Media and entertainment (M&E) executives remain focused on M&A in 2018, according to the EY Media & Entertainment Global Capital Confidence Barometer(CCB). The report reveals that 72% of respondents expect the M&A market to improve in the next 12 months, up dramatically from 47% six months ago.
M&E executives are also highly confident about the macroeconomic environment — 70% of those interviewed see the global economy as improving and 87% expect better corporate earnings in the sector globally.
This confidence is spurring strong dealmaking intentions, with 55% of companies having revenues of US$1b or more intending to pursue acquisitions in the year ahead.
Will Fisher, EY Global Media & Entertainment Strategy and Transactions Leader, says:
“From a position of confidence, M&E executives are poised for opportunities to create value through acquisitions. But confidence is not a strategy, and that’s what is needed most in such a heated, competitive market. Whether as buyers or sellers, M&E companies need to be perpetually prepared, acutely focused and highly strategic to get to where they want to be.”
The findings expose a longer-term need for companies to strategically position their portfolio for future growth. Almost three-quarters (74%) of respondents say that their last portfolio review identified an asset to divest. In fact, according to the EY Media & Entertainment Global Corporate Divestment Study, 87% of respondents across the sector plan to divest within the next two years, a dramatic increase from 33% the previous year.
Media and entertainment companies interviewed on divestment have a positive outlook for their future growth plans. Almost half (47%) of the companies planning a divestment say they intend to use the proceeds to invest in new technology. Those that are divesting to fund technological change are primarily looking to improve operating efﬁciency (75%) and address changing customer needs (80%) in their remaining businesses.
For more information, visit ey.com/ccb/mediaentertainment.
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About the EY Global Capital Confidence Barometer
The EY Global Capital Confidence Barometer is a biannual survey compiled by Euromoney Institutional Investor Thought Leadership of more than 2,500 senior executives from large companies around the world and across industry sectors. This is the 18th biannual CCB in the series, which began in November 2009; respondents for the 18th edition were surveyed in March and April 2018. Respondents represented 14 industries, including financial services, consumer products and retail, technology, life sciences, automotive and transportation, oil and gas, power and utilities, mining and metals, diversified industrial products, and construction and real estate. The objective of the Global Capital Confidence Barometer is to gauge corporate confidence in the global and domestic economic outlook, to understand boardroom priorities in the next 12 months and to identify emerging capital practices that will distinguish those companies building competitive advantage as the global economy continues to evolve. ey.com/ccb #EYCCB
About the EY Global Corporate Divestment Study
The EY Global Corporate Divestment Study focuses on how companies should approach portfolio strategy, improve divestment execution and future-proof their remaining business amid rapid technological change. The results of the 2018 study are based on more than 900 interviews with corporate executives and 100 private equity executives worldwide surveyed between October and December 2017 by FT Remark, the research and publishing arm of the Financial Times Group. Key sector findings can be found at ey.com/divest.