Concerns over economic uncertainty drop greatly for the first time in six years among CFOs of the Largest M&E Companies; Focus shifts from cost-cutting to growth, As economic confidence improves,
reveals E&Y study. Research augurs that digital technology presents best opportunities for growth.
The media and entertainment industry (M&E) has moved past the economic uncertainty of the global recession and shifted their primary focus from cost-cutting to growth, revealed Ernst & Young’s survey of CFOs of leading global M&E companies. According to its latest report It’s Showtime! Digital, released last month, CFOs are no longer worried about the global recession and are well-positioned to grow their companies by capitalising on digital opportunities and investments in technology, digital talent and infrastructure. The study had surveyed CFOs of 50 large global M&E companies.
The study pointed out that only 26 per cent of senior executives surveyed said global economic uncertainty would be a challenge during the next three years, compared to 62 per cent two years ago, showing a dramatic decrease in concern over the economy. “The media and entertainment industry is now poised to deliver on the promises it has been making the past several years but has been unable to achieve because of the economy. The CFOs recognise the recession is over and it’s show time,” said John Nendick, Global Media & Entertainment Leader at EY in a statement.
For organisations seeking to accelerate their growth trajectory, transactions are making a comeback. For companies that are looking to grow through acquisitions, a majority of CFOs indicated that their organisations are focused on expanding the geographic footprint for existing businesses.
“Given increases in their market value, some M&E companies are able to access capital markets and use their stock as currency to aggressively pursue acquisitions in the future which they need to do as both an offensive and defensive strategy,” said Farokh Balsara, M&E sector leader, E&Y India.
However, the industry still faces many challenges. A majority of CFOs identified the greatest obstacles for the industry during the next three years as technology and platform disintermediation, inability to persuade consumers to pay fair value for content, structural and regulatory uncertainty, and reductions of marketing budgets. The CFOs, nevertheless, see data analytics as the means to achieve it. They are placing significant emphasis on data to improve decision-making, systems and processes. But much work remains to be done.