The UK broadcasting sector is undecided on how much to engage with a technology that could simultaneously threaten industry jobs, intellectual property, and competitive advantages. Some do not see themselves as in a position to take risks with AI, but the sector must consider the longer-term risks to inaction.

There is clear value to be unlocked along the production pipeline with AI, and unrealised opportunities for content owners to apply AI to their libraries and enhance discovery.

None in the industry can ignore how AI changes the wider competitive landscape: new AI services will provide audiences with alternative products, and disrupt distribution.

The expected service revenue boost from in-contract price increases failed to materialize this quarter, nullifying the upside surprise last quarter.

Traffic growth picked up again to 17%, lending further weight to the view that at least some of the recent sharp slowdown was somewhat one-off in nature.

Government statistics imply steep mobile price inflation while the opposite is true—which may help to diffuse the current furore over in-contract price increases.

The centre of gravity for kids’ media has shifted. YouTube now captures around 44% of UK children’s viewing, with broadcasters adapting to stay relevant in an environment built around algorithmic discovery and constant replay.

Alongside the BBC, YouTube is one of the few spaces where education and entertainment intersect. Around a third of our sample of 5–8s YouTube Kids videos were educational, while older cohorts gravitate toward faster, creator-driven formats.

There remains a distinction between YouTube and broadcaster kids’ programmes: we found YouTube-native content twice as fast, and brighter, although the broadcast content that also runs on YouTube shows less disparity. Broadly, on YouTube, US-originated formats dominate.
 

Broadband market revenue continued to decline by 1% in Q3, thanks to stagnant broadband volumes and weak ARPU growth. 

Pricing is declining at 5-10% per annum as a modest retail altnet slowdown is countered by TalkTalk losses moderating, and competitive pressure remains intense.

Recovery looks very much dependent on the retail altnets consolidating into a more sustainable wholesale model

Big tech, even the US economy at large, is betting the house on AI. Some air might come out of the bubble, but AI investments’ trajectory will stay the course over the next 24 months.

UK national media and content creators face an acute challenge as they exploit global platforms’ ‘export’ opportunities, with AI’s ‘glocalisation’ potential a key new trend for future online video.

AI platforms could create an even tougher online media environment over the next few years. OpenAI’s spending plans are predicated on resetting how people shop, search and access entertainment.

DMGT proposes to acquire Telegraph Media Group (TMG) after RedBird Capital pulled its bid. 

TMG has a pristine balance sheet and is ready to be sold by RedBird IMI for the reserve price of £500 million to DMGT.

Lacklustre results for the topline in 2024 are partly due to the lengthy period of limbo since May 2023, but EBITDA is steady at £61 million.

Altnet losses expanded to £1.5bn in 2024, as EBITDA losses persisted and interest costs rose sharply, with ARPUs weakening and operating costs stubbornly high, and the increasing interest burden looking unpayable under any reasonable scenario.

Even the best performing altnets can barely make EBITDA breakeven, and not make sufficient margins to cover ongoing customer acquisition investment, resulting in a perpetual cash drain for their investors.

The impact on the rest of the sector is worsening in the short term as pricing falls, but this should accelerate the inevitable consolidation into a sustainable wholesale model under CityFibre and/or VMO2/nexfibre.

Paramount wins the rights to the largest packages of Champions League matches for 2027-31 in the UK and Germany, taking over from TNT Sports and DAZN.

In the UK, increased fragmentation of premium football coverage strengthens Sky’s attractiveness as an aggregator.

In Germany, Paramount will accelerate the market reshuffle.

DAZN is on track to reach profitability in 2026, the tenth year since its launch, supported by Foxtel’s full-year consolidation and the margin improvements already evident in its 2024 accounts.

Foxtel’s integration diversifies the group, with Australia becoming DAZN’s largest market by revenue.

Expansion in ancillary areas (betting, product developments) and the distribution of third-party services under revenue-sharing agreements complements DAZN’s rights’ ownership in key markets.

Q2 results were something of a mixed bag. Headline growth was solid thanks to 1&1 onboarding, and whilst underlying trends in Germany for both revenue and EBITDA were still firmly negative, the former stabilised and the latter improved.

Tightening of EBITDA guidance in Europe is welcome, implying a flat headline performance and an underlying EBITDA decline of no more than 4%, with the potential for better, we believe.

VodafoneThree synergies and cloud reselling should take over the growth mantle when the 1&1 boost fades, facilitating some limited capacity for dividend growth.