CMS Technology Transformation Report 2022: Media

Media companies embrace digitalization but are underprepared for major tech risks

• New research by international law firm CMS finds media companies are embracing digitalisation in response to new, transformative technology.
• However, they have fewer safeguards against current and future technology risks compared to the average across all sectors.
• Media companies have “cultural” barriers to reducing technology risks.

(Worldwide, Tuesday 8th November 2022) – While media companies remain engaged in the adoption of new technologies, they have fewer safeguards against current and future technology risks compared to the average across all sectors, according to data collated by international law firm CMS in its 2022 Technology Transformation Report.

The cross-sector study surveyed 510 senior counsel and risk managers across the Consumer & Retail, Energy & Infrastructure, Financial Services, Life Sciences and Healthcare and Other Sectors, with 75 respondents operating in the media sector.

It found that fewer media companies report having policies to manage IP rights (56% against 61% for all sectors), crisis management plans for technology failures (63% against 71% for all sectors) and to manage cyber breaches (41% against 54% for all sectors) than the average across all sectors. 

Sheena Jacob, Technology & Intellectual Property Partner at CMS, said: “The data suggests a certain degree of reluctance around the protection of core business assets within the media sector. For companies that place digital at the heart of their business models, this is a critical reminder for media firms to ensure that they have the right policies, staff and equipment in place to deal with technological compliance risks.”

The study also found that risk managers remain engaged with digitalisation, citing the top drivers for adoption to be a response to transformative technology (40%), followed by business efficiencies or removing outdated technology (39%) and competition with other businesses (37%). 

The study also stated that the expected future risks are different to those media firms currently face today. The media sector is currently most concerned with risks around the performance of IT suppliers (64%), compliance and regulatory issues (61%) and claims related to personal data breaches (57%). The risks that media firms expect to see in the future, however, include intellectual property issues and breach of business secrets (61%), issues arising from smart contracts (60%) and concerns arising from migration or the increased use of cloud services (49%). 

Interestingly, 43% of respondents cited crypto as a key driver for the increase in legal issues relating to technology, compared to 38% for all sectors. Luke Pardey, Dispute Resolution Partner at CMS, explained: “This may be due to media companies being concerned about digital advertising and crypto regulation, as well as the use of digital crypto products, such as NFTs, which are popular in parts of the media sector, particularly across gaming, art and sports.”

While media companies are broadly in line with the cross-sector picture when considering barriers to reducing tech risks, three barriers stand out and all are “cultural”. First, overall resistance to change is the leading barrier to reducing tech risks (67% against 54% for all sectors), followed by a lack of operational knowledge (55% against 41% for all sectors) and a lack of employee engagement (49% against 39% for all sectors). 

Sheena Jacob added: “For a sector that must constantly embrace change, especially with the major shift from print to online content, that the leading barriers are cultural is somewhat surprising. It may reflect organizational change fatigue given the exponential changes in the industry. By building employee trust and more effectively communicating the real benefits of change, businesses can better prepare themselves for potential risks ahead.”

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