NYU Stern School of Business

Undergraduate College

MKTG-UB.0021.001 (C55.0021): ENTERTAINMENT FINANCE

Spring 2013

Instructor Details

Kim, Andrew

akim3@stern.nyu.edu

By Appointment

Tisch 8th Floor

 

Course Meetings

M, 9:30am to 10:45am

KMC 4-120


Final Exam:

Schedule exceptions
    Class will not meet on:
    Class will meet on:

 

Course Description and Learning Goals

The focus of this course is financial applications within the entertainment industry.  The course will emphasize the characteristics of financial analysis, deal structures and valuation within the highly dynamic and uncertain environment of the entertainment industry.  While discussions will touch many facets of entertainment, much of the analysis and issues surrounding entertainment finance will be illustrated via the film industry.  While the core of the material is corporate finance, the issues encompass accounting, marketing, economics, strategy and legal aspects.

 

Course Pre-Requisites

The prerequisite is the core course in finance.

 

Course Outline

(SUBJECT TO CHANGE)

Session

Topic

Description and readings

1.

  • Class introduction and semester overview
  • A macroeconomic look
  • Common themes and trends
  • Risk and opportunities

2.

  • The Music Industry
  • Sources of revenue
  • Models and profitability
  • The effects of piracy
  • Capital structure
  • Bankruptcy
  • Reading due: WMG 10-K
  • Assignment #1 due – box office prediction

3.

  • The Music Industry
  • …continued
  • Assignment #2 due – build a music model

4.

  • Video Games

 

  • Sources of revenue
  • Models and profitability
  • How does TTWO make its money?
  • What accounts for its volatile earnings?
  • Reading due: TTWO 10-K
  • Guest speaker: Joe Spiegel

   

  • Presidents’ Day
  • Presidents’ Day (no class)

5.

  • The Television Industry
  • Sources of revenue
  • The traditional model
  • The digital transformation
  • Deficit financing
  • What is the future of advertising?
  • Reading due: CBS 10-K

6.

The Television Industry

  • …continued
  • Assignment #3 due – build a TV model

    

  • Spring Break (no class)
  • Spring Break (no class)

7.

  • Midterm exam
  • Midterm exam

8.

  • The Film Industry
  • Business model
  • Sources of revenue
  • Reading due: DWA 10-K

9.

  • The Film Industry
  • Business model continued
  • Sources of revenue
  • Single-picture financing

10.

  • The Film Industry
  • Sources of costs
  • Royalties, Participations, Residuals
  • Assignment #4 due – build a film revenue model

11.

  • The Film Industry
  • ‘Greenlight’ financial analysis
  • Valuation techniques – breakeven, return on investment, DCF, probabilities

12.

  • The Film Industry
     
  • Capital raising applications
  • Current trends in film finance
  • Financing vehicles
  • Portfolio theory

13. Apr. 30

  • Marvel Entertainment Inc. – from licensor to financier
  • Semester wrap-up
  • Marvel Case Study discussion
  • Should MVL pursue this strategic shift?
  • What financing structure should it employ?
  • What are the financial risks/rewards?
  • Marvel Case Study Due

14. May 7

  • Final exam
  • Final exam

 

Required Course Materials

  1. Marvel Enterprises Inc., HBS Case Study #9-505-001, May 5, 2005.
  2. Warner Music Group (WMG), Form 10-K: Items 1 (Business), 1A (Risk Factors), 7 (MDA), Financials.
  3. CBS Corporation (CBS), Form 10-K: Items 1 (Business), 1A (Risk Factors), 7 (MDA), Financials.
  4. Take Two Interactive (TTWO), Form 10-K: Items 1 (Business), 1A (Risk Factors), 7 (MDA), Financials.
  5. Lionsgate (LGF), Form 10-K: Items 1 (Business), 1A (Risk Factors), 7 (MDA), Financials.
  6. Other assigned readings (recent news articles, etc.) throughout the semester.

 

Assessment Components

Final grades will be based on:

 

Group Projects

Guidelines for Group Projects

Business activities involve group effort. Consequently, learning how to work effectively in a group is a critical part of your business education.

Every member is expected to carry an equal share of the group’s workload. As such, it is in your interest to be involved in all aspects of the project. Even if you divide the work rather than work on each piece together, you are still responsible for each part. The group project will be graded as a whole:   its different components will not be graded separately. Your exams may contain questions that are based on aspects of your group projects.

It is recommended that each group establish ground rules early in the process to facilitate your joint work including a problem-solving process for handling conflicts. In the infrequent case where you believe that a group member is not carrying out his or her fair share of work, you are urged not to permit problems to develop to a point where they become serious. If you cannot resolve conflicts internally after your best efforts, they should be brought to my attention and I will work with you to find a resolution.

You will be asked to complete a peer evaluation form to evaluate the contribution of each of your group members (including your own contribution) at the conclusion of each project. If there is consensus that a group member did not contribute a fair share of work to the project, I will consider this feedback during grading.

 

Grading

The final grade will be allocated according to the following formula:

Participation / Assignments 15%
Group project / Case study 25%
Midterm 30%
Final exam 30%

 

Re-Grading

The process of assigning grades is intended to be one of unbiased evaluation. Students are encouraged to respect the integrity and authority of the professor’s grading system and are discouraged from pursuing arbitrary challenges to it.

If you believe an inadvertent error has been made in the grading of an individual assignment or in assessing an overall course grade, a request to have the grade re-evaluated may be submitted. You must submit such requests in writing to me within 7 days of receiving the grade, including a brief written statement of why you believe that an error in grading has been made.

 

Professional Responsibilities For This Course

Attendance

 

Participation

In-class contribution is a significant part of your grade and an important part of our shared learning experience. Your active participation helps me to evaluate your overall performance.
You can excel in this area if you come to class on time and contribute to the course by:

 

Assignments

 

Classroom Norms

 

Stern Policies

General Behavior
The School expects that students will conduct themselves with respect and professionalism toward faculty, students, and others present in class and will follow the rules laid down by the instructor for classroom behavior.  Students who fail to do so may be asked to leave the classroom. 

 

Collaboration on Graded Assignments
Students may not work together on graded assignment unless the instructor gives express permission. 

 

Course Evaluations
Course evaluations are important to us and to students who come after you.  Please complete them thoughtfully.

 

Academic Integrity

Integrity is critical to the learning process and to all that we do here at NYU Stern. As members of our community, all students agree to abide by the NYU Stern Student Code of Conduct, which includes a commitment to:

The entire Stern Student Code of Conduct applies to all students enrolled in Stern courses and can be found here:

Undergraduate College: http://www.stern.nyu.edu/uc/codeofconduct
Graduate Programs: http://w4.stern.nyu.edu/studentactivities/involved.cfm?doc_id=102505

To help ensure the integrity of our learning community, prose assignments you submit to Blackboard will be submitted to Turnitin.  Turnitin will compare your submission to a database of prior submissions to Turnitin, current and archived Web pages, periodicals, journals, and publications.  Additionally, your document will become part of the Turnitin database.

 

Recording of Classes

Your class may be recorded for educational purposes

 

Students with Disabilities

If you have a qualified disability and will require academic accommodation of any kind during this course, you must notify me at the beginning of the course and provide a letter from the Moses Center for Students with Disabilities (CSD, 998-4980, www.nyu.edu/csd) verifying your registration and outlining the accommodations they recommend.  If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.

 

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