Copyright

Arundel Partners: The Sequel Project

Harvard Business School Case 9-292-140
Case Software 2-293-716
Copyright 1992 by the President and Fellows of Harvard College
William A. Teichner, Charles M. Williams Fellow, prepared this case under the supervision of
Professor Timothy A. Leuhrman. HBS cases are developed solely as the basis for class discussion.
Cases are not intended to serve as endorsements, sources of primary data, or illustrations of
effective or ineffective management.

Exhibit 1

Selected Motion Picture Industry Data, 1980-1991

North American Theatrical Film Rental Shares of Major Film Distributorsa,b

Sonyc

20th
Century
Fox

MetroGoldwyn
Mayer

Paramount

MCA
Universal

Warner
Brothers

Buena
Vistad

1991

20%

12%

2%

12%

11%

14%

14%

1990
1989

14%
16%

13%
7%

3%
6%

15%
14%

13%
17%

13%
17%

16%
14%

1988
1987
1986
1985
1984
1983
1982
1981
1980

10%
9%
16%
20%
21%
14%
10%
13%
14%

12%
9%
8%
11%
10%
21%
14%
13%
16%

10%
4%
4%
9%
7%
10%
11%
9%
7%

15%
20%
22%
10%
21%
14%
14%
15%
16%

10%
8%
9%
16%
8%
13%
30%
14%
20%

11%
13%
12%
18%
19%
17%
10%
18%
14%

19%
14%
10%
3%
4%
3%
4%
3%
4%

Sources: Goldman Sachs Investment Research, Movie Industry Update 1992; MPAA, 1991 U.S. Economic
Review; and industry sources.
Several companies have undergone various transformations since 1980. The chart shows the company's current name.
Includes re-releases of films that were first released in earlier years.
c
Includes films distributed by Columbia and Tri-Star. Tri-Star began operations in 1984.
d
Buena Vista distributes films by The Walt Disney Company, and includes films produced by the Disney, Touchstone, and
Hollywood Pictures studios.
e
Excludes re-releases of films first issued in prior years.
f
Excludes independent films.
a

Exhibit 1 (continued)

Orion

y's current name.

ey, Touchstone, and

Total
Majors

Aggregate Box Office Data

9%

94%

Number of Films Released

in the U.S. by Major and

6%
4%

93%
95%

Independent Distributorse
Major
Independent

5.5
10%
7%
5%
5%
4%
3%
1%
2%

637%
87%
88%
92%
95%
96%
96%
86%
93%

Releases
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980

150
158
157
153
122
133
138
152
166
150
145
134

U.S. and
Canada

Releases
274
221
292
319
365
286
251
256
230
211
NA
NA

Gross
Box Office

U.S. Rentals

(millions)

(millions)f

$4,803
5,022
5,033
4,458
4,253
3,778
3,749
4,031
3,766
3,453
2,967
2,749

$2,160
2,260
2,165
1,920
1,830
1,650
1,635
1,800
1,700
1,555
1,335
1,235

gate Box Office Data

U.S. Average
Theater
Ticket Price
$4.89
4.75
4.45
4.11
3.91
3.71
3.55
3.36
3.15
2.94
2.78
2.69

Exhibit 2
Revenue and Cost Estimates for "Typical" Film Distributed by a Major Studio a,b
(in millions of 1991 $)
Percent of
U.S.
Theatrical
Rental
Revenue Collected by Distributor
U.S. theater rentals
Non-U.S. theater rentals
Worldwide home video
Worldwide pay TV
Worldwide TVc
Total

100%
90%
150%
55%

22%
19%
32%
12%

$46.5

70%
465%

15%
100%

$12.5

50%
40%
15%
20%
125%

11%
9%
3%
4%
27%

$15.5

120%
35%
?
?
155%

26%
8%
?
?
34%

7.0

Distribution Fees
Worldwide theater
Worldwide home video
Worldwide pay TV
Worldwide TV
Total

$5.0
4.0
1.5
2.0

Distribution Expenses
Worldwide theater
Worldwide home video
Worldwide pay TV
Worldwide TV
Total

$12.0
3.5
?
?

Negative Costd
Story rights/script development
Actors/director
Production management
Production crew
Set design/construction
Transportation/locations
Wardrobe/makeup/hair
Extras/props
Lighting
Special effects
Other principal photography
Film editing
Music
Other postproduction
All other
Total negative cost
Pretax net profits

$10.0
9.0
15.0
5.5

$0.5
6.0
1.0
1.0
2.0
1.5
0.5
0.5
0.3
0.3
1.0
0.7
0.4
0.8
1.5
$18.0

$0.5

The figures represent estimates of a typical film, not the average film

Fee structure assumes film is independently financed.

In this chart, worldwide TV includes U.S. network, U.S. syndicated, and non-U.S. television.

The negative cost breakdown is shown for illustrative purposes only, and provides

Percent of
Total
Revenue

one possible breakdown of a film's cost.

e

Excludes interest charges. Assumes no gross participations.

Exhibit 6
Estimated Revenues and Costs for Films Released in 1989 by Six Major Studios and Hypothetical Sequels a
(in millions of 1991 $)

Studio/Movie Title

U.S.
Theater
Rentals

First Film
Other
Revenue

Distribution
Fees

Distribution
Expense

Negative
Cost

U.S.
Theater
Rentals

Hypothetical Sequel
Other
Revenue

Distribution
Fees

Distribution
Expense

Negative
Cost

MCA UNIVERSAL
1 PARENTHOOD
2 BORN ON THE FOURTH OF JULY
3 FIELD OF DREAMS
4 UNCLE BUCK
5 SEA OF LOVE
6 ALWAYS
7 K-9
8 THE 'BURBS
9 THE DREAM TEAM
10 DO THE RIGHT THING
11 DAD
12 SHOCKER
13 THE WIZARD
14 RENEGADES

$55.0
40.5
33.6
33.3
31.5
22.0
20.5
19.0
15.8
14.6
11.9
8.3
5.5
4.6

$146.1
110.9
94.1
93.6
89.0
66.1
62.3
58.9
51.1
48.2
41.5
32.7
26.1
23.9

$53.6
40.3
34.0
33.8
32.1
23.4
22.0
20.7
17.8
16.7
14.2
10.9
8.4
7.6

$43.1
33.1
31.6
30.2
32.0
28.0
20.9
22.9
19.0
14.6
20.0
14.6
9.5
13.1

$22.0
19.8
17.6
16.5
27.5
34.1
13.2
18.7
16.5
7.7
20.9
6.6
8.8
13.2

$38.5
28.4
23.5
23.3
22.0
15.4
14.3
13.3
11.1
10.5
8.3
5.8
3.9
3.2

$106.1
81.4
69.7
69.3
66.1
50.4
47.5
45.0
39.6
37.6
32.9
26.7
22.1
20.6

$38.5
29.2
24.8
24.7
23.5
17.4
16.4
15.5
13.5
12.7
11.0
8.6
6.9
6.3

$32.6
26.0
22.9
22.8
22.0
17.7
17.0
16.4
14.9
14.4
13.1
11.5
10.3
9.9

$26.4
23.7
21.1
19.8
33.0
40.9
15.8
22.4
19.8
9.2
25.0
7.9
10.5
15.8

PARAMOUNT PICTURES
15 HARLEM NIGHTS
16 PET SEMATARY
17 BLACK RAIN
18 MAJOR LEAGUE
19 COUSINS
20 WE'RE NO ANGELS
21 LET IT RIDE
22 SHIRLEY VALENTINE
23 FAT MAN AND LITTLE BOY
24 THE EXPERTS

$36.3
29.1
27.5
23.7
11.0
5.5
2.3
2.3
1.5
0.0

$100.8
83.2
79.4
70.1
39.4
26.1
18.3
18.3
16.5
12.7

$36.5
29.9
28.5
25.0
13.4
8.4
5.5
5.5
4.8
3.4

$41.7
27.1
31.6
26.1
14.4
19.9
10.8
5.6
9.2
0.8

$33.0
12.1
33.0
13.2
14.3
24.2
19.8
8.8
20.9
13.2

$25.4
20.3
19.3
16.6
7.7
3.9
1.6
1.6
1.1
0.0

$74.4
62.0
59.4
52.9
31.4
22.1
16.7
16.7
15.3
12.7

$26.6
21.9
20.9
18.5
10.4
6.9
4.8
4.8
4.3
3.4

$24.1
20.9
20.2
18.4
12.8
10.3
8.8
8.8
8.5
7.8

$39.5
14.5
39.5
15.8
17.1
29.0
23.7
10.5
25.0
15.8

SONY PICTURES ENTERTAINMENT

25 LOOK WHO'S TALKING (TS)
26 WHEN HARRY MET SALLY (C)
27 STEEL MAGNOLIAS (TS)
28 SEE NO EVIL; HEAR NO EVIL (TS)
29 THE BEAR (TS)
30 GLORY (TS)
31 LOOK UP (TS)
32 CASUALTIES OF WAR (C)
33 CHANCES ARE (TS)
34 (FAMILY BUSINESS (TS)
35 SHE'S OUT OF CONTROL (C)

$75.8
46.1
44.0
22.5
14.9
14.3
8.8
8.1
7.2
6.6
5.7

$196.5
124.5
119.4
67.1
48.7
47.4
34.1
32.5
30.1
28.7
26.6

$72.6
45.4
43.5
23.8
16.9
16.4
11.4
10.8
9.9
9.4
8.6

$51.7
38.1
35.9
23.1
22.5
14.5
16.1
17.1
15.4
16.5
12.2

$11.0
20.9
24.2
19.8
23.1
23.1
18.7
27.5
19.8
19.8
16.5

$53.1
32.3
30.8
15.7
10.4
10.0
6.2
5.7
5.0
4.6
4.0

$141.4
91.0
87.4
50.8
37.9
37.0
27.7
26.6
24.9
23.9
22.4

$51.8
32.8
31.5
17.7
12.8
12.5
9.0
8.6
7.9
7.6
7.0

$41.9
28.5
27.6
17.9
14.5
14.2
11.8
11.5
11.0
10.8
10.4

$13.2
25.0
29.0
23.7
27.7
27.7
22.4
33.0
23.7
23.7
19.8

Studio/Movie Title
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58

WHO'S HARRY CRUMB? (TS)

ADVENTURES OF BARON MUNCHAUSEN (C)
TRUE BELIEVER (C)
TROOP BEVERLY HILLS (C)
TAP (TS)
DEEPSTAR SIX (TS)
JOHNNY HANDSOME (TS)
MUSIC BOX (TS)
IMMEDIATE FAMILY (C)
LISTEN TO ME (C)
PHYSICAL EVIDENCE (C)
OLD GRINGO (C)
LOVERBOY (TS)
SING (TS)
WINTER PEOPLE (C)
WELCOME HOME (C)
ADVENTURES OF MILO AND OTIS (C)
THE BIG PICTURE (C)
SLAVES OF NEW YORK (TS)
EAT A BOWL OF TEA (C)
TO KILL A PRIEST (C)
ME AND HIM (C)
BLOODHOUNDS OF BROADWAY (C)

TWENTIETH CENTURY FOX

59 THE WAR OF THE ROSES
60 THE ABYSS
61 WEEKEND AT BERNIE'S
62 SAY ANYTHING
63 SKIN DEEP
64 THE FABULOUS BAKER BOYS
65 MILLENNIUM
66 WORTH WINNING
67 GLEAMING THE CUBE
68 HOW I GOT INTO COLLEGE
69 WHEN THE WHALES CAME
WARNER BROTHERS
70 BATMAN
71 DRIVING MISS DAISY
72 TANGO & CASH
73 LEAN ON ME
74 HER ALIBI

U.S.
Theater
Rentals

First Film
Other
Revenue

Distribution
Fees

Distribution
Expense

Negative
Cost

U.S.
Theater
Rentals

Hypothetical Sequel
Other
Revenue

Distribution
Fees

Distribution
Expense

Negative
Cost

5.0
4.3
4.1
4.0
3.9
3.4
2.9
2.8
2.3
2.0
1.7
1.5
1.5
1.0
0.8
0.4
0.1
0.1
0.1
0.1
0.0
0.0
0.0

24.7
23.1
22.6
22.3
22.1
21.0
19.7
19.4
18.3
17.5
16.7
16.5
16.5
15.1
14.6
13.8
13.0
13.0
13.0
13.0
12.7
12.7
12.7

7.9
7.3
7.1
7.0
6.9
6.5
6.0
5.9
5.5
5.2
4.9
4.8
4.8
4.3
4.1
3.8
3.5
3.5
3.5
3.5
3.4
3.4
3.4

13.2
7.8
12.8
11.5
11.4
10.0
9.7
8.4
12.1
12.0
9.2
6.6
10.5
9.0
6.3
4.9
6.0
0.8
1.5
0.8
0.8
0.8
0.8

15.4
57.1
15.4
19.8
16.5
8.8
22.0
19.8
15.4
16.5
18.7
37.3
11.0
15.4
17.6
15.4
8.8
8.8
6.6
2.2
11.0
8.8
3.3

3.5
3.0
2.9
2.8
2.7
2.4
2.0
1.9
1.6
1.4
1.2
1.1
1.1
0.7
0.5
0.3
0.1
0.1
0.1
0.1
0.0
0.0
0.0

21.1
20.0
19.6
19.5
19.3
18.5
17.6
17.4
16.7
16.1
15.5
15.3
15.3
14.4
14.0
13.5
12.9
12.9
12.9
12.9
12.7
12.7
12.7

6.5
6.1
6.0
5.9
5.8
5.5
5.2
5.1
4.8
4.6
4.4
4.3
4.3
4.0
3.8
3.6
3.4
3.4
3.4
3.4
3.4
3.4
3.4

10.0
9.7
9.6
9.6
9.5
9.3
9.1
9.0
8.8
8.7
8.5
8.5
8.5
8.2
8.1
8.0
7.8
7.8
7.8
7.8
7.8
7.8
7.8

18.5
68.5
18.5
23.7
19.8
10.5
26.4
23.7
18.5
19.8
22.4
44.8
13.2
18.5
21.1
18.5
10.5
10.5
7.9
2.6
13.2
10.5
4.0

$45.6
31.6
15.4
9.8
9.4
8.8
2.6
1.7
1.2
0.6
0.0

$123.2
89.3
50.1
36.5
35.4
34.1
19.1
16.7
15.7
14.1
12.7

$44.9
32.2
17.4
12.3
11.9
11.4
5.8
4.9
4.5
3.9
3.4

$39.1
37.2
16.3
15.2
15.0
16.1
7.1
10.5
6.5
8.8
1.4

$27.5
49.4
11.0
14.3
11.0
14.3
16.5
14.3
12.1
13.2
4.4

$31.9
22.1
10.8
6.9
6.5
6.2
1.8
1.2
0.8
0.4
0.0

$90.0
66.3
38.9
29.4
28.6
27.7
17.2
15.5
14.8
13.7
12.7

$32.5
23.5
13.2
9.6
9.3
9.0
5.0
4.4
4.1
3.7
3.4

$28.3
22.0
14.7
12.2
12.0
11.8
9.0
8.5
8.3
8.0
7.8

$33.0
59.3
13.2
17.1
13.2
17.1
19.8
17.1
14.5
15.8
5.3

$165.6
55.6
33.1
15.8
10.1

$414.2
147.4
93.0
51.1
37.3

$154.5
54.1
33.6
17.8
12.6

$102.0
43.3
40.4
17.7
16.6

$54.9
8.8
60.4
16.5
22.0

$115.9
38.9
23.2
11.1
7.1

$293.7
107.0
68.9
39.6
29.9

$109.2
38.9
24.5
13.5
9.8

$82.3
32.8
22.7
14.9
12.4

$65.9
10.5
72.5
19.8
26.4

U.S.
Theater
Rentals

Studio/Movie Title
75
76
77
78
79
80
81
92
83
84
85
86
87
88

NEXT OF KIN
PINK CADILLAC
YOUNG EINSTEIN
DEAD-BANG
DEAD CALM
SECOND SIGHT
SEE YOU IN THE MORNING
IN COUNTRY
COOKIE
HOW TO GET AHEAD IN ADVERTISING
POWWOW HIGHWAY
BERT RIGBY, YOU'RE A FOOL
PENN & TELLER GET KILLED
CHECKING OUT

THE WALT DISNEY COMPANYb

89 HONEY, I SHRUNK THE KIDS (W)
90 DEAD POETS SOCIETY (T)
91 THE LITTLE MERMAID (W)
92 TURNER AND HOOTCH (T)
93 THREE FUGITIVES (T)
94 AN INNOCENT MAN (T)
95 BLAZE (T)
96 NEW YORK STORIES (T)
97 GROSS ANATOMY (T)
98 DISORGANIZED CRIME (T)
99 CHEETAH (W)
AVERAGES

First Film
Other
Revenue

Distribution
Fees

Distribution
Expense

Negative
Cost

U.S.
Theater
Rentals

Hypothetical Sequel
Other
Revenue

Distribution
Expense

Negative
Cost

7.7
7.5
6.6
3.9
3.6
2.8
2.4
1.8
1.1
0.2
0.1
0.0
0.0
0.0

31.4
30.9
28.7
22.1
21.5
19.4
18.6
17.0
15.4
13.3
13.0
12.7
12.7
12.7

10.4
10.2
9.4
6.9
6.7
5.9
5.6
5.0
4.4
3.6
3.5
3.4
3.4
3.4

14.3
16.8
11.3
11.4
10.1
9.7
9.6
9.3
5.1
0.9
0.8
1.4
0.8
0.8

13.2
20.9
4.4
15.4
9.9
11.0
18.7
19.8
14.3
5.5
4.4
14.3
8.8
5.5

5.4
5.2
4.6
2.7
2.5
1.9
1.7
1.2
0.8
0.2
0.1
0.0
0.0
0.0

25.8
25.4
23.9
19.3
18.9
17.4
16.8
15.7
14.6
13.3
12.9
12.7
12.7
12.7

8.3
8.1
7.6
5.8
5.7
5.1
4.9
4.5
4.1
3.5
3.4
3.4
3.4
3.4

11.3
11.2
10.8
9.5
9.4
9.0
8.9
8.6
8.3
7.9
7.8
7.8
7.8
7.8

15.8
25.0
5.3
18.5
11.9
13.2
22.4
23.7
17.1
6.6
5.3
17.1
10.5
6.6

$80.0
53.3
44.2
38.8
20.4
11.6
9.9
5.2
5.1
4.4
4.4

$206.7
141.8
120.0
106.9
62.1
40.7
36.7
25.3
25.0
23.4
23.4

$76.4
52.0
43.7
38.8
21.9
13.9
12.4
8.1
8.0
7.4
7.4

$58.6
46.2
38.6
32.5
22.2
17.2
17.8
10.7
13.2
11.7
10.4

$24.2
22.0
22.0
19.8
18.7
18.7
19.8
20.9
13.2
12.1
7.7

$56.0
37.3
31.0
27.2
14.3
8.1
6.9
3.6
3.5
3.1
3.1

$148.5
103.1
87.8
78.6
47.3
32.3
29.5
21.5
21.3
20.2
20.2

$54.5
37.4
31.6
28.2
16.4
10.7
9.7
6.7
6.6
6.2
6.2

$43.8
31.8
27.7
25.3
17.0
13.0
12.3
10.1
10.1
9.8
9.8

$29.0
26.4
26.4
23.7
22.4
22.4
23.7
25.0
15.8
14.5
9.2

$14.9

$48.8

$17.0

$17.4

$17.7

$10.4

$38.0

Metro-Goldwyn-Mayer and Orion are excluded. Fees assume films were financed by an independent producer. Costs exclude gross participations and interest charges.
C=Columbia Pictures, TS=Tri-Star W=Walt Disney; T=Touchstone

Distribution
Fees

$12.9

$14.5

$21.2

Exhibit 7
Estimated Expected Present Values and One-Year Holding Period Returns Based on Data in Exhibit 6
(in millions of dollars)

Studio/Movie Title
MCA UNIVERSAL
1 PARENTHOOD
2 BORN ON THE FOURTH OF JULY
3 FIELD OF DREAMS
4 UNCLE BUCK
5 SEA OF LOVE
6 ALWAYS
7 K-9
8 THE 'BURBS
9 THE DREAM TEAM
10 DO THE RIGHT THING
11 DAD
12 SHOCKER
13 THE WIZARD
14 RENEGADES
PARAMOUNT PICTURES
15 HARLEM NIGHTS
16 PET SEMATARY
17 BLACK RAIN
18 MAJOR LEAGUE
19 COUSINS
20 WE'RE NO ANGELS
21 LET IT RIDE
22 SHIRLEY VALENTINE
23 FAT MAN AND LITTLE BOY
24 THE EXPERTS
SONY PICTURES ENTERTAINMENT

PV of
Net Inflows
at Year 1a

First Film
PV of
Negative
Cost at
Year 0

One-Year
Returnb

Hypothetical Sequel
PV of
PV of
Negative
Net Inflows
Cost at
One-Year
a
at Year 4
Year 3
Returnb

$100.1
74.5
59.1
60.0
53.5
34.3
37.8
32.2
28.4
30.0
17.7
14.3
12.7
6.9

$21.5
19.4
17.2
16.1
26.9
33.3
12.9
18.3
16.1
7.5
20.4
6.5
8.6
12.9

$3.7
2.85
2.44
2.72
0.99
0.03
1.93
0.76
0.76
2.98
(0.13)
1.22
0.48
(0.46)

$76.8
56.8
47.3
47.0
44.4
31.4
29.3
27.3
22.9
21.2
17.4
12.4
8.7
7.4

$28.2
25.4
22.6
21.2
35.3
43.7
16.9
24.0
21.2
9.9
26.8
8.5
11.3
16.9

$1.7
1.24
1.10
1.22
0.26
(0.28)
0.73
0.14
0.08
1.15
(0.35)
0.47
(0.23)
(0.56)

$55.4
52.6
44.1
40.3
21.2
2.1
3.6
8.9
3.3
8.2

$32.3
11.8
32.3
12.9
14.0
23.7
19.4
8.6
20.4
12.9

$0.7
3.45
0.37
2.12
0.52
(0.91)
(0.82)
0.04
(0.84)
(0.36)

$51.1
41.1
39.0
33.7
16.2
8.7
4.3
4.3
3.2
1.1

$42.3
15.5
42.3
16.9
18.3
31.0
25.4
11.3
26.8
16.9

$0.2
1.65
(0.08)
0.99
(0.11)
(0.72)
(0.83)
(0.62)
(0.88)
(0.94)

Studio/Movie Title
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55

LOOK WHO'S TALKING (TS)

WHEN HARRY MET SALLY (C)
STEEL MAGNOLIAS (TS)
SEE NO EVIL; HEAR NO EVIL (TS)
THE BEAR (TS)
GLORY (TS)
LOOK UP (TS)
CASUALTIES OF WAR (C)
CHANCES ARE (TS)
(FAMILY BUSINESS (TS)
SHE'S OUT OF CONTROL (C)
WHO'S HARRY CRUMB? (TS)
ADVENTURES OF BARON MUNCHAUSEN (C)
TRUE BELIEVER (C)
TROOP BEVERLY HILLS (C)
TAP (TS)
DEEPSTAR SIX (TS)
JOHNNY HANDSOME (TS)
MUSIC BOX (TS)
IMMEDIATE FAMILY (C)
LISTEN TO ME (C)
PHYSICAL EVIDENCE (C)
OLD GRINGO (C)
LOVERBOY (TS)
SING (TS)
WINTER PEOPLE (C)
WELCOME HOME (C)
ADVENTURES OF MILO AND OTIS (C)
THE BIG PICTURE (C)
SLAVES OF NEW YORK (TS)
EAT A BOWL OF TEA (C)

PV of
Net Inflows
at Year 1a
$142.3
83.3
80.4
40.5
22.4
29.3
14.1
11.4
10.8
8.3
10.5
7.6
11.6
5.8
6.9
6.7
7.1
6.0
7.1
2.2
1.6
3.6
6.0
2.0
2.2
4.4
5.1
3.1
8.4
7.8
8.4

First Film
PV of
Negative
Cost at
Year 0
$10.8
20.4
23.7
19.4
22.6
22.6
18.3
26.9
19.4
19.4
16.1
15.1
55.9
15.1
19.4
16.1
8.6
21.5
19.4
15.1
16.1
18.3
36.6
10.8
15.1
17.2
15.1
8.6
8.6
6.5
2.2

One-Year
Returnb
$12.2
3.08
2.40
1.09
(0.01)
0.30
(0.23)
(0.57)
(0.44)
(0.57)
(0.35)
(0.49)
(0.79)
(0.61)
(0.64)
(0.58)
(0.17)
(0.72)
(0.63)
(0.85)
(0.90)
(0.80)
(0.84)
(0.81)
(0.85)
(0.74)
(0.66)
(0.64)
(0.02)
0.20
2.92

Hypothetical Sequel
PV of
PV of
Negative
Net Inflows
Cost at
One-Year
at Year 4a
Year 3
Returnb
$105.5
64.6
61.7
32.0
21.5
20.8
13.2
12.3
10.9
10.2
9.0
7.9
7.0
6.7
6.5
6.4
5.8
5.0
4.9
4.3
3.8
3.4
3.2
3.2
2.4
2.1
1.7
1.2
1.2
1.2
1.2

$14.1
26.8
31.0
25.4
29.6
29.6
24.0
35.3
25.4
25.4
21.2
19.7
73.4
19.7
25.4
21.2
11.3
28.2
25.4
19.7
21.2
24.0
48.0
14.1
19.7
22.6
19.7
11.3
11.3
8.5
2.8

$6.5
1.41
0.99
0.26
(0.27)
(0.30)
(0.45)
(0.65)
(0.57)
(0.60)
(0.58)
(0.60)
(0.90)
(0.66)
(0.74)
(0.70)
(0.49)
(0.82)
(0.81)
(0.78)
(0.82)
(0.86)
(0.93)
(0.77)
(0.88)
(0.91)
(0.91)
(0.89)
(0.89)
(0.85)
(0.56)

Studio/Movie Title
56 TO KILL A PRIEST (C)
57 ME AND HIM (C)
58 BLOODHOUNDS OF BROADWAY (C)
TWENTIETH CENTURY FOX
59 THE WAR OF THE ROSES
60 THE ABYSS
61 WEEKEND AT BERNIE'S
62 SAY ANYTHING
63 SKIN DEEP
64 THE FABULOUS BAKER BOYS
65 MILLENNIUM
66 WORTH WINNING
67 GLEAMING THE CUBE
68 HOW I GOT INTO COLLEGE
69 WHEN THE WHALES CAME
WARNER BROTHERS
70 BATMAN
71 DRIVING MISS DAISY
72 TANGO & CASH
73 LEAN ON ME
74 HER ALIBI
75 NEXT OF KIN
76 PINK CADILLAC
77 YOUNG EINSTEIN
78 DEAD-BANG
79 DEAD CALM
80 SECOND SIGHT
81 SEE YOU IN THE MORNING
92 IN COUNTRY

PV of
Net Inflows
at Year 1a

First Film
PV of
Negative
Cost at
Year 0

One-Year
Returnb

Hypothetical Sequel
PV of
PV of
Negative
Net Inflows
Cost at
One-Year
at Year 4a
Year 3
Returnb

8.2
8.2
8.2

10.8
8.6
3.2

(0.24)
(0.05)
1.54

1.1
1.1
1.1

14.1
11.3
4.2

(0.92)
(0.90)
(0.74)

$80.8
48.4
30.2
17.5
16.6
14.1
8.2
2.2
5.3
1.3
7.5

$26.9
48.4
10.8
14.0
10.8
14.0
16.1
14.0
11.8
12.9
4.3

$2.0
0.00
1.81
0.25
0.54
0.01
(0.49)
(0.84)
(0.55)
(0.90)
0.75

$63.8
44.6
22.3
14.6
14.0
13.2
4.7
3.4
2.7
1.8
1.1

$35.3
63.5
14.1
18.3
14.1
18.3
21.2
18.3
15.5
16.9
5.6

$0.8
(0.30)
0.58
(0.21)
(0.01)
(0.28)
(0.78)
(0.82)
(0.82)
(0.89)
(0.81)

$311.5
101.2
48.9
29.8
16.8
13.2
10.1
13.6
6.7
7.6
5.8
5.1
3.8

$53.8
8.6
59.1
16.1
21.5
12.9
20.4
4.3
15.1
9.7
10.8
18.3
19.4

$4.8
10.76
(0.17)
0.85
(0.22)
0.02
(0.51)
2.17
(0.55)
(0.22)
(0.46)
(0.72)
(0.80)

$229.1
77.6
46.7
22.9
15.0
11.7
11.4
10.2
6.4
6.1
4.9
4.4
3.5

$70.5
11.3
77.6
21.2
28.2
16.9
26.8
5.6
19.7
12.7
14.1
24.0
25.4

$2.3
5.87
(0.40)
0.08
(0.47)
(0.31)
(0.58)
0.80
(0.68)
(0.52)
(0.65)
(0.82)
(0.86)

Studio/Movie Title
83
84
85
86
87
88

COOKIE
HOW TO GET AHEAD IN ADVERTISING
POWWOW HIGHWAY
BERT RIGBY, YOU'RE A FOOL
PENN & TELLER GET KILLED
CHECKING OUT

PV of
Net Inflows
at Year 1a

First Film
PV of
Negative
Cost at
Year 0

One-Year
Returnb

Hypothetical Sequel
PV of
PV of
Negative
Net Inflows
Cost at
One-Year
at Year 4a
Year 3
Returnb

6.4
8.6
8.4
7.5
8.2
8.2

14.0
5.4
4.3
14.0
8.6
5.4

(0.54)
0.61
0.96
(0.46)
(0.05)
0.53

2.6
1.4
1.2
1.1
1.1
1.1

18.3
7.1
5.6
18.3
11.3
7.1

(0.86)
(0.80)
(0.78)
(0.94)
(0.90)
(0.85)

$145.5
92.5
78.1
71.2
36.3
19.7
15.0
10.7
7.8
7.8
9.2

$23.7
21.5
21.5
19.4
18.3
18.3
19.4
20.4
12.9
11.8
7.5

$5.2
3.30
2.63
2.68
0.98
0.08
(0.22)
(0.47)
(0.39)
(0.34)
0.22

$111.2
74.4
62.0
54.6
29.1
17.0
14.7
8.2
8.1
7.1
7.1

$31.0
28.2
28.2
25.4
24.0
24.0
25.4
26.8
16.9
15.5
9.9

$2.6
1.64
1.20
1.15
0.21
(0.29)
(0.42)
(0.69)
(0.52)
(0.54)
(0.28)

Average:
Median:
Standard deviation:

$27.7
$10.5
$41.4

$17.3
$16.1
$10.1

$0.7
($0.02)
$2.1

$21.6
$8.7
$31.5

$22.6
$21.2
$13.3

($0.08)
($0.54)
$1.2

Interquartile range:

$6.9 to
$34.30

(.55) to
0.99

$3.4 to
$29.10

THE WALT DISNEY COMPANY

89 HONEY, I SHRUNK THE KIDS (W)
90 DEAD POETS SOCIETY (T)
91 THE LITTLE MERMAID (W)
92 TURNER AND HOOTCH (T)
93 THREE FUGITIVES (T)
94 AN INNOCENT MAN (T)
95 BLAZE (T)
96 NEW YORK STORIES (T)
97 GROSS ANATOMY (T)
98 DISORGANIZED CRIME (T)
99 CHEETAH (W)

$10.8 to
$20.40

Net inflows consist of all revenues minus associated distribution fees and expenses.
One-year return is defined as: [PV of net inflows minus PV of negative cost] divided by [PV of negative cost].
c
C=Columbia Pictures; TS=Tri-Star; W=Walt Disney; T=Touchstone.
a

$14.1 to
$26.80

(.82) to
0.21

$13.71

$14.39

Exhibit 9
Summary Statistics for Samples of Films Released in 1987 and 1988a
(dollar figures in millions)
Table A

1987 Data

Studio/Movie Title

Average (in 1991 $):

U.S.
Theater
Rentals

$21.3

First Film
Other
Revenue

$64.4

Distribution
Fees

$22.8

PV of
Net Inflows
at Year 1a

Distribution
Expense

$21.5

First Film
PV of
Negative
Cost at
Year 0

Negative
Cost

$26.3

One-Year
Returnb

U.S.
Theater
Rentals

$14.9

Hypothetical Sequel
Other
Revenue

Distribution
Fees

$48.9

$17.0

39.40
30.9
38.4

25.80
22.3
9.4

0.71
0.04
2.05

30.40
24
29.4

33.80
29.3
12.3

0.01
(0.39)
1.20

Interquartile range:

$11.10
to
$52.10

$18.80
to
$29.30

0.60
to
1.22

$8.80
to
$40.20

$24.60
to
$38.50

(0.75)
to
0.31

$31.6

1988 Data

Studio/Movie Title

Average (in 1991 $):

U.S.
Theater
Rentals

$19.7

First Film
Other
Revenue

$60.5

Distribution
Fees

$21.3

PV of
Net Inflows
at Year 1a

Distribution
Expense

$20.5

First Film
PV of
Negative
Cost at
Year 0

Negative
Cost

$24.4

One-Year
Returnb

U.S.
Theater
Rentals

$13.8

Hypothetical Sequel
Other
Revenue

$46.1

Distribution
Fees

$15.9

Hypothetical Sequel
PV of
PV of
Negative
Net Inflows
Cost at
One-Year
at Year 4a
Year 3
Returnb

Average:
Median
Standard deviation:

$36.4
22.4
38.2

$23.8
20.3
11.4

0.48
0.01
1.37

$28.2
17.5
29.3

$31.3
26.6
14.9

(0.13)
0.40
0.80

Interquartile range:

9.3
to
42.1

16.9
to
24.8

(0.48)
to
0.93

7.5
to
32.5

22.2
to
32.5

(0.69)
to
0.14

$17.4

Negative
Cost

Hypothetical Sequel
PV of
PV of
Negative
Net Inflows
Cost at
One-Year
at Year 4a
Year 3
Returnb

Average:
Median
Standard deviation:

Table B

Distribution
Expense

One-year return is defined as: [PV of net inflows minus PV of negative cost] divided by [PV of negative cost].

Distribution
Expense

$16.7

Negative
Cost

$29.2