Skip to Main Content
Access your saved content
The broadcast sector is emerging from the toughest period in its history–and there are difficult waters ahead.
During the recession, cyclical and structural forces combined to provoke panic within the industry and drain investors’ confidence. While the upturn in the economy has boosted the financial performance of traditional broadcasters, this bounce should not obscure the underlying trends that threaten to overwhelm broadcasting businesses that do not transform for the multiplatform digital era.
This latest installment in Accenture Media and Entertainment’s “Future of Broadcasting” series looks at how broadcasters fared during the recession and how they are positioned as the economic recovery takes firmer root, with the dimensions of a new ‘connected broadcast’ market coming into sharper focus.
We argue for a new vision of the future of broadcasting, in which linear TV is redefined to be relevant for a connected, interactive, consumer-centric world.
While the economic cycle has begun to turn in the right direction, this is no time for complacency. If anything, the structural challenges faced by broadcasters are becoming more acute. Consumers and technology are ever more sophisticated and the new breed of global competitors – digital natives like Google and consumer electronics players like Apple and Samsung – are starting to show their true colors.
Broadcasters should play to their strengths and take heart from the continued resilience – indeed, growth – of linear viewing. But they must also continue to transform into high performing digital, multiplatform businesses that drive success, above all, from an increasingly intimate knowledge of their consumers.
Accenture believes that the strength of broadcasters’ prospects depend on their ability to use insights about a fast changing media landscape and to drive change through their businesses. We base our convictions on our client work at the heart of the broadcast, media and entertainment sectors and our constant surveys and studies of the industry and its consumers.
This is the second in Accenture’s Future of Broadcasting series Points of View. This series brings together our proprietary Shareholder Value Analysis (SVA) which gives us insights into the links between strategy, performance and shareholder value with the experience we gain from our client work and other primary and secondary research and analysis.
This Point of View is reinforced by two further studies: our 2011 Global Media and Entertainment High Performance Study 2011 (including in-depth interviews with 35 senior broadcast industry executives across the world) which benchmarks the characteristics of high performing content companies of the future, and our 2011 Video Solutions Survey (a survey of 6,550 consumers across seven geographies) which gives us first hand insight into the latest multiplatform viewing trends.
Our regular analysis of trends in Total Return to Shareholders (TRS) and Enterprise Value in the broadcasting sector seeks to gauge what is important to shareholders and why. Total Return to Shareholders is our measure of the value of stock plus dividends, correlated to the efficiency of operations and effectiveness of long-term investment decisions and strategies.
Investors were getting nervous before the recession.
In early 2008, before the depths of the recession, our Shareholder Value Analysis of 20 major listed broadcasters from across the globe showed investors already becoming nervous about the industry. TRS compound annual growth rates (CAGRs) had declined from 21.5 percent over the period 2002-2007 to 8.7 percent from 2007-2008. Investors clearly favored those businesses with subscription models over the traditional, advertising-funded models heavily reliant on linear TV: four of the top five performers in TRS terms in 2007 had subscription-based, multichannel, enhanced TV services at the core of their business models (Austar, Dish Network, BSkyB and Direct TV).
After the slump, the market is preparing to reward more sophisticated business models, whether pay or free.
Fast forward to 2011 and the industry, and the wider world with it, is emerging from the most severe economic recession experienced in at least a generation. In 2008 the industry fell fast and fell hard. By the end of 2008, Enterprise Value was down by an average of 33 percent year-on-year across the sector. Analysis of the slow road to recovery since then is illuminating for a number of reasons:
The recession has necessarily taken up considerable amount of management time and attention, and there is still a long way to go and no time to lose, as our wide ranging 2011 Global Media and Entertainment High Performance Study has highlighted. In keeping with the hypotheses put forward in this paper, the biggest challenge over the next one to two years identified by the senior broadcast senior executives we spoke to across the globe was around new monetization models, with competition from new players coming in second.
The traditional broadcasting industry remains on its transformation journey – and the top level imperatives for broadcasters are much the same as they have been for the last couple of years: to transform into digital, connected B2C businesses. Those imperatives have implications right across organizations.
What are the key attributes, then, that broadcasters need to develop in order to confront these challenges and weather – even conquer – the new storms ahead?
We see 5 key differentiators that every broadcaster should be building into the heart of its business and operating model.
April 6, 2011
Skip Footer Links