"Organic" growth will be the primary driver of the media business over the next 12 to 24 months, according to nearly 500 executives in the information, marketing services and technology sectors, according to the first annual Media Growth survey from investment banker The Jordan, Edmiston Group and digital research company Econsultancy.
However, nearly half of respondents expect to make an acquisition within the next two years, with 81 percent of companies with more than $250 million in revenue planning to buy. Expect smaller deals for the short-term; forty-eight percent of senior executives plan to spend less than $10 million on an acquisition in the next 12 to 24 months, while 30 percent plan to spend between $10 million and $50 million. However, nearly a quarter of respondents (22 percent) are planning to spend more than $100 million on an acquisition in the next one to two years.
Meanwhile, just 27 percent of companies expect a divestiture in near-term future.
Factors With the Biggest Short-Term Impact
The rise of data and analytics will have the most significant impact on media companies within the next two years according to 46 percent of respondents (44 percent see it having the most impact in 3-5 years, while 44 percent of media executives see multiples devices (smart phones, tablets, etc.) playing the biggest role over the next year or two (that number increases to 54 percent when talking about the impact of devices over the next 3-5 years).
And while respondents see social networks gaining importance over the long haul, just 32 percent say social media will have a significant impact on their business over the next 1-2 years, signifying the difficulty many media companies are having monetizing and maintaining communities.
Good news for those still hanging onto a job in media: just 2 percent of executives say outsourcing or off-shoring will have a significant impact on their companies over the next two years (that number goes up to 3 percent over 3-5 years).
In fact, acquiring and developing talent and new technologies are also key areas of investment, according to the survey. Respondents "repeatedly" cited difficulty in attracting salespeople who excel at selling against hybrid digital/traditional media model as well as finding senior management that understands emerging media.
Larger organizations ($250 million in revenue and up) are focused on new acquisitions and new talent. Mid-sized companies (between $50 million and $250 million in revenue) are more concerned with acquiring new talent and technologies, as well as developing existing talent, while infrastructure and acquisitions are also important areas of investment. Smaller companies (less than $50 million in revenue) are focused on acquiring new talent and technologies, with some investment in infrastructure and talent development.
Internal obstacles vary by revenue and size. Small companies complain of the lack of capital and credit for expansion while larger companies are primarily concerned with a lack of talent in emerging areas.
Areas of Investment for Media Industry in Next 12-24 Mos.
New Product Development: 73 percent
New Talent: 63 percent
Talent Development: 48 percent
Infrastructure: 41 percent
Acquisitions: 38 percent
Overseas operations: 26 percent
Source: Media Growth Survey, JEGI, Econsultancy