Five steps to securing your media business' future

Five steps to securing your business’ future

No industry has been immune to the global, cyclical and structural changes reshaping the world economy. It is difficult, however, to think of another sector that has experienced greater challenges and more fundamental change in 2009 than the media sector.

With traditional media audiences shrinking, businesses that have not already begun to consider new strategic models for survival and growth will surely have been delivered a knock-out blow by the recent economic turmoil. In this climate, the media industry is still searching for new economic models that will allow old media to survive and new media to thrive.

Reasons for optimism

Despite the doom and gloom of recent months the media sector still has reason to be optimistic. Live events, such as seminars or live music, still have the power to engage audiences and deliver the all important 'experience' which in turn develops and cements brand loyalty. Cinema and theatre offer affordable entertainment and escapism whatever the economic outlook and if Avatar box office sales are anything to go by, 3D film has already captured the imagination of consumers. In the world of mobile advertising, the purchase of AdMob Inc. by Google will make it the largest mobile advertising company and will help bring on board advertisers who are apprehensive of mobile and the opportunities that the mobile culture of smart phones is bringing.

In addition, the potential market growth is significant: Sales of filmed entertainment, recorded music, video games, books, casino gaming generated $19bn in 2005 and are expected to increase to over $67bn by the end of 2010. The number of households worldwide that have access to broadband is expected to increase from 187 million in 2005 to 433 million by the end of 2010.

Five challenges that the successful businesses will need to overcome

We regularly provide commercial advice and technical support to media businesses across a wide range of issues and we believe there are five key challenges that media businesses should be addressing to better weather the economic storm and the changes in the sector:

• Continued vigilance on cost cutting – Finance Directors will need to rigorously analyse all of their cost centres and identify those that are no longer fundamental to the new growth strategy.

• Valuing intellectual property (IP) – This is defined as the present value of the future economic benefits that can be anticipated to accrue. Business leaders should seek advice as to the most appropriate method of identifying, valuing and protecting IP.

• Economic Model – Merely shifting traditional media online is unlikely to be successful. Businesses need to move away from paid content in this highly competitive online market where content is freely available. The successful finance managers will find new revenue streams that focus on specialised content.

• Ownership and funding – As the markets start to recover, businesses will need to consider whether their current ownership structure is providing them with sufficient funds in order to take advantage of the growth opportunities. Private companies need to weigh up the benefits of the exposure to global funds that a listing might bring, against the listing costs and ongoing regulation of moving public.

• Understanding consumer behaviours – There is now significantly more information that is freely available regarding consumer interests and behaviours, such as geo-tagging, social networking sites and search traffic. Businesses need to understand consumers’ desire for personalised, on-demand content and provide quality specialised media in a format that will be heard amongst the white-noise.

Preparing for change

Media businesses, that have already had to reconsider how they operate, will now have to fundamentally address the opportunites and challenges of the digital media revolution in order to survive and grow. They also need to ensure that they have the right advice and support to implement a successful business strategy in the challenging year ahead.

For further information on any of the topics raised please contact: Simon Wax, Director on +44 (0)20 7556 1231 or at waxs@buzzacott.co.uk