October 2013 – April 2014
Capital confidence barometer: Media & Entertainment
Confidence grows in the Media and Entertainment industry
Our ninth annual Capital Confidence Barometer shows confidence in the global economy is at a two-year high.
The media and entertainment (M&E) executives surveyed expect overall M&A activity to increase as the number and quality of acquisition opportunities improve. However, within the industry, executives revealed a lower expectation of acquisition activity as compared to other sectors surveyed.
“M&E executives are being judicious about risk while simultaneously focusing on growth. They are looking to gain share in core products and geographies while developing new sales channels. They remain optimistic about emerging markets, but remain rigorous in evaluating new opportunities.”Tom Connolly, Global Leader, Media & Entertainment Transaction Advisory Services
Higher confidence in modest growth. Over two-thirds of M&E executives believe the global economy is improving, up from 26% a year ago. Improving credit availability, employment growth and growing corporate earnings are contributing to this positive sentiment. However, global political instability and continued stagnation in the Eurozone are expected to keep economic growth at a modest 1%-3% for the next twelve months.
Disciplined use of leverage. Improving credit conditions will enable executives to advance their strategic imperatives. The ability to increase leverage indicates a fundamental shift in the deal making environment. The overall optimism, expectations for growth and the potential use of greater leverage will lead the way to a growing number of larger deals for the M&E sector.
A focus on core strengths. After a prolonged period of global uncertainty, over 50% of M&E executives say they will focus on growth over the next year. Growth is expected to come more from investing in new sales channels and in strengthening existing product and service lines and less from investing in new geographies, which is consistent with concerns of continuing global political risk.
Transaction conditions improve. The volume of M&A transactions is expected to grow driven by positive economic sentiment, enhanced credit availability and the need for growth. These expectations, along with increased deal size, are clear indicators that a more robust deal making environment is on the horizon. They signal companies have confidence in their capital structures, in deal fundamentals and in a sustainable economic recovery.
About this survey
The Global Capital Confidence Barometer gauges corporate confidence in the economic outlook, and identifes boardroom trends and practices in the way companies manage their Capital Agenda — EY’s framework for strategically managing capital. Our 9th Capital Confidence Barometer, released in October 2013, is based on a panel of 56 M&E executives from every global region. Forty-eight percent were CEO, CFO and other C-level executives.