Publications

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UK TV Trends

Our presentation UK TV Trends January 2006 [2006-01]* provides our most up-to-date views on three subjects:

Media 18 January 2006
Consolidation in Italian mobile

Egypt-based mobile operator Orascom’s investment in Hutchison Telecom creates an intriguing if convoluted link between the 3rd and 4th players in the Italian market, Wind and H3G

Telecoms 17 January 2006
Freeview enters 2006 with a bang

Freeview recorded its strongest monthly increase of 694,000 homes in December 2005 according to BARB survey estimates, with 6.393 million digital terrestrial television (DTT) homes projected for the beginning of 2006.

Media 9 January 2006
UK TV Video-on-Demand

UK broadband network operators have begun full-scale deployment of video-on-demand (VOD) services. NTL/Telewest have almost completed the upgrade of their networks to enable homes in their footprint for VOD, hoping to achieve similar success as the US cablecos in the past five years. In 2006, BT is to launch its hybrid Freeview/VOD device to BT broadband customers and VOD will also be a part of the IPTV offers from Bulldog and Wanadoo UK. Is this enthusiasm for VOD in the UK warranted?

IPWireless’s TDtv technology offers an intriguing alternative, using otherwise spare spectrum, but it is the most costly technology to roll out, and the most underdeveloped in handset terms

Media 8 December 2005
GCap Media

GCap Media's first financial results last week were described as "extremely disappointing” by Chief Executive Ralph Bernard. Formed earlier this year from the merger of GWR plc and Capital Radio plc, the industry’s two former heavyweights, GCap owns one national radio licence, 55 local radio licences and 100 digital radio licences.

The recent results from Vodafone’s competitors in Europe show it experiencing a clear performance lag, with growth dipping in the December quarter at Vodafone but its competitors maintaining their previous pace

Media 30 November 2005
3G Datacards

3G datacards slot into laptops to provide Internet connectivity when on the move. They make good use of the current patchy 3G networks: demand is likely to be concentrated in areas that are currently covered, while GPRS is a good back-up outside these areas and the ‘bursty’ nature of their usage does not put an unsustainable load on the 3G networks. However, they are far more expensive and much slower than fixed line broadband, and they are likely to remain so for the foreseeable future, leaving their appeal as a ‘last resort’ rather than a genuine alternative.

The resulting outlook for C&W UK’s performance in the short term is uncomfortable

Longer term, the strategy looks feasible, but better implemented under private ownership

Bulldog’s strategy is unchanged and remains dubious

Telecoms, Mobile 9 November 2005
UK Commercial Radio

The liberalised ownership provisions in the Communications Act 2003 have facilitated consolidation of the commercial radio sector in the past year. Two top-tier groups have emerged in GCap Media and Emap, following its acquisition of Scottish Radio Holdings. The pressures for consolidation have become more acute in the past year due to the structural problems of the commercial radio sector and the advertising downturn. But assets have become more difficult to value due to the uncertain timing of the recovery in advertising and the prospect that radio will be edged out of national budgets by online. UK radio groups are increasingly cautious to buy and anxious to sell, and we also discount the prospect of a bid from a major US group, expecting instead keen competition for the 35 new licences Ofcom will be allocating in the next few years.

Media 4 October 2005
Mobile TV

Mobile TV is being hailed as the next killer consumer mobile data application, and is already credited with being the most popular 3G service where it is offered.

This report examines recent developments in Local Loop Unbundling (LLU) in the UK and their implications for market structure and BT’s revenue from residential customers.

 

 

Telecoms, Mobile 18 September 2005
NGN in the UK

BT and other industry players have announced plans to upgrade their fixed telecommunications networks to Next Generation Networks (NGNs). In the UK, BT’s ‘21st Century Network’ plans are the most ambitious. BT intends to rationalise all its existing network platforms, bringing all services and applications onto a single IP-based platform, using the same equipment for handling and routing traffic over one transmission network. The new network also has the potential to support new services.

The decline in underlying Group EBITDA is continuing to decelerate

Local loop unbundling volumes are set to explode, but the impact of LLU on BT Group revenue will be lower than expected

Fixed Line 31 August 2005
TF1 - Digital Challenge

Television's old world of analogue scarcity produced a clutch of big names in free-to-air (FTA) commercial broadcasting: ITV1, TF1, Mediaset, RTL and Sat.1/Pro7 being among the most prominent in Europe - companies grown rich and powerful through advertising demand and lack of competition. Today, they face the common challenge of making a successful transition into the new world of digital plenty. Can they prosper? Or must they disappear like dinosaurs in a whirl of audience fragmentation, ad avoidance, on demand, downloading, video-streaming, convergence, piracy and whatever else the future holds?

The new UK management team, led by former Energis CEO John Pluthero, still has the opportunity to improve C&W UK’s longer-term position

Rapid implementation of a Next Generation Network to cut costs and refocusing Bulldog remain critical

  • TF1
Media 24 August 2005
Recorded Music

After ten years of top line decline, the total recorded music market stabilised in 2004 at $34.4 billion, but our view remains that specific factors rather than fundamental change in the key market and economic drivers explain this stabilisation. These specific factors included a 9% average retail price decline in the US leading to a 1.4% unit sales increase, a creative resurgence, and the adoption of digital sales by iPod enthusiasts. However, the CD format resumed its long-term decline in the second half of 2004 and we expect this decline to continue.

This price increase brings H3G much more into the fold of UK prepay pricing, putting its outgoing call prices on a par with Virgin Mobile, at a premium to easyMobile/Fresh, and at a much reduced discount to the larger operators.

Media 18 August 2005
E-Recruitment and UK Regional Newspapers

Recruitment ad spend has led the growth of ad revenues of regional newspapers in recent years. Declining recruitment ad volumes in Q2 2005 and weak outlook for H2 2005 will significantly reduce ad revenue growth in 2005 from the 4.9% of 2004. This outlook will adversely impact groups that are more heavily reliant on recruitment ad spend, such as Northcliffe Newspaper Group and Trinity Mirror Group, and both have confirmed the challenging nature of the current trading environment in their results.

Media 10 August 2005
TSR - Impact on Industry

This report examines the impact on alternative communications service providers - unbundlers, resellers, altnets and the cable companies - of BT's proposed settlement of the Telecoms Strategic Review (TSR) conducted by Ofcom, completing the coverage of our recently published Telecoms Strategic Review [2004-14].

Fixed Line 27 July 2005
Telecoms Strategic Review

Ofcom, BT and the industry are getting closer to completing the Telecoms Strategic Review (TSR), currently in its Phase 3, and scheduled to complete in the Autumn. Ofcom's proposals and the supportive measures announced by BT offer some good news for virtually all players in the UK market, although clearly such judgements depend on what was expected prior to these announcements. We have always considered it unlikely that Ofcom would choose the option of investigating BT and possibly making a referral to the Competition Commission, which could have led to the break-up of BT. However the reaction of the financial markets suggests that at least some City analysts considered that BT has secured a major win by avoiding this outcome.

Strong growth in both online and mobile music revenues was not enough to compensate for the erosion of the core CD market

Telecoms 4 July 2005
Freeview Plus

The competitive strength of Freeview is growing. Freeview is already in five million homes and increasing at the rate of about two million homes a year, far exceeding initial expectations at the time of its launch on 30th October 2002. At that time, there was muted demand for channel space on the digital terrestrial TV (DTT) platform carrying Freeview and no one except the BBC seemed to want to know. This was still the case a year later when Five sublet all its extra gifted capacity to the minipay service Top Up TV, which launched in April 2004.

Media 23 June 2005
Football Rights

Although Sky’s monopoly over UK Premier League football runs for only two more seasons, the jostling between other broadcasters eager to transmit top tier football matches has already begun. Persistent rumours suggest that broadcasters are trying to build a consortium to bid for Premier League matches. We believe, however, that such a consortium might well run foul of the competition law, and would in any case be fiercely resisted by the Premier League.

Although the service includes the latest features such as user-customisable channels and the ability to skip tracks, adoption will be limited by the widespread availability of cheap or free substitutes and the massive drain that it will place on the handset battery

In order to make the service affordable, data is priced at an effective 95% discount to current high-usage data tariffs, further highlighting operators’ difficulty in offering attractive data services at economic pricing levels

Media 16 June 2005
LLU in France Update

France has become the largest market for broadband in Europe (7.7 million connections at the end of Q1 2005) as a result of the aggressive price competition unleashed by local loop unbundling (LLU) since 2002. In addition, ADSL2+ line speeds have become standard in densely populated areas (where customers are within 2 kilometres of the exchange).

Digital TV growth trends following the record surge of Freeview homes in December 2005;

Financial assessment of Sky’s broadband/telephony strategy following the acquisition of Easynet;

ITV1 audience and advertising revenue prospects for 2006 in the wake of more than a 10% decline in commercial viewing share in 2005.

Telecoms 16 June 2005
Ofcom - ITV Licence Fee Decision

Ofcom will announce at the end of June the new terms for ITV to operate the analogue portion of its broadcast licence for ITV1. According to Ofcom's own statements, it is obliged to estimate the full value of ITV’s operation of the analogue ITV1 service and then extract all this value – bar some profit and other small allowances – in the form of annual licence payments. To do so, Ofcom has announced a methodology based on what the winning broadcaster would bid in a hypothetical competitive tender. In order to estimate the licence payments, analysts must grapple with the highly complex tasks of inferring the model from Ofcom's description and establishing the inputs.

An eventual merger is possible but difficult, especially given Hutchison Whampoa’s inflated view of H3G Italia’s value, considering it worth about the same as Wind itself, which is double the size and actually makes a profit (unlike H3G Italia)

Nonetheless, this does create a possible exit should H3G Italia’s planned Q1 2006 IPO fail, with the consolidation likely to benefit all players in the Italian market. H3G UK does not enjoy such an option, and is struggling more on a stand-alone basis to boot

  • ITV
Media 6 June 2005
UK Mobile Consumer Trends

The UK mobile market can give the unwary observer the impression of strong subscriber growth, dangerously high levels of competition for the incumbents, and high levels of consumer enthusiasm for both advanced handsets and advanced mobile data services. These impressions are however all incorrect or misleading, as our recent UK mobile user survey helps to show.

Media 12 May 2005
UK Broadband Market 2005

Broadband growth has been very strong in the UK, with 7 million businesses and households connecting to the Internet via a broadband cable or DSL connection at the end of Q1 2005. Driven by rapid migration of dial-up Internet users to broadband, we expect high levels of net adds to continue in 2005 and 2006, before declining steeply as the market approaches saturation.

Telecoms 9 May 2005

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