Fashion Channel (4) & (5) Exhibits

Harvard Business School Publishing Brief Case 2075

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Exhibit 4: Ad Revenue Calculator

Ad Revenue Calculator

TV HH
Average Rating
Average Viewers (Thousand)
Average CPM*
Average Revenue/Ad Minute**
Ad Minutes/Week
Weeks/Year
Ad Revenue/Year
Incremental Programming Expense

Current
2007 Base Scenario 1
Scenario 2
Scenario 3
110,000,000
110,000,000
110,000,000
110,000,000
110,000,000
1.0%
1.0%
1.2%
0.8%
1.2%
1100
1100
1320
880
1320
$2.00
$1.80
$1.80
$3.50
$2.50
$2,200
$1,980
$2,376
$3,080
$3,300
2016
2016
2016
2016
2016
52
52
52
52
52
$230,630,400 $207,567,360 $249,080,832 $322,882,560 $345,945,600
$
$
$ 15,000,000 $ 20,000,000

Grey =
student input area

* Revenue/Thousand Viewers
** Calculated by multiplying Average Viewers by Average CPM

2006 Actual

2007 Base

Scenario 1

Scenario 2

Scenario 3

Assumptions

Exhibit 5: Financials

Revenue
Ad Sales
Affiliate Fees
Total Revenue

$230,630,400 $207,567,360 $249,080,832 $322,882,560 $345,945,600

$80,000,000
$81,600,000
$81,600,000
$81,600,000
$81,600,000
$310,630,400 $289,167,360 $330,680,832 $404,482,560 $427,545,600

Expenses
Cost of Operations
Cost of Programming
Ad Sales Commissions
Marketing & Advertising
SGA
Total Expense

$70,000,000
$72,100,000
$72,100,000
$72,100,000
$72,100,000
$55,000,000 $ 55,000,000 $ 55,000,000 $ 70,000,000 $ 75,000,000
$6,918,912
$6,227,021
$7,472,425
$9,686,477
$10,378,368
$45,000,000
$60,000,000
$60,000,000
$60,000,000
$60,000,000
$40,000,000
$41,200,000
$41,200,000
$41,200,000
$41,200,000
$216,918,912 $234,527,021 $235,772,425 $252,986,477 $258,678,368

Grows 3% per year with inflation

$93,711,488
30%

Spreadsheet calculates automatically

Net Income
Margin

139559082.xls.ms_office (Exhibits 4, 5)

$54,640,339
19%

$94,908,407 $151,496,083 $168,867,232

29%
37%
39%

HBSP Confidential

Insert scenario results from revenue calculator

Grows 2% per year with population

Add incremental programming expense

3% of ad sales revenue
Reflects increased spending of $15M
Growing with inflation 3%
Spreadsheet calculates automatically

Spreadsheet calculates automatically

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