LOS ANGELES: Cable is the most profitable of all businesses in the media and entertainment sector, according to a new study by Ernst & Young. Broadcasting landed at No. 7 of 10 and shrinking. The sector as a whole also is outpacing the winder market, the firm said.
“The data illustrates that despite a difficult operating environment, media and entertainment companies continue to show great resiliency,” said John Nendick of Ernst & Young. “Additionally, we believe that as advertising and consumer spending continues to rebound, and digital initiatives blossom, improved growth and profitability lie ahead.”
E&Y ranked 10 media and entertainment industry sectors for profitability and growth based on EBITDA and dollars, as well as providing a performance comparison of the overall media and entertainment business to other stock market indices.
During the period between 2006 and 2010 estimated, cable operators had the highest average profitability at 38 percent, followed by interactive media at 35 percent; cable networks 31 percent; satellite television 27 percent; publishing 20 percent; conglomerates 19 percent; television broadcast 18 percent and film and television production, electronic games and music, all at 11 percent.
When looking at just estimated 2010 profitability, the media and entertainment sectors ranked nearly identical to the five-year average with cable operators placing first at 39 percent; interactive media, 36 percent; cable networks, 33 percent; satellite TV, 27 percent; publishing, 20 percent; conglomerates, 18 percent; TV broadcast, 16 percent; electronic games and film and television production, both at 12 percent; and music, 9 percent.
In terms of EBITDA dollars, interactive media is the fastest growing media and entertainment sector at 15 percent, followed by electronic games, 14 percent; cable networks, 10 percent; cable operators, 10 percent; satellite TV, 9 percent; film and television production, 7 percent; conglomerates, 3 percent; publishing, -1 percent; television broadcast, -4 percent; and music, -5 percent.
The combined growth rate of all 10 media and entertainment sectors outperformed several other industries and market indices, E&Y said. The sector logged 5 percent growth during 2006-09. The CAC 40 and the Nikkei fell 5 percent during the same period. The S&P dropped 13 percent. DAX was down 14 percent and the FTSE fell 17 percent.
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