1. August 2011
MEDIA TRENDS – Q3 2011
While mixed economic conditions and competition continue to impact the media and communications
marketplace the subscription television industry continues to see earnings growth and decreased
churn. Industry investment and rationalisation is also reflected through the divestment and purchase
decisions of sector participants.
This quarter significant price increases and product changes for over the top services in the United
States and the cancellation of the iTunes television program rental option show that business models
continue to evolve. Marked increases in the cost of advertising on Facebook in major international
markets is also indicative of the growth of social media advertising.
The volatility of the tablet computer sector can be highlighted by the decision of Hewlett Packard to
totally withdraw from that marketplace, the on-going patent action between Apple and Samsung and
the growing dominance of the iPad as supply for the past quarter was adjusted to meet demand.
Convergence continues as the focus for Government and regulators both in Australia and the United
Kingdom. The development of new and innovative content, across multiple devices, is reflected
through industry development and multiplatform investment. The first program in the United States to
end its run on television and move online is also highlighted.
STV DISTRIBUTION 140,000 subscribers in the quarter including
ii
conversions from analogue cable.
UNITED KINGDOM
AUSTRALIA
Virgin Media sells stake in UKTV for £339M
AUSTAR/FOXTEL merger: ACCC decision
delayed
US company Scripps Networks has
purchased Virgin Media’s 50% stake in The ACCC requested further information from
UKTV. Scripps currently owns US TV brands FOXTEL and AUSTAR in relation to the
including The Cooking Channel and the DIY proposed merger. The ACCC will announce
Network. UKTV has a portfolio of ten a new proposed decision date on receipt of
channels including Gold, Dave, Home, Watch, further information.
iii
i
Yesterday and Good Food.
AUSTAR Q2 2011 results show subscriber
Ofcom reports UK digital take-up reaches and MyStar increases coupled with lower
92.5% with take-up of digital pay satellite churn
and cable services also increasing
AUSTAR reported a net subscriber gain of
Ofcom has reported that a Q4 2010 survey of 8,609 on Q1 2011. Customer churn
digital take-up has revealed that 92.5% of UK decreased from 1.72% in the first quarter to
households have now converted to digital 1.31%. The company reported that MyStar
television. The contribution of subscription subscribers also increased by 11% on Q1
iv
services in the UK is recognised with a 2.5% 2011.
increase in pay satellite services to 36.7% of
homes and an increase in digital cable TV FOXTEL announces 17.5% earnings
take-up to 3.8 million. At the same time growth
BskyB added an additional
FOXTEL announced a 17.5% growth in
earnings (EBITDA) to $477m for the year to
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2. August 2011
30 June 2010. FOXTEL’s revenue for the
year ended 30 June 2010 was up nearly 10% DEVICE TRENDS
to just over $2bn. The result was supported
by continued strong uptake of the FOXTEL iQ UNITED KINGDOM
v
and FOXTEL High Definition services.
Launch of improved BBC iPlayer for ‘big
FOXTEL signs four year installation and screens’ via Playstation 3 Console
maintenance contract with Downer
The BBC has launched a new and improved
iPlayer for TV with features such as content
Downer EDI Limited has signed a four year
availability messages, same program episode
contract with FOXTEL to provide installation
grouping, search results updates, previous
and maintenance services for FOXTEL’s
successful search results and previously
satellite and cable customers in Adelaide,
vi played episode data. The iPlayer also gives
Brisbane, Melbourne and Sydney.
the viewer the ability to navigate through
other content while continuing to watch a
UNITED STATES
program. While the new iPlayer has initially
Time Warner to purchase US Insight been launched via the Playstation 3 console
Communications for $3bn in cash the BBC plans to roll the service out to other
ix
connected devices.
After months of negotiations, Time Warner
has indicated it will purchase Insight AUSTRALIA
Communications for US$3bn. Reuters
reported that Insight is currently the 10th- FOXTEL on T-Box switched on in June
largest cable operator in the United States. 2011
Insight sells cable television, high-speed
Internet and telephone services and serves The first stage of the FOXTEL on T-Box
750,000 customers in Illinois, Indiana, service was switched on from Sunday 26
Kentucky and Ohio. The purchase is set to June 2011. The service allows customers to
expand Time Warner’s reach into the US access up to 30 FOXTEL channels and a
vii
Midwest. selection of Catch-up channels including
FOX8, Discovery and Movie One. The basic
Viacom Group reports 39% increase in
starter service offers 11 channels for $19.50
year over year profits Q3 2011
per month, with entertainment, sport and
x
Viacom Group has reported a 39% increase movie packages from $10-$15 per month.
in year over year profits for the quarter ending
June 2011. Consolidated revenues in the UNITED STATES
quarter grew by 15% to $3.77bn driven by
growth in affiliate, advertising and licence Google buys Motorola Mobility for $12.5bn
revenues. Viacom said that the breadth of hit
programming including tentpole events on The Google Inc. purchase of Motorola
MTV, Nickelodeon, Comedy Central, BET and Mobility gives it access to the part of the
TV Land as well as international networks business that covers converged mobile
viii devices such as smartphones and tablets;
contributed to strong advertising growth.
wireless accessories; end-to-end video and
data delivery; and management solutions,
including set-tops and data-access devices.
It is also a move that has been reported as
supercharging the android ecosystem. The
transaction is expected to be finalised by the
xi
end of 2011 or early 2012.
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3. August 2011
MAX GO joins HBO GO with the launch of Last month Apple revealed that it had sold
a new mobile app on Apple and Android 9.25 million iPads in Q3 2011. This growth
follows on from the sale of 4.6 million iPads in
Following on from the launch of the the previous quarter. Apple’s decision to
successful HBO GO app in May this year double iPad shipments in Q3 resulted in
Time Warner has launched MAX GO which significant growth at 183%. While the iPhone
will provide unlimited access to over 700 is still the biggest seller for Apple the iPad has
hours of programming free of charge for now overtaken sales of the Apple Mac.
Cinemax subscribers. The launch coincides During Q3 revenue from the iPad reached $6
xv
with Cinemax’s first original prime series billion.
Strike Back. Along with the debut episode,
MAX GO users will have access to a second Research company IHS iSuppli has recently
episode prior to its broadcast on the linear revised their forecast for tablet computers
xii
network. sales figures up with Apple expected to
account for 74% of media tablet shipments in
xvi
Netflix growth stalls following monthly 2011.
rate increase
Netflix has experienced a slow-down in
growth following a monthly fee increase. The
increase also followed Sony’s decision to
remove their movie streaming service last
month. The pricing re-structure will see
some subscribers pay up to 60% more per
month as Netflix separates its DVD rental and
xiii
streaming services.
Subscriber decline continues for TiVo
TiVo has continued to experience a
subscriber decline with 456,000 subscriber Source: IHS iSuppli August 2011
losses reported for Q2 2011. TiVo also
reported a loss of $19.6 million for the quarter. Other manufactures have yet to make a
It was reported that the branded DVR had significant dent in the iPad’s popularity with
experienced losses as consumers switched to Hewlett Packard recently announcing that
generic DVR’s supplied by cable they are withdrawing from the tablet market.
xiv
companies.
The patent dispute between Samsung and
Apple is currently involved in a patent dispute
INNOVATION with Apple has seen the Galaxy Tab banned
A FOCUS ON TABLETS from sale in the EU. Motorola, Lenovo and
others are still developing their product line
While current patent action between Apple utilising the Google Android operating system.
and Samsung has resulted in claims that the
design of the tablet computer originally A recent report from InfoCom on Tablet TV
featured in the 1968 Stanley Kubrick film usage has shown that Tablet TV apps can be
2001 A Space Odyssey, the popularity of the an effective tool in mitigating customer churn
device is reflected through strong for subscription operators. They highlight that
marketplace growth. while Tablet TV applications have primarily
featured remote control functions recent
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4. August 2011
upgrades have resulted in the ability to AUSTRALIA
wirelessly stream live TV and video on-
demand. InfoCom note that the ‘service Australian original production Killing Time
appeal is the ‘entertainment anywhere’ starring David Wenham to premiere on
promise, enabling users to enrich their mobile TV1 in late 2011
xvii
experience with TV entertainment’.
TV1 has announced that it will premiere the
first six episodes of one of the most gripping
In the United Kingdom, the rating agency
and controversial Australian stories ever
BARB has announced they will begin to roll
produced starring well known Australian actor
out a new measurement of TV viewing on
David Wenham. The drama series is
PCs and tablet computers to 100 of its panel
inspired by the story of former criminal lawyer
homes over the coming months. The
Andrew Fraser who made a fortune out of the
measurement will allow the ratings agency to
Melbourne underworld and eventually
examine web TV measurement alongside xxi
xviii became one of them.
linear broadcasts.
Multiplatform teen drama SLIDE attracts
Last year Nielsen reported that up to 24
over 10,000 Facebook followers and
percent of Australian Internet users were
makes twitter top trend for Sydney and
considering purchasing a tablet computer in
Australia
the next 12 months. The take-up of tablet
devices in Australia has enabled subscription
The popularity of the FOX8 drama SLIDE has
television platforms and channels to continue
been reflected through social media.
to build and expand their range of services
Following the premiere of the program, on 16
and content across multiple platforms.
August 2011, #SLiDEFOX8 was one of the
top ten trends on Twitter for Sydney and
A recent report from Nielsen also highlighted
Australia and 'likes' on the SLiDE Facebook
demographic shifts related to tablet ownership
page had grown to 10,550 followers as of 23
in the United States that showed the over 55 xxii
August 2011.
market achieving the highest growth in
xix
ownership from 2010 to 2011.
UNITED STATES
NEW DEVELOPMENTS IN Netflix Inc. launches children’s channel
PROGRAMMING
Netflix has rolled out a new channel to
UNITED KINGDOM subscribers. The new Just for Kids sections
will allow children to search for content by
Opening game of FA cup streamed live on clicking on their favourite characters. It has
Facebook for Budweiser fans been reported that Netflix worked with the not
for profit group, Common Sense Media to
The first game of the FA cup was streamed determine which films and program should be
th xxiii
live on Facebook on the 19 August, 2011. included in the Just for Kids section.
The 90-minute live stream was available via
an application that Budweiser built for All My Children and One Life to Live first
Facebook. The match was only available to programs to end run on television and
those over the legal drinking age and fans move to online only
had to ‘like’ the Budweiser Facebook page to
xx
access the live stream. Long running US soap operas All My Children
and One Life to Live are set to end a long run
on broadcast television. It has been reported
that both series currently have an
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5. August 2011
unprecedented licensing agreement that will would see the first services licensed in August
xxvii
see them move intact from television to the 2012.
internet. In the lead up to the end of the
shows broadcast life a number of long- UK Communications Review for the Digital
departed characters will make return Age
appearances. Contract negotiations are
currently on-going and the production A wide ranging review of the regulatory
company is yet to announce whether the regime for the UK communications sector was
content will be pay per view or advertising launched in May 2011. The Government has
xxiv
supported. commenced the review by opening a dialogue
with all those interested in the issues
DirecTV offers popular NFL Sunday Ticket involved. As part of the process the
Government will gather views on some
streamed live over PS3 for one off
specific questions posted in an open letter to
payment
all those who work in the industry as well as
bodies representing the interests of
NFL games will now be available for live
consumers, citizens and the businesses that
streaming on PlayStation 3 consoles. The xxviii
trade online.
DirecTV package will allow viewers to watch
out-of-market games live on PlayStation 3
AUSTRALIA
even if they don’t have a DirectTV
subscription. The Sunday Ticket package
Convergence Review Emerging Issues and
features up to 14 games a week in high proposed detailed papers
xxv
definition.
As part of the public consultation process the
Apple removes TV program rental option Convergence Review Committee announced
from iTunes that they would release five detailed papers.
These papers will cover Australian content;
Apple has made to the decision to remove the spectrum; market structures and media
ability to rent television programs from diversity; layering, licensing and regulation
iTunes. The 99 cent per program rental and community standards. Submissions for
functionality has been removed but users can the Convergence Review Emerging Issues
still purchase television programs through paper will close on 28 October 2011.
xxvi
iTunes.
National Cultural Policy Review
announced
REGULATORY DEVELOPMENTS
Minister for the Arts, Simon Crean has
UNITED KINGDOM announced that the Government would
conduct a review into how the arts and
The DCMS releases a new framework for creativity would be supported and developed
local TV in the UK consultation document into the future. Submissions to the review
xxix
close on 21 October 2011.
The UK Government is creating the
opportunity for a new generation of local TV UNITED STATES
licences to be awarded through a competitive
market based selection process run by FCC to officially remove the Fairness
Ofcom. Licensees will be able to broadcast Doctrine and another 86 rules relating to
targeted and relevant local content including the media
news, current affairs and entertainment
programs. The plan sets a timeframe that
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6. August 2011
The fairness doctrine, which has been around
TRENDS & TIPS
since the end of the second world war
required licensed broadcasters to give equal
time to differing political views to ensure that
viewers had access to both sides of political IHS iSuppli has predicted that sales of
debate. While some Democrats had called internet enabled consumer electronics
for the rule to be actively reinstated over the devices will exceed PCs for the first time
years it has effectively been out of practice in 2013.
since it was abandoned by the Reagan
administration in 1987. The FCC ruling 3DTV’s are proving popular with UK
removes the doctrine so it cannot be consumers. Curry’s and PC World have
xxx reported that one in five televisions sold in
reinstated in the future.
the UK are 3DTV’s.
ADVERTISING In Australia free to air networks have
removed their 3D transmitters from
transmission towers.
Global advertising spend up 8.8% in Q1
2011 with television increasing ad market
Facebook has launched a new video
share
integration service using the Skype
application that allows Facebook users to
Nielsen has reported that global advertising
video chat with each other.
rose by 8.8% year on year in Q1 2011 to total
US$118 billion. Nielsen noted that published
Nielsen has released research that shows
rate cards showed that advertisers spent
the majority of Netflix users watch content
more on television and continued to invest in
on the TV screen connected via a gaming
the consumer Asian and Latin American
console whereas the majority of Hulu
markets. At the same time television
users watch via a computer.
advertising also increased its share amongst
xxxi
other traditional media.
NBN Co has released details about a
planned multicast feature that will enable
Australian subscription television
high quality, high definition video
advertising revenues increase by over 7%
channels over the fibre network.
An Ernst & Young report compiled for ASTRA
GoogleTV is planning to launch in the
found that STV advertising grew by 7.4% from
United Kingdom in the next six months
financial years 2010 to 2011 to a total of
according to an industry report.
$385,921,612. The report also found that
net ad revenues were $180,076,820 from 1
UK set top box manufacturer Pace has
January 2011 to 30 June 2011 which was an
released a new set top box that is
increase of 3.4% on the previous
xxxii capable of offering full HD, 3D and are IP
corresponding period.
ready.
The price for Facebook cost-per-click ads
has risen by 74% in the past year
The Media Trends Report is created by
The Financial Times has reported that a
survey by TBG Digital has shown that the
Infodec: www.infodec.com.au for
cost of Facebook advertising has increased www.astra.org.au
by 74% in four of the largest media markets
xxxiii
around the world over the past year.
www.astra.org.au Page 6

7. August 2011
SOURCES
i
http://www.hollywoodreporter.com/news/us-tv-company-scripps-networks-223029
ii
http://stakeholders.ofcom.org.uk/binaries/research/tv-research/tv-data/dig-tv-updates/q42010.pdf
iii
http://www.accc.gov.au/content/index.phtml/itemId/975742/fromItemId/750991
iv
www.austar.com.au
v
http://www.foxtel.com.au/about-foxtel/communications/foxtel-continues-eernings-momentum-84876.htm
vi
http://www.downergroup.com/Investors/ASX-Announcements/2011/Downer-Signs-Four-Year-Contract-With-Foxtel.aspx
vii
http://www.reuters.com/article/2011/08/15/us-insight-timewarner-idUSTRE77D30220110815
viii
http://phx.corporate-ir.net/phoenix.zhtml?c=85242&p=irol-IRHome
ix
http://sociable.co/2011/08/08/bbc-launch-new-tv-friendly-iplayer/
x
http://www.foxtel.com.au/about-foxtel/communications/telstra-to-switch-on-foxtel-on-t-box-131488.htm
xi
http://www.advanced-television.com/index.php/2011/08/15/google-buys-motorola-mobility-in-12-5bn-deal/
xii
http://www.timewarner.com/newsroom/press-
releases/2011/08/MAX_GO174_app_Launched_on_Apple174_iPad174_iPhone174_08-12-2011.php
xiii
http://www.pcworld.com/article/235627/netflix_users_protest_proposed_price_increases_with_social_media_firestorm.html
xiv
http://newsfeedresearcher.com/data/articles_b35/million-tivo-quarter.html
xv
http://seekingalpha.com/article/280344-apple-management-discusses-q3-2011-results-earnings-call-
transcript
xvi
http://news.cnet.com/8301-13924_3-20096903-64/apples-ipad-will-only-get-more-popular-analyst-says/
xvii
http://www.infocom-de.com/p
xviii
http://www.barb.co.uk/
xix
http://blog.nielsen.com/nielsenwire/online_mobile/changing-demographics-of-tablet-and-ereader-owners-in-the-
us/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NielsenWireNielsenNews+%28Nielsen+Wire+%C
2%BB+Nielsen+News%29&utm_content=Google+Reader
xx
http://sociable.co/2011/08/18/budweiser-to-live-stream-opening-fa-cup-match-on-facebook/
xxi
http://assets.astra.org.au.s3.amazonaws.com/dee2410c33a1315fba9d70211fd2b1d1/KILLINGTIMEMEDIARELEASEAUSTR
ALIANPREMIEREDAVIDWENHAM10.pdf
xxii
http://www.mcn.com.au/News/Detail.aspx?IdDataSource=819
xxiii
http://www.canada.com/story_print.html?id=5266968&sponsor=
xxiv
http://www.okmagazine.com/2011/07/all-my-children-one-life-to-live-get-another-life-online/
xxv
http://www.deadline.com/2011/08/directvs-nfl-sunday-ticket-now-available-on-playstation-for-a-hefty-339/
xxvi
http://bestnewsdaily.com/apple-stops-renting-tv-shows-in-itunes-could-be-working-on-a-new-kind-of-video-service/1009/
xxvii
http://www.culture.gov.uk/images/consultations/Local-TV-Framework_July2011.pdf
xxviii
http://www.culture.gov.uk/images/publications/commsreview-open-letter_160511.pdf
xxix
http://www.minister.regional.gov.au/sc/releases/2011/august/sc099_2011.aspx
xxx
http://blogs.wsj.com/washwire/2011/08/22/off-the-books-fcc-to-delete-fairness-doctrine/
xxxi
http://blog.nielsen.com/nielsenwire/global/global-ad-spend-up-q1-2011-as-advertisers-increase-tv-spend/
xxxii
http://assets.astra.org.au.s3.amazonaws.com/690d0242f7ce4afffb1003a8e22afac5/ASTRA_STVAd_REV_28July11.pdf
xxxiii
http://www.digitalmarketeers.co/facebook-advertising-costs-rise-by-74-survey-claims
www.astra.org.au Page 7