Media /Entertainment Firms Optimistic about Global Economy

Entertainment

Entertainment (Photo credit: vagabondblogger)

Media and entertainment companies are optimistic about the global economy in the year ahead expecting to see growth and an improving M&A deal environment and anticipate either maintaining or growing their current workforce.

“As we approach the end of 2013, it’s clear the media and entertainment industry is optimistic about the year ahead”

Sixty-eight percent of media and entertainment executives believe the global economy is improving, which is a significant increase from last year’s survey that showed only 26% believed the economy was on an upswing. Twenty-three percent believe the economy is stable, 4% feel it is modestly declining and 5% that it is strongly declining.

The report is a survey of senior executives from large media and entertainment companies around the world that gauges corporate confidence in the economy, identifies boardroom trends and provides insight into companies’ capital agenda.

In addition to overall confidence in the global economy, media and entertainment executives showed significantly increased confidence in other areas compared with last year’s survey. Fifty-seven percent of executives indicated confidence in employment growth, up from 20% last year; 52% in corporate earnings, up from 15%; and 43% in credit availability, up from 10%.

The ranking of priorities in the boardroom for media and entertainment companies is also shifting with 66% of executives saying there is a greater focus on efficiency and cost control for their companies than a year ago. Risk management is a higher priority in 60% of boardrooms; corporate governance, 57%; investor relations, 53%; regulatory issues, 50%; attracting and retaining talent, 47%; and capital allocation, 43%.

“As we approach the end of 2013, it’s clear the media and entertainment industry is optimistic about the year ahead,” says Tom Connolly, EY’s Global Media & Entertainment Transaction Advisory Services Leader. “Growing confidence in the global economy, a focus on investments in core products and services, and an improving transaction outlook all point to the potential for larger and more significant deals within the M&E industry,” he adds.

Other key findings include:

  • Seventy-nine percent of media and entertainment executives think the current regulatory environment is supportive of business growth initiatives.
  • Seventy-three percent are expecting some growth during the next 12 months. Sixty-two percent believe the global economy will grow 1%-3%, 11% believe it will grow 3%-5%, 20% believe there will be no growth, and 7% believe there will be negative growth.
  • Media and entertainment jobs are relatively secure with only 13% of executives indicating they plan to reduce workforce numbers. Fifty-five percent plan to maintain their current workforce size and 32% plan to increase it.
  • Eighty-five percent of executives consider credit availability as either stable or improving, compared with 55% a year ago.
  • Fifty-seven percent of executives say they plan to use a greater proportion of cash to finance deals. Twenty-five percent lean toward debt financing and 18% will weigh more heavily toward equity as a deal currency.
  • Following a period of uncertainty, there appears to be a return to resiliency with 53% of executives saying their focus during the next 12 months will be growth, compared with only 39% one year ago. Thirty-two percent of executives indicated cost reduction and operational efficiency will be their focus and 13% said maintaining stability.
  • Seventy-four percent of executives expect M&A deal volumes to improve during the next year, 21% believe it will remain the same and 5% say it will decline.
  • Twenty-five percent of media and entertainment executives expect their company to pursue acquisitions during the next year.
  • There will be a greater focus on emerging markets in the year ahead, with 43% of executives indicating their companies are more interested than a year ago.

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