FT : Internet access costs set to sap digital content spending

Internet access costs set to sap digital content spending

Consumers’ willingness to pay for digital content is in danger of being held back by their rising spending on internet access, according to a new forecast that raises questions about the media industry’s hopes for streaming music and video subscriptions.
The report from consultancy PwC, to be released on Wednesday, estimates the total size of the industry will grow to $2.15tn by 2018. But the fortunes of the market’s three segments will vary, with internet access revenues growing faster than both consumer spending and advertising.

That suggests internet providers such as Time Warner Cable and AT&T will be poised to capture a growing share of industry revenue. Streaming services such as Netflix and Spotify , the latter of which had Macklemore & Ryan Lewis as its most popular music artists last year, will also be well-positioned to lead growth in consumer spending, as they capture subscribers willing to pay for round-the-clock access to movies, television shows and music.
However, while consumer spending will still make up the largest portion of industry revenue, the balance is shifting as the cost of internet access itself may be sapping willingness to pay for digital content.
By 2018 PwC predicts consumer spending will slip from 45 to 41 per cent of total industry revenues and advertising will fall from 30 to 29 per cent as outlays on internet access rise from 25 to 30 per cent, driven in large part by mobile use.
“A concern for content providers is that spending on internet access may be taking share away from spending on content and services,” PwC said.
Internet access will drive more consumer spending than any other product or service over the next half-decade, PwC said, growing to $636bn by 2018. The trend has been one factor behind a recent dealmaking wave in the cable and telecommunications sectors from Europe to the US. Consumer revenue is expected to reach $875bn and advertising is forecast to grow to $640bn in the same period.
Digital content, which is generally cheaper than traditional books, music, video games and news, is forecast to rise to 17 per cent of consumer spending excluding internet access in 2018 from 10 per cent in 2013.
That contrasts with a faster migration to digital advertising. A third of ad revenue is expected to come from digital in five years, compared with 14 per cent in 2009 and 25 per cent in 2013, as the industry shifts its focus to digital marketing efforts to reach a more precisely targeted audience.
The divergence highlights what PwC calls a “huge challenge” for companies wishing to monetise consumers’ digital appetites and suggests the industry will still rely heavily on advertising and business-to-business spending.
“The irony is that, ultimately, we’ve never consumed so much and paid so little,” said Marcel Fenez, PwC global leader for entertainment and media.
Global music revenues
Overall, PwC forecasts the global media and entertainment industry will grow at a 5 per cent compound annual growth rate from $1.69tn in 2013 to $2.15tn in 2018. That is down from the 5.6 per cent five-year compound rate the consultancy predicted last year and only slightly above last year’s 4.9 per cent annual rise.
Total digital spending will grow at a 12.2 per cent compound rate over that same period, and will account for 65 per cent of revenue growth.
The success of subscription-based models like Netflix and Spotify is evident in PwC’s prediction that streaming video and music will be two of the fastest-growing consumer segments over the next half-decade, with compound growth rates of 28.1 and 13.4 per cent, respectively. By contrast, digital music downloads are set to grow just 3.3 per cent.
But Mr Fenez said that in order to capture a greater share of digital spending, companies need to adopt more “flexible” business models.
“What people pay for are differentiated experiences. If people are only interested in the basic [content], inevitably they will find it somewhere free,” he said. “It’s not just the convenience of content, it’s the convenience of payment.”
Some may prefer to pay a fixed monthly subscription each month while others would rather pay on a per-item basis, so companies should “offer more choices and better experiences”.
Emerging market consumers are predicted to contribute the fastest growth in the next five years. China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia together will account for 21.7 per cent of global revenue in 2018, up from 12.4 per cent in 2009.
China’s clout in particular will be felt as it eclipses Japan as the world’s second-largest entertainment and media market, behind the US, with revenues of $213bn in 2018.

(BFW) Italy Mkt Has ‘Now or Never’ Chance This Year: Kepler Cheuvreux


Italy Mkt Has ‘Now or Never’ Chance This Year: Kepler Cheuvreux
2014-06-04 06:32:41.220 GMT


By Francesca Cinelli
     June 4 (Bloomberg) -- Italy has greatest recovery potential
in terms of productivity, profitability of capital of any of
large European economies, Kepler Cheuvreux says.
  * Highlights Italian equity mkt suffered most prolonged
    valuation derating of its modern history from 2000-01
    through to 2012-13
  * Says 2013 marked end of chronic underperformance of Italian
    mkt in Europe
  * Says potential for recovery in corporate profitability could
    be sustained over next 3-4 yrs
  * Says Italy biggest winner within Europe from decline in cost
    of public debt
    * Says cost of debt servicing in Italy could fall by as
      much as 2pp of GDP over next 5 yrs if ylds of govt debt
      recorded since start of yr hold
  * 5 preferred cos. remain (in order of mkt cap) Atlantia,
    Telecom Italia, Enel Green Power, Gtech, Finmeccanica

Link to Company News:{ENEL IM <Equity> CN <GO>}
Link to Company News:{ATL IM <Equity> CN <GO>}
Link to Company News:{TIT IM <Equity> CN <GO>}
Link to Company News:{EGPW IM <Equity> CN <GO>}
Link to Company News:{GTK IM <Equity> CN <GO>}
Link to Company News:{FNC IM <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story:
Francesca Cinelli at +39-02-80644-252 or
fcinelli@bloomberg.net

>>> Sinclair IS Pharma rumoured to have received ‘friendly’ approach from Nestle

Sinclair IS Pharma rumoured to have received ‘friendly’ approach from Nestle 

Sinclair IS Pharma, the London-based healthcare company, is believed to have received a “friendly” takeover approach from Switzerland-based food group Nestle, The Daily Mail reported. The market report said Sinclair, which has discovered an anti-ageing treatment to compete with Botox, would be a good fit for Nestle, after the Swiss group recently acquired North American rights to commercialise a number of Valeant Pharmaceuticals’ aesthetic dermatology products.

The report said Sinclair’s recent low share price has put the company onto the radar of cash-rich prospective buyers, and the business has been eyed by private-equity firms for some time.

AIM-listed Sinclair has a GBP 144m (EUR 177m) market cap.

Source Daily Mail

(BN) World’s Biggest Wealth Fund Escapes Flash Boys in IEX Dark Pool


World’s Biggest Wealth Fund Escapes Flash Boys in IEX Dark Pool
2014-06-03 22:00:01.6 GMT


By Saleha Mohsin
     June 4 (Bloomberg) -- Norway’s $880 billion sovereign
wealth fund, the world’s largest, is throwing its support behind
Brad Katsuyama’s new exchange.
     Katsuyama’s IEX Group Inc., made famous in Michael Lewis’s
best-selling book “Flash Boys,” could shield investors from
the predatory habits of high-frequency traders, said the fund,
which holds $521.2 billion in stocks globally and is Europe’s
biggest equity investor.
     “IEX is a trading venue where all players participate on
the same terms,” oil fund spokesman Thomas Sevang said in an e-
mailed response to questions. “We support this.”
     IEX, which the oil fund uses for both direct and indirect
trades, doesn’t pay firms to buy or sell shares, shunning a
practice that many markets use to lure business from high-speed
traders. It mandates a 350-microsecond delay between requests to
trade and executions to prevent traders from pre-empting their
moves through high-frequency maneuvers.
     Concern about dark pools was amplified after the
publication of “Flash Boys,” which portrayed an equities
market where exchanges, broker-dealers and high-frequency
traders are conspiring to cheat investors.
     The book says the firms involved helped rig the $22
trillion U.S. stock market. The story centers around Katsuyama,
who was global head of electronic sales and trading at RBC
Capital Markets LLC before becoming president and chief
executive officer of IEX, and his efforts to shed light on the
alleged practice of front-running investors by gathering data on
their trades before they’re executed and then acting on that
information.

                            Dark Pool

     Volume on IEX has steadily grown since its creation, with
an average of 31.3 million shares changing hands on the platform
each day last month, compared with 29 million in April.
     Katsuyama’s trading platform “might solve some of these
problems, but not all of them,” Sevang said. “One problem
related to IEX is that the pricing must take place at another
market place, due to the fact that IEX is a dark pool.”
     Katsuyama and Lewis were attacked by William O’Brien, the
president of exchange operator Bats Global Markets Inc., in an
April 1 interview on CNBC, for what he described as a
misunderstanding of how markets operate. He accused Katsuyama of
criticizing high-frequency trading to promote his own exchange.
     “It’s a very, very old tactic to try to build a business
on the planks of fear, mistrust and accusation,” O’Brien said
in April. “This has certainly taken that to new level.”

                          Bats Corrects

     Bats three days later corrected a comment by O’Brien from
the same program, after he misstated details about the speed of
data feeds used at two of his exchanges.
     Norway’s wealth fund, which gets its guidelines from the
government in Oslo, saw its stock holdings return 26.3 percent
in 2013, while the total portfolio rose 15.9 percent. The fund
is mandated to hold 60 percent in stocks, 35 percent in bonds
and 5 percent in real estate.
     In March, New York Attorney General Eric Schneiderman said
he was looking into practices that give some firms a speed
advantage in equities trading. Agents from the Federal Bureau of
Investigation are investigating whether HFT firms break U.S.
laws by acting on nonpublic information to gain an edge.
     High-frequency traders rely on computers to post and cancel
orders at rates measured in thousandths and even millionths of a
second to capture price discrepancies on more than 50 public and
private venues that make up the American equities market.

For Related News and Information:
High-Frequency Traders Ripping Off Investors, Michael Lewis Says
NSN N39UHZ6JTSFO <GO>
IEX Details Dark Pool Process to Ease High-Frequency Concerns
NSN N4UX526TTDS1 <GO>
Top Nordic Stories: TOP NORD <GO>
Stories on Norway’s Oil Fund 100781Z NO <Equity> CN <GO>
Stories on sovereign wealth funds NI SWF <GO>

To contact the reporter on this story:
Saleha Mohsin in Oslo at +47-22-00-8214 or
smohsin2@bloomberg.net
To contact the editors responsible for this story:
Jonas Bergman at +47-22-00-8213 or
jbergman@bloomberg.net
Tasneem Hanfi Brogger, Kim McLaughlin

>>> Rockhopper Exploration PLC Signs rig contract with Premier Oil plc to drill


Rockhopper Exploration PLC Signs rig contract with Premier Oil plc to drill a minimum of four firm wells in the North Falkland Basin
- Announce that a drilling unit has been contracted by Premier Oil plc ("Premier") to drill a minimum of four firm wells in the North Falkland Basin. 
- The rig has been contracted by Premier as Operator and will also be used by Noble Energy under a rig sharing agreement to drill a further two firm wells elsewhere in the Falklands. Additionally, eight options have been secured which can be exercised prior to mobilisation and a further eight, which can be elected at key points during the campaign. 
- While the drilling order has yet to be finalised, Rockhopper and its partners anticipate using the first two firm slots on the rig to drill the Zebedee and Isobel/Elaine prospects, with Noble taking the third and fourth, before the rig returns to the North Falkland Basin for the final two firm wells which are likely to be the Jayne East and Chatham / Sea Lion West Flank locations.

(BFW) Ophir Says Taachui-1 Tanzanian Well Has 155-Meter Net Gas Pay


Ophir Says Taachui-1 Tanzanian Well Has 155-Meter Net Gas Pay
2014-06-04 06:07:57.307 GMT


By Benjamin Dow
     June 4 (Bloomberg) -- Offshore well operated by BG near
western edge of block 1 encountered gas in single gross column
of 289 meters.
  * Drill stem test to be performed on discovery; results
    expected before end-June
  * NOTE: BG holds 60% stake, Ophir 20%; est. for mean
    recoverable gas resources at discovery ~1tcf


Link to statement:{NSN N6MRD23HBS3N<Go>}
Link to Company News:{OPHR LN <Equity> CN <GO>}
Link to Company News:{BG/ LN <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story:
Benjamin Dow at +7-495-771-7735 or
bdow2@bloomberg.net

>>> What to look at today - 04/06/2014

US Market closed slightly down, near from flat line, with Small caps underperforming again, four countercyclical groups finished mixed with health care (+0.2%) and utilities (+0.3%) posting slim gains, while consumer staples (-0.3%) and telecom services (-1.0%) ended in the red, energy (+0.3%) and financials (+0.1%) posted modest gains, the industrial sector (-0.2%) settled just behind the broader market...we saw some interest in protection buying ahead of ECB on Thu. VIX @ 11.79 +1.8%, Despite the uptick, the near-term volatility measure ended the day not far above its 2014 low (11.29%), volume small better but still below average @ 644mil shares....Japan's Dai-ichi Life reached a deal to acquire US-based Protective Life in a $5.7B merger, creating a new top-20 global life insurance entity (PL US : Bid $70/ share - 10% premium)

Eur$ 1.3616 S&P Fut -0.13% European Fut. -0.15%

Macro
- ECB is reportedly looking to cut benchmark and/or deposit rates by 10 or 15 basis points at Thursday's meeting, reportedly would reiterate forward guidance after a potential rate cut
- Caruana Says Negative ECB Rate May Not Boost Lending: Boersen

Keep an eye on :
- A2A IM :A2A Expected to delay sale of 5% stake - Italian Press
- AF FP : Air France’s De Juniac Switches Focus to Competitivity: Echos
- BNP FP : Regulators May Suspend BNP’s Dollar Payment Processing: NYT {http://nyti.ms/1oUCMJY}
- EN FP : Montebourg Wants French Telecoms Consolidation, Tribune Says {NSN N6MOXR6K50Y7<Go>}
- CABK SM : Caixabank May Sell 20% Stake in Credit Card Unit: Expansion
- CO FP : Casino Guichard-Perrachon SA To partner with Bollore to develop ecommerce platform in Africa
- DAI GY : China Warns of Gear Risks on Imported Mercedes-Benz
- DBK GY : Spec. that right issue (€8b ) could be price €21-21.50/share (-28.9% / -27.2% Discount)
- DGE LN : Diageo CEO Says to Move ~25% of Media Spend Into Digital: WSJ
- DUFN VX : Dufry to buy Nuance group for CHF1.5b, Expects Nuance Group Purchase to Add to 2015 EPS, Right Issue to come, willseek approval at EGM on the 26th
- Euronext : Total, Orange, GDF to Take Stakes in Euronext, Echos Says
- LG FP : Lafarge to combine South African, Nigerian businesses in USD 1.35bn deal for listing in Nigeria
- MS IM : Mediaset may match Telefonica's bid for 56% stake in Digital Plus
- ORA FP : Montebourg Wants French Telecoms Consolidation, Tribune Says {NSN N6MOXR6K50Y7<Go>}
- PVA S< : Pescanova 2013 Net Loss EU715m Vs EU776m Y/y
- TEF SM : Telefonica Said in Talks With Freenet on E-Plus Deal
- VOE AV : Voestalpine FY EPS Beats Ests., Dividend Misses BDVD Forecast

>>> Brokers Upgrade & Downgrade

>>> Up
*ARKEMA RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
*CREDIT SUISSE RAISED TO CONVICTION BUY VS NEUTRAL AT GOLDMAN
*DEUTSCHE BANK RAISED TO NEUTRAL VS SELL AT GOLDMAN
*ENEL RAISED TO STRONG BUY VS OUTPERFORM AT RAYMOND JAMES
*HAULOTTE GROUP RAISED TO HOLD VS SELL AT SOCGEN
*HAVAS RAISED TO BUY VS NEUTRAL AT NOMURA
*POUNDLAND RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN

>>> Down
*BOUYGUES CUT TO REDUCE VS HOLD AT KEPLER CHEUVREUX
*ELECTROCOMPONENTS CUT TO UNDERPERFORM AT CREDIT SUISSE
*IMI CUT TO HOLD VS BUY AT INVESTEC
*NOVATEK CUT TO HOLD VS BUY AT SOCGEN
*PFEIFFER VACUUM CUT FROM CONVICTION BUY AT GOLDMAN, STILL BUY
*PUBLICIS CUT TO NEUTRAL VS BUY AT NOMURA
*SABMILLER CUT TO EQUALWEIGHT VS OVERWEIGHT AT MORGAN STANLEY

>>> PT Change
*DANIELI ORD. PT CUT TO EU26 VS EU27 AT GOLDMAN; KEPT AT NEUTRAL
*DANIELI SAV. PT CUT TO EU18 VS EU19 AT GOLDMAN; KEPT AT NEUTRAL
*EASYJET PT RAISED TO 1,500P VS 1,400P AT CANTOR; KEPT AT HOLD

>>> Initiation
*DS SMITH RATED NEW HOLD AT JEFFERIES
*SMURFIT KAPPA RATED NEW BUY AT JEFFERIES

>>> Call
>> Stock
*BHP BILLITON ADDED TO CITI'S FOCUS LIST EUROPE
*SPORTS DIRECT ADDED TO EXANE KEY IDEAS LIST; ILIAD REMOVED