How UK media companies are surviving digital disruption

William Turvill
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The UK’s media and entertainment sector is in “rude health”, with revenues up 21 per cent since 2011, despite digital disruption.

Deloitte’s Media Metrics 2016 report looked at the 100 largest UK companies in the area, finding a total turnover of £87bn in the firms’ latest accounts.

Deloitte predicts this number, based on 2014 or 2015 figures, will reach £100bn in the next five years.

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TV production and distribution makes up the biggest sub-sector, with 19 companies generating £34.6bn of the total. Next were advertising (£17.9bn across 18), information publishing and events (£16.6bn across 15) and news publishing (£6.3bn across 13).

The biggest single company was advertiser WPP, which recorded a compound annual growth rate (CAGR) of five per cent to £12.2bn.

Facebook’s UK operation was the fastest growing company, with a 73 per cent CAGR in revenue to £105m. Google UK was the second fastest growing, up 44 per cent.

Media sub-sector Annual revenue (£m) Companies in the Media & Entertainment top 100
TV production & distribution 34584 19
Advertising 17907 18
Information publishing & events 16608 15
News publishing 6279 13
Film production & distribution 4830 13
Video gaming 3307 4
Magazine publishing 1416 6
Book publishing 819 6
Music publishing & distribution 784 4
Other 187 1
Social media 105 1
TOTAL 86825 100

Deloitte also examined which companies are most profitable, with Auto Trader (profit margin, 53 per cent), Sony Music Entertainment UK (37 per cent) and Euromonitor International (23 per cent) top.

Dan Ison, Deloitte’s lead partner for media and entertainment, said: “Our analysis has found the UK media sector to be in rude health. TV in particular is riding high despite digital entrants and uncertainties around public broadcasting in the UK.

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“Physical products are currently the dominant source of revenue, but this is likely to change as consumers’ adoption of and appetite for digital content grows. Whilst a number of organisations have seen their investment in digital start to pay off, media executives need to ensure their business strategies can adapt to further digital disruption.

“The top 10 UK media companies should be commended for quickly achieving large scale and, in many cases, enviable global presence. The industry will need to consider how to best preserve diversity in the UK’s creativity in the years ahead.”

Top 10 UK media companies

Company Annual revenue Three-year compound annual growth rate
WPP £12.2bn 5%
Liberty Global £12bn 25%
Sky £10bn 14%
RELX Group £6bn -1%
BBC £4.8bn -2%
Pearson £4.5bn -2%
ITV £3bn 7%
Sony Computer Entertainment Europe £2.9bn 7%
Daily Mail and General Trust £1.8bn 1%
Walt Disney Company £1.6bn 6%

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