Spanish pay TV continues its resurgence after five years in the doldrums until the end of 2014, with IPTV still driving the growth at the expense of satellite. The pattern is to some extent mirrored in some other leading European markets, such as Italy where more modest pay TV growth masks slight decline in satellite. Not surprisingly OTT growth is occurring everywhere and undermining pay TV in some countries such as Italy, but not yet in Spain, largely because IPTV is still benefitting from expansion of broadband and especially FTTH footprints.
Spanish pay TV subs and revenues flatlined in the wake of the 2008 credit crunch and reflected the malaise of Europe’s weaker southern Eurozone countries, but has emerged strongly since then as the economy recovered somewhat. Revenue has climbed steadily after languishing just below 1.7 billion Euros for that period and was heading for almost 2.1 billion for 2017, although final year figures have yet to be confirmed.
Regulator CNMC has published final subs figures for the year ending September 2017, registering a 6.6% rise to 6.4 million. The country’s commercial TV market has two unusual features, firstly that IPTV is still mopping up all the pay TV subs growth on the back of successful promotion of bundled offerings. The number of quadruple and quintuple-play packages sold increased by 1 million in the year to September, taking the total to 11.5 million, while the IPTV base expanded by 464,000 to 3.8 million. However the satellite base declined by 141,000, with some of that loss reflecting a switch to IPTV from the DTH offering within Telefonica’s Movistar customer base.
The other unusual feature of Spain’s TV landscape is the continued dominance of FTA (Free To Air) services. According to satellite platform operator SES Astra 60% of Spanish viewers watch TV via DTT versus 26% on average for the rest of Europe (although this varies a lot from country to country). It also generates almost identical income, from advertising, to pay TV as a whole, unlike almost all other leading markets.
This DTT strength has been a longstanding source of controversy on competition grounds, coming to a head with two recent rulings. Firstly a European Union (EU) investigation over alleged illegal government subsidies for DTT services has been rumbling on for years and appears to have come to a final conclusion in December 2017 when its Court of Justice finally overruled the European Commission’s earlier decision to force the Spanish Administration to recover €300 million it had contributed.
This dates back to the period 2005 to 2009, when the government invested €300 million for deployment of DTT throughout the country, chiefly remote areas. SES Astra then complained that this amounted to unfair competition as it favored commercial DTT services over DTH pay TV offerings. The European Commission upheld these complaints in 2014 on the grounds these were contrary to free competition and technological neutrality, benefiting DTT providers to the detriment of DTH operators. But now the Court based in Luxembourg has decided that these earlier verdicts were wrong since there is no clear evidence that the aid benefited DTT TV providers.
This is a good time for established Spanish DTT providers because the other verdict, over complaints from advertisers has also been thrown out. Spanish TV advertisers had complained that the government’s awarding of HD channels to Mediaset and Atresmedia in 2015 had strengthened their duopoly over the commercial DTT market and weakened competition, exerting upward pressure on prices. But in January 2018 the Spanish Supreme Court ruled that this awarding of DTT channels was legal and met all the requirements.
Meanwhile pay TV has also been recovering in Italy although at a more modest rate and in 2017 overtook advertising to become the country’s biggest source of TV revenue after 2.7% growth in 2017. Italy is notable for having a significant number of pay DTT subscribers, mostly with Europa 7 HD and Mediaset Premium.