Media & Communications
The Media and Communications sector continues to both grow and consolidate at a rapid pace. With a total value of $1.5 trillion, the global telecommunications market is the world’s second-largest industry.
The sheer scale of the telecommunications market, and the constant drive from operators and handset manufacturers to grow their user base, means there are continued opportunities for companies that can reduce customer churn and increase average revenue per-unit through improved customer satisfaction and greater operational efficiency.
Sectors include:
- Broadcast Media
- Internet Advertising & Content
- Infrastructure Networks
- Mobile Devices
- Telecom Equipment
- Wireline & Wireless
- Broadband & Service Providers
- Network Security
- Communication Services
- Convergence Technologies
- Components & Software
- Mobile Broadcasting
The telecom industry was at the center of the collapse of technology stocks in late 2000 and 2001 that led to a global economic slowdown and wavering revenues within the US market for communications services. However, since that time the market has rebounded led by the expansion of the wireless sector.
The increasing market penetration of digital networks has resulted in escalating demand for wireless products. The emergence of 3G technologies has begun to drive growth within the market - albeit slower than expected – and operators are laying the groundwork for 3G networks, the third-generation infrastructure to follow first-generation analog and second-generation digital systems.
While telecom infrastructure and equipment are volume businesses dominated by industry giants, there are many opportunities to work with companies that supply a broad-range of specialty applications, from handset software and games, through wireless and convergence technologies, to billing systems and network management.
Promising innovative and disruptive technologies arrive on the market continually, giving venture capital investors opportunities to support early-stage businesses that change the rules of the game. As a result, established operators are forced to re-assess their priorities, spinning out non-core activities that make attractive partners for growth capital and buyouts.
Media is a dynamic, wide-ranging sector with broadcasting and entertainment, which includes all forms of TV, radio, Internet, mobile broadcasting and the creators and owners of content. Media markets are simultaneously global and local, distinct and linked. In this complex mix, one theme stands out - technology-driven change; and its huge impact on producers and consumers. New online operators have quickly gained market share in areas like recruitment advertising and information supply, to the detriment of traditional players.
Digital convergence is changing the nature of business, as technology, media and entertainment reshape today's marketplace. With the proliferation of broadband and the emergence of powerful new mobile technologies, leading investors are capitalizing on the massive changes in how content is created, distributed and consumed.
Meanwhile, the proliferation of new channels enables consumers greater access and more choices of what they want and how they want it – ending the mass audience and threatening the traditional advertising models. These trends bring uncertainty and will create winners and losers in every part of the sector. There is no simple recipe for success. With continual migration from analogue to digital, companies will need to become more skilled in building scale and efficiencies.
And, as more channels compete for attention, consumers will choose those with the ‘essential’ content – placing content owners in powerful positions. Above all, businesses need to quickly grasp how to adapt their model to the digital world and migrate effectively with speed, taking customers and revenue streams with them.
In the data communications market, network management and optimization are becoming ever more important as multimedia content competes with traditional data on corporate LANs and WAN’s. The integration and management of the intersections between wireless and fixed infrastructures continues as a constant area of development.
In the wireless arena, we embrace business models with applications and content for both the consumer and the enterprise mobile users. We also see outsourcing of services to telecom companies as an area of opportunity and are keen to support good service offerings, whether as emerging companies or as buyouts.
We identify with companies that create and enable the communications highway; companies that provide value-added services, content delivery, fixed and wireless infrastructure, networking, equipment, components and software. Increased awareness of IT security issues continues to fuel growth in the networked-security arena as well.
At Lexington, we embrace companies with disruptive technologies in clearly defined market niches. We are particularly keen on companies enabling existing technologies to deliver on their promise with solid, management depth and assertive growth and expansion strategies.
In a fast-moving sector like communications, it's all too easy to get left behind. That's why you need an experienced banker who can offer the depth of investor resources and sector experience to help your company become one of the leading communication providers.
We look to engage with growing and established companies in the wireline and wireless communications sectors as well as the digital convergence of cable, Internet, mobile technologies and broadcast media.
