Industries
Media and Entertainment
MorganFranklin recognizes the challenges facing the Media and Entertainment sector. Consumer choices and control, new business models and the rapid growth of alternative viewing platforms makes the sector one of the most exciting, dynamic and risk-laden in the economy today.
The goals of improving financial reporting and transparency, better governance and controls, improving margins and reducing operating costs are on the top of the list for every CEO, CFO and CIO across all industries. In addition to these challenges companies operating in the entertainment and media market are tacking challenges associated with:
Reductions in Discretionary Spending
The global economic downturn and collapse in the housing market is continuing to have a significant impact on a consumers willingness to spend discretionary funds on entertainment and media. Sports, gambling, advertising, movies, travel and every other segment of the market are starting to see modest increases in demand. Despite the decline in online ad spending in 2008 and 2009, Internet advertising is beginning to see a turn around.
Content Portability and New Business Models
Consumers have infinite choices when it comes to the consumption of media. Smart phones and mobile devices, wireless broadband, the DVR, and countless other innovations have put consumers in control of their own media experiences. Digital content crosses all platforms giving consumers ultimate control and portability. This shift has put an end to the long-term viability of mass advertising as the primary revenue source for content owners and distributors. Today consumers have access to the content they want, when they want it and on any device they choice. Producers, distributors and advertisers need to rethink their business models and find new ways to capture revenue. Content is king and business models must adapt.
M&A and Growth Every Which Way
Over the last five years the market for M&A in the media and entertainment world has been fierce, especially as it relates to content, advertising and distribution. New technology, digitization of content, new revenue models, consumer demand and other factors put pressure on companies to move fast to capture market share. Mergers, acquisitions, divestitures, and joint ventures are all being utilized in an effort to find the most profitable operating models, however. Today the capital markets are just starting to loosen and companies still must weigh the cost of capital to make acquisitions against the uncertainties of a recession and waning consumer demand.
Changes in the Regulatory Environment
Telecom operators must balance capital requirements for the foreseeable future with uncertain technological, consumer and regulatory environments. Unlike other technology areas, regulatory considerations continue to significantly impact the competitive telecom environment, as an operator's ability to anticipate, respond to, and drive regulatory changes will require even greater interdisciplinary interaction and overhead support from the corporate legal, finance, and marketing functions.
In addition, although the FCC Broadband plan aims to expand broadband access throughout the country, the U.S. Court of Appeals for the District of Columbia threw the future of Internet regulations and U.S. broadband expansion plans into doubt by ruling that the FCC lacks the authority to require broadband providers to give equal treatment to all Internet traffic flowing over their networks. Many speculate that the FCC will reclassify Internet service as a utility similar to telephone service to overcome the court decision. What is certain is that the broadband environment and net neutrality rulings are creating some major changes in today's regulatory environment.
How Can MorganFranklin Help?
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