OREANDA-NEWS. Increasingly fragmented audiences resulting from the rise of on-demand content continue to disrupt traditional media models, presenting both risks and opportunities for media and entertainment companies, according to Fitch Ratings' ninth annual Credit Encylo-Media report. Content owners are best positioned to capitalize on this paradigm shift as demand for high quality content will remain strong across the board.

"Traditional media platforms aren't dead, but evolving," says David Peterson, Senior Director, U. S. Corporates. "Relevance will be determined by platforms that can capture large audiences with compelling content, target them specifically, and measure their success."

In the U. S. and Europe, sports content is king. Live sports programming remains one of the few opportunities for broadcast and cable networks to generate large viewing audiences. Although sports license fees are already high, making significant profits difficult, Fitch believes they will continue to rise as sports remains one of the last segments to remain "appointment television" and resist the shift to on-demand.

With time-shifted, on-demand content growing in popularity, Internet-based, or over-the-top (OTT), television distribution now represents the fastest growing method of video content consumption. Traditional cable networks have responded to increased competition by launching their own OTT services like CBS/Showtime, HBO, DISH Network's Sling TV, and Hulu, which is owned by Disney, Twenty-First Century Fox, Comcast and Time Warner.

As digital and mobile offerings become more integral to growth of the overall media landscape, the ability to measure audiences and ROI are increasingly important for differentiation. While new measurement tools have been slow to deploy and advertiser confidence in them remains low, the shift is inevitable. In the meantime, partnerships between digital platforms and measurement platforms, like YouTube's Nielsen and comScore deal, will continue.

Trends in advertising spending continue to be a bellwether for the sector's operating performance. Fitch expects ad revenue growth will slow in the near term, likely not rising above GDP growth (1%-2%). Advertising dollars will follow broader trends in the industry, like the shift to digital and mobile platforms and to more measurable and targeted mediums.

Fitch Ratings' Credit Encyclo-Media is comprehensive handbook covering the major trends and issues affecting credit in the media and entertainment sectors, containing data and opinions on more than 20 media subsectors. It will be followed by issuer-specific handbooks focusing on the sector's investment-grade and high-yield names. Published annually, these reports are designed to help investors assess various categories of risk across the media and entertainment space.