Media & Entertainment Executives See Need for New Breed of Technology-Saavy Managers, Says Ernst & Young Study

Media & Entertainment Executives See Need for New Breed of Technology-Saavy Managers, Says Ernst & Young Study

Global Report Finds Media & Entertainment Industry in the Midst of Rapid Changes Driven by Digital and Broadband Technology Adoption

NEW YORK, Dec. 1 /PRNewswire/ -- Media and entertainment executives around the world are focused on the impact of technology on their industry and believe more technology-savvy managers are critical to their companies' future success, according to a new study by Ernst & Young. Executives participating in the study say that the digitization of content, combined with the increasing adoption of broadband distribution technologies, is creating major shifts, challenges and opportunities for their industry.

(PHOTO: NewsCom: http://www.newscom.com/cgi-bin/prnh/20041201/NYW059 )

The study, Fast Forward: Technology Propels Media & Entertainment CEOs into the Future, is based on extensive industry research, including in-depth discussions with 23 CEOs, CFOs and leading industry financial stakeholders, including top executives from such major global companies as The Walt Disney Company, Viacom, Inc., Time Warner, Inc., Sony Corporation of America, Reuters Group plc, Metro-Goldwyn-Mayer, Inc., Liberty Media Corporation, EMI Group plc, The DIRECTV Group, Inc., Clear Channel Communications, Inc. and others. The media and entertainment companies represented in these high-level discussions had combined annual revenues of $214 billion (FY03) and a combined market cap of approximately $340 billion.

"The pace of technology-driven changes in the media and entertainment industry throughout Europe and the world has created enormous strategic challenges and uncertainty for global companies," said John Nendick, Americas Industry Leader of Media and Entertainment for Ernst & Young. "It is not unlike a chess match in which new pieces are constantly introduced into the game. As a result, executives believe they must bring new talents and skills onto their management teams capable of better understanding and responding to constant change."

As a result of the fast-paced changes facing their industry, media and entertainment companies are highly concerned about bringing the right disciplines into their organizations. In fact, building the right management team was cited by 75 percent of participants as a major internal challenge to success, far more than any other factor. Technology and financial knowledge were frequently cited skills that will differentiate the next generation of managers, according to the executives.

Among the study's findings:

* The introduction of new industry-altering technologies is occurring at
an increasingly rapid pace without any slowdown in the rate of consumer
adoption. (See figure 1).

* 75 percent of executives participating in the study cited digital video
recorders (DVRs)-more than any other new technology-as an innovation
likely to disrupt the industry's status quo.

* DVR use, allowing viewers to time-shift programming and thus bypass
advertising, is expected to grow rapidly in Europe, reaching
6.5 million households by 2007.

* Some 24.7 million U.S. homes are expected to have DVRs by 2007,
threatening approximately 12.5 percent, or about $4 billion, of
traditional television advertising.

* Electronic game software has the fastest growth in earnings before
interest, taxes, depreciation and amortization (EBITDA) profitability
of any media and entertainment industry sector.

* An infusion of new management with greater technology and financial
skills is seen as critical to media and entertainment business success.
Those skill sets were each cited by 47 percent of executives as
characteristics that would be more evident in future management teams.

* While television broadcasting remains one of the most profitable
segments of the media and entertainment industry, executives generally
see it as the most challenged to thrive and grow in the future.

* The music industry, which has been hard hit by piracy enabled by
content digitization, now has the lowest profitability margins of any
segment in the industry.

* Cable operators, which have not performed as well in Europe as in the
U.S. market, were cited by executives more often than other industry
segments as likely to thrive in the years ahead.



"While the current level of new technology adoption may differ by country and region, the overall trend remains the same worldwide," said Steve Barber, European head of Media and Entertainment for Ernst & Young. "Content digitization and the introduction of broadband technologies are forcing media and entertainment companies to rethink every aspect of their business, from intellectual property protection to new models for distribution and revenue creation."

About Ernst & Young

Ernst & Young, a global leader in professional services, is committed to restoring the public's trust in professional services firms and in the quality of financial reporting. Its 100,000 people in 140 countries around the globe pursue the highest levels of integrity, quality, and professionalism to provide clients with solutions based on financial, transactional, and risk- management knowledge in Ernst & Young's core services of Audit, Tax, and Transaction Advisory Services. Ernst & Young practices also provide Law services in some parts of the world where permitted. Further information about Ernst & Young and its approach to a variety of business issues can be found at http://www.ey.com/perspectives. Ernst & Young refers to all the members of the global Ernst & Young organization.

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20041201/NYW059
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk, photodesk@prnewswire.com
Source: Ernst & Young LLP

CONTACT: William Mutton, Global Communications, +44-20-7980-0532, or
william.mutton@uk.ey.com, or Nicole Thomas, U.S. Communications,
+1-213-977-3348, or nicole.thomas@ey.com, both of Ernst & Young

Web site: http://www.ey.com/


-------
Profile: intent