Major media and entertainment companies have shifted their strategic focus from cost-cutting to digital growth, according to an Ernst & Young survey of chief financial officers released Monday.
It’s the first time in six years that economic uncertainty has dropped significantly, according to the study, for which executives at 50 top media and entertainment companies were polled. Only 26 percent of the senior executives surveyed said that global economic uncertainty would be a primary challenge over the next three years, as compared to 62 percent two years ago.
“The CFOs recognize the recession is over and it’s showtime.” said John Nendick, global media and entertainment leader at E&Y. “The CFOs told us in no uncertain terms that the economy is no longer an obstacle and now is the time for media and entertainment companies to invest in growth and focus on building their businesses. The industry is now poised to deliver on the promises it has been making the past several years but has been unable to achieve because of the economy.”
The survey, which is conducted every two years by E&Y, polls the CFOs of major media and entertainment corporations, including: Time Warner (Howard Averill), Lionsgate (Jimmy Barge), Liberty (Bernard G. Dvorak), Univision (Andrew Hobson), the New York Times (James Follo), Sony Corp. (Steven E. Kober), Mircrosoft (Mitch Koch) and DIRECTV (Patrick T. Doyle) among others.
Asked to list their top priorities for the year ahead, the executives pointed to the evolution of digital and online distribution (74 percent), cost reduction and business efficiency (34 percent), creatively differentiating content (32 percent), extending brands globally (32 percent) and growth in new market segments (30 percent).
They see a more efficient use of data analytics as key to growth, but see significant challenges.
While 59 percent of CFO felt their companies successfully use data to respond to and up-sell existing customers, only 33 percent said their companies do a good job of using data to generate new business. Just 39 percent of the executives believe their organization is good at sharing data, and 58 percent indicated that sharing data between business units would improve their organization’s overall effectiveness.
Other findings of the survey include:
- Emerging markets are no longer the top geographic focus for growth; 72 percent of the respondents said that their focus is on existing/core markets.
- Seventy-two percent chose interactive media businesses as being best positioned to evolve and thrive in the future, followed by cable television networks and channels (42 percent), conglomerates (36 percent), film and TV production (30 percent) and content and information services (30 percent.
- The top actions identified to make companies more effective are attracting and retaining talent (58 percent, improved information technology capabilities (42 percent), deeper understanding of market trends, customers and competitors (38 percent) and getting new products to market faster (30 percent.
- The CFOs prefer deals that give them either complete or majority ownership (61 percent) instead of making investments or having a minority interest (34 percent).
“Recruiting and retaining talent is a significant concern for almost every CFO we surveyed,” said Howard Bass, EY’s global media & entertainment advisory services leader.
“All agreed that talent, as well as establishing better collaboration between teams and different business units, are the most important factors for efficiently running their companies. The right talent means finding people who have the technical skills but are also digital savvy,” he said.