Arundel Partners/Sequel

Harvard Business School Case #292-140

Case Software #XLS078

Copyright 2010 President and Fellows of Harvard College. No part of this product may be reproduced, stored in a retr
or by any meanselectronic, mechanical, photocopying, recording or otherwisewithout the permission of Harvard Busin

reproduced, stored in a retrieval system or transmitted in any form

permission of Harvard Business School.

Exhibit 1

Selected Motion Picture Industry Data, 1980-1991

North American Theatrical Film Rental Shares of Major Film Distributors

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

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

20th Century Metro-Goldwyn

Fox
Mayer
Paramount
12%
13
7
12
9
8
11
10
21
14
13
16

Number of Films Released in

the U.S. by Major and
Independent Distributorse

1991
1990
1989
1988

Major
Releases
150
158
157
153

Independent
Releases
274
221
292
319

2%
3
6
10
4
4
9
7
10
11
9
7

a,b

MCA
Universal

12%
15
14
15
20
22
10
21
14
14
15
16

11%
13
17
10
8
9
16
8
13
30
14
20

Aggregate Box Office Data

U.S. and
Canada Gross
Box Office
(millions)
$4,803
5,022
5,033
4,458

U.S.
U.S. Average
Rentalsf
Theater
(millions)
Ticket Price
$2,160
$4.89
2,260
4.75
2,165
4.45
1,920
4.11

Warner
Brothers

Buena
Vistad

Orion

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

14%
16
14
19
14
10
3
4
3
4
3
4

9%
6
4
7
10
7
5
5
4
3
1
2

Total
Majors
93%
93
95
94
87
88
92
95
96
96
86
93

1987
1986
1985
1984
1983
1982
1981
1980

122
133
138
152
166
150
145
134

365
286
251
256
230
211
NA
NA

4,253
3,778
3,749
4,031
3,766
3,453
2,967
2,749

1,830
1,650
1,635
1,800
1,700
1,555
1,335
1,235

3.91
3.71
3.55
3.36
3.15
2.94
2.78
2.69

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 companys
current name.
a

Includes re-releases of films that were first released in earlier years.

Includes films distributed by Columbia and Tri-Star. Tri-Star began operations in 1984.

Buena Vista distributes films by The Walt Disney Company, and includes films produced by the Disney,
Touchstone, and Hollywood Pictures studios.
d

e
f

Excludes re-releases of films first issued in prior years.

Excludes independent films.

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

$10.0
9.0
15.0
5.5
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

$46.5

100%
90
150
55
70
465%

22%
19
32
12
15
100%

$12.5

50%
40
15
20
125%

11%
9
3
4
27%

$15.5

120%
35

155%

26%
8

33%

$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

Total negative cost

Pretax net profitse

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

Fee structure assumes film is independently financed.

$18.0
$0.5

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 one possible breakdown of a
films cost.
d

Excludes interest charges. Assumes no gross participations.

Exhibit 3

Typical Beginning Dates for Film Production and Release

Year
Film Production
Release Schedule
U.S. Movie Theaters
Non-U.S. Movie Theaters
U.S. Home Video
Non-U.S. Home Video
U.S. Pay Per View
U.S. Pay TV
Non-U.S. Pay TV
U.S. Network TV
Non-U.S. TV
U.S. Syndicated TV
Non-U.S. TV, 2nd Run

0
X

0.5

1.0

1.5

2.0

2.5

3.0
S1

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

X
X
X
X
X
X
X
X
X

1) S= a possible sequels most likely beginning date of production. The rest of the pattern for a sequel was expected to be similar to that of the first film.

X
X

Exhibit 6

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

Studio/Movie Title

U.S.
Theater
Rentals

Hypothetical Sequel

Distributi
Other Distributi
on
Negative
Revenue on Fees Expense
Cost

U.S.
Theater
Rentals

Distributi
Other Distributi
on
Negative
Revenue on Fees Expense
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
10.2
8.3
5.8
3.9
3.2

$106.1
81.4
69.7
69.3
66.1
50.1
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 WERE 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 ENTERTAINMENTb

25 LOOK WHOS 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 SHES OUT OF CONTROL (C)
36 WHOS HARRY CRUMB? (TS)
37 ADVENTURES OF BARON
MUNCHAUSEN (C)
38 TRUE BELIEVER (C)
39 TROOP BEVERLY HILLS (C)
40 TAP (TS)
41 DEEPSTAR SIX (TS)
42 JOHNNY HANDSOME (TS)
43 MUSIC BOX (TS)
44 IMMEDIATE FAMILY (C)
45 LISTEN TO ME (C)
46 PHYSICAL EVIDENCE (C)
47 OLD GRINGO (C)
48 LOVERBOY (TS)
49 SING (TS)
50 WINTER PEOPLE (C)
51 WELCOME HOME (C)
52 ADVENTURES OF MILO AND OTIS (C)
53 THE BIG PICTURE (C)
54 SLAVES OF NEW YORK (TS)
55 EAT A BOWL OF TEA (C)
56 TO KILL A PRIEST (C)
57 ME AND HIM (C)

$75.8
46.1
44.0
22.5
14.9
14.3
8.8
8.1
7.2
6.6
5.7
5.0

$196.5
124.5
119.4
67.1
48.7
47.4
34.1
32.5
30.1
28.7
26.6
24.7

$72.6
45.4
43.5
23.8
16.9
16.4
11.4
10.8
9.9
9.4
8.6
7.9

$51.7
38.1
35.9
23.1
22.5
14.5
16.1
17.1
15.4
16.5
12.2
13.2

$11.0
20.9
24.2
19.8
23.1
23.1
18.7
27.5
19.8
19.8
16.5
15.4

$53.1
32.3
30.8
15.7
10.4
10.0
6.2
5.7
5.0
4.6
4.0
3.5

$141.4
91.0
87.4
50.8
37.9
37.0
27.7
26.6
24.9
23.9
22.4
21.1

$51.8
32.8
31.5
17.7
12.8
12.5
9.0
8.6
7.9
7.6
7.0
6.5

$41.9
28.5
27.6
17.9
14.5
14.2
11.8
11.5
11.0
10.8
10.4
10.0

$13.2
25.0
29.0
23.7
27.7
27.7
22.4
33.0
23.7
23.7
19.8
18.5

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

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

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

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

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

3.0
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

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

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

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

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

58 BLOODHOUNDS OF BROADWAY (C)

TWENTIETH CENTURY FOX
59 THE WAR OF THE ROSES
60 THE ABYSS
61 WEEKEND AT BERNIES
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
82 IN COUNTRY
83 COOKIE
84 HOW TO GET AHEAD IN ADVERTISING
85 POWWOW HIGHWAY
86 BERT RIGBY, YOURE A FOOL
87 PENN & TELLER GET KILLED
88 CHECKING OUT

0.0

12.7

3.4

0.8

3.3

0.0

12.7

3.4

7.8

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
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

$414.2
147.4
93.0
51.1
37.3
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

$154.5
54.1
33.6
17.8
12.6
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

$102.0
43.3
40.4
17.7
16.6
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

$54.9
8.8
60.4
16.5
22.0
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

$115.9
38.9
23.2
11.1
7.1
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

$293.7
107.0
68.9
39.6
29.9
25.8
25.4
23.9
19.3
18.9
17.4
16.8
15.7
14.6
13.1
12.9
12.7
12.7
12.7

$109.2
38.9
24.5
13.5
9.8
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

$82.3
32.8
22.7
14.9
12.4
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

$65.9
10.5
72.5
19.8
26.4
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

THE WALT DISNEY COMPANYb

89 HONEY, I SHRUNK THE KIDS (W)
90 DEAD POETS SOCIETY (T)
91 THE LITTLE MERMAID (W)
92 TURNER & 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

$80.0
53.3
44.2
38.8
20.4
11.6
9.9
5.2
5.1
4.4
4.4
$14.9

$206.7
141.8
120.0
106.9
62.1
40.7
36.7
25.3
25.0
23.4
23.4
$48.8

$76.4
52.0
43.7
38.8
21.9
13.9
12.4
8.1
8.0
7.4
7.4
$16.9

$58.6
46.2
38.6
32.5
22.2
17.2
17.8
10.7
13.2
11.7
10.4
$17.4

$24.2
22.0
22.0
19.8
18.7
18.7
19.8
20.9
13.2
12.1
7.7
$17.6

$56.0
37.3
31.0
27.2
14.3
8.1
6.9
3.6
3.5
3.1
3.1
$10.4

$148.5
103.1
87.8
78.6
47.3
32.3
29.5
21.5
21.3
20.2
20.2
$38.0

$54.5
37.4
31.6
28.2
16.4
10.7
9.7
6.7
6.6
6.2
6.2
$12.9

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.

$43.8
31.8
27.7
25.3
17.0
13.0
12.3
10.1
10.1
9.8
9.8
$14.5

$29.0
26.4
26.4
23.7
22.4
22.4
23.7
25.0
15.8
14.5
9.2
$21.2

Exhibit 7
dollars)

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

First Film

Studio/Movie Title
MCA UNIVERSAL
1 PARENTHOOD
10 DO THE RIGHT THING
11 DAD
12 SHOCKER
13 THE WIZARD
14 RENEGADES
15 HARLEM NIGHTS
16 PET SEMATARY
17 BLACK RAIN
18 MAJOR LEAGUE
19 COUSINS
2 BORN ON THE FOURTH OF JULY
20 WERE NO ANGELS
21 LET IT RIDE
22 SHIRLEY VALENTINE
23 FAT MAN AND LITTLE BOY
24 THE EXPERTS
25 LOOK WHOS TALKING (TS)
26 WHEN HARRY MET SALLY (C)
27 STEEL MAGNOLIAS (TS)
28 SEE NO EVIL; HEAR NO EVIL (TS)
29 THE BEAR (TS)
3 FIELD OF DREAMS
30 GLORY (TS)
31 LOOK UP (TS)

PV of Net
Inflows at
Year 1a

$100.1
30.0
17.7
14.3
12.7
6.9
$55.4
52.6
44.1
40.3
21.2
74.5
2.1
3.6
8.9
3.3
8.2
$142.3
83.3
80.4
40.5
22.4
59.1
29.3
14.1

PV of
Negative
Cost at
Year 0

$21.5
7.5
20.4
6.5
8.6
12.9
$32.3
11.8
32.3
12.9
14.0
19.4
23.7
19.4
8.6
20.4
12.9
$10.8
20.4
23.7
19.4
22.6
17.2
22.6
18.3

Hypothetical Sequel

One-Year
Returnb

3.65
2.98
(0.13)
1.22
0.48
(0.46)
0.72
3.45
0.37
2.12
0.52
2.85
(0.91)
(0.82)
0.04
(0.84)
(0.36)
12.24
3.08
2.40
1.09
(0.01)
2.44
0.30
(0.23)

PV of Net
Inflows at
Year 4a

$76.8
21.2
17.4
12.4
8.7
7.4
$51.1
41.1
39.0
33.7
16.2
56.8
8.7
4.3
4.3
3.2
1.1
$105.5
64.6
61.7
32.0
21.5
47.3
20.8
13.2

PV of
Negative
Cost at
Year 3

$28.2
9.9
26.8
8.5
11.3
16.9
$42.3
15.5
42.3
16.9
18.3
25.4
31.0
25.4
11.3
26.8
16.9
$14.1
26.8
31.0
25.4
29.6
22.6
29.6
24.0

One-Year
Returnb

1.72
1.15
(0.35)
0.47
(0.23)
(0.56)
0.21
1.65
(0.08)
0.99
(0.11)
1.24
(0.72)
(0.83)
(0.62)
(0.88)
(0.94)
6.48
1.41
0.99
0.26
(0.27)
1.1
(0.30)
(0.45)

32 CASUALTIES OF WAR (C)

33 CHANCES ARE (TS)
34 FAMILY BUSINESS (TS)
35 SHES OUT OF CONTROL (C)
36 WHOS HARRY CRUMB? (TS)
37 ADVENTURES OF BARON MUNCHAUSEN (C)
38 TRUE BELIEVER (C)
39 TROOP BEVERLY HILLS (C)
4 UNCLE BUCK
40 TAP (TS)
41 DEEPSTAR SIX (TS)
42 JOHNNY HANDSOME (TS)
43 MUSIC BOX (TS)
44 IMMEDIATE FAMILY (C)
45 LISTEN TO ME (C)
46 PHYSICAL EVIDENCE (C)
47 OLD GRINGO (C)
48 LOVERBOY (TS)
49 SING (TS)
5 SEA OF LOVE
50 WINTER PEOPLE (C)
51 WELCOME HOME (C)
52 ADVENTURES OF MILO AND OTIS (C)
53 THE BIG PICTURE (C)
54 SLAVES OF NEW YORK (TS)
55 EAT A BOWL OF TEA (C)
56 TO KILL A PRIEST (C)
57 ME AND HIM (C)
58 BLOODHOUNDS OF BROADWAY (C)
59 THE WAR OF THE ROSES
6 ALWAYS
60 THE ABYSS
61 WEEKEND AT BERNIES
62 SAY ANYTHING
63 SKIN DEEP

11.4
10.8
8.3
10.5
7.6
11.6
5.8
6.9
60.0
6.7
7.1
6.0
7.1
2.2
1.6
3.6
6.0
2.0
2.2
53.5
4.4
5.1
3.1
8.4
7.8
8.4
8.2
$8.2
8.2
$80.8
34.3
48.4
30.2
17.5
16.6

26.9
19.4
19.4
16.1
15.1
55.9
15.1
19.4
16.1
16.1
8.6
21.5
19.4
15.1
16.1
18.3
36.6
10.8
15.1
26.9
17.2
15.1
8.6
8.6
6.5
2.2
10.8
$8.6
3.2
$26.9
33.3
48.4
10.8
14.0
10.8

(0.57)
(0.44)
(0.57)
(0.35)
(0.49)
(0.79)
(0.61)
(0.64)
2.72
(0.58)
(0.17)
(0.72)
(0.63)
(0.85)
(0.90)
(0.80)
(0.84)
(0.81)
(0.85)
0.99
(0.74)
(0.66)
(0.64)
(0.02)
0.20
2.92
(0.24)
(0.05)
1.54
2.01
0.03
0.00
1.81
0.25
0.54

12.3
10.9
10.2
9.0
7.9
7.0
6.7
6.5
47.0
6.4
5.8
5.0
4.9
4.3
3.8
3.4
3.2
3.2
2.4
44.4
2.1
1.7
1.2
1.2
1.2
1.2
1.1
$1.1
1.1
$63.8
31.4
44.6
22.3
14.6
14.0

35.3
25.4
25.4
21.2
19.7
73.4
19.7
25.4
21.2
21.2
11.3
28.2
25.4
19.7
21.2
24.0
48.0
14.1
19.7
35.3
22.6
19.7
11.3
11.3
8.5
2.8
14.1
$11.3
4.2
$35.3
43.7
63.5
14.1
18.3
14.1

(0.65)
(0.57)
(0.60)
(0.58)
(0.60)
(0.90)
(0.66)
(0.74)
1.22
(0.70)
(0.49)
(0.82)
(0.81)
(0.78)
(0.82)
(0.86)
(0.93)
(0.77)
(0.88)
0.26
(0.91)
(0.91)
(0.89)
(0.89)
(0.85)
(0.56)
(0.92)
(0.90)
(0.74)
0.81
(0.28)
(0.30)
0.58
(0.21)
(0.01)

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
7 K-9
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
8 THE BURBS
80 SECOND SIGHT
81 SEE YOU IN THE MORNING
82 IN COUNTRY
83 COOKIE
84 HOW TO GET AHEAD IN ADVERTISING
85 POWWOW HIGHWAY
86 BERT RIGBY, YOURE A FOOL
87 PENN & TELLER GET KILLED
88 CHECKING OUT
89 HONEY, I SHRUNK THE KIDS (W)
9 THE DREAM TEAM
90 DEAD POETS SOCIETY (T)
91 THE LITTLE MERMAID (W)
92 TURNER & HOOTCH (T)
93 THREE FUGITIVES (T)
94 AN INNOCENT MAN (T)
95 BLAZE (T)

14.1
8.2
2.2
5.3
1.3
7.5
37.8
$311.5
101.2
48.9
29.8
16.8
13.2
10.1
13.6
6.7
7.6
32.2
5.8
5.1
3.8
6.4
8.6
8.4
7.5
8.2
8.2
$145.5
28.4
92.5
78.1
71.2
36.3
19.7
15.0

14.0
16.1
14.0
11.8
12.9
4.3
12.9
$53.8
8.6
59.1
16.1
21.5
12.9
20.4
4.3
15.1
9.7
18.3
10.8
18.3
19.4
14.0
5.4
4.3
14.0
8.6
5.4
$23.7
16.1
21.5
21.5
19.4
18.3
18.3
19.4

0.01
(0.49)
(0.84)
(0.55)
(0.90)
0.75
1.93
4.80
10.76
(0.17)
0.85
(0.22)
0.02
(0.51)
2.17
(0.55)
(0.22)
0.76
(0.46)
(0.72)
(0.80)
(0.54)
0.61
0.96
(0.46)
(0.05)
0.53
5.15
0.76
3.30
2.63
2.68
0.98
0.08
(0.22)

13.2
4.7
3.4
2.7
1.8
1.1
29.3
$229.1
77.6
46.7
22.9
15.0
11.7
11.4
10.2
6.4
6.1
27.3
4.9
4.4
3.5
2.6
1.4
1.2
1.1
1.1
1.1
$111.2
22.9
74.4
62.0
54.6
29.1
17.0
14.7

18.3
21.2
18.3
15.5
16.9
5.6
16.9
$70.5
11.3
77.6
21.2
28.2
16.9
26.8
5.6
19.7
12.7
24.0
14.1
24.0
25.4
18.3
7.1
5.6
18.3
11.3
7.1
$31.0
21.2
28.2
28.2
25.4
24.0
24.0
25.4

(0.28)
(0.78)
(0.82)
(0.82)
(0.89)
(0.81)
0.73
2.25
5.87
(0.40)
0.08
(0.47)
(0.31)
(0.58)
0.80
(0.68)
(0.52)
0.14
(0.65)
(0.82)
(0.86)
(0.86)
(0.80)
(0.78)
(0.94)
(0.90)
(0.85)
2.58
0.08
1.64
1.20
1.15
0.21
(0.29)
(0.42)

96 NEW YORK STORIES (T)

97 GROSS ANATOMY (T)
98 DISORGANIZED CRIME (T)
99 CHEETAH (W)
PARAMOUNT PICTURES
SONY PICTURES ENTERTAINMENTc
THE WALT DISNEY COMPANY
TWENTIETH CENTURY FOX
WARNER BROTHERS

10.7
7.8
7.8
9.2

20.4
12.9
11.8
7.5

(0.47)
(0.39)
(0.34)
0.22

8.2
8.1
7.1
7.1

26.8
16.9
15.5
9.9

(0.69)
(0.52)
(0.54)
(0.28)

Average:
Median:
Standard deviation:

$27.7
$10.5
$41.4

$17.3
$16.1
$10.1

0.67
(0.02)
2.07

$21.6
$8.7
$31.5

$22.6
$21.2
$13.3

(0.08)
(0.54)
1.21

Interquartile range:

$6.9 to
$34.3

$10.8 to
$20.4

(0.55) to
0.99

$ 3.4 to
$29.1

$14.1 to
$26.8

(0.82) to
0.21

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=Columbia Pictures; TS=Tri-Star. W=Walt Disney; T=Touchstone.

Studio/Movi
e Title

PV of Net
Inflows at
Year 1a

MCA UNIVERSAL
1 PARENTHO
$100.1
10 DO THE R
30.0
11 DAD
17.7
12 SHOCKER
14.3
13 THE WIZA
12.7
14 RENEGAD
15 HARLEM
16 PET SEM
17 BLACK RA
18 MAJOR L
19 COUSINS
2 BORN ON T
20 WERE N
21 LET IT RI
22 SHIRLEY
23 FAT MAN
24 THE EXP
25 LOOK WHO
26 WHEN HAR
27 STEEL MA
28 SEE NO EV
29 THE BEAR
3 FIELD OF
30 GLORY (T
31 LOOK UP (
32 CASUALTI
33 CHANCES
34 FAMILY B
35 SHES OU
36 WHOS HA
37 ADVENTU
38 TRUE BEL
39 TROOP BE
4 UNCLE BU
40 TAP (TS)
41 DEEPSTAR
42 JOHNNY
43 MUSIC BO
44 IMMEDIATE
45 LISTEN TO
46 PHYSICAL
47 OLD GRIN
48 LOVERBO
49 SING (TS)
5 SEA OF LO

PV of
Negative
Cost at Year
0

One-Year
Returnb

PV of Net
Inflows at
Year 4a

PV of
Negative
Cost at Year
3

One-Year
Returnb

$21.5
7.5
20.4
6.5
8.6

3.65
2.98
(0.13)
1.22
0.48

$76.8
21.2
17.4
12.4
8.7

$28.2
9.9
26.8
8.5
11.3

1.72
1.15
(0.35)
0.47
(0.23)

6.9

12.9

(0.46)

7.4

16.9

(0.56)

$55.4
52.6
44.1
40.3
21.2
74.5
2.1
3.6
8.9
3.3
8.2
$142.3
83.3
80.4
40.5
22.4
59.1
29.3
14.1
11.4
10.8
8.3
10.5
7.6
11.6
5.8
6.9
60.0
6.7
7.1
6.0
7.1
2.2
1.6
3.6
6.0
2.0
2.2
53.5

$32.3
11.8
32.3
12.9
14.0
19.4
23.7
19.4
8.6
20.4
12.9
$10.8
20.4
23.7
19.4
22.6
17.2
22.6
18.3
26.9
19.4
19.4
16.1
15.1
55.9
15.1
19.4
16.1
16.1
8.6
21.5
19.4
15.1
16.1
18.3
36.6
10.8
15.1
26.9

0.72
3.45
0.37
2.12
0.52
2.85
(0.91)
(0.82)
0.04
(0.84)
(0.36)
12.24
3.08
2.40
1.09
(0.01)
2.44
0.30
(0.23)
(0.57)
(0.44)
(0.57)
(0.35)
(0.49)
(0.79)
(0.61)
(0.64)
2.72
(0.58)
(0.17)
(0.72)
(0.63)
(0.85)
(0.90)
(0.80)
(0.84)
(0.81)
(0.85)
0.99

$51.1
41.1
39.0
33.7
16.2
56.8
8.7
4.3
4.3
3.2
1.1
$105.5
64.6
61.7
32.0
21.5
47.3
20.8
13.2
12.3
10.9
10.2
9.0
7.9
7.0
6.7
6.5
47.0
6.4
5.8
5.0
4.9
4.3
3.8
3.4
3.2
3.2
2.4
44.4

$42.3
15.5
42.3
16.9
18.3
25.4
31.0
25.4
11.3
26.8
16.9
$14.1
26.8
31.0
25.4
29.6
22.6
29.6
24.0
35.3
25.4
25.4
21.2
19.7
73.4
19.7
25.4
21.2
21.2
11.3
28.2
25.4
19.7
21.2
24.0
48.0
14.1
19.7
35.3

0.21
1.65
(0.08)
0.99
(0.11)
1.24
(0.72)
(0.83)
(0.62)
(0.88)
(0.94)
6.48
1.41
0.99
0.26
(0.27)
1.1
(0.30)
(0.45)
(0.65)
(0.57)
(0.60)
(0.58)
(0.60)
(0.90)
(0.66)
(0.74)
1.22
(0.70)
(0.49)
(0.82)
(0.81)
(0.78)
(0.82)
(0.86)
(0.93)
(0.77)
(0.88)
0.26

50 WINTER P
51 WELCOME
52 ADVENTUR
53 THE BIG P
54 SLAVES O
55 EAT A BOW
56 TO KILL A
57 ME AND HI
58 BLOODHO
59 THE WAR
6 ALWAYS
60 THE ABYS
61 WEEKEND
62 SAY ANYT
63 SKIN DEE
64 THE FAB
65 MILLENNI
66 WORTH W
67 GLEAMIN
68 HOW I GO
69 WHEN TH
7 K-9
70 BATMAN
71 DRIVING
72 TANGO &
73 LEAN ON
74 HER ALIBI
75 NEXT OF
76 PINK CAD
77 YOUNG EI
78 DEAD-BA
79 DEAD CA
8 THE BURB
80 SECOND
81 SEE YOU
82 IN COUNT
83 COOKIE
84 HOW TO G
85 POWWOW
86 BERT RIG
87 PENN & T
88 CHECKIN
89 HONEY, I
9 THE DREA
90 DEAD POE
91 THE LITT
92 TURNER &
93 THREE FU
94 AN INNOC
95 BLAZE (T)
96 NEW YORK
97 GROSS AN
98 DISORGAN
99 CHEETAH

4.4
5.1
3.1
8.4
7.8
8.4
8.2
$8.2
8.2
$80.8
34.3
48.4
30.2
17.5
16.6
14.1
8.2
2.2
5.3
1.3
7.5
37.8
$311.5
101.2
48.9
29.8
16.8
13.2
10.1
13.6
6.7
7.6
32.2
5.8
5.1
3.8
6.4
8.6
8.4
7.5
8.2
8.2
$145.5
28.4
92.5
78.1
71.2
36.3
19.7
15.0
10.7
7.8
7.8
9.2

17.2
15.1
8.6
8.6
6.5
2.2
10.8
$8.6
3.2
$26.9
33.3
48.4
10.8
14.0
10.8
14.0
16.1
14.0
11.8
12.9
4.3
12.9
$53.8
8.6
59.1
16.1
21.5
12.9
20.4
4.3
15.1
9.7
18.3
10.8
18.3
19.4
14.0
5.4
4.3
14.0
8.6
5.4
$23.7
16.1
21.5
21.5
19.4
18.3
18.3
19.4
20.4
12.9
11.8
7.5

(0.74)
(0.66)
(0.64)
(0.02)
0.20
2.92
(0.24)
(0.05)
1.54
2.01
0.03
0.00
1.81
0.25
0.54
0.01
(0.49)
(0.84)
(0.55)
(0.90)
0.75
1.93
4.80
10.76
(0.17)
0.85
(0.22)
0.02
(0.51)
2.17
(0.55)
(0.22)
0.76
(0.46)
(0.72)
(0.80)
(0.54)
0.61
0.96
(0.46)
(0.05)
0.53
5.15
0.76
3.30
2.63
2.68
0.98
0.08
(0.22)
(0.47)
(0.39)
(0.34)
0.22

2.1
1.7
1.2
1.2
1.2
1.2
1.1
$1.1
1.1
$63.8
31.4
44.6
22.3
14.6
14.0
13.2
4.7
3.4
2.7
1.8
1.1
29.3
$229.1
77.6
46.7
22.9
15.0
11.7
11.4
10.2
6.4
6.1
27.3
4.9
4.4
3.5
2.6
1.4
1.2
1.1
1.1
1.1
$111.2
22.9
74.4
62.0
54.6
29.1
17.0
14.7
8.2
8.1
7.1
7.1

22.6
19.7
11.3
11.3
8.5
2.8
14.1
$11.3
4.2
$35.3
43.7
63.5
14.1
18.3
14.1
18.3
21.2
18.3
15.5
16.9
5.6
16.9
$70.5
11.3
77.6
21.2
28.2
16.9
26.8
5.6
19.7
12.7
24.0
14.1
24.0
25.4
18.3
7.1
5.6
18.3
11.3
7.1
$31.0
21.2
28.2
28.2
25.4
24.0
24.0
25.4
26.8
16.9
15.5
9.9

(0.91)
(0.91)
(0.89)
(0.89)
(0.85)
(0.56)
(0.92)
(0.90)
(0.74)
0.81
(0.28)
(0.30)
0.58
(0.21)
(0.01)
(0.28)
(0.78)
(0.82)
(0.82)
(0.89)
(0.81)
0.73
2.25
5.87
(0.40)
0.08
(0.47)
(0.31)
(0.58)
0.80
(0.68)
(0.52)
0.14
(0.65)
(0.82)
(0.86)
(0.86)
(0.80)
(0.78)
(0.94)
(0.90)
(0.85)
2.58
0.08
1.64
1.20
1.15
0.21
(0.29)
(0.42)
(0.69)
(0.52)
(0.54)
(0.28)

PARAMOUNT PICTURES
SONY PICTURES ENTERTAINMENTc
THE WALT DISNEY COMPANY
TWENTIETH CENTURY FOX
WARNER BROTHERS

Average:
Median:
Standard

$27.7
$10.5
$41.4

$17.3
$16.1
$10.1

0.67
(0.02)
2.07

$21.6
$8.7
$31.5

$22.6
$21.2
$13.3

(0.08)
(0.54)
1.21

Interquart

$6.9 to
$34.3

$10.8 to
$20.4

(0.55) to
0.99

$ 3.4 to
$29.1

$14.1 to
$26.8

(0.82) to
0.21

One year return average greater

than 0.2

36.97
1.48

Avg of comp

Negative

613.6
24.544
20.6076156827

BSM Model
Standard inputs
Stock Price
Volatility of Stock Returns
Exercise Price
Time Period
Risk-free rate (annual, cts)

X
T
r

37.09
1.48
20.60
1
6%

Calculations
d1
d2
N(d1)
N(d2)

1.177875889
-0.302124111
88.06%
38.13%

Output
Probability of default
Value of Call Option
Value of Put Option

pd
c
p

11.94%
25.26
7.57

Put Call Parity

Fudiciary Call
Protective Put

44.6640081708
44.6640081708

Pv at year 4

1,459.2
58.368
37.0939192

dollars)
First Film

Studio/Movie Title

PV of Net
Inflows at
Year 1a

PV of
Negative
Cost at Year
0

Hypothetical Sequ

One-Year
Returnb

PV of Net
Inflows at
Year 4a

MCA UNIVERSAL
1 PARENTHOOD
10 DO THE RIGHT THING
11 DAD
12 SHOCKER
13 THE WIZARD
14 RENEGADES

$100.1
30.0
17.7
14.3
12.7
6.9

$21.5
7.5
20.4
6.5
8.6
12.9

3.65
2.98
(0.13)
1.22
0.48
(0.46)

$76.8
21.2
17.4
12.4
8.7
7.4

15 HARLEM NIGHTS
16 PET SEMATARY
17 BLACK RAIN
18 MAJOR LEAGUE
19 COUSINS
2 BORN ON THE FOURTH OF JULY
20 WERE NO ANGELS
21 LET IT RIDE
22 SHIRLEY VALENTINE
23 FAT MAN AND LITTLE BOY
24 THE EXPERTS
25 LOOK WHOS TALKING (TS)
26 WHEN HARRY MET SALLY (C)
27 STEEL MAGNOLIAS (TS)
28 SEE NO EVIL; HEAR NO EVIL (TS)
29 THE BEAR (TS)
3 FIELD OF DREAMS
30 GLORY (TS)
31 LOOK UP (TS)
32 CASUALTIES OF WAR (C)
33 CHANCES ARE (TS)
34 FAMILY BUSINESS (TS)
35 SHES OUT OF CONTROL (C)
36 WHOS HARRY CRUMB? (TS)
37 ADVENTURES OF BARON MUNCHAUSEN (
38 TRUE BELIEVER (C)
39 TROOP BEVERLY HILLS (C)
4 UNCLE BUCK
40 TAP (TS)
41 DEEPSTAR SIX (TS)
42 JOHNNY HANDSOME (TS)
43 MUSIC BOX (TS)
44 IMMEDIATE FAMILY (C)
45 LISTEN TO ME (C)
46 PHYSICAL EVIDENCE (C)
47 OLD GRINGO (C)
48 LOVERBOY (TS)

$55.4
52.6
44.1
40.3
21.2
74.5
2.1
3.6
8.9
3.3
8.2
$142.3
83.3
80.4
40.5
22.4
59.1
29.3
14.1
11.4
10.8
8.3
10.5
7.6
11.6
5.8
6.9
60.0
6.7
7.1
6.0
7.1
2.2
1.6
3.6
6.0
2.0

$32.3
11.8
32.3
12.9
14.0
19.4
23.7
19.4
8.6
20.4
12.9
$10.8
20.4
23.7
19.4
22.6
17.2
22.6
18.3
26.9
19.4
19.4
16.1
15.1
55.9
15.1
19.4
16.1
16.1
8.6
21.5
19.4
15.1
16.1
18.3
36.6
10.8

0.72
3.45
0.37
2.12
0.52
2.85
(0.91)
(0.82)
0.04
(0.84)
(0.36)
12.24
3.08
2.40
1.09
(0.01)
2.44
0.30
(0.23)
(0.57)
(0.44)
(0.57)
(0.35)
(0.49)
(0.79)
(0.61)
(0.64)
2.72
(0.58)
(0.17)
(0.72)
(0.63)
(0.85)
(0.90)
(0.80)
(0.84)
(0.81)

$51.1
41.1
39.0
33.7
16.2
56.8
8.7
4.3
4.3
3.2
1.1
$105.5
64.6
61.7
32.0
21.5
47.3
20.8
13.2
12.3
10.9
10.2
9.0
7.9
7.0
6.7
6.5
47.0
6.4
5.8
5.0
4.9
4.3
3.8
3.4
3.2
3.2

49 SING (TS)
5 SEA OF LOVE
50 WINTER PEOPLE (C)
51 WELCOME HOME (C)
52 ADVENTURES OF MILO AND OTIS (C)
53 THE BIG PICTURE (C)
54 SLAVES OF NEW YORK (TS)
55 EAT A BOWL OF TEA (C)
56 TO KILL A PRIEST (C)
57 ME AND HIM (C)
58 BLOODHOUNDS OF BROADWAY (C)
59 THE WAR OF THE ROSES
6 ALWAYS
60 THE ABYSS
61 WEEKEND AT BERNIES
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
7 K-9
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
8 THE BURBS
80 SECOND SIGHT
81 SEE YOU IN THE MORNING
82 IN COUNTRY
83 COOKIE
84 HOW TO GET AHEAD IN ADVERTISING
85 POWWOW HIGHWAY
86 BERT RIGBY, YOURE A FOOL
87 PENN & TELLER GET KILLED
88 CHECKING OUT
89 HONEY, I SHRUNK THE KIDS (W)
9 THE DREAM TEAM
90 DEAD POETS SOCIETY (T)
91 THE LITTLE MERMAID (W)
92 TURNER & HOOTCH (T)
93 THREE FUGITIVES (T)
94 AN INNOCENT MAN (T)
95 BLAZE (T)
96 NEW YORK STORIES (T)
97 GROSS ANATOMY (T)

2.2
53.5
4.4
5.1
3.1
8.4
7.8
8.4
8.2
$8.2
8.2
$80.8
34.3
48.4
30.2
17.5
16.6
14.1
8.2
2.2
5.3
1.3
7.5
37.8
$311.5
101.2
48.9
29.8
16.8
13.2
10.1
13.6
6.7
7.6
32.2
5.8
5.1
3.8
6.4
8.6
8.4
7.5
8.2
8.2
$145.5
28.4
92.5
78.1
71.2
36.3
19.7
15.0
10.7
7.8

15.1
26.9
17.2
15.1
8.6
8.6
6.5
2.2
10.8
$8.6
3.2
$26.9
33.3
48.4
10.8
14.0
10.8
14.0
16.1
14.0
11.8
12.9
4.3
12.9
$53.8
8.6
59.1
16.1
21.5
12.9
20.4
4.3
15.1
9.7
18.3
10.8
18.3
19.4
14.0
5.4
4.3
14.0
8.6
5.4
$23.7
16.1
21.5
21.5
19.4
18.3
18.3
19.4
20.4
12.9

(0.85)
0.99
(0.74)
(0.66)
(0.64)
(0.02)
0.20
2.92
(0.24)
(0.05)
1.54
2.01
0.03
0.00
1.81
0.25
0.54
0.01
(0.49)
(0.84)
(0.55)
(0.90)
0.75
1.93
4.80
10.76
(0.17)
0.85
(0.22)
0.02
(0.51)
2.17
(0.55)
(0.22)
0.76
(0.46)
(0.72)
(0.80)
(0.54)
0.61
0.96
(0.46)
(0.05)
0.53
5.15
0.76
3.30
2.63
2.68
0.98
0.08
(0.22)
(0.47)
(0.39)

2.4
44.4
2.1
1.7
1.2
1.2
1.2
1.2
1.1
$1.1
1.1
$63.8
31.4
44.6
22.3
14.6
14.0
13.2
4.7
3.4
2.7
1.8
1.1
29.3
$229.1
77.6
46.7
22.9
15.0
11.7
11.4
10.2
6.4
6.1
27.3
4.9
4.4
3.5
2.6
1.4
1.2
1.1
1.1
1.1
$111.2
22.9
74.4
62.0
54.6
29.1
17.0
14.7
8.2
8.1

98 DISORGANIZED CRIME (T)

99 CHEETAH (W)
PARAMOUNT PICTURES
SONY PICTURES ENTERTAINMENTc
THE WALT DISNEY COMPANY
TWENTIETH CENTURY FOX
WARNER BROTHERS

7.8
9.2

11.8
7.5

(0.34)
0.22

7.1
7.1

Average:
Median:
Standard deviation:

$27.7
$10.5
$41.4

$17.3
$16.1
$10.1

0.67
(0.02)
2.07

$21.6
$8.7
$31.5

Interquartile range:

$6.9 to
$34.3

$10.8 to
$20.4

(0.55) to
0.99

$ 3.4 to
$29.1

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=Columbia Pictures; TS=Tri-Star. W=Walt Disney; T=Touchstone.

Hypothetical Sequel

Top 10

PV of
Negative
Cost at Year
3

One-Year
Returnb

$28.2
9.9
26.8
8.5
11.3
16.9

1.72
1.15
(0.35)
0.47
(0.23)
(0.56)

$42.3
15.5
42.3
16.9
18.3
25.4
31.0
25.4
11.3
26.8
16.9
$14.1
26.8
31.0
25.4
29.6
22.6
29.6
24.0
35.3
25.4
25.4
21.2
19.7
73.4
19.7
25.4
21.2
21.2
11.3
28.2
25.4
19.7
21.2
24.0
48.0
14.1

0.21
1.65
(0.08)
0.99
(0.11)
1.24
(0.72)
(0.83)
(0.62)
(0.88)
(0.94)
6.48
1.41
0.99
0.26
(0.27)
1.1
(0.30)
(0.45)
(0.65)
(0.57)
(0.60)
(0.58)
(0.60)
(0.90)
(0.66)
(0.74)
1.22
(0.70)
(0.49)
(0.82)
(0.81)
(0.78)
(0.82)
(0.86)
(0.93)
(0.77)

PV of Net Inflows at
Year 4a

PV of Negative Cost at Year

3

$884.1
88.41
56.1861533118

$272.2
27.22
19.3746583455

BSM Model
Standard inputs
Stock Price
S
Volatility of Stock Returns
Exercise Price
X
Time Period
T
Risk-free rate (annual, cts r

Calculations
d1
d2
N(d1)
N(d2)

Output
Probability of default
Value of Call Option
Value of Put Option

Put Call Parity

Fudiciary Call
Protective Put

pd
c
p

19.7
35.3
22.6
19.7
11.3
11.3
8.5
2.8
14.1
$11.3
4.2
$35.3
43.7
63.5
14.1
18.3
14.1
18.3
21.2
18.3
15.5
16.9
5.6
16.9
$70.5
11.3
77.6
21.2
28.2
16.9
26.8
5.6
19.7
12.7
24.0
14.1
24.0
25.4
18.3
7.1
5.6
18.3
11.3
7.1
$31.0
21.2
28.2
28.2
25.4
24.0
24.0
25.4
26.8
16.9

(0.88)
0.26
(0.91)
(0.91)
(0.89)
(0.89)
(0.85)
(0.56)
(0.92)
(0.90)
(0.74)
0.81
(0.28)
(0.30)
0.58
(0.21)
(0.01)
(0.28)
(0.78)
(0.82)
(0.82)
(0.89)
(0.81)
0.73
2.25
5.87
(0.40)
0.08
(0.47)
(0.31)
(0.58)
0.80
(0.68)
(0.52)
0.14
(0.65)
(0.82)
(0.86)
(0.86)
(0.80)
(0.78)
(0.94)
(0.90)
(0.85)
2.58
0.08
1.64
1.20
1.15
0.21
(0.29)
(0.42)
(0.69)
(0.52)

15.5
9.9

(0.54)
(0.28)

$22.6
$21.2
$13.3

(0.08)
(0.54)
1.21

$14.1 to
$26.8

(0.82) to
0.21

One-Year Returnb

26.06
2.606

odel
56.19
2.61
19.37
1
6%

1.7346738826
-0.8713261174
95.86%
19.18%

4.14%
50.36
12.42
68.6033246607
68.6033246607

Exhibit 9
Table A

Summary Statistics for Samples of Films Released in 1987 and 1988 a (dollar figures in millions)
1987 Data
First Film
U.S.
Theater
Rentals

Average (in 1991 $):

$21.3

Hypothetical Sequel

Distributi
Other Distributi
on
Negative
Revenue on Fees Expense
Cost
$64.4

$22.8

$21.5

$26.3

First Film

U.S.
Theater
Rentals
$14.9

Distributi
Other Distributi
on
Negative
Revenue on Fees Expense
Cost
$48.9

$17.0

$17.4

$31.6

Hypothetical Sequel

PV of
PV of
PV of Net Negative
PV of Net Negative
Inflows Cost at One-Year Inflows Cost at One-Year
at Year 1 Year 0
Returna at Year 4 Year 3
Returna
Average:
Median:
Standard deviation:

$39.4
$30.9
$38.4

$25.8
$22.3
$9.4

0.71
0.04
2.05

$30.4
$24.0
$29.4

$33.8
$29.3
$12.3

0.01
(0.39)
1.20

Interquartile range:

$11.1
to
$52.1

$18.8
to
$29.3

(0.60)
to
1.22

$8.8
to
$40.2

$24.6
to
$38.5

(0.75)
to
0.31

Table B

1988 Data
First Film
U.S.
Theater
Rentals

Average (in 1991 $):

$19.7

Hypothetical Sequel

Distributi
Other Distributi
on
Negative
Revenue on Fees Expense
Cost
$60.5

$21.3

$20.5

$24.4

U.S.
Theater
Rentals
$13.8

Distributi
Other Distributi
on
Negative
Revenue on Fees Expense
Cost
$46.1

$15.9

$16.7

$29.2

First Film

Average:
Median:
Standard deviation:
Interquartile range:

Hypothetical Sequel

PV of
PV of
PV of Net Negative
PV of Net Negative
Inflows Cost at One-Year Inflows Cost at One-Year
at Year 1 Year 0
Returna at Year 4 Year 3
Returna
$36.4
$23.8
0.48
$28.2
$31.3
(0.13)
$22.4
$20.3
0.01
$17.5
$26.6
(0.40)
$38.2
$11.4
1.37
$29.3
$14.9
0.80
$9.3
$16.9
(0.48)
$7.5
$22.2
(0.69)
to
to
to
to
to
to
$42.1
$24.8
0.93
$32.5
$32.5
0.14

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