· Disney is the most valuable media brand, up 10% in value to US$34.5 billion
· Opening of Shanghai Disneyland propels revenue of Disney Parks division
· ITV’s brand value takes a hit amidst economic uncertainty following Brexit
· LexisNexis’ acquisition spree pays off as its brand value grows 44%
Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Brands are first evaluated to determine their power / strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s 25 most valuable media brands are then ranked and included in the Brand Finance Media 25.
Disney, the most valuable media brand, grew 10% this year to US$34.5 billion. With an AAA+ brand rating, Disney is the world’s sixth most powerful brand. The continued growth in value is attributed in part to the success of its many divisions. Its Parks and Resorts division increased 6% in revenue in Q3 of the 2016 fiscal year due to higher average guest spending, attendance and occupied room nights. The opening of Shanghai Disneyland has carried the division’s growth – since it opened its doors, the park has received approximately 7 million visitors, seeing a large influx in attendance during Chinese New Year.
The brand’s Interactive Media and Consumer Products segment reaped the benefits of ‘Star Wars: The Force Awakens’. Not only did the movie’s success drive an 8% increase in merchandise licensing revenue during the first quarter of 2016, it also resulted in an increase in licensing revenue for the games division due to the strong performance of the ‘Star Wars: Battlefront’ game. Although the release of ‘Star Wars: Rogue One’ failed to match the success of ‘The Force Awakens’ (which has grossed close to US$1 billion at the box office) it must be noted that Rogue One became the second-biggest December opening in history, taking US$155 million. Moreover, Disney’s shares climbed 1.3% on the Monday following Rogue One’s release.
A brand faring far less well this year is ITV. The UK’s biggest commercial broadcaster has seen its brand value fall 25% to US$3.5 billion. The brand suffered a 3% drop in advertising revenue last year which led to a 14% drop in pre-tax profits. Economic uncertainty following Brexit was the reason for this dip. Despite this, ITV’s Chief Executive Adam Crozier, has expressed optimism that the brand will see a reversal in the coming year and recent data suggesting unexpectedly high consumer confidence in the UK will work in ITV’s favour.
Longer-term viewing habits are shifting towards on-demand channels such as Netflix and Amazon, as well as more fragmented media formats such as YouTube. This undeniably poses a threat to ITV and other legacy broadcasters as ad budgets follow consumers in their online migration. To combat this, ITV and the BBC – whose brand value has also fallen - have launched BritBox, a subscription streaming service to following Netflix’s footsteps that will both capture audience attention and help ITV to reduce its dependence on the advertising market and potentially give the BBC a more sustainable financial footing if the license fee were to come under sustained attack.
LexisNexis is the fastest growing media brand, up 44% in value to US$1.6 billion. The legal research provider has indulged in an acquisition binge in the last few years. The extensive list of takeovers, including Jordan Publishing, the ‘Crash and Project’ business of Appriss and Insurance Initiatives to name a few, have allowed LexisNexis to enhance its capabilities in providing more complete solutions and services to the legal community. The wider application of the brand increases revenues and hence brand value, but the economies of scale and enhanced reach are likely to improve brand strength in addition to business performance.
Note to Editors
Brand values are reported in USD. For precise conversions into local currency values, please confirm rates with the Brand Finance team. More information about the methodology, as well as definitions of key terms are available in the Brand Finance Media 25 report document.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.
Brand Finance is a regulated accountancy firm, leading the standardization of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671 and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.