Analysis Of The Movie Arundel Partners - 779 Words

Arundel 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. There is value in Arundel’s right to forgo production of the sequel if they discover that the original is a flop. If Arundel chooses to forgo producing a sequel, in this model they are now only taking a $2M loss. To the movie studios, Arundel’s proposal creates great value. By offering the cash for all movies in advance, Arundel is providing upfront financing to the cash-hungry studios, allowing them the resources to pursue other projects, especially big budget blockbusters that ha ve substantial negative costs. The guaranteed profit of the sequel rights fees abolishes some risk for the studios, even though it eliminates their potential upside. By purchasing the rights to an entire portfolio of films from the studios, it also serves Arundel to diversify away the risks of individual films, much like investing in diversified funds of market indexes. Based on the attached analysis, 26 of the 99 potential sequels are profitable to pursue as they have a positive NPV. The NPV of theShow 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 Case Analysis Essay1499 Words   |  6 PagesArundel 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 profitabilityRead 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. 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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 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 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 Partners3638 Words   |  15 PagesSCHOOL OF FINANCE MSc FINANCE Corporate Finance and Banking Arundel Partners: The Sequel Project The East Wind Amol Marathe 140843 Linglan Tan 140838 Xiangyu Zhou 140912 Date: 20/11/2014 Arundel Partners: The Sequel Project The East Wind Executive Summary: Arundel group is looking into the project of purchasing the sequel rights associated with films produced by one or more major movie studios in United States. Arundel believes that they can calculate a value for the rights to produceRead MoreArundel Partners1808 Words   |  8 Pages1. INTRODUCTION In 1992, Arundel Partners was looking into the idea of purchasing the sequel rights associated with films produced by one or more major movie studios. Movie rights were to be purchased prior to films being made. Arundel wanted to determine if this innovative business strategy is viable by estimating the value of the sequel rights. 2. OBJECTIVE Our report aims to investigate the viability of the implementation of Arundels strategy in purchasing sequel rights to produceRead MoreArundel Partners1802 Words   |  8 Pages1. INTRODUCTION In 1992, Arundel Partners was looking into the idea of purchasing the sequel rights associated with films produced by one or more major movie studios. Movie rights were to be purchased prior to films being made. Arundel wanted to determine if this innovative business strategy is viable by estimating the value of the sequel rights. 2. OBJECTIVE Our report aims to investigate the viability of the implementation of Arundels strategy in purchasing sequel rights to produce potential