EY: Media & Entertainment Execs Optimistic About Global Economy

LOS ANGELES: The media and entertainment (M&E) industry has shown record confidence in the global economy, according to a recent survey of senior executives from international M&E companies conducted by EY.

Of the M&E execs surveyed about the global economy, 81 percent said it is improving, up from 52 percent one year ago. Executives maintained an overall positive attitude, indicating an improving level of confidence in corporate earnings (64 percent), short-term market stability (83 percent), credit availability (77 percent) and equity valuations (56 percent).

In looking at economic risks to their businesses, executives indicated increased volatility in currencies to be the greatest (36 percent), followed by slowing growth in key emerging markets (23 percent), the economic and political situation in the Eurozone (20 percent), increased global and regional political instability (14 percent) and timing and pace of interest rate rises in the U.S. (7 percent).

The M&E executives surveyed overwhelmingly expect the global mergers and acquisitions market to remain strong in the year ahead, with 73 percent indicating it will improve (up from 49 percent last year), 24 percent saying it will remain stable and only 3 percent saying that it will decline. When asked if they expect to actively pursue acquisitions in the next 12 months, 59 percent responded favorably, which is more than double from two years ago, when only 25 percent indicated they were going to actively pursue acquisitions. Even though the number of M&E companies expecting to pursue an acquisition in the next 12 months is the highest it has been in two years, only 44 percent of respondents are optimistic about the likelihood of closing acquisitions. This is possibly a result of the perceived valuation differential between sellers and buyers increasing in the past six months. Respondents are most likely to invest in China, the U.S., the U.K., India and Australia, according to the survey.

EY also found that digital continues to have the greatest impact on M&E companies' core business and acquisition strategies.

John Harrison, the global media and entertainment, transaction advisory services leader at EY, said: "Media and entertainment executives are more confident about the global economy and key market indicators than 12 months ago. However, short-term headwinds, such as foreign currency volatility and earnings pressure from digital transformation are tempering enthusiasm. As the industry learns to better harness digital adoption and fully exploit the multiplatform distribution environment, companies are becoming more confident about expanding their offerings and making strategic acquisitions that will improve their competitive advantage."