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Key Points:

WCHI Chicago of Multimed INC., Independent station, syndication market


Multimed INC.: newspapers, ind. Tv, mags, film/video
2/4 ind stations: low householod rating & weak demographics
5/7 all stations
3 years without new programming, lost audience base, but out of financial
trouble
HollyvilleInc. Moms.com: SBT, 20 rating & 30 share
Demo: women, 25-54 (45% of moms inc audience)
o Higher advertising & 6PM slot larger audience
3 Tasks:
o Assess current ratings position in Chicago market
o Evaluate audience potential of current library
o Analyze present syndication market
o Determine what products are available
o Negotiate best possible deal for new programs
WILL: - 10% increase in mkt share young men (NO)
WXYZ: smallest/4, finanacial (No)
WWIN: , YES to offset competitors
Hollyville:
o More stations = has more negotiating power
o Poor season, 2 synd shows never sold
o Deteriorated $$ position from projected
Moms.com
o 100 episodes
o 5 yr contract non-negotiable
o Advertising revenue! (expected net programming licensing fee)
o Advert rev = based on demo # OR rating within primary demo
category (25-54 women)
o Projected = $7,000,000 advert rev over 5 yrs if demo ratings are 2-3
range
o Addtl $1,000,000 With every increase in demo rating pt
o Expected = 3-4 rating
o Ratings & advert rev uncertain
o Estimate avert rev = $8,400,000
Each episode runs 6 times, up to 8/ep
Addtl ep = $800,000
Past 8 = no good
Less than 6 = each less = loss $800,000
Cant spend more than $60,000 licensing fee/episode
Show would never sell for less than $30,000/ep

Ratings
2-3

Likelihoo
d
20%

3-4

50%

4-5

10%

5-6

10%

6-7

10%

Advert
Rev
$7,000,00
0
$8,000,00
0
$9,000,00
0
$10,000,0
00
$11,000,0
00

5,400,000

6,200,000

7,800,000

8,600,000

6,400,000

7,200,000

8,800,000

9,600,000

7,400,000

8,200,000

9,800,000

8,400,000

9,200,000

9,400,000

10,200,00
0

10,800,00
0
11,800,00
0

10,600,00
0
11,600,00
0
12,600,00
0

Alternate show/same time slot would produce $3,000,000 net programming


rev
$$$ Hollyville:
o They want 50% up-front payment & 25% in years 1 & 2
o I want 0 payment up front and even payments over 5 yrs
o They want to sell Juniors for upcoming season, 100 eps
Low advert rate
Max $20,000/ep, lic fee below this = profit
Money Paid
I Save
Up Front
0% of money paid in this year
1 yr
10% of money paid in this year
2 yr
20% of money paid in this year
3 yr
30% of money paid in this year
4 yr
40% of money paid in this year
5 yr
50% of money paid in this year

Want this relationship

Agreement:
1. Expected Advert Rev from show
$8.4 +/- $.8
2. Licensing Fee
Fee per ep X 100
3. Payment Savings
See chart
4. Net licensing fee of the show
Lic fee - payment savings
5. Other Terms of Agreement
6. Net Programming Rev of Deal
Exp advert rev net lic fee, + other terms
7. Value of Alternative Deal

$3,000,000
8. Net Value of Bargaining Agreement
$ programming rev - $3,000,000
Mine
BATNA
Continue existing
contract
RESO PT
$8M for 7 runs/ep
Lic Fees
30,000 60,000
Runs/ep
6-8
Payment Terms
6 terms, 5 yrs-0
Juniors
0-20,000

Theirs
Sell to other
competitor
$6M for 6 airs/ep
35,000-70,000
4-8
4 terms, 3 yrs-o
10,000 +

Bargaining Zone

$2M, Positive
35,000-60,000
6-8
0-3 yrs (4 terms)
10,000-20,000

Counterpoints:
Runs: industry average was 6 runs per episode and how hard it would be to
get advertisement contracts on so few runs per episode.
if the shows ratings drop into the 2-3 range, which is likely over a
five year period, then I would be losing money
I didnt want to spend that much for just the industry standard of runs per
episode
Price/Episode: $60,000
Run/Episode: 8
Financing % of payment in each year: 1>40%; 2>25%; 3>20%% and 4>15%
Junior (per episode): $16,000
Net Value: $ 2,060,000 Buyer; $ 2,430,00 Seller with a total of $4,490,00