Cable Operators Top Media Profitability Ranking

LOS ANGELES: An Ernst & Young report reveals that cable operators showed the highest profitability among all media and entertainment sectors, while the fastest growth is coming from the interactive media segment.

The study goes on to say that the media and entertainment industry as a whole is yielding greater profitability and growth than many other stock-market indices. "The data illustrates that despite a difficult operating environment, media and entertainment companies continue to show great resiliency," said John Nendick, Global Media and Entertainment Leader at Ernst & Young. "Additionally, we believe that as advertising and consumer spending continues to rebound, and digital initiatives blossom, improved growth and profitability lie ahead."

Ranking overall profitability from 2006 to 2010, cable operators ranked highest at 38 percent, followed by interactive media a 35 percent, cable networks at 31 percent, satellite television at 27 percent, media conglomerates at 19 percent, television broadcast at 18 percent and film and television production at 11 percent. The rankings were nearly identical to the estimated rankings for 2010 alone.

Over the five-year period, in terms of EBITDA dollars, interactive media is the fastest-growing media and entertainment sector at 15 percent. Cable networks and cable operators recorded a 10-percent growth, with satellite TV just behind at 9 percent and film and television production at 7 percent. Media conglomerates’ EBITDA was up just 3 percent in the period, while television broadcast was down 4 percent.

"An improved advertising climate, combined with strong digital distribution strategies will be the key to growth among these media and entertainment sectors," said Mark Besca, Ernst & Young Media & Entertainment Partner. "Media and entertainment companies are unbundling and repackaging content in new and innovative ways and recognizing that the majority of future revenue will come from services rather than products."