×

Media and Entertainment Sector Profitability Forecast to Rise Again in 2014

Digital and international growth key factors for boosting M&E average profit margins, according to EY

Big media and entertainment companies worldwide are expected to average 28% profit margins this year, up from 26% last year, according to a forecast from consulting firm EY. That’s better than major stock-market indices, and the highest level since it began tracking sector-wide profitability in 2006.

Of the 10 media and entertainment sectors EY tracks, cable TV leads the pack. Cable operators are projected to achieve 41% margins in 2014, followed by cable networks at 37%. The others are: interactive media, 36%; electronic games, 29%; media conglomerates, 26%; satellite TV, 26%; publishing and information services, 21%; television broadcast, 19%; film and TV production, 12%; and music, 11%.

By comparison the firm expects companies in the S&P 500 Index to have 27% margins on average this year, with other cross-industry indices around globe lower, per EY. The report analyzes earnings before interest, tax, depreciation and amortization (EBITDA) to gauge relative profitability, and found that on average M&E EBITDA profits have risen each year since 2010.

“The hidden secret is, media and entertainment companies are performing very efficiently,” said John Nendick, EY’s global head of media and entertainment.

However, not everything is coming up roses for all M&E players. Jobs in the motion picture and sound industries have declined 19% over the last two years, according figures from the U.S. Bureau of Labor Statistics through August 2014.

Over all, though, media and entertainment companies remain healthy, according to EY. Key factors boosting M&E sector profitability in 2014 are chiefly expansion of digital distribution and growth in international markets, Nendick said, along with higher advertising spending and acquisitions and divestitures.

“We are seeing that digital is very much driving profits now, instead of disrupting it,” Nendick said. And while U.S. M&E markets are generally mature, “internationally there is still substantial growth.”

The report examined 106 companies worldwide that reported at least $1 billion in revenue for 2013, including Disney, Time Warner, Comcast, CBS, Viacom, 21st Century Fox, Sony Pictures Entertainment, Lionsgate, Google, Netflix and Facebook.

More Biz

  • Asian Streamer Iflix Completes $50 Million

    Asian Streamer Iflix Completes $50 Million Fund Raising

    Asia-based streaming firm Iflix has completed its latest funding round by bringing in major institutional investor Fidelity. The company says it is now looking towards an IPO. Iflix, which has operations across 12 countries in Asia, says that the funding cycle brought in “well in excess of $50 million,” but provided few new details. Other [...]

  • WGA West Logo

    WGA West Unveils Candidates for Election That Reflects Discord Over Agency Campaign

    The WGA West has unveiled the slate of candidates for officer posts and board seats in the election that reflects the divisions among members over the guild’s handling of the campaign to reform its rules governing talent agents. Scribes Phyllis Nagy (“Carol”) and William Schmidt (“Yellowstone”) are set to challenge David Goodman for the president’s [...]

  • The Netflix logo is displayed at

    Netflix Target of Shareholder Lawsuits After Q2 Subscriber Shortfall

    Like clockwork, Netflix’s big miss on subscriber targets for the second quarter of 2019 have prompted lawsuits filed on behalf of shareholders. At least two suits seeking class-action standing were filed Monday, by the Rosen Law Firm and Schall Law Firm, which both specialize in investor litigation. The lawsuits allege Netflix violated SEC regulations by [...]

  • Terry Wakefield Exits Sony/ATV to Head

    Terry Wakefield Exits Sony/ATV to Head Up A&R at UMPG Nashville

    After a decades-long tenure at Sony/ATV Nashville, Terry Wakefield has followed another alumnus, Troy Tomlinson, across town to take a top position at Universal Music Publishing Group Nashville. Wakefield is senior VP of A&R at UMPG after having been senior VP of creative in his previous post. Personal loyalty to Tomlinson, UMPG Nashville’s recently named chairman/CEO, [...]

  • Sally Williams at PBS Country Music

    Sally Williams to Leave Longtime Opry Home for Top Post at Live Nation in Nashville

    Nashville executive Sally Williams is leaving Opry Entertainment, where she rose to the top over a two-decade tenure there, to join Live Nation’s regional office as the president of Nashville music and business strategy, the company announced Monday. Live Nation said Williams will not only lead programming and marketing for their concerts in the area, [...]

  • Fourward

    Management Company Fourward Taps Christopher Burbidge as Head of Talent Division

    Will Ward’s management company Fourward has promoted long-time colleague Christopher Burbidge to head the company’s rapidly growing talent division, while also promoting Brooke Blann to manager in the company’s music division. Both Blann and Burbidge are based in the company’s Los Angeles office and will continue to report directly to Ward. Burbidge works closely on [...]

  • Writers vs Agents Packaging War WGA

    Kaplan Stahler Agency Signs Modified Code of Conduct in Win for WGA

    Kaplan Stahler has become the latest agency to sign the Writers Guild of America’s (WGA) modified code of conduct in a win for the Guild. In a message sent out to WGA members today, the negotiating committee wrote that the agreement with Kaplan Stahler “bans packaging fees and agency-affiliated production companies and, through information-sharing, makes [...]

More From Our Brands

Access exclusive content