Media & Entertainment Sectors Show Promising Growth
Ernst & Young recently released a new study to determine the growth and profitability trends in the media and entertainment industry. Their results showed that cable operators experienced the highest profitability in the whole industry. Interactive media has seen the most growth. Many investors are worried that the economy and technological advances have hurt the entertainment industry’s ability to produce profits, but the results of this study show that this sector is experiencing more growth and rising in profitability than other stock market categories.
The findings of the report are based on the common EBITDA margins. Named Spotlight on Profitable Growth: Media & Entertainment, it ranks 10 different sectors of the industry on both growth ratings and profitability. Performance comparisons of the entire industry, when compared to other indices, are also included. The environment for media operators has increased in difficulty over the past few years due to both economic challenges and the rise in media sharing over the internet. Despite these two adverse conditions most media industry companies are continuing to thrive.
The industry is currently supported by the recent rises in both consumer spending and advertising budgets as the economy rebounds. Digital initiatives from many other industries are also helping the explosive growth seen in the interactive media sector. Over four years from 2006 to 2010, cable operators showed a profitability of 38%, interactive media with 35%, and cable networks at 31%. Electronic games profitability was lowest at only at 11%, possibly due to increase media piracy, sharing that percentage with film and television production as well as music.
Growth favors a different pattern. Interactive media led with 15%, electronic games followed at 14%, and was rounded out by cable networks and operators sharing 10%. Music lost the most at -5%, and even publishing saw growth in the negatives.