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
Virgin Media’s consumer cable revenue growth dipped down to 3% in Q4, largely driven by weaker RGU growth during the year feeding through
Subscriber net adds were however much stronger in Q4, and the company has confidently implemented firm price increases this month, backed up by another speed increase across all tiers
OCF declined by 5%, or 1% excluding one-off items, with increased sports content costs from BT and Sky weighing. However, the company remains confident of mid-single digit OCF growth in 2014, with growth improving through the year
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
Vodafone Europe’s revenue growth was again weak, flat on the previous quarter in reported terms at -10%, but underlying revenue growth declined slightly, despite a strong recovery in GDP growth
There are some limited signs of recovery – improved contract net adds, sustained data volume growth, an end in sight to ARPU dilution – but realistically Vodafone’s admirable organic investment push will not reap rewards within the year
More near term interest is on M&A, with Vodafone shopping for fixed line operations, important in-market mobile consolidation regulatory decisions coming up, and interest in Vodafone itself possible after the Verizon deal closes later this month
TalkTalk enjoyed a healthy December quarter, with broadband net adds steady, TV net adds accelerating, churn falling and revenue growth accelerating to 5%
Revenue growth was boosted by a big wholesale contract win and the timing of line rental price increases, but the company did achieve a complex price restructuring with no negative ARPU impact
With churn heading down again, the company appears to have successfully weathered the BT Sport-related storm, leaving it on track to achieve its aims
BT grew both its Group level and consumer retail revenue for the first time in years, and while the extent of growth was flattered by one-off factors, growth is still positive on an underlying basis, an impressive achievement indeed for a European fixed incumbent
This is mainly driven by robust pricing, declining line losses, and continuing fibre adoption, with the indirect impact of BT Sport still hard to discern, but the direct impact absorbing all of BT’s hard won cost reduction gains to leave EBITDA flat
The outlook is positive in that BT can achieve its current financial guidance even with the millstone of BT Sport costs, but the uncertain outcome of the next Premier League rights auction casts a shadow on prospects thereafter
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.