Big Media Expects Digital Sales Gains

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Media executives are optimistic that
revenue will rise sharply this year, but fears that an overall
economic recovery will take longer than expected
have tempered their enthusiasm for job growth, according
to KPMG’s annual Communications and Media Industry
Business Climate Survey.

In a survey of communications and media-company executives
across the U.S., 94% expect an increase in digital revenue
in 2011, up from last year when 84% predicted gains. Of
those surveyed, 37% expect their companies to grow digital
revenue by more than 10%, compared to 31% in 2010.

The executives cited increased broadband-access speeds,
new distribution methods, social media platforms and online
advertising as the most important drivers of overall revenue
growth, according to the survey.

“It’s clear from our survey that communications and
media executives are more optimistic and their companies
are placing bets that now is the time to position and
invest for growth, despite an uneven economic recovery,”
KPMG national sector leader for communications
and media Paul Wissmann said in a statement. “They’re
focused on investing in technology and products through
both organic growth and mergers and acquisitions to
beat the competition and grab emerging opportunities.”


That growth won’t necessarily translate into more jobs.
About 47% of those surveyed said they expected to add
personnel in 2011. Last year, 57% of those surveyed expected
to increase employment in the coming year.

Looking back, only 34% of the executives said they increased
employment in the past year, 41% said they reduced
headcount in the past year
and 23% said they expected to cut
employees over the next year.

About 22% of respondents said
their headcount has reached or
exceeded pre-recession levels,
with 35% predicting they would
return to pre-recession levels
during the next 30 months. About
34% said that headcount will never
return to pre-recession levels.

Part of that lack of optimism
could be tied to fears that the
overall economic recovery will
take longer than expected.

According to the survey, although
two-thirds of respondents
expect improvement in the U.S.
economy in the next 12 months, they believe that a national
economic recovery won’t take hold until 2013. Last year,
they predicted the overall recovery would take hold in 2012.

While the macroeconomic picture remains cloudy, the
haze lifted when it came to their own businesses. Nearly
75% of those executives surveyed said they expected their
companies’ overall revenue to be higher one year from
now, adding that in the next 12 months continued industry
convergence resulting in new business opportunities
like mobile commerce will have the greatest impact.

About 47% of the executives surveyed predicted a revenue
increase of between 1% and 5% in the next 12 months,
with 32% expecting a growth range of 6% to 20%, according
to the survey.

Over the next three years, new distribution methods
and social media are seen as the keys to growth. About
44% of respondents ranked new distribution methods, including
devices and access technologies, in the top three
positions; 43% ranked social media among top drivers
of growth; and 37% placed online advertising, including
search ads, in the top three.


Acquisitions are also expected to play a big role in growth.
Nearly 70% of executives said they believed their companies
would be involved in a merger or acquisition in the next two
years — 58% as a buyer and 10% as a seller.

Those surveyed also said that access to new technology
and products (53%), product synergies (38%) and access to
new geographic markets (35%) will be the most important
drivers of alliances, mergers and acquisitions over the next
12 months.

The KPMG survey was conducted in the U.S. in May
through June and reflects the responses of 101 primarily Clevel
and senior executives at communications and media
companies. Of the 101 respondents, 66% are with companies
with revenues of more than $1 billion and 34% are companies
with revenues in the $100 million-$1 billion range.


Media and communications executives were bullish on growth prospects
for their businesses in the coming year:

94% expect digital revenue to increase in 2011.

37% expect digital revenue to grow by more than 10% in 2011.

said they expect to be involved in a merger or acquisition
in the next two years.

expect to add to their headcount this year.