Analysis of “The Interview” JESSICA MATHES, HARSH MOTA, RUSSELL PANG, JEFFREY MARSCHKE.
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Analysis of “The Interview” JESSICA MATHES, HARSH MOTA, RUSSELL PANG, JEFFREY MARSCHKE
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Transcript of Analysis of “The Interview” JESSICA MATHES, HARSH MOTA, RUSSELL PANG, JEFFREY MARSCHKE.
Analysis of “The Interview”JESSICA MATHES, HARSH MOTA, RUSSELL PANG, JEFFREY MARSCHKE
Task 1: Dec 31, 2013
Data Chosen for Use
* Ferrari, Mark J., and Andrew Rudd. "Investing in Movies." Journal of Asset Management 9.1 (2008): 22-40. JSTOR. Web. 7 Feb. 2015
Data Chosen for Use
Data Chosen For use
Calculating Multiple Average Worldwide Box Office Revenue Earned Per Dollar Invested (AWBOREDI)
Broke data into three categories and calculated average multiple within each◦ Bear , Base, Bull
Scenario (AWBOREDI)Bear $0.40Base $1.82Bull $9.12
Revenue Streams and Percentages
Worldwide Box Office (50%) Other (50%)
◦ DVD◦ Blue Ray◦ DVD Rental◦ Blue Ray Rental◦ EST◦ VOD/PPV
Revenue Streams and Percentages
*Palank, Michael. "2012 State of Media Presentation." 2012 State of Media Presentation. N.p., 11 Jan. 2013. Web. 07 Feb. 2015. <http://www.slideshare.net/mpalank101/2012-state-of-media-presentation>.
Revenue Attribution Per Year
Point in Time After Release
(Year)
Percentage of Revenue Received
Each Year1 60%2 20%3 7%4 7%5 7%
Weighted Average Cost of Capital (WACC)
Used industry averages
CAPM model for Return on Equity◦ Risk Free rate – 3.6%◦ Beta – 1.57◦ Market Risk Premium – 5%
Cost of Debt◦ Moody’s bond rating Baa3 – 7%
WACC – 8.63% rounded to 9%
Assigning Probabilities Ballpark Figure for Box Office Revenue:
◦ $ 100-140 million
Average Total Gross ($) - US Average Total Gross ($) - Theatres*Director Evan Goldberg-All (Comedy) 92,442,735.44 141,852,702.66 Actor Seth Rogen- All (Comedy) 76,697,637.71 117,691,965.14 Actor James Franco- All 65,409,212.25 100,369,958.68 Actor James Franco- Comedy 63,573,022.20 97,552,338.45 Actors Seth Rogen and James Franco 94,405,791.00 144,864,997.08
*estimated on a factor of .65
Assigning Probabilities
Senario From Theatres Total Revenue
Bear 17,601,407.20$ 35,202,814$ Base 79,980,689.70$ 159,961,379$ Bull 401,353,559.60$ 802,707,119$
Net Present Value
NPV: $ 116,810,395
Bull
Base
Bear NPV ($13,696,336)
NPV $646,994,947
NPV $93,699,699
Task 2: Dec 16, 2014
Task #2: Threats from North Korea
Specific Threats
Adjust WACC to 10%◦ Reflect the additional uncertainty◦ Risk averse movie goers
◦ Age groups◦ Recent events
Alter the proportions relating to the scenarios◦ Reflect a higher chance of not earning incomes
Net Present Value
NPV: $ 23,022,110
Bull
Base
Bear 0.70 ($14,156,447)
0.29$91,608,929
0.01$636,503,341
Task 3: Dec 20, 2013
Task 3: No Movies in Theaters• Do not change ticket prices for movies
• Increase the DVD Prices
• Projected NPV is -$34million
Net Present Value
NPV : ($34,324,099)
Questions? Any additional questions, feel free to contact us:
