More Than Nine Out of Ten Communications, Media Execs See Digital Revenues Growth This Year

NEW YORK, Aug. 2, 2011 /PRNewswire/ -- More than 90 percent of the communications and media business leaders expect digital revenues to grow this year and more than a third anticipate increases greater than 10 percent, according to the results of the annual Communications and Media Industry Business Climate Survey by KPMG LLP, the audit, tax, and advisory firm.  

In the survey of communications and media company management nationwide, 94 percent expect an increase in digital revenues, up from 2010 when 83 percent expected gains. Also, more of them look to larger increases, as 37 percent expect their companies to grow digital revenues by over 10 percent, compared to 31 percent in the 2010 survey who expected double-digit growth.

In addition, the respondents in the 2011 survey said increasing broadband access speeds, new distribution methods, social media platforms and online advertising are the most important drivers of their company's overall revenue growth over the next three years.

"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," said Paul Wissmann, KPMG's National Sector Leader for Communications and Media. "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."

Anticipated Digital Revenue Gains

In addition to the previously mentioned 37 percent who see digital revenues increasing by greater than 10 percent in 2011, 21 percent of those surveyed, compared to 15 percent in 2010, see a 7 percent to 10 percent increase, and 20 percent expect a 4 percent to 6 percent gain. The 2011 respondents also said that maximizing digital media revenue growth, managing subscriber growth and managing customer churn are the most important challenges facing their companies.

Convergence A Significant Positive In Optimistic Outlook for Overall Revenue

Nearly three-fourths of communications and media executives said they expect the overall revenue at their companies to be higher one year from now which contrasts with 58 percent who anticipate current year growth. The respondents in the KPMG survey believe that in the next 12 months, communications and media industry convergence resulting in new business opportunities (e.g. mobile commerce) will have the greatest positive impact on their business.  

In considering the communication and media industry's growth rate over the next year, 47 percent of those surveyed predict a 1 percent to 5 percent increase in the next 12 months and 32 percent expect growth in the 6 percent to 20 percent range. "Communications and media companies are sensing industry momentum that is the result of leaner organizations coming out of the recession, combined with the opportunity offered by the development of and users rapid adoption of innovation such as tablets, high-speed wireless access and social networking platforms," said Carl Geppert, KPMG's National Account Leader for Communications and Media.

New Distribution Methods and Social Media Among Keys To Three-Year Outlook

In fact, KPMG's survey results show 44 percent ranked new distribution methods, which can include devices and access technologies, as either the first, second or third most important driver, 43 percent placed social media platforms among the top drivers, and 37 percent ranked online advertising, including search ads, among the top three. Also, three-fourths of communications and media respondents expect Cloud computing to have a slight to moderate transformational impact on their business in the next few years.

Mergers and Acquisitions Top of Mind

Nearly 7 out of 10 communications and media executives believe their companies will be involved in a merger or acquisition during the next two years, with 58 percent likely involved as a buyer and 10 percent as a seller. Those surveyed also said that access to new technology and products (53 percent), product synergies (38 percent), and access to new geographic markets (35 percent) will be the most important drivers of alliances, mergers and acquisitions over the next 12 months. This is consistent with the executives' expectation that their companies will increase spending the most over the next year in new products, IT, and acquisitions.

"Given the pressure on communications and media companies to evolve to grab market share or be left behind in the shift to digitally-based services, it makes sense that M&A remains a key tactic for many," said Wissmann. "Recent large acquisitions in the communications and media industry, and numerous smaller acquisitions of digitally strategic companies, increase the pressure on all companies wanting a part of the digital value chain."

Less Optimism about Headcount

In the 2011 survey, 47 percent of the communications and media leaders anticipate their companies' headcount increasing over the next year compared to the 2010 survey when 57 percent expected headcount to increase during the coming 12 months. Also, in this year's survey, looking back, only 34 percent said they actually increased headcount in the last year.  Forty-one percent said their company reduced headcount in the past year, while 23 percent expect their company to cut headcount over the next year.

In addition, while 22 percent of the communications and media executives said their headcount already has reached or exceeded pre-recession levels, another 35 percent said their companies' headcount would return to pre-recession levels over the next 30 months, and 34 percent said headcount will never return to those levels.

Full U.S. Economic Recovery Pushed Out

While two-thirds expect improvement in the U.S. economy a year from now, the communications and media business leaders believe national economic recovery has been pushed out and won't take hold until 2013.  Last year, they predicted the overall recovery taking hold in 2012.

The KPMG Communications and Media Industry Business Climate Survey

The KPMG survey was conducted in the U.S. in May-June - 2011 and reflects the responses of 101 primarily C-level and senior executives at communications and media companies.  Of the 101 respondents, 66 percent are in companies with revenues exceeding $1 billion and 34 percent are companies with revenues in the $100 million-$1 billion range.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International's member firms have 138,000 professionals, including more than 7,900 partners, in 150 countries.

SOURCE KPMG LLP