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Viewing report
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The North America Media Sectors : A Company and Industry Analysis (July 2006)
Mergent, July 2006
This report looks at the media industries in the United States and Canada
Current Environment - Key Points
- The US media industry continued to be robust over the past six months, with most leading companies performing well financially
However, while visual broadcast companies saw audience numbers rise, many print companies saw circulations and revenues decline
- Media stocks performed well, with the Dow Jones Media 5500 Index rising every month from February to June
The share prices of leading companies including Comcast and News Corp performed well, rising consistently over the December 1, 2005 to June 1, 2006 period
- The M&A market was very active over the past six months, with the number of deals going up by 8% from first quarter 2005 to 168 deals in first quarter 2006
Unlike that for M&A, the IPO market has been quiet, with high listing costs and saturated ownership pricing out new listings
- In Canada, the industry also performed well, with revenues of many industry segments going up, though some leading companies turned in mixed financial results, as foreign exchange fluctuations and flatter international media content and advertising markets adversely affected them
- The limited Canadian market has led to top Canadian media companies making M&As abroad
One such deal involved CanWest, which entered into an agreement with European private equity firm Doughty Hanson & Co (DHC) to sell off its Irish-based TV3 Network
Industry Profile - Key Points
- The media industry in the US is one of the largest, most vibrant and influential in the world, producing media content and products that dictate global trends
New media is becoming increasingly popular and has challenged all other media types for market share
- The emergence of TiVo and digital video recorders (DVR) over the past few years has given viewers the ability to skip advertisements
Anti-ad-skipping technologies have emerged to aid advertising sales for broadcast media companies
- In March, the Federal Communications Commission handed down a ruling which dealt with more than 300,000 public complaints about broadcast indecency and profane and obscene television content
- The Canadian media industry offers a wide variety of programs, catering for a multicultural population
The Canadian commercial radio industry has proposed giving more focus and funding to develop Canadian talent and higher quality media content
Market Trends and Outlook - Key Points
- Although paid online video content has been popular in the US over the past few years, studies show that more people prefer free, ad-supported versions
US local television has continued to thrive, but faces increasing challenge from digital distribution technology
- Newspapers continued to face strong challenges from online media and, although many have adapted, some giant newspaper publishers have fallen victim
Newspaper companies, which acquired existing news websites, were generally more successful than those that created their own
- Online media continues to be the fastest growing media segment in the US
The US Government and the private sector have been pushing for digitalization by 2008, but all signs point to 2014 as a more likely target date
- In Canada, new and mobile media continued to increase in popularity, and investment in the sector is likely to go up over the next few years
The C-60 Copyright Bill has come under pressure to take into account internet users- rights and respect internet public domains
- Privacy and security issues such as identity theft and credit card fraud have hit the new media industry
However, the new media sector is expected to continue to grow and be worth about C$1 trillion (US$0.91 trillion) by 2010
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