Media & Entertainment Biz Poised To Generate One Of The Best Profit Margins In 2015 Compared To Leading Stock Market Indices
October 16, 2015 at 3:52 AM (PT)
The media and entertainment industry is expected to generate higher margins than several leading stock market indices, according to an EY report. "Spotlight on profitable growth: Media & Entertainment Vol. VIII" provides a performance comparison of the overall M&E business to major stock market indices as well as a ranking of 11 M&E industry sectors on both their profitability and profitability growth rate.
M&E industry earnings before interest, taxes, depreciation and amortization (EBITDA) have increased every year during the period 2011 to 2014 and are expected to remain constant in 2015 as companies continue to leverage digital media, deliver new consumer experiences and expand into emerging markets.
EY Global Media & Entertainment Leader JOHN NENDICK said, "the evolution of the M&E industry continues to focus on the exploitation of digital distribution and finding new and innovative ways to reach and interact with the consumer. With surging demand for content, M&E companies are growing their profitability through multiple consumer offerings, better knowledge of consumer tastes and preferences and continued international expansion."
When looking at the estimated 2015 profitability of the 11 M&E sectors, cable operators are expected to have the highest profitability at 40%, followed by cable networks, 36%; interactive media, 34%; information services, 30%; electronic games, 28%; conglomerates, 28%; satellite television, 25%; TV broadcast, 21%; film and TV production, 14%; consumer publishing, 13%; and music, 13%.
A review of the 2011-2015 compound annual growth rate in terms of EBITDA dollars indicates that interactive media is the fastest growing media and entertainment sector at 17%, followed by film and TV production, 14%; music, 9%; electronic games, 7%; conglomerates, 6%; cable networks, 6%; TV broadcast, 5%; information services, 4%; cable operators, 4%; satellite television, 4%. Only consumer publishing is projecting a decline, estimated at 7%.