Media sector to be swept by a wave of mergers: survey

A wave of mergers and acquisitions is about to sweep through the media and entertainment sector, according to a new survey by consultancy firm EY.

The survey among executives in the sector showed that 40% of them expect their company to be pursuing acquisitions in the next 12 months, the highest level in three years.

It comes after a survey of executives in the power and utilities sector showed their appetite for mergers and acquisitions was at a two-year high .

Another survey of executives in the technology sector showed the appetite for M&A hit the highest level after the dotcom bubble.

Fewer executives in the media and entertainment sector said they believe that the economy was improving in the quarter that ended in October compared to the quarter that ended in April.

Media Executives Confident on the Economy

Media and entertainment executives are confident the economy is stable. Source: EY

The number of executives who believe the economy is stable has nearly doubled, while that of those who believe it is worsening has dropped sharply, which bodes well for confidence.

Executives in the media and entertainment sector were much more optimistic about global earnings, short-term market stability and credit availability in the quarter that ended in October than in the quarter that ended in April.

While mergers and acquisitions generally bring cost savings in the form of staff cuts, the answers regarding hiring intentions are upbeat.

The number of executives planning to hire staff has more than doubled, while that of executives saying their organisation plans to cut the workforce has fallen sharply.

Media Executives Optimistic on Hiring

Media and entertainment executives are optimistic on hiring. Source: EY

The need for “technically and digitally adept workers” who can help accelerate the businesses’ migration towards digital platforms is critical to employment growth in the media and entertainment sector, according to EY.

Just like with executives in other sectors, the main challenge that media and entertainment executives see for their business is geopolitics, with 39% naming increased geopolitical instability as the greatest risk to their business, up from 36% in the quarter that ended in April.

The tapering of the Federal Reserve’s quantitative easing policies was named as the biggest risk by 24% of executives, down from 31%, while the slow pace of structural reforms in the eurozone was cited by 14%, much higher than the previous quarter’s 3%.

Slowing growth in emerging markets is less of a risk now, with 13% of executives naming it as a key challenge, down from 25%; 6% saw inflation as a high risk, up from 3% in the previous quarter, while 4% named deflation, up from 2%.

@AntoniaOprita