Factoring in the risk of recession and/or of a disorderly Brexit transition, the Bo E/OBR’s projections could yet seem over-optimistic European mobile service revenue growth declined this quarter to 0.3%, likely due in large part to the increased negative impact from the European roaming surcharge cuts, which we estimate at around 0.5-1.0ppts for Europe as a whole The continued growth was supported by continued ‘more-for-more’ price increases coupled with strong data volume growth.Partially countering this, there has been a step up in competition at the low end in some markets, often driven by the smaller operators Looking forward, the negative EU roaming impact is likely to decline from next quarter given the end of the summer holiday season, and on balance we would expect positive price increase trends to overcome negative low end competitive trends, at least in the short term.Merwin confirmed that IAC hoped for Tinder users to translate to Match consumers eventually.
Subscriber volume growth was a little weak at the margin, but this will be helped by all-IP products expanding the economically addressable base in new, and existing, markets There remain questions on content, with the outlook for premium football rights uncertain in the UK and Italy, and investment in Originals questionable given a mixed track record, but certainly with upside The overall scale of the GAFAN digital media giants may be huge, but the cost of becoming a major player in Premier League (PL) football remains utterly disproportionate to the current scale and ambitions of their video businesses in the UK Furthermore, the main package PL rights are live-only, UK-only, and of limited breadth of appeal, making a poor strategic fit for any of the digital players The cheaper minor packages, near-live and clips rights may be a better fit, but bidding on these will not move the needle in terms of the £1.7 billion per year main PL auction rights costs Tencent’s recent investments in Snap and Spotify suggest media platform ambitions beyond games in the West, but close ties to the Chinese government could complicate regulatory approval for strategic acquisitions BT Group revenue growth held steady at -1.5% during the quarter, but this was helped by some recovery in the (still declining) Global Services division, with weaknesses appearing in a number of other areas BT Consumer is of particular concern, with revenue growth turning negative as a result of declining volumes and weak ARPU growth, which are driven by industry-wide trends that are hard for BT to avoid Looking forward, the March quarter will be flattered by an overlapping price rise at BT Consumer, but thereafter pressures will resume, with few obvious sources of upside on the horizon Baidu, Alibaba, and Tencent (BAT) have built their leading market positions in Chinese online media on the back of the mobile revolution and an absence of foreign rivals The big three’s rivalry in online advertising reflects a broader struggle over key gatekeeper roles in the Chinese online economy, albeit one shaped by state intervention While benefiting from protectionism at home, BAT are weak in most foreign markets and links to the Chinese state may hamper international expansion, particularly in the US The Competition and Markets Authority (CMA) has provisionally found that Fox’s acquisition of Sky is against the public interest on media plurality grounds, although it could proceed with an appropriate remedy The CMA found the merger would give the Murdoch Family Trust (MFT) and family members “too much influence over public opinion and the political agenda” The CMA now enters the challenging remedies phase.
Fox could offer an Editorial Board for Sky News pending finalisation of Disney-Fox (by 2019).
Third parties seem likely to continue to seek to prohibit the merger The Italian league, unhappy with broadcasters’ bids of €830m, are now holding talks with Spain’s Mediapro, who has offered €950m and would produce a channel to wholesale to all platforms Mediapro’s bid faces challenging economics given the low potential for an OTT strategy and Sky’s exclusive possession of a sufficiently monetisable subscriber base Ultimately, we expect Sky to continue its full coverage and to increase its outlay only if it gains more exclusive fixtures Subscription fashion retailer Stitch Fix has gone public, revealing a rare example of a new, private, technology-based company capable of making a profit Stitch Fix relies on the ‘mixed intelligence’ of algorithms and human stylists to offer its customers a curated fashion “Fix” of clothing and accessories, aiming to cut through some of the chaos of ecommerce Though Stitch Fix’s success is not guaranteed, there is much to be learned from its approach of focusing on building a solid business and generating positive earnings early, rather than growing users at any cost Results of the league’s new call for tender for its 2018-21 broadcasting rights will be unveiled on 22 January.
The platform-based packaging was reviewed after last year’s aborted auction, apparently to accommodate loss-making Mediaset Premium, the participation of which remains nevertheless uncertain Sky could keep its current satellite and internet coverage without increasing its outlay.
Amazon had a tough 2017 for video, and are still struggling to create a hit.
Both the Bank of England and the Office for Budget Responsibility have in the last month severely downgraded their view of the long-term underlying growth potential of the UK economy, reflecting a new forecasting consensus that the UK’s disastrous productivity performance post-crisis is not a blip but indicative of a disappointing new normal The fundamentals of the UK economy, however, remain little altered from earlier this year – investment is weak, household finances are emaciated, people are compensating for weak productivity by simply working more and harder, and consumption growth is approaching its limits The outlook for the next five years is bleak – earnings are in store for the longest squeeze in living memory and inequality is set to explode.
However, both giants have attempted to move into online classifieds before, with little demonstrable success The slowing UK economy since Q3 2016 has had a knock-on effect on the property and autos marketplaces underlying UK classified advertising revenues, with house prices slowing, transactions stabilising (instead of rising), and new car registrations down sharply in 2017 to date.
Recruitment activity by agencies and employers has instead been dynamic as the UK nears full employment Advertisers in these verticals continue to switch expenditure from print classifieds to internet portals and search, which offer superior lead generation, analytics, and user experience.
We expect no major Telecom Italia (TI) or GAFA bid Serie A seeks an unrealistic €1.05 billion per year (up 24%).