Article at a glance:

More restructuring ahead for media and entertainment

Despite recent broad declines in the major media conglomerates' valuations, they continue to embed expectations of substantial long-term growth. Significant near- and midterm challenges will make it hard for such companies to perform at the level needed to justify these valuations, and organic initiatives alone probably can't meet the expectations they reflect. An industry hampered by the tremendous disruption from new digital technologies, a changing regulatory framework, and a difficult capital market environment is likely to require a combination of levers.

The take-away

Operational improvements and organic growth will continue to be critical in the media and entertainment industry. But its companies also need a carefully constructed and strategically rational M&A and divestiture program to meet the market expectations embedded in today's share prices.