Author: kktan
StarHub – DBSV
Do exclusive content rights matter?
What’s new?
StarHub has clinched the exclusive rights for the UEFA Euro 2012 football tournament. This would trigger Singapore’s cross-carriage law for the first time since it took effect in August 2011. It is reported that these rights were negotiated mutually and there was no bidding process.
Our view
The impact on StarHub’s earnings should be minimal in either direction. This is not the most popular piece of content and there was absence of bidding. As such we assume that content-cost should not be a big burden for StarHub. SingTel appears to have stayed away as they paid a huge price tag for English Premier League (EPL) rights, leaving less headroom to pay for more content in our view.
Cross-carriage regulation does not address the bundling issue. In 2008, StarHub’s sports package customers paid S$10-S$20 to sign up while those not subscribing to StarHub’s sports package paid S$50. While cross-carriage regulation may help mio TV subscribers to watch these matches this time around, they could end up paying more in our view. Consumers can subscribe directly to StarHub (with or without sports package) rather than going through SingTel’s mio TV to enjoy savings through bundling discounts. In either case, StarHub would take care of billing the customers for UEFA Euro matches and will have a chance to re-engage them through promotions.
We prefer StarHub & SingTel over M1. We continue to like StarHub for its 7% yield. We also like SingTel for over 5% yield, slow migration to National Broadband Network (NBN) and growth prospects from emerging markets. M1 is least preferred due to slow progress on NBN and use of fair value accounting for smart phones.
Maintain BUY on StarHub with TP S$3.05.
StarHub – BT
StarHub scores Uefa for both teams’ viewers
It wins broadcast rights; mio viewers will not be denied
StarHub has clinched the exclusive broadcast rights for the Uefa Euro 2012 football tournament, in what will almost certainly trigger Singapore’s cross-carriage law for the first time since it took effect in August.
The football championship, jointly hosted by Poland and Ukraine, will kick off on June 8, 2012 and end on July 2, 2012, Singapore time.
StarHub said that it will announce subscription rates for the tournament next year. In 2008, customers of its Digital Cable Sports Group who signed up early paid $10 or $20 for signing up later. Customers without a Sports Group subscription paid $50.
This time around, SingTel’s mio TV subscribers will be able to watch the action on the pitch for the same price as StarHub viewers if they want to, thanks to the cross-carriage law. Under this new mandate, StarHub has to make the matches available to its competitors’ subscribers within five days of a viewer’s request.
This law only applies to exclusive content acquired on or after March 12, 2010.
‘We note StarHub’s acquisition of the Euro 2012 rights and look forward to StarHub announcing more details…Football fans already have a lot of choice on mio TV – however, if the content is offered to us, we would welcome the opportunity to enhance our customers enjoyment of this major event,’ a SingTel spokesperson said.
While SingTel did not say if it had made play for the Euro 2012 rights, BT understands that they were in negotiations with the rights sellers at one point.
While analysts had widely expected StarHub and SingTel to submit a joint bid just as they had with the last Fifa World Cup, StarHub’s decision to go solo has its rewards. BT understands that there was no bidding process this time around, but rather a negotiated deal.
One way this could play out for SingTel mio TV subscribers who opt to watch the Euro 2012 is that they could subscribe directly to StarHub for the content, while still being mio subscribers, industry observers said.
The subscription revenue will go directly to StarHub. What is more, the game has to be aired in its original form, bearing StarHub’s branding and commercials. StarHub, however, would be expected to reimburse SingTel for the carrying cost incurred, as part of a possible outcome, BT understands.
While the cost of the rights remain unknown, analysts agree that if another operator had joined StarHub in the fray, the final price could have been driven up.
‘If it had been a competitive process, then I’m sure it would have been higher,’ said Gregory Yap, analyst with Kim Eng Research.
On top of that, Uefa expects Euro 2012 to earn 1.3 billion euros (S$2.26 billion), more than 840 million euros of which will come from media rights.
The MDA had mooted the cross-carriage mandate after a StarHub-SingTel bidding war broke out over the Barclay’s Premier League (BPL) broadcast rights in 2010.
While SingTel’s BPL coup helped to swell its subscriber ranks from 155,000 to about 200,000 in less than a year, it was said to have more than paid the price – a reported $300 million for the BPL rights.
While consumers will not be torn between set-top boxes for football action, it remains to be seen just how much the cross-carriage law has kept bidding ardour low and consequently, content price contained.
Foong King Yew, research director at Gartner, reckons that it is too early to tell how cross-carriage will change bidding behaviour.
‘I suspect that it’d depend on the type of content. Sports content is highly desirable because there’s a big following here. The incentive to go for an exclusive agreement is definitely much stronger compared to some other sort of content,’ he said.
The Uefa deal has been sealed late in Singapore, relative to its neighbours. Thailand’s GMM Grammy was awarded exclusive rights in April, while Malaysia’s Astro had the deal in the bag since last year.
StarHub – BT
StarHub scores Uefa for both teams’ viewers
It wins broadcast rights; mio viewers will not be denied
StarHub has clinched the exclusive broadcast rights for the Uefa Euro 2012 football tournament, in what will almost certainly trigger Singapore’s cross-carriage law for the first time since it took effect in August.
The football championship, jointly hosted by Poland and Ukraine, will kick off on June 8, 2012 and end on July 2, 2012, Singapore time.
StarHub said that it will announce subscription rates for the tournament next year. In 2008, customers of its Digital Cable Sports Group who signed up early paid $10 or $20 for signing up later. Customers without a Sports Group subscription paid $50.
This time around, SingTel’s mio TV subscribers will be able to watch the action on the pitch for the same price as StarHub viewers if they want to, thanks to the cross-carriage law. Under this new mandate, StarHub has to make the matches available to its competitors’ subscribers within five days of a viewer’s request.
This law only applies to exclusive content acquired on or after March 12, 2010.
‘We note StarHub’s acquisition of the Euro 2012 rights and look forward to StarHub announcing more details…Football fans already have a lot of choice on mio TV – however, if the content is offered to us, we would welcome the opportunity to enhance our customers enjoyment of this major event,’ a SingTel spokesperson said.
While SingTel did not say if it had made play for the Euro 2012 rights, BT understands that they were in negotiations with the rights sellers at one point.
While analysts had widely expected StarHub and SingTel to submit a joint bid just as they had with the last Fifa World Cup, StarHub’s decision to go solo has its rewards. BT understands that there was no bidding process this time around, but rather a negotiated deal.
One way this could play out for SingTel mio TV subscribers who opt to watch the Euro 2012 is that they could subscribe directly to StarHub for the content, while still being mio subscribers, industry observers said.
The subscription revenue will go directly to StarHub. What is more, the game has to be aired in its original form, bearing StarHub’s branding and commercials. StarHub, however, would be expected to reimburse SingTel for the carrying cost incurred, as part of a possible outcome, BT understands.
While the cost of the rights remain unknown, analysts agree that if another operator had joined StarHub in the fray, the final price could have been driven up.
‘If it had been a competitive process, then I’m sure it would have been higher,’ said Gregory Yap, analyst with Kim Eng Research.
On top of that, Uefa expects Euro 2012 to earn 1.3 billion euros (S$2.26 billion), more than 840 million euros of which will come from media rights.
The MDA had mooted the cross-carriage mandate after a StarHub-SingTel bidding war broke out over the Barclay’s Premier League (BPL) broadcast rights in 2010.
While SingTel’s BPL coup helped to swell its subscriber ranks from 155,000 to about 200,000 in less than a year, it was said to have more than paid the price – a reported $300 million for the BPL rights.
While consumers will not be torn between set-top boxes for football action, it remains to be seen just how much the cross-carriage law has kept bidding ardour low and consequently, content price contained.
Foong King Yew, research director at Gartner, reckons that it is too early to tell how cross-carriage will change bidding behaviour.
‘I suspect that it’d depend on the type of content. Sports content is highly desirable because there’s a big following here. The incentive to go for an exclusive agreement is definitely much stronger compared to some other sort of content,’ he said.
The Uefa deal has been sealed late in Singapore, relative to its neighbours. Thailand’s GMM Grammy was awarded exclusive rights in April, while Malaysia’s Astro had the deal in the bag since last year.
TELCOs – OCBC
Steady as they go – maintain OVERWEIGHT
Decent 3CY11 showing. All the three telcos – M1, SingTel and StarHub – put in pretty decent showing in their 3QCY results recently, mostly meeting our forecasts, and largely demonstrating the defensive nature of their businesses. StarHub declared a quarterly dividend of S$0.05/share, while SingTel declared an interim dividend of S$0.068/share.
Review of Singapore operations. For the post-paid mobile market, there was no change to status quo – SingTel continues to dominate with a ~46% share, followed by StarHub with ~28% and M1 ~26%. Overall, the post-paid subscriber base here grew by some 55k QoQ to 3967k in the quarter, with the bulk coming from SingTel (+40k) while smartphones continued to be the phone of choice. However, we note that all three telcos saw higher monthly churn; monthly ARPUs have also declined for both M1 and SingTel but rose marginally for StarHub. The broadband segment was quite mixed, with SingTel adding 2.1% more subscribers, while StarHub saw a 1.3% fall; M1 revealed that it added 16k fiber customers, but did not reveal its overall broadband numbers. Finally on Pay TV, SingTel gained more traction in the quarter, while StarHub saw a marginal dip in subscribers; but we believe that content will determine growth.
4QCY11 outlook remains stable. Going forward, all the three telcos expect their Singapore operations to remain stable or show modest growth, buoyed by continued customer additions and increasing mobile data usage. We expect the three telcos’ EBITDA margins to remain around current levels – 42% for M1, 42% for SingTel and 30% for StarHub. All three of them have also kept their capex guidances unchanged. And thanks to their strong cashflow-generative businesses, the telcos have largely kept their dividend payout guidance; M1 to pay at least 80% of underlying net profit; SingTel to pay 55-70% of underlying earnings – recent interim dividend was 62% of 1HFY12 core earnings; StarHub to pay S$0.05/share in the last quarter, making a total of S$0.20 for the year.
OVERWEIGHT on telcos, M1 is top pick. In light of the increased volatility in the market due to the unresolved uncertainties in Europe, the still floundering economic recovery in the US and potentially slowing economic growth in China, we continue to like the telcos’ defensive earnings and relatively attractive dividend yields. Maintain OVERWEIGHT. While we have BUY ratings on all three telcos, our preference is for M1 as we believe it has potentially the most to gain from the NBN in the coming two years.
TELCOs – OCBC
Steady as they go – maintain OVERWEIGHT
Decent 3CY11 showing. All the three telcos – M1, SingTel and StarHub – put in pretty decent showing in their 3QCY results recently, mostly meeting our forecasts, and largely demonstrating the defensive nature of their businesses. StarHub declared a quarterly dividend of S$0.05/share, while SingTel declared an interim dividend of S$0.068/share.
Review of Singapore operations. For the post-paid mobile market, there was no change to status quo – SingTel continues to dominate with a ~46% share, followed by StarHub with ~28% and M1 ~26%. Overall, the post-paid subscriber base here grew by some 55k QoQ to 3967k in the quarter, with the bulk coming from SingTel (+40k) while smartphones continued to be the phone of choice. However, we note that all three telcos saw higher monthly churn; monthly ARPUs have also declined for both M1 and SingTel but rose marginally for StarHub. The broadband segment was quite mixed, with SingTel adding 2.1% more subscribers, while StarHub saw a 1.3% fall; M1 revealed that it added 16k fiber customers, but did not reveal its overall broadband numbers. Finally on Pay TV, SingTel gained more traction in the quarter, while StarHub saw a marginal dip in subscribers; but we believe that content will determine growth.
4QCY11 outlook remains stable. Going forward, all the three telcos expect their Singapore operations to remain stable or show modest growth, buoyed by continued customer additions and increasing mobile data usage. We expect the three telcos’ EBITDA margins to remain around current levels – 42% for M1, 42% for SingTel and 30% for StarHub. All three of them have also kept their capex guidances unchanged. And thanks to their strong cashflow-generative businesses, the telcos have largely kept their dividend payout guidance; M1 to pay at least 80% of underlying net profit; SingTel to pay 55-70% of underlying earnings – recent interim dividend was 62% of 1HFY12 core earnings; StarHub to pay S$0.05/share in the last quarter, making a total of S$0.20 for the year.
OVERWEIGHT on telcos, M1 is top pick. In light of the increased volatility in the market due to the unresolved uncertainties in Europe, the still floundering economic recovery in the US and potentially slowing economic growth in China, we continue to like the telcos’ defensive earnings and relatively attractive dividend yields. Maintain OVERWEIGHT. While we have BUY ratings on all three telcos, our preference is for M1 as we believe it has potentially the most to gain from the NBN in the coming two years.