Communications, Media, and Technology: State of the Industry 2010

In 2009, the Communications, Media, and Technology (CMT) sector recovered almost half the market value lost in 2008, but the recovery was uneven. Technology and Media rebounded strongly; in Communications, traditional sources of value growth showed signs of drying up. And some parts of the CMT universe look increasingly like ‘zero-sum’ games—with intensifying competition to steal value share rather than grow value. The difficult search for new sources of value growth is the key theme that we explore in this year’s report.

Oliver Wyman's third annual CMT State of the Industry report reviews performance by region and sector in the CMT space, while highlighting key trends and strategies of the top-performing firms. The report gives senior executives insights and information with which to successfully navigate a highly competitive and uncertain landscape.

The report highlights several important insights:

Technology firms made a big comeback in 2009, emerging as the clear CMT winner. The sector recovered more than 70% of the value lost in 2009, and Tech firms occupy 13 places on our overall top 20 Shareholder Performance IndexSM (SPI).
Conversely, the Communications sector has been slow to recover, recapturing just 15% of the value it lost in 2008. Many traditional sources of value growth – like raw subscriber growth and new services – are increasingly difficult to realize, and for many operators learning how to squeeze the core business harder will be the key focus in 2010 and beyond.
The Media sector recovered well overall but the migration online continued to wreak havoc beneath the surface. The shift to online viewing of TV shows and movies gathered pace in 2009, and our report includes highlights from primary research designed to evaluate which business models have the potential to succeed in this nascent sub-sector.

To discover who the top performing companies are, where they are located, and what distinguishes them from average and below-average performers, Oliver Wyman used its Shareholder Performance IndexSM (SPI) to analyze the world's top 450 publicly quoted CMT firms with a market capitalization of at least $750 million. By adjusting for the volatility of returns, currency risk, and mergers and acquisitions, the SPI enables apples-to-apples comparison of companies in widely divergent regions and sectors.

Some CMT firms created significant value in 2009, as our Shareholder Performance IndexSM indicates. For others the search for new value growth has never been tougher. 2010 promises to be another eventful year for the industry.