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| Media companies can achieve substantial cost reductions by applying traditional operations techniques such as process redesign and supply chain rationalization. For example, we are helping clients implement lean systems for production and editorial processes that maintain quality while delivering cost reductions – ensuring that what is spent shows up on the screen or on the page. Similarly, supply chain restructuring is yielding results for packaged media companies such as music, book, and video producers. |
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Operations effectiveness
A global network news organization worked with McKinsey to reduce operating costs without reducing the quality of programming or breaking news coverage. The team consolidated some program staffs into news bureaus, used digital production equipment to streamline field crews, optimized satellite/fiber arrangements, and improved vendor management. The team also improved the decision making processes between the producers, assignment desks and news bureaus to reduce material produced but not aired and to increase updating frequency on important stories.
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Enhancing the network
A large cable MSO needed help rebuilding and upgrading its network and engaged McKinsey. We first determined that overuse of local and regional vendors had left the company with 50 to 125 vendors for each purchased product and found that prices across vendors varied by up to 30 percent. The team recommended a new vendor selection process and standardized work practices and specifications, allowing the company to consolidate with a few national vendors for each product. We also assisted the company in reviewing its decision to rebuild versus upgrade its networks by region. Our recommendations saved 10 to 15 percent on the cost of the network upgrade/rebuild.
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Improved operating performance
A major movie theater chain needed to improve its operating performance. McKinsey thoroughly reviewed the company's core operations and helped increase revenue generation by optimizing staffing levels at peak times and identifying ancillary revenue opportunities, including concessions, advertising, and rentals. The team also helped the company reduce costs by centralizing purchasing, improving training, standardizing processes around best practices, and improving systems. We developed a detailed implementation plan with the client to ensure near-term impact. The result for the company was a 40 percent improvement in annual operating income.
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Operational effectiveness
A mail order entertainment company with competitive disadvantage in cycle time length engaged McKinsey to help it with its production processes. Our team helped the company match processing capacity with demand, reduce its batch sizes, and eliminate the root causes for shipping delays to drive near-term reduction of average cycle time by 50 percent. We crafted our recommendations to minimize necessary IT changes and capital expenditures and focused the organization on tracking ongoing cycle time performance.
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