Music, Film Industries Average Lowest Profit Margins Over Past Five Years
All the hubbub about a crashing music industry, and it turns out that during the past five years, it has fared no worse than the film business, according to an Ernst & Young study released Monday.
From 2006-10, the music industry notched an average 11 percent profit margin, tied for last place among 10 media sectors. Also scoring 11 percent were film and TV production and electronic games.
For its calculations, Ernst & Young divides earnings before interest, taxes, depreciation and amortization (known as EBITDA) by revenue.
Ernst & Young said cable operators boasted the highest profitability at 38 percent, followed by interactive media (35 percent), cable networks (31 percent), satellite TV (27 percent), publishing (20 percent), conglomerates (19 percent) and television broadcast (18 percent).
As for profitability growth rates from 2006-10, interactive media scores highest at 15 percent annually, followed by electronic games (14 percent), cable networks and cable operators (tied at 10 percent), satellite TV (9 percent), film and television production (7 percent), conglomerates (3 percent), publishing (minus 1 percent), television broadcast (minus 4 percent) and music (minus 5 percent).
The report concludes that, "despite current perceptions, the media and entertainment industry as a whole is yielding greater profitability and growth than many other stock market indices."