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With a rapid succession of layoffs being announced, many industry folks and investors are concerned about the future of media. Analysts say, however, that it isn't even as much as a paring of resources to stay afloat.
They believe what we're seeing is a restructuring of companies, as legacy publications and new media start-ups finally get how to leverage digital media in order to gain revenue.
"Traditional media companies and new media companies are making the pivot from more traditional models to the mobile world. ... Companies are very aggressively looking at the resources they have, and making sure they are allocated to the right areas to drive growth going forward," said John Harrison, global media & entertainment leader.
Vice went through a large round of layoffs last week. Meanwhile, The New York Times announced last Wednesday it would be offering buyouts, while The Telegraph announced layoffs the week prior. Earlier this year, Mashable gutted its editorial staff.
Still, Ernst & Young's M&E Capital Confidence Barometer, which surveyed 75 media and entertainment executives, showed that though no one was predicting strong growth, 84 percent were expecting stability or modest growth within their companies in spite of the down economy.
Indeed, the S&P 500 Media Index, comprised of media stocks, is up 6.5 percent year to date, versus 2.6 percent for the broader S&P 500 Index.
Digital strategies lead plans to increase revenue for media and entertainment companies, with more than half of the respondents saying they planned to "make better use of digital, technology and analytics to drive growth." Harrison explained that as media companies and advertisers try to reach millennials and Gen Z, they're finding they have to be more digitally focused and are shifting resources.
"A lot of companies are understanding that change is part of the business, whereas in the past these much more traditional businesses culturally wouldn't make moves around staff in particular," said Chris Lederer, principal at PricewaterhouseCoopers' global strategy consulting firm Strategy&. "They are becoming much more proactive in pivoting resources to what the market looks like. I think it's encouraging."
The New York Times, for example, has a new team of seven staffers running its Facebook Live initiatives. It also announced a relaunch of its R&D Lab called Times Story [X] during its digital content NewFront presentation for advertisers in early May, which will focus on finding new ways to use technology for storytelling.
Vice, on the other hand, has hired more people than it has laid off. The company is preparing to increase its offerings from Vice News, its "Vice" on HBO show and its upcoming nightly HBO series. The new direction will be deployed under recently appointed Vice news operations lead, Josh Tyrangiel. Insiders say that Vice has plans to add new editorial and production bureaus in Hong Kong and San Francisco in the next few months.
"We're bullish that media companies will continue to make content their number one priority," Lederer said. "They're investing in content that can travel across platforms, whether that's traditional or digital platforms. That's where their purse dollars will go. How they sell advertising on it is important, but I wouldn't say it is as important as acquisition and development of content."
Growth isn't just coming from adding digtally adept staff. The EY report showed that a little less than half of the executives were planning mergers and acquisitions in the upcoming 12 months, with about one-third of those deals above $250 million. The U.K. and the U.S. were the top investment areas, with the top five rounded out by France, Canada and China.
"We're going to continue to see a lot of cross-sector investment out of the bigger companies looking to target smaller companies that deliver any combination of new capabilities, that have new technologies or that have new management talent, executives that have grown up in this new media world that bring a new perspective," Harrison said. "Or, they're looking at companies that bring a new perspective and help them gain access to an end market or audience they are under-penetrated in today."
Harrison also didn't rule out the idea of brands, especially consumer products groups, snapping up smaller digital media outlets as more companies branch out into making content themselves. Lederer added that PwC also believes some advertising holding companies will continue to invest in media companies.
For example, investing in a company like Vice, which is known for its irreverent tone, allows more buttoned-up establishments like 21st Century Fox and Disney to reach their audience without having to shift tone. Even communications service group WPP invested in Vice back in 2011.
Mashable, which has said it laid off its editorial staff in order to pivot toward more video initiatives, received a $15 million investment from Turner in March. NBCUniversal touted its investment in both BuzzFeed and Vox Media during its upfront presentation in May.
"Traditional publishing organizations, they've invested in digital communities to get millennials," Lederer said. "It's faster to buy them than to build them."
Update: NBC Universal is the parent company of CNBC.