Media and Telecommunications

Mobile devices and related broadband connectivity are at the epicenter for growth, innovation, and disruption in several industries. The increasing revenue and market share of the telecommunications sector has negatively affected movie production businesses. Movie producers have struggled with decreased ticket sales because of an increase in at-home content viewership. While low-cost rental and video streaming services such as Redbox, Netflix, and Amazon Prime have provided new opportunities, they have failed to generate the same substantial margins that traditional and 3D films frequently command. Movie producers currently face high production costs, low DVD and physical media sales, and escalating competition from at-home television streaming services. Mobile data will continue to act as the key consumer draw to this sector. Furthermore, cable companies that offer broadband and Wi-Fi have begun testing avenues to provide their own wireless networks, which can set the stage for future partnerships. The proliferation of smartphones will result in increased demand for mobile data. Furthermore, demand for telecommunications services among manufacturing and transportation sectors will increase as operators in these sectors continue to adopt monitoring systems and business solutions that use wireless data.

 

Value of Closed Domestic M&A Transactions ($mm)

 

Sector Performance vs. National GDP

Wireless carriers are likely to remain in intense competition for subscribers. Increasing demand for wireless data services is anticipated as consumers continue purchasing broadband-enabled mobile devices such as tablets, modems, and smartphones, in addition to using cloud-based services. As major companies swallow revenue and profit losses to win more subscribers, the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) are expected to increase their scrutiny of this sector, which could curtail potential transactions. Over the next five years, the media sector will likely place greater emphasis on distributing content to at-home entertainment channels rather than the box office. Furthermore, the restructuring of state budgets nationwide also presents obstacles for video production companies, since these budget expenses cut into state subsidy programs that usually provide incentives for producers to film in particular states. The lack of state aid will likely increase costs for production companies, thereby cutting into industry profit.

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