European telcos dial up investments in content

August 01, 2017  | Subscribers Only

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With their days as monopoly providers of communications long behind them, telephone companies are facing a whole new set of challenges. While each company faces different competitive conditions, all face the need to find the right strategy to survive in a rapidly-converging world with fixed line revenues declining, threats from OTT services eating into their core voice business, and ARPUs hit by the commoditisation of broadband and TV distribution.

Many European telcos have responded to the digitisation of TV by carrying video services over their networks. Others, like BT and Altice, have made a massive play in pay TV sports, while Orange and Telefonica are planning ambitious investments in original TV series.

Highlights:

  • Orange and Telefonica have both announced heavy investments in scripting programming—part of a new wave of investments by European telephone companies in content
  • No deal matches the scale of AT&T’s investments in DirectTV and Time Warner in the US
  • Sports rights are a key battleground for many European telcos, with Altice spending heavily to launch sports pay TV channels France, a strategy similar to that of BT in the UK
  • Rationales for content investment are to support the pay TV services which many telcos are offering over their networks and the need to offset declines in voice services with investment in adjacent industries 
  • Liberty Global has built up stakes in a range of content businesses, including ITV, Lionsgate and All3Media, having sold most of its channels business to AMC
  • However, other telecom operators have steered clear of investments in sports to focus on distributing third party channels: Orange and Deutsche Telekom have both declined to take part in auctions for rights to domestic league football
  • One major European telco that remains conspicuously absent in relation to investment in premium content is Vodafone. The operator is currently focused on gaining scale in pay TV and has negotiated carriage deals in order to bundle non-exclusive content

List of tables and charts:

  • European telco investments in content
  • UK: Multiplay subscribers (000s), Q4 2016
  • Germany : Multiplay subscribers (000s), Q4 2016
  • France : Multiplay subscribers (000s), Q4 2016
  • Italy : Multiplay subscribers (000s), Q4 2016         
  • Spain : Multiplay subscribers (000s), Q4 2016

Number of pages: 13

Number of tables and charts: 5

Tim Westcott

Senior Principal Analyst, Television Media

Tim Westcott is a senior member on the television team at IHS and editor of the monthly Media and Technology Digest. He joined the company in September 2004 and specializes in TV programme production and distribution, sports rights and public broadcasting.

Seth Wallis-Jones

Principal Research Analyst, Service Providers & Platforms

Mr. Seth Wallis-Jones, principal research analyst at IHS Markit, covers telecom multiplay strategies for the Service Providers & Platforms team.

Matteo Marchello

Analyst, TV Programming

Matteo joined IHS Technology in March 2016 as part of the TV programming team. His areas of research include broadcasting rights in sports and TV series.

James Joiner

Senior Research Analyst, Service Providers & Platforms

Mr. James Joiner, senior research analyst at IHS Markit, covers telecom operator strategies in Western Europe.

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