• by Mark Walsh  @markfwal, August 11, 2014

Media and entertainment executives say they’re poised for growth for the first time since 2008, with digital as the focus of their renewed expansion plans. That’s according to a new Ernst & Young studybased on interviews with 50 CFOs across 10 countries and companies, including Time Warner, WPP, Hearst Corp. and Disney.

The report indicates industry CFOs are finally ready to put the cost-cutting and efficiency efforts of the recession behind them to focus on growing again. This year, only 26% identified economic uncertainty as a challenge for their companies compared to 62% in 2012.

For those looking to scale through acquisitions, a majority of CFOs want to broaden the scope of existing businesses geographically. Nearly half are willing to make bets on new business ventures, in categories such as games, social media and online entertainment. When it comes to hiring, 58% said recruiting, developing and retaining the right talent was critical to their organization’s success.

The volume and velocity at which change is taking place in the media world has created pressure to ramp up growth in a matter of weeks and months instead of years. In that vein, almost two-thirds (64%) of CFOs cited being “disintermediated” by technological advances as their greatest challenge, followed by losing control of the customer relationship. Specifically, 58% fear they won’t be able to get consumers to pay “fair value” for content.

For recruiting, and for overall growth, executives are targeting the digital realm. Nearly three-quarters (74%) see the “evolution of digital and online distribution” as a priority. M&E CFOs no longer see digital as a new media play. They see it as an essential and fundamental component of their organization in every dimension,” according to Howard Bass, who leads Ernst & Young’s global media & entertainment practice in New York.

In connection with digital expansion, a crucial issue is how companies are using their own customer data. Most believe they’re doing a good job using data for providing service to current customers and determining investments in content development. But only a third think they’re applying data effectively when it comes to generating new leads or attracting new customers.

“In fact, CFOs acknowledge that real-time access to data is their greatest area for improvement,” states the report. The push to accelerate growth and bolster digital competence has led to the average deal valuation in the media and entertainment sector more than doubling in the first half of 2014 to $939 million. That figure includes announced deals like the proposed $54 billion Comcast-Time Warner Cable merger.

Internally, most media and entertainment companies (64%) are expanding digital staff faster than digital revenue is growing. That includes traditional areas like publishing, where the rate of adding digital expertise is even higher than the industry average, at 71%. That doesn’t necessarily mean finding help is easy.

The report quoted one study participant, anonymously, saying: “My personal priority is talent. The talent I am seeing doesn't align with needs and expectations…hard to find people with the right digital skills to help us transform.”

Companies in the Ernst & Young study overall represent $475 billion in annual revenue, with most reporting sales of at least $1 billion a year. Half (52%) are based in the U.S., with nearly half of the total revenue (48%) coming from North America.

The companies also spanned eight media industry categories including publishing and information services (20%), filmed entertainment (18%), broadcast and cable networks (16%), media conglomerates 14%), advertising and measurement (10%), Internet and interactive media (10%), cable/satellite distributors (8%), and music/radio (4%).