Arundel Partners Case Analysis Essay - 1499 Words

Arundel Partners Case Analysis Executive Summary: A group of investors (Arundel group) is looking into the idea of purchasing the sequel rights associated with films produced by one or more major movie studios. Movie rights are to be purchased prior to films being made. Arundel wants to come up with a decision to either purchase all the sequel rights for a studios entire production during a specified period of time or purchase a specified number of major films. Arundels profitability is dependent upon the price it pays for a portfolio of sequel rights. Our analysis of Arundels proposal includes a net present value calculation of each movie production company. In order to decide whether Arundel can make money buying movie†¦show more content†¦In addition, once production started, the studio would inevitably form an opinion about the movie and the likeliness that a sequel would be possible. This would put Arundel at a disadvantage, because they would then have to negotiate the price for sequel rights o n each film produced, while knowing much less than the production studio about the film. What are primary advantages and disadvantages of the approach that was taken by us in valuing the sequel rights? Our analysis of Arundels proposal includes a net present value calculation of each movie production company. Arundel feels that waiting to purchase sequel rights until after the movie goes into production will make it more difficult and costly to purchase the rights. Below are advantages and disadvantages of our approach. ADVANTAGES: - Simplicity - Because all available data was used, there is a greater sample in our analysis. We assume that more data points will lead to a more accurate conclusion. - We did not eliminate any outliers because we felt outliers are characteristic of the industry. - The analysis is based upon historical data rather than fabricated assumptions. - We believe that breaking out the data by studio is an advantage because it provides direction. DISADVANTAGES: - It is assumed that historicalShow MoreRelatedArundel Partners Case Analysis Essay1441 Words   |  6 Pages----------------------------------- spootyhead Apr 17, 2007 Arundel Partners Case Analysis ----------------------------------- Arundel Partners Case Analysis Executive Summary: A group of investors (Arundel group) is looking into the idea of purchasing the sequel rights associated with films produced by one or more major movie studios. Movie rights are to be purchased prior to films being made. Arundel wants to come up with a decision to either purchase all the sequel rights forRead MoreSolutions to Arundel Partners Case1450 Words   |  6 Pagessolutions to arundel partners case http://www.justanswer.com/law/0vnrc-solutions-arundel-partners-case.html Executive Summary:   A group of investors (Arundel group) is looking into the idea of purchasing the sequel rights associated with films produced by one or more major movie studios. Movie rights are to be purchased prior to films being made. Arundel wants to come up with a decision to either purchase all the sequel rights for a studios entire production during a specified period of timeRead MoreArundel Partners: the Sequel Project1339 Words   |  6 PagesArundel Partners: The Sequel Project The maximum per-film price for the sequel rights that Arundel Partners should pay is $5.12M. If Arundel Partners were to use the traditional DCF methods to find the value of the sequel rights, the NPV would be -$8.42M loss per-film (see Appendix 1). Calculation Details We assume that Arundel Partners will purchase a portfolio of films similar to one used in the analysis. The average hypothetical net inflow of the sequel ($21.57M) is used toRead MoreArundel Partners Case1423 Words   |  6 Pagesï » ¿Arundel Partners: The Sequel Project The maximum per-film price for the sequel rights that Arundel Partners should pay is $5.12M. If Arundel Partners were to use the traditional DCF methods to find the value of the sequel rights, the NPV would be -$8.42M loss per-film (see Appendix 1). Calculation Details We assume that Arundel Partners will purchase a portfolio of films similar to one used in the analysis. The average hypothetical net inflow of the sequel ($21.57M) is used to figure out theRead MoreAnalysis Of The Movie Arundel Partners 779 Words   |  4 PagesArundel Partners wants to buy the rights to produce the sequels in advance rather than negotiating on a film-by-film basis because otherwise, the studios will have an informational advantage. Later on in the production process, studios will have a greater idea of the quality of the film, making them less likely to sell the rights to more profitable sequels. Advanced rights to the entire portfolio of films mitigates this informational asymmetry and creates an options-pricing model for Arundel. ThereRead MoreArundel Partners1040 Words   |  5 PagesCase Write-Up: Arundel Partners 15.415 Finance Theory Section B, Oysters Arundel Partners: The Sequel Project With the purchase of sequel rights, what Arundel is achieving is to have a call option on the revenue that each movie brings. This helps to remove the uncertainty and risks associated with producing a movie, especially with regard to moviegoers’ taste. With the sequel right, Arundel will only exercise this option to produce a sequel if the first movie proved to be popular and theRead MoreEssay Arundel Partners Guidelines922 Words   |  4 PagesGuidelines for the Arundel Partners Case Assignment This is a group project and only one case-report should be submitted FIN 6425 – â€Å"Arundel Case† Guidelines Nimalendran In this case, a movie industry analyst is asked to evaluate a proposed venture in which a group of partners would purchase the sequel rights to movies produced by the major studios. Your objective is to 1) discuss and evaluate the basic concept; 2) determine the value of the sequel rights on a per-movie basis; 3) evaluateRead MoreArundel : Options Case Essay1669 Words   |  7 PagesArundel Partners – The Sequels Project After evaluation of the proposed acquisition of the movie sequel rights, we recommend to offer movie studios as a per-movie price to purchase the sequel rights for their entire portfolio of movies the studios are going to produce over the next year.   Arundel should make an offer to buy sequel rights as the average NPV (on a per film basis ) is $5.51 mn (this is the value calculated using real options method). Hence, we should pay a price below $5.51mnRead MoreArundel Partners Investment Analysis Essay1867 Words   |  8 PagesArundel Partners Investment Analysis EXECUTIVE SUMMARY Background The proposed business venture, Arundel Partners, is an investment group which would purchase the sequels rights associated with all films produced by 1 or more selected U.S. movie production studios for a specified period of time, or a specified number of films. As your investment analysts, ourRead MoreEssay about EM and Presentation Guidance Questions 1481 Words   |  6 Pagesits capital needs over the next 3 to 5 years? What sources other than the public equity market could be tapped to satisfy those needs? 3. Why, in general, do companies go public? What are the advantages and disadvantages of public ownership? 4. The case points out that the IPO market is sometimes characterized as a â€Å"hot issue† market and that many IPOs are viewed in retrospect as having been â€Å"underpriced.† What might explain these phenomena? Should the Netscape board be concerned about underpricing