Media’s Future: Reinvent or Fail

By Simon BambergerWolfgang BockPatrick ForthAnna GreenDerek KennedyTim Nolan, and Neal Zuckerman

Value creation in the media industry depends on one’s perspective. In China, small-cap companies are the shooting stars, feeding that nation’s appetite for online activities and entertainment. At the same time, the US internet giants are driving massive value creation. In the traditional media space, however, companies are addressing declines in their legacy businesses and the need for transformation with varying levels of urgency.

Value Creation in the Media Industry

Chinese companies hold six of the top ten spots in the media industry’s league table for the period from 2011 through 2015. (See Exhibit 1.) These predominantly small-cap stocks have benefited from the rapid rise in online penetration, mobile usage, and consumer adoption. Number one, Leshi Internet Information and Technology, has aggressively expanded into online content, applications, and devices, launching a brand of fast-selling smartphones in 2015. Number two, East Money, and number four, Hithink RoyalFlush Information Network, providers of online financial and trading information, have profited from the growth of the middle class and investor sophistication. For seven of the top ten companies, sales growth was the largest contributor to TSR.


Media’s Future: Reinvent or Fail