Why do the principals of Arundel Partners think they can make money buying the movie sequel rights.d

  • No School
  • AA 1
  • 5

This preview shows page 1 - 2 out of 5 pages.

1. Why do the principals of Arundel Partners think they can make money buying the movie sequel rights? Why do the partners want to buy a portfolio of rights in advance, rather than negotiating to buy them on a film-by-film basis? i. Arundel partners think they can make money buying movie for several reason ii. They thought they could profit from such adventure specifically "arundel partners would be interested in purchasing the sequal right for one or more studios entire production over an extended period on of not less than one year. If the film was a hit and AP thought it was profitable it would exercise it right by producing the sequsl it self or by hiring a professional to do so, alternatively it could send the rights to the highest bidder". Most first films would not justify sequel and for them the sequel rights would not be exercised for most movies it was clear after the first few week in theaters that whether a sequel would be justified. Thus, by purchasing the right, well in advance of the sequal and in advance of the first film they real purchased and option that for reasonably smaller price would permit them to wait and see if the first movies is succesful or not and "only then would they invested in the sequal". They feel that they can do this advantageously because paul kagen and associated have expertise in the analysis of the film business, and have " assembled priopriety data on industry cash flow". Meaning data though research that allowes them to better predict favorable out come on movies sequals. There is research valuable. Using this research allows them to better price the option which part and parcel of the rights purchase - the option is the right purchase- . As such the option through the purchase of the rights has value in that AP do not have to commit a huge investment until a successful movies day views which in turn triggers and investment in the sequal. In other word they can make and investment with more information rather then less information which would then improve the odds of investing in producing or even selling to a third party, a succesful sequal movie. Even by looking the charts and cost structure of a "typical film" ( again as for the foot note these figure represent an estimates of a typical film not the average film) the ney profit is only 500,000 on revenue of 46,500,000 , taking into account distribution fees of 12,500,000, distrubution expenses of 15,500,000, and total negative cost of 18,000,000 a small margin given the risk. See bellow. This shows that level of risk relative to the return is highly discrouaging to investerrs. Arrendul partners removes much of the uncertenty and reduces risk by buying movie sequal rights which gives them more time, by first letting them look at the success of the initial film, to make a informed decision on whether or not to go ahead with production.
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Fall '19

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes