Reducing headcount, as a relatively quick fix and short-term expediency, is also a key lever. Previously, managing the staffing expense was a priority for just 22% of executives who wanted to lower costs. Today, headcount actions are vital as executives look to achieve near-term stability through employee hours and salaries, as well as the appropriateness and impact of largescale furloughs.
Whether headcount returns to previous levels may depend on what the new normal looks like. In our survey, executives identified process automation as a key catalyst for driving efficiency. Automation was the number one priority for executives (46%) looking to control costs. This was reaffirmed in EY’s latest Global Capital Confidence Barometer, in which 40% of executives stated their plans to speed-up automation. Given that process automation doesn’t require wholesale finance transformation but can be achieved with some relatively quick fixes, now is the time for media executives to scale up and accelerate their ambitions.
Companies expedite operating model redesign
Prior to the pandemic, many industry executives were already redesigning operating models to enhance efficiency and effectiveness. These efforts are now moving forward on an expedited basis.
For many, the emphasis was on simplification of the enterprise. Fifty-five percent spotlighted the consolidation of internal segments and duplicative corporate functions, while the delayering of management and increasing the span of responsibilities was also a high priority. Transitioning certain functions to lower-cost shared service centers or outside the enterprise entirely via managed service or outsourcing relationships with third parties were also high on the list of planned actions when we surveyed the market. These initiatives are now more relevant than ever. Companies need leaner, more adaptive digital enterprises that can change and respond quickly. This means simpler organizational structures, efficient operating models – especially for core back-office and corporate functions – and an empowered management team that has greater responsibility and is less siloed.
With a return to normal unlikely, executives must plan for a new future
Steadying the ship is only part of the story; executives must also look to the horizon.
Trying to forecast supply and demand is difficult in these turbulent times. Although the outlook for future customer and consumer behaviors is unclear, a return to the “old normal” is unlikely. Will the crisis drive rapid, unruly, structural change in the industry? Or will it speed up the long-term trends already taking shape and well-known by market participants? As part of the EY Digital Home Study, 27% of all respondents and 43% of respondents aged 18–34 said their TV/content consumption habits will permanently change as a result of COVID-19 – if this vision proves accurate, consumer-led disruption will have an even greater impact on media companies than previously expected.
Almost all media companies have suspended their market guidance due to an inability to forecast the near-to-intermediate term with confidence in a fast-changing and unpredictable environment. Yet all stakeholders need some level of surety. It demands mapping out potential scenarios in hours not weeks, although existing strategic and financial planning tools and processes are rarely fit for this purpose.
Companies need to adapt or reinvent their approach and add to their toolkits. Examples of this include the use of predictive analytics to project sales and anticipate clients’ ability to pay, the shift in reporting cycles and tracking of new KPIs to better understand and meet the needs of the business, and the reprioritization of certain datasets to enhance the inputs that are critical for decision-making.
Once the future scenarios are mapped out, companies need to begin planning and executing against them — doing business in unusual times. A quarter (25%) of media and entertainment executives in EY’s latest Global Capital Confidence Barometer see the emergence from the shelter-at-home environment as an opportunity to grow market share as the shape of the recovery comes into view, and nearly half (49%) expect to execute M&A in the year ahead. These companies will be positioning strategy teams and the wider business to identify and pursue areas of innovation and competitive advantage in a post-pandemic world, focusing on development and growth opportunities, both organic and through acquisition.