UK regulator opens probe into groups including BT and Sky over sports broadcasts
Competition watchdog to investigate whether companies fixed pay for freelance workers
The UK competition regulator has opened an investigation into whether BT, IMG Media, ITV and Sky are fixing the rate offered to freelance workers who provide their services at sports broadcasts.
The Competition and Markets Authority on Wednesday said its probe related to the purchase “of freelance services which support the production and broadcasting of sports content in the UK”.
It will focus on the pay offered to highly skilled staff, such as camera operators and sound engineers, who work for a range of broadcasters, said two people briefed on the investigation.
The CMA said it had “reasonable grounds” to suspect at least one breach of competition law. Its investigation will date back to 2015, according to one person briefed on the process.
Camera operators and sound engineers working for broadcasters such as Sky on a freelance basis are paid a flat rate designed to cover travel and expenses as well as their work. One camera operator told the Financial Times that all broadcasters tended to pay the same rate and that it had not changed materially in recent years.
“Everyone wants the rates to go up and we’d love it for [broadcasters] to compete more . . . I don’t think it’s conscious but . . . as soon as one jumps they all jump . . . we’d just like them to make more of a bold jump . . . in seven years [the day rate] has gone up £40 [to £400],” he said.
The CMA’s investigation is the first probe into sports broadcasters since the Office of Fair Trading, the CMA’s predecessor, investigated a media rights deal between the Racecourse Association, Channel 4 and British Sky Broadcasting among others to show horseracing in the UK in the early 2000s. No action was taken following an appeal against the OFT’s decision.
However, it is one of several probes relating to the wider market for sports goods. The CMA is looking at potential price fixing in relation to football shirts and in June provisionally ruled that retailer JD Sports, another retailer, Elite Sports, and Rangers Football Club colluded to fix the price of Rangers replica kits and other merchandise.
The regulator is also weighing a decision on whether or not Leicester City Football Club and JD Sports broke competition law in relation to the sale of Leicester City-branded kit and other merchandise.
BT, Sky and IMG’s premises have been raided in connection with the CMA’s latest investigation, according to people familiar with the situation.
Sky was crucial to the formation of the Premier League in 1992 and remains the biggest broadcaster of the competition in the UK. It also has the UK rights to Formula One car racing. The company said it was “co-operating fully with the CMA”.
Internationally, Premier League Productions distributes and produces content for broadcasters. PLP is operated by the Premier League and IMG. IMG Media confirmed that it had been subject to a site inspection by the CMA and was “co-operating with the CMA in its inspection”.
The Premier League declined to comment.
The company screens the Uefa Champions League, Europe’s most prestigious club competition, Premiership Rugby, and Ultimate Fighting Championship (the mixed martial arts series owned by Endeavor, the parent company of IMG).
BT said in a statement: “It is clear that [the] CMA’s investigation is focused very specifically on the purchase of freelance services and not any other aspects of the BT Sport or wider BT Group business.”
Meanwhile, ITV is known for its horseracing coverage, including marquee races such as the Grand National at Aintree, Royal Ascot and the Epsom Derby. The company said it was “committed to complying with competition law and is co-operating with the CMA’s inquiries”.
The regulator has wide latitude in Competition Act cases and can fine companies up to 10 per cent of turnover if it uncovers wrongdoing.
The CMA is investigating the companies over a potential breach of rules that prevent them from entering into agreements that deliberately thwart competition, including price-fixing scams.
Research Calls
- Upgrades:
- AmBev (ABEV) upgraded to Overweight from Neutral at JP Morgan
- Armstrong World Industries (AWI) upgraded to Buy from Neutral at Goldman; tgt $93
- CCC Intelligent Solutions (CCCS) upgraded to Buy from Neutral at Goldman; tgt raised to $12
- Molson Coors Brewing (TAP) upgraded to Neutral from Sell at Redburn
- PowerSchool (PWSC) upgraded to Neutral from Sell at Goldman; tgt raised to $16
- U.S. Silica (SLCA) upgraded to Equal-Weight from Underweight at Morgan Stanley; tgt $15
- Downgrades:
- American Equity Investment Life (AEL) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $41
- Audacy (AUD) downgraded to Neutral from Buy at B. Riley Securities; tgt $1
- AZEK (AZEK) downgraded to Buy from Conviction Buy at Goldman; tgt $23
- Caesars Entertainment (CZR) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
- Celanese (CE) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $116
- Clearwater Analytics (CWAN) downgraded to Sell from Neutral at Goldman; tgt lowered to $12
- Commvault Systems (CVLT) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $69
- DigitalOcean (DOCN) downgraded to Sell from Buy at Goldman; tgt lowered to $40
- Ecolab (ECL) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $183
- F5 Networks (FFIV) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $173
- Gap (GPS) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $9
- GrafTech International (EAF) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $7
- Harmony Biosciences (HRMY) downgraded to Neutral from Buy at Goldman; tgt $55
- Hasbro (HAS) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
- Humanigen (HGEN) downgraded to Neutral from Buy at H.C. Wainwright
- Humanigen (HGEN) downgraded to Neutral from Overweight at Cantor Fitzgerald; tgt lowered to $2
- Illumina (ILMN) downgraded to Underweight from Equal Weight at Barclays; tgt lowered to $150
- Juniper Networks (JNPR) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $27
- Latham Group (SWIM) downgraded to Sell from Neutral at Goldman; tgt lowered to $5.50
- Lazard (LAZ) downgraded to Underperform from Mkt Perform at Keefe Bruyette; tgt lowered to $30
- OneMain Holdings (OMF) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $40
- SeaWorld Entertainment (SEAS) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
- Sherwin-Williams (SHW) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $292
- Veritone (VERI) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $10
- Verra Mobility (VRRM) downgraded to Neutral from Outperform at Robert W. Baird; tgt $18
- Vista Outdoor (VSTO) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
- YETI Holdings (YETI) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
- Others:
- Alnylam Pharma (ALNY) initiated with a Neutral at Cantor Fitzgerald; tgt $175
- Arista Networks (ANET) initiated with a Buy at Rosenblatt; tgt $140
- Bath & Body Works (BBWI) initiated with a Strong Buy at Raymond James; tgt $45
- BioMarin Pharmaceutical (BMRN) initiated with an Overweight at Cantor Fitzgerald; tgt $110
- Boxed (BOXD) initiated with an Overweight at Wells Fargo; tgt $8
- Boston Beer Co (SAM) initiated with a Sell at Redburn
- Cintas (CTAS) initiated with an Equal Weight at Wells Fargo; tgt $393
- Cisco (CSCO) initiated with a Neutral at Rosenblatt; tgt $48
- Clarivate (CLVT) initiated with an Overweight at Wells Fargo; tgt $20
- Clorox (CLX) initiated with an Outperform at Raymond James; tgt $160
- Constellation Brands (STZ) initiated with a Buy at Redburn
- Ecolab (ECL) initiated with an Overweight at Wells Fargo; tgt $187
- Enhabit Inc. (EHAB) initiated with an Underperform at BofA Securities; tgt $16
- Equifax (EFX) initiated with an Equal Weight at Wells Fargo; tgt $200
- Extreme Networks (EXTR) initiated with a Buy at Rosenblatt; tgt $13.50
- Gartner (IT) initiated with an Overweight at Wells Fargo; tgt $305
- Gilead Sciences (GILD) initiated with a Neutral at Cantor Fitzgerald; tgt $70
- Helen of Troy (HELE) initiated with a Mkt Perform at Raymond James
- Juniper Networks (JNPR) initiated with a Neutral at Rosenblatt; tgt $33
- LKQ (LKQ) initiated with a Buy at MKM Partners; tgt $68
- Lyft (LYFT) initiated with a Sector Weight at KeyBanc Capital Markets
- MongoDB (MDB) initiated with an Outperform at Robert W. Baird; tgt $360
- Opendoor Technologies (OPEN) initiated with a Buy at Truist; tgt $9
- Opendoor Technologies (OPEN) initiated with a Sector Weight at KeyBanc Capital Markets
- Redfin (RDFN) initiated with a Sector Weight at KeyBanc Capital Markets
- Regeneron Pharma (REGN) initiated with a Neutral at Cantor Fitzgerald; tgt $625
- Rollins (ROL) initiated with an Equal Weight at Wells Fargo; tgt $37
- SiteOne Landscape Supply (SITE) initiated with a Hold at Stifel; tgt $105
- Snowflake (SNOW) initiated with an Outperform at Robert W. Baird; tgt $200
- Spectrum Brands (SPB) initiated with a Mkt Perform at Raymond James
- Stock Yards Bancorp (SYBT) initiated with a Neutral at Piper Sandler; tgt $65
- TransUnion (TU) initiated with an Equal Weight at Wells Fargo; tgt $88
- Uber (UBER) initiated with a Sector Weight at KeyBanc Capital Markets
- Vertex Pharma (VRTX) initiated with an Overweight at Cantor Fitzgerald; tgt $365
- Vista Outdoor (VSTO) initiated with a Buy at MKM Partners; tgt $54
- Zillow (ZG) initiated with a Sector Weight at KeyBanc Capital Markets; tgt $35
Gapping down
In reaction to earnings/guidance:
- FAST -5.5%, DAL -3.7%
Other news:
- HGEN -65.2% (receives preliminary topline data from NIH/NIAID study of Lenzilumab in ACTIV-5/BET-B ; study did not meet primary endpoint)
- ATRA -50.9% (completes ATA188 Phase 2 EMBOLD Study interim analysis)
- U -7.1% (Unity (U) confirms merger agreement with ironSource)
- FAST -5.2% (authorizes new 8 mln share repurchase program)
- CRNT -3.7% (AVNW issues letter to CRNT shareholders re acquisition proposal)
- SLI -3.2% (provides updates on project developments)
- ILMN -2.1% (loses Grail antitrust probe challenge against EU according to Reuters)
- KNTK -1.3% (files for $400 mln mixed securities shelf offering)
- DM -1.2% (CFO resigning to pursue other interests)
Analyst comments:
- CWAN -5% (downgraded to Sell from Neutral at Goldman)
- AZEK -4% (downgraded to Buy from Conviction Buy at Goldman)
- CZR -1% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)
Gapping up
News:
- IS +65% (Unity (U) confirms merger agreement with ironSource)
- SFIX +8% (director purchases 1 mln shares)
- WBX +7.4% (Wallbox and Svea Solar announce a new partnership to integrate solar and EV charging)
- MYGN +5.2% (new study by VA shows Major Depressive Disorder remission rates were significantly improved with GeneSight)
- GBDC +5% (reports investment commitments in JunQ)
- NUTX +4.5% (provides update on growth strategy)
- PSNL +3.3% (adds patent to its portfolio)
- SWVL +2.8% (Swvl's Founders SPAC Sponsor and Certain Pre-Business Combination Investors Voluntarily Extend Lock-Up Reinforcing Long-Term Commitment)
- GOEV +2.5% (provides additional details in regard to Walmart (WMT) contract)
- GEVO +2.1% (announces a new fuel sales agreement with Aer Lingus which is owned by International Airlines Group)
- BTBT +2% (announces monthly production update for June)
- TWTR +1.9% (files lawsuit against Elon Musk to enforce merger agreement according to CNBC)
- UEC +1.5% (Files S-K 1300 Technical Report Summary Disclosing a Total of 32M lbs of Indicated Resources for the Anderson Project in Arizona)
- ARVL +1.4% (proposes a reorganization which limits spending)
- RKLB +1% (on track to launch national security mission for US govt)
Analyst comments:
- CCCS +3.5% (upgraded to Buy from Neutral at Goldman)
- ABEV +1.6% (upgraded to Overweight from Neutral at JP Morgan)
- AWI +1.1% (upgraded to Buy from Neutral at Goldman)
Early premarket gappers
- Gapping up:
- SFIX +7.8%, SWVL +7.3%, GEVO +6%, MYGN +5.2%, GBDC +5%, GOEV +4.4%, ARVL +2.7%, RKLB +2.3%, BTBT +2%, NUTX +1.9%, TWTR +1.8%, PSNL +1.8%, BEN +1.7%, FCEL +1.5%, VSCO +1.1%, SIGA +1%, PCVX +0.5%
- Gapping down:
- HGEN -55.5%, ATRA -43.9%, CRNT -3.7%, DM -3.3%, KNTK -1.3%, OR -0.8%, PLRX -0.7%, APAM -0.6%
An iPhone on wheels: the existential challenge for carmakers
The spread of Apple’s CarPlay system is a threat to the auto industry
To sound smart, some car manufacturing executives have defaulted to calling their product “an iPhone on wheels”.
The phrase helps investors conjure up images of smooth, glitzy, consumer-beloved technology, while helpfully banishing visions of heavy machinery or labour unions.
It is true that connecting cars to the internet unlocks an array of features, from ordering coffee while driving to on-board streaming for the children in the back. These features, carmakers believe, will provide them with lucrative new revenue streams in the future, helping them expand from low-margin metal bashing to the more investor-friendly arena of “services”.
Stellantis, the owner of Fiat, Jeep and Peugeot, believes it can make €20bn of revenue from services by 2030. Additionally, selling directly to drivers brings the all-important “customer relationship” — largely farmed out to the dealerships — to the manufacturers themselves, along with a treasure trove of data.
All of this helps an industry with meagre valuation multiples that mask the fact that its companies are world leaders in a host of areas from research, engineering and marketing to manufacturing.
Unless, of course, Apple gets there first. That the technology giant is working on some sort of automotive proposition is widely known.
Yet for all the whispered talk of a secretive “Apple car”, its real foray into the industry is already hard-wired into millions of vehicles. At its developers’ conference last month, Apple unveiled its latest CarPlay system, a significantly metamorphosed beast from the maps-and-music service of today.
“Deep integration with the car’s hardware lets you tune the car’s radio or change the temperature without ever leaving the CarPlay experience,” boasted company executive Emily Schubert.
The new system takes over all the screens in a vehicle, with customisable dials and display. A slide flashed up with a dozen car brands, from Ford and Honda to Porsche and Mercedes-Benz, that are “excited to bring this new vision of CarPlay to customers”, Apple announced.
This was news to some of the carmakers listed, which did not expect to have their names stamped on the product. Yet as long as customers want Apple features, the brands have little choice but to buy it.
However, the “iPhone-isation” of the car industry brings its own lessons from the smartphone world, where producers that were unable to provide consumer software ended up as unglamorous device makers. The great fear in boardrooms from Detroit to Tokyo is that consumers who buy a car for the Apple interface won’t really mind what logo adorns the steering wheel.
After seeing the announcement, the chief executive of one large carmaker put it like this: “Do we want Apple or Google to come in and take over, to enter our car and get the direct customer relationship, to get our customer to talk to Siri as opposed to our own system?”
Software in cars, though, is a far cry from smartphones. “How often do you restart software in a phone?” asks one auto executive. “Even if it’s once in a while, that cannot happen in a car.”
But already, the best in-car technology offered by carmakers feels clunky compared with Apple’s current technology. Just as many of the industry’s enthusiastic new entrants have discovered that making cars is hard, so established manufacturers have found software a tough nut to crack.
Volvo Cars’ new boss Jim Rowan, who joined earlier this year, reversed a company position to focus on cars and let other companies build its software.
VW’s bid to bring its software efforts under one project called “Cariad” have been underwhelming, while software faults in the electric Jaguar I-Pace significantly delayed its rollout. Barely a week goes by without carmakers somewhere in the world issuing a software-related product recall.
Yet even if the industry produces crisp, intuitive systems, there is a larger hurdle: getting consumers, who are used to interacting with Apple or Android systems in their life, to put up with something different when driving.
“You take Apple from your kitchen to your car, but you never take VW from your car to your living room,” notes Philippe Houchois, an auto analyst at Jefferies. Fresh from the latest slightly-tweaked phone, Apple’s slick design team has drawn the latest battle lines with the carmakers. The industry has yet to figure out how, or even whether, to face it down.