Fashion Channel (4) & (5) Exhibits

Harvard Business School Publishing Brief Case 2075

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Exhibit 4: Ad Revenue Calculator
Ad Revenue Calculator
Current 2007 Base Scenario 1 Scenario 2 Scenario 3
TV HH 110,000,000 110,000,000 110,000,000 110,000,000 110,000,000
Average Rating 1.0%
Average Viewers (Thousand) 1100
Average CPM* $2.00
Average Revenue/Ad Minute** $2,200 $0 $0 $0 $0
Ad Minutes/Week 2016 2016 2016 2016 2016
Weeks/Year 52 52 52 52 52
Ad Revenue/Year $230,630,400 $0 $0 $0 $0
Incremental Programming Expense
* 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 $230,630,400 Insert scenario results from revenue calculator
Affiliate Fees $80,000,000 $81,600,000 $81,600,000 $81,600,000 $81,600,000 Grows 2% per year with population
Total Revenue $310,630,400 $81,600,000 $81,600,000 $81,600,000 $81,600,000
Expenses
Cost of Operations $70,000,000 $72,100,000 $72,100,000 $72,100,000 $72,100,000 Grows 3% per year with inflation
Cost of Programming $55,000,000 Add incremental programming expense
Ad Sales Commissions $6,918,912 3% of ad sales revenue
Marketing & Advertising $45,000,000 Reflects increased spending of $15M
SGA $40,000,000 $41,200,000 $41,200,000 $41,200,000 $41,200,000 Growing with inflation 3%
Total Expense $216,918,912 $113,300,000 $113,300,000 $113,300,000 $113,300,000 Spreadsheet calculates automatically
Net Income $93,711,488 ($31,700,000) ($31,700,000) ($31,700,000) ($31,700,000) Spreadsheet calculates automatically
Margin 30% -39% -39% -39% -39% Spreadsheet calculates automatically
Grey =
student input area
231046121.xlsx.ms_office (Exhibits 4, 5) HBSP Confidential Page 2 of 2