Strategies for growth in the media and communications industry: Does size really matter?

Abstract

This empirical study examines potential size effects in the US media and communications industry. Motivated by investors’ demand for continuous profit growth, media and communications executives attempt to leverage size effects, be it by growing the core business or by diversifying into other media segments, thereby exploiting cross‐media synergies. However, contrary to conventional wisdom, the authors could not find a general correlation between size and diversification on the one hand and performance on the other hand. The authors’ reason that exploiting size effects in the media and communications industry is far from simplistic and cross‐media synergies may take more time and effort to leverage than assumed. Therefore, research is recommended to focus on the operational level of size effects and their development over time. For media managers, the findings imply that more emphasis should be placed on strategy implementation and operational effectiveness, rather than on sophisticated M&A and growth initiatives.