From broadcast TV and radio to newsprint and new media, the market – but some areas are more intoxicating performers than others. Broadcasting deregulation and the move from analogue to digital is providing more complex plot lines than Eastenders while falling classified ad sales and uncompetitive editorial operations are forcing newspaper companies to rewrite their business processes and shrink their costs.
And, for many consultancies, media is inextricably linked with burgeoning telecoms services, such as broadband Internet access and e-commerce.
Arthur D Little’s Time practice, for example, focuses on telecoms, information, media and electronics, while KPMG’s ICE covers information, communication and entertainment. Says Michael Chamberlain, head of media Europe and director of the UK Time practice at ADL: “Despite the fears of recession last year the market is very robust, particularly on the telecoms side.
Everything that is happening in satellite, new technologies and the way the world is embracing the Internet is creating huge demand for consultancy services.” In the telcos, he says, there is now an understanding that the pipe is no longer sufficient to guarantee a stream of profits. “What they put down the pipe is increasingly important – they are becoming increasingly media-facing and seeing on what kind of added value services they can make a margin. They haven’t got the core competencies of media creation to do that so they are having to learn how to partner with media owners, content providers and others.”
The media picture per se, he adds, is more mixed. “There has been a reduction in classified ad sales in regional and national newspapers and the business press, while the display market is not so buoyant. Changing reading habits have produced growth in men’s and sports magazines at the expense of newspapers.
“Fragmenting TV audiences – brought about by new channels and the proliferation of cable, satellite and digital – means that advertisers are moving out of TV into other media. So there is a lot of demand for cost reduction and downsizing.”
Media and telecoms specialist Spectrum focuses on converging sectors, says consultant Jon Watts. “Almost any company in almost any sector is impacted by changes in telecoms, media and IT. There is an enormous amount of work out there.”
He cites a recent project for Cirque du Soleil. “We were looking at ways of exploiting its rights,” he says. “Any company which owns rights clearly has an interest in the way the media environment is evolving.” The sector is also of interest for retailers, he adds. “The Internet has created a new channel to market, but it is not easy to exploit. It requires complex business planning and strategy development.”
Since Spectrum was set up five years ago, it has quadrupled in size, says Watts. And he anticipates further growth: “This is an incredibly active, vibrant market – if anything we have more work than we can do.”
Most of that work comes from participants in the sector, and licence applications are a characteristic project. “Applications are highly complex processes requiring forward thinking, business planning and discussion about services, pricing, marketing and so on,” says Watts.
KPMG’s ICE practice has worked on a number of ITV franchises and commercial radio licence applications, says director Paul Styles, as well as Art Council franchises for film companies . The firm also has a lot of international work, with an emphasis on America, Europe and Australasia. “We have considerable broadcasting clients in those areas, such as NBC and CBS Network, National Geographic Magazine Worldwide and Readers Digest Worldwide. A lot of these clients have to be managed globally from the area where they are headquartered. For example, we do all of TCI Telecoms’ work, which is the largest cable company in the US (soon to merge with AT&T), and is based in Denver.” The ICE practice picks up TCI’s European activities through its local operation in the UK and Northern Europe, Flextech.
“KPMG is the lead supplier to the BBC and traditional media clients in the UK include ITV companies and some of the big publishing houses,” says Styles. “We have also done well with cable and satellite networks and we do a lot of regulatory response work. And merger and acquisition work is going on all the time.”
A concerted move towards integrating the practice on two levels has enabled ICE to do more and more convergent work, says Styles. “We are integrated with audit and tax on a management matrix and the ability to work as a cross-ICE team with emphasis on entertainment or communications where appropriate has proved to be very successful for us. We see that as being a major area of growth.”
The creation of small cell-like structures within the practice has improved staff retention, he says, and recruitment revolves around filling key areas as they emerge. “For example, the emphasis is on advertising professionals at the moment and we are always looking for good project managers with sales skills. People with good convergent skills are also very interesting to us – for example, if they have worked in computing and are interested in e-commerce for media.”
The firm’s audit practice has proved a successful source of recruits, says Styles. “As part of a pan-KPMG initiative to retain talent post-qualification, ICE has acted as an open channel to the rest of the firm.
Media is a sexy environment and subject with attractive clients and stimulating projects: we have had a lot of enthusiasm from recruits.”
For ADL’s Chamberlain, candidates must possess strong analytical skills, be numerate and have a grasp of the fundamental changes going on in communications – essentially the move from analogue to digital. “They need a degree of computer literacy and an awareness of what is available in digital format, including things like data mining and manipulation on various platforms.”
As far as graduates are concerned, an internship in a media area would help, he says, and in an international consultancy like ADL a second language is a huge advantage. And for those looking to come out of line management, people skills are important together with an understanding of the applications areas.
Chamberlain outlines one further prerequisite: enthusiasm. “You have got to love ‘meeja’ – if you haven’t got the religion for it, don’t apply.”
Tim Vignoles, who specialises in the sector for executive search firm Gartner International, emphasises the importance of chemistry in media.
“It is very much about matching culture and personalities – for example, you couldn’t put someone from MTV into Disney, which is much more like McKinsey than an entertainments company.”
While there is not a lot of demand from consultancies for his services, he has placed some high profile people in the big firms. “Knowledge and experience of industry is essential,” he says.
Styles moved into consulting in the early 90s, after contact with KPMG’s auditors in his role in TV admin, to start the firm’s media practice.
“We have non-poaching agreements with key clients but people do find their way to us from the big broadcasters through agencies.”
In fact, he says, much of the traffic is in the opposite direction.
“There is a lot of poaching, not so much by our competitors as our clients.
A steady stream of people go into broadcasting and now go to clients from our Internet group.” Styles is not too dismayed by this trend, though, as alumni help the firm to pick up quite a lot of work. “There is a lot of loyalty,” he says.
Nick Watkins, managing director of executive search consultancy Tyzack, is not surprised that consultants want to move into industry. “Many find the high octane excitement there at the moment more appealing. In consultancy there tends not to be the same sense of ownership.”
THE CHANGING FACE OF MEDIA
The dynamics of the broadcasting industry are certainly exciting: “Digitalisation has dramatic ramifications for every step of the broadcasting value chain,” says Watts. It will create new competition by multiplying the number of channels and, therefore, licences, and dramatically increasing the value of content. A major transition from free to air to pay TV will see broadcasters like BskyB outbidding terrestrial channels not only for sports and film rights but for other talent as well. And power will shift towards the consumers as they move towards “meTV”, with more choice and the ability to preselect programmes, interactive services and broadband access to the Internet.
On the press side, says Andrew Collinson, a partner at Collinson Grant, the general commercial trend towards building pan-European businesses and running them as a single entity will begin to affect the media sector.
And the “leverage” strategies of the likes of TV programme Top Gear – leveraging margin through a series of different media spin-offs, such as magazines and shows – will become ever more prevalent as newspapers and magazines see circulation fall, year on year. Collinson stresses the need for media companies to try to expand into the pan-European market: “Why aren’t we making pan European programmes?” he asks.
It seems our European counterparts are less likely to be reluctant on this point. Styles expects to see big European operators, such as TV player Canal Plus, take advantage of open competition in the UK media market. And he predicts a move into media by Microsoft which has been buying stakes in cable companies NTL and Orange and forging alliances with broadcasters in the UK. “It is going to be a very dynamic period with a lot of change. It is good for consulting but it might well be a rocky ride for some of our clients,” he says.