"The media and entertainment industry is striving to meet the 'anywhere, anytime' content demands of today's consumer," says John Nendick, Ernst & Young's Global Media and Entertainment leader. "With the rapid pace of change, companies that will succeed are those that adopt more flexible business models and quickly identify new distribution channels."

Industry evolution

The evolution of the industry is demonstrated by comparing a similar survey of media and entertainment executives conducted by Ernst & Young in 2004.

Findings from the 2004 survey of CEOs and other industry leaders showed that 75% of respondents viewed digital video recorders as the primary driver for industry change, while the current study finds 86% of respondents believe changing content and distribution models will be the greatest catalyst. Also in the 2004 study, more than half the respondents identified cable operators as being in the driver's seat. In contrast, 77% of participants in the current study considered Internet media providers as the most likely market winners.

In South Africa, we are seeing the rapid growth in media and entertainment companies as more licenses become available for satellite and cable broadcasting. In addition, a proliferation of platforms, such as cellphones, are expanding.

"As with global companies, the key to success for local companies will be the agility to respond to new technologies with compelling content," says Julia Lamberth, director and sector leader for the Media & Entertainment Sector at Ernst & Young South Africa.

Changing finance function

Changes in the media and entertainment business model are forcing changes in the finance function as well.

Today's CFO has to deal with a more complex industry as well as growing executive demands. To meet these new demands on the finance function, CFOs aspire to improve planning and decision support, but at the same time they must also implement efficient finance processes and technology, and ensure regulatory compliance.

"CFOs are playing a strategic role in all phases of transactions, from assessment to post-integration," notes Nendick. While 93% of respondents agree that the finance function plays a key role in M&E activity, few organisations follow a rigorous process to track the performance of an acquired entity or asset against the original investment criteria.

Concludes Lamberth, "Amongst a rapidly changing industry, we believe the key focus for companies and CFOs is to continue evolving new business models to prevail in the market place."

[8 Dec 2006 09:13]

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