Collins | Diversity’s Vital Contribution To Industry Growth

Mary Collins

February is Black History Month, as well as National Women’s History Month, which is celebrated in March, despite Susan B. Anthony’s birthdate being Feb. 15. As such, I wanted to look at the subject of diversity in media. The industry has both an opportunity and an obligation to support diversity and inclusion across its many platforms, and as I’ll outline below, promoting diversity also contributes to our bottom line.

Five Years of Progress and Missed Opportunities is the title of the 2018 Hollywood Diversity Report produced by UCLA’s College of Social Sciences. Financial contributors to the report include industry notables BET Networks, El Rey Network, OWN, Sony Pictures Entertainment, Starz Entertainment, The Will and Jada Smith Family Foundation, the Walt Disney Co., and Time Warner.

The report, the fifth in a series, evaluates “the top 200 theatrical film releases in 2016, and 1,251 broadcast, cable and digital platform television shows from the 2015-2016 season.” The study’s authors were looking at the “degree to which women and people of color are present in front of and behind the camera” and how that data correlates with box office receipts and audience ratings. What they found is, diversity pays.

The good news out of the UCLA report is that of 11 categories measured, “people of color have posted gains relative to their white counterparts in eight of the key industry employment areas.” In addition, women were better represented in seven of the 11 areas.

Unfortunately for women, while minorities fell farther behind in only one of the areas measured, women regressed in three categories and barely held their own in the fourth.

Despite the gains noted above, the study underlines the uncomfortable truth that, in all 11 areas measured, neither women nor minorities are represented proportionately. For example, while minorities are 40% of the U.S. population, the UCLA report shows them to be underrepresented “greater than 5 to 1 among the creators of broadcast scripted shows.”

They found the same gap for cable scripted shows.  Women fare only slightly better, being underrepresented by “greater than 2 to 1 among the creators of broadcast scripted shows,” and “3 to 1 among creators of cable scripted shows.”

In their conclusion, the report’s authors point out that the results for both groups are more nuanced than might appear when viewed through the lens of the five years for which they have data. They say, “the areas in which women and people of color registered sustained progress were more rare.”

Other media segments are seeing similar disconnects between decision makers and consumers. FCC Chairman Ajit Pai introduced the agency’s Broadcast Radio Incubator Program at the end of October 2018 to bring more diverse voices into the medium. Information about the program and how to apply are on the FCC website.

Even video games, traditionally portrayed as young, white, straight, and male, are looking at diversity. A 2017 article in The Guardian entitled Why Diversity Matters in the Modern Video Games Industry, declares that this needs to change, even if only to allow the industry to release different, perhaps more interesting, products.

The Bottom Line

Diversity is more than something that’s nice to do. Including minorities in leadership positions directly, and positively, impacts a company’s bottom line.

The overview to the UCLA report points out that the United States includes increasingly diverse audiences. These audiences prefer diverse video content. They cite examples including that “films with casts that were from 21% to 30% minority enjoyed the highest median global box office receipts and the highest median return on investment, while films with the most racially and ethnically homogenous casts were the poorest performers.”

Additionally, they found higher social media engagement for scripted cable programs with “casts that were at least 31% minority.”

Two reports from McKinsey, one outlined in a 2015 article entitled Why Diversity Matters, and a second expanded study covered in a report called Delivering through Diversity, both conclude that inclusion and diversity lead to positive business outcomes.

The 2015 report includes three eye-opening statistics. First, “companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective industry medians.”

In contrast, those companies in the bottom quartile “are statistically less likely to achieve above-average financial returns.” Finally, they report a linear relationship for U.S. companies “between racial and ethnic diversity and better financial performance. For every 10% increase in racial and ethnic diversity on the senior executive team, earnings before interest and taxes (EBIT) rise 0.8%.”

McKinsey’s 2018 report seeks to measure both diversity’s effect on EBIT, and on longer-term value creation. Their finding is that companies with “the most diverse executive teams are 33 percent more likely to outperform their peers on profitability.”

More importantly, there is a penalty for companies that do not have both gender and ethnic diversity. The 2018 McKinsey report finds companies in the bottom quartile for these measures are 29 percent more likely to underperform their peers.

When considering diversity, let’s not forget generational diversity. Millennials and the incoming Generation Z are looking for work-life balance, authenticity, and they want to create social change. They are paying attention and demand to be heard. Fred Jacobs of Jacobs Media Strategies says they appreciate opinionated brands that speak out.

It is interesting to note that Jacobs’ recent post about Super Bowl ads garnered comments saying essentially, “political correctness has sanitized agency copywriters.” Jacobs’ response is, “Perhaps, but whether Howard Schultz ends up being a viable presidential candidate or not is overshadowed by the fact that Starbucks’ activism has been the engine that has vaulted him into the public eye.”

A more diverse workforce presents both opportunities and challenges, particularly around acceptable workplace behavior. Critically assessing where you are will result in better content and a more profitable bottom line.

It is with this in mind that we added a discussion called “21^st Century Employment Law Challenges…” to our upcoming MFM CFO Summit. Russell Jones of Littler Mendelson P.C. will cover topics including the multigenerational workforce,  managing social media accounts, harassment, and employment agreements. The topic of workforce diversity is also certain to come up in future Human Factor columns in MFM’s member magazine – The Financial Manager (TFM).

Diversity and inclusion takes many forms. It is certain that recognizing, appreciating, and celebrating differences in the media industry can positively impact our businesses’ bottom line. What better time than Black History/Women’s National History Month to consider how diversity and inclusion can and is contributing to your business? And while we’re celebrating let’s not forget it’s also Chocolate Lovers’ Month.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at [email protected] and via the association’s LinkedIn, Twitter or Facebook sites.