Media, Entertainment Industry to Outperform Major Stock Indices

LOS ANGELES: According to EY, the media and entertainment business will outperform major global stock market indices for the first time in five years, thanks in part to rising digital revenues.

Spotlight on Profitable Growth: Media and Entertainment, Vol. VI, reports that revenues and EBITDA have continued to climb for media and entertainment companies while other industries have struggled. EY expects the media and entertainment industry to have a profit margin this year of 26 percent, ahead of the S&P 500 Index (24 percent), FTSE 100 Index (23 percent), CAC 40 Index (18 percent), DAX 30 (16 percent) and the Nikkei (12 percent).

“Media and entertainment companies are maintaining and growing their businesses primarily by growing their digital revenues and scaling back overhead associated with traditional media,” said John Nendick, global media and entertainment leader at EY. “In emerging markets, increases in advertising, as well as rising incomes and media consumption, have also helped drive revenue and fuel long-term growth as consumers in mature markets continue to migrate toward digital.”

Of the ten sectors covered by EY's media and entertainment report over a five-year period from 2009 to 2013, cable operators lead in profitability at 41 percent, followed by cable networks at 37 percent, interactive media at 35 percent, satellite TV at 26 percent and electronic games at 25 percent. Rounding out the ten are conglomerates (23 percent), content and information services (19 percent), television broadcast (17 percent), film and television production (10 percent) and music (10 percent). For 2013 profitability estimates, cable operators remain in the lead with 41 percent.

In terms of growth rates, from 2009 to 2013 interactive media leads the pack with a 22-percent increase in EBITDA dollars, as compared with 10 percent for cable networks, 9 percent for media conglomerates and broadcast TV, 8 percent for DTH and just 6 percent for cable operators.