Ernst & Young’s Global Media and Entertainment department has found that cable operators were the most profitable out of a group of ten media sectors, and cable networks weren’t far behind in third place, with interactive media breaking the pair up by claiming second place.
“The data illustrates that despite a difficult operating environment, media and entertainment companies continue to show great resiliency,” said John Nendick, Global Media and Entertainment Leader at Ernst & Young. “Additionally, we believe that as advertising and consumer spending continues to rebound, and digital initiatives blossom, improved growth and profitability lie ahead.”
E&Y ranked 10 sectors three different ways, by profitability over the five-years running from 2006-2010, by profitability for 2010 alone, and in terms of five-year EBITDA performance. Publishing, broadcast television and music all suffered negative results in the third study.
The 2006-2010 profitability ranking is: “cable operators had the highest average profitability at 38%, followed by interactive media 35%; cable networks 31%; satellite television 27%; publishing 20%; conglomerates 19%; television broadcast 18% and film and television production, electronic games and music, all at 11%.”
Next, the 2010 profitability ranker: “cable operators placing first at 39%; interactive media, 36%; cable networks, 33%; satellite TV, 27%; publishing, 20%; conglomerates, 18%; TV broadcast, 16%; electronic games and film and television production, both at 12%; and music, 9%.”
Finally, the 2006-2010 EBITDA pecking order: “interactive media is the fastest growing media and entertainment sector at 15%, followed by electronic games, 14%; cable networks, 10%; cable operators, 10%; satellite TV, 9%; film and television production, 7%; conglomerates, 3%; publishing, -1%; television broadcast, -4%; and music, -5%.”
RBR-TVBR observation: It is very hard to square these results with cable complaints that broadcasters are trying to bleed them dry via retransmission fees. The simple truth is still that broadcast stations are among the most import offerings on a cable channel lineup, and they deserve to be compensated accordingly.