Insight

The road to recovery: How media companies move on from disruption

Taking a balanced approach to growth and cost options will better position businesses for recovery and a new reality.

Michelle Wroan

Michelle Wroan

National Media Industry Leader, KPMG US

+1 213-955-8657

In my previous blogs I introduced a coordinated series of actions that media businesses should undertake in response to COVID-19 to address challenges and impacts, build resilience, and begin to plan for recovery. Today I will focus on the performance improvement actions businesses should consider to facilitate recovery from economic disruption while maximizing available options in the face of uncertainty. 

When identifying actions for recovery, a balanced approach is needed—to consider not just cost cutting, but also opportunities for growth and accelerated digital transformation. In prior recessions, companies that addressed growth and cost in a balanced manner had twice the sales and EBITDA growth of the market in recovery.1

Growth opportunities

COVID-19 has accelerated the digital disruption that media companies were already facing. We’ve seen it in digital delivery of content (streaming vs. cable), the movement of advertising dollars to digital channels, and tech-enabled virtual events. Media companies need to move quickly to take advantage of these trends and capture revenue opportunities where they are emerging.

Example actions for media companies:

  • Align resources against lasting trends. Accelerate investment in digital ad technology to support targeting and increased rates
  • Conduct pricing and contract assessments. Review customer arrangements, including subscription and advertising, to mitigate churn risk and secure revenue, renewals, and terms to improve revenue visibility
  • Engage and study customers. Launch consumer surveys and conduct analytics across numerous data sets to gain real-time and predictive insights to inform company and product positioning

Operating model imperatives

COVID-19 has increased liquidity pressure throughout the media sector, forcing companies to assess the effectiveness and efficiency of their existing operating models.  Operating model alignment opportunities are organization-wide transformation initiatives to optimize the business across functions, and better enable the business to go to market in a new reality.

Example actions for media companies:

  • Rationalize product and service offerings. Streamline the portfolio to free up resources, sunset content and product/service offerings now/faster, and take a digital-first mindset to select services and content
  • Streamline organizational structure. Use this dynamic time as an opportunity to move beyond legacy organizational structures and politics to create a leaner organization
  • Reduce overhead costs. Determine future real estate requirements (including commercial/office space and studio lot/production facilities); review and consolidate procurement spend with key suppliers to obtain economies of scale and better terms
  • Centralize services. Identify processes to be standardized and centralized within hubs or Centers of Excellence, enabling further organizational streamlining and ensuring best practice processes
  • Optimize marketing/ad spend. Perform ROI analysis to focus spending in key areas

The road to recovery will be challenging, but by establishing a team (a “Control Tower”) that is responsible for managing initiatives, prioritizing available levers, and ensuring a balanced approach, media companies will ultimately be better positioned for a New Reality.

Learn more about how technology, media and telecommunication companies are playing a crucial role in addressing the COVID-19 challenge.

Footnotes

Sources:

  1. T. Lambert, A. Miller, T. Dubner, D. Roszman. CEO Mission: Lean into the unknown, 2020.