 with respect to paid subscriptions that was ahead of company guidance and consensus expectations

The positive news about subscriber numbers, which saw a sharp jump in share price immediately after the results, was heavily reinforced by Netflix’s announcement of its aim to expand its global base from 50 to 200 countries over the next two years and generate a material profit from 2017

As usual Netflix provided no international details other than to say that LatAm had passed the 5 million milestone in Q4. Elsewhere, BARB data suggest that Netflix passed the 4 million milestone in the UK, while it is still too early to assess the longer term potential of its September launches in France and Germany

Ofcom has decided to implement a fibre margin squeeze test on BT, starting in March, which will include the costs of BT Sport as part of the calculation

Ofcom has stated that on its preliminary figures, BT does currently pass the test, but given earlier statements we conclude that it does not have a lot of headroom

This will make it challenging for BT to absorb the extra costs for its Champions League rights hitting from July without breaching the test, and even harder to absorb an increased cost for Premier League rights, reducing its incentive to bid aggressively in the upcoming auction

For the second year running, 2014 has seen a steep year-on-year decline in total daily average viewing time, which fell by almost 5%, and was again, as in 2013, greatest among younger age demos, especially among children aged 4-15 where the decline reached double figures

Connectivity and the rapidly growing population of smartphones and tablets appear the main, though not the only, causes of a decline that appears general across the main PSB, PSB family and non-PSB channel groups. The decline nevertheless varies by channel genre, with the more youth oriented, such as Children and Music, feeling the connectivity squeeze the most

Whilst the great majority of non-PSB channels are only available on the pay-TV platforms, the DTT platform provides a significant audience and advertising contribution (ballpark estimate of £150-200 million per annum) to the relatively small group of leading free-to-air non-PSB channels, which are also less constrained in developing their online initiatives than the mixed advertising/subscription non-PSB channels on the pay-TV platforms

One year on from the launch of the latest generation of gaming consoles Microsoft and Sony remain locked in a high stakes struggle for dominance of the gaming industry, and longer term viability of the console category.

Sony’s PS4, which we estimate outsold Microsoft’s Xbox One 3:1 in Q3, looks certain to win this round in a return to form for Sony following the relative disappointment of the PS3. Microsoft, struggling from missteps early in the Xbox One cycle, may have left it too late to catch up.

The wider games market continues to shift to mobile and online gaming, as developers seek to exploit the vast installed base of connected devices. New console gaming experiences from Steam and Amazon may be the primary growth driver for controller-based gameplay.

The European mobile market had a rare quarter of solid improvement in Q3, with reported service revenue growth improving by over 2ppts to -4.7%, helped by a 1ppt improvement in regulated MTR cuts (which have now dropped to near zero) and a 1ppt improvement in underlying growth

The improvement appears largely driven by improved pricing trends, with the improvement in Italy particularly strong. However we feel that pricing is still in general in a fragile equilibrium, with the potential longer term structural improvements - consolidation and network focus - yet to be made

Consolidation has certainly progressed, but more in-market mobile deals need to be made, and while current levels of investment are encouraging, with accelerating data volume growth also encouraging, they will take some time to have an effect at the consumer level

In 2014 Canal+’s core premium French pay-TV business has continued to lose subscribers and swallowed a VAT increase. But this was offset by growth in FTA ad sales, in ARPU, in overseas subscriptions and by acquisitions. EBITDA has continued the decline which commenced in 2013

Eleven years ago Canal+ in France and Sky in Britain had the same household penetration, but since then a gap has opened up and now Canal+ lags behind at 21% compared to Sky’s 34%. The French platform suffers from its regulated focus on films and its neglect of hardware

A deep revision of Canal+’s model is needed, through building a library of scripted series and a revamp of the consumer proposition to differentiate on quality and user experience. Building on recent initiatives, mediocre IPTV services should be bypassed by OTT bundles on fibre, and the satellite offering upgraded

Underpinned by a legislative regime since the 1970s designed to prevent sex discrimination and unequal pay between men and women, the UK has enjoyed successive and ever bigger waves of young women gaining the education and skills to enter the work force as professionals, now standing at 5 million strong. The UK also boasts 1 million female-led companies and the digital age has greatly expanded the opportunity for entrepreneurship for women to be their own bosses.

The workplace inflicts a stiff ‘motherhood penalty’ that produces a yawning gender pay gap for women in their 40s and 50s as men more readily gain access to managerial and executive positions, radiating from there to board positions, where Lord Davies’ initiative for FTSE companies has led some to endorse the merit of a diversity of directors on boards.

On the whole, however, employers often overlook the potential to optimise talent management practices to accommodate maternity and support the work-life balance of employees, prevent sexism and unequal pay, and offer women an equality of opportunity to accede to top jobs. Companies that do so could be more likely to establish a lasting competitive advantage and the UK economy will gain too from releasing the talent and energy of women at work.

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