The Year Ahead: A Sweet ‘16? | TMT | Articles | FTI Consulting

The Year Ahead: A Sweet ‘16?

Media & Entertainment Outlook

Telecom, Media & Technology (TMT)

February 4, 2016

With 2016 off to a fast start, we would like to share some points of view we developed while working on more than 150 projects for media companies throughout the industry during the year just ended. We hope that our experiences will help you to prosper amid the evolution of our industry today.

Cord Cutting
Declines in viewers and subscribers attributable to cord cutting, though still modest, have threatened growth and dented market values of most major media companies. The best antidote we see for flagging media company valuations is a scaled growth story to offset the diminishing dominance of cable TV. We see that growth story coming in two potential versions in 2016:

• One would be a strategy to stem the tide of fewer eyeballs on linear, ad-supported TV using advances in targeted TV advertising from emerging big data analytics and programmatic ad distribution.

• The other would be to find digital distribution opportunities that promise large sub-universes over the next 5-10 years.

In our view, there are reasons for further consolidation of channel groups in 2016 to gain economies of scale in the slower growth environment of MVPD delivered services and to balance power with MVPD giants like AT&T/DirecTV, Comcast and Charter in the U.S., and Sky plc., Vodafone and LGI in Western Europe. That is, provided that common ground on valuation can be reached.


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