The Fashion Channel – Case Study

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The Fashion Channel – Case Study
Exercise 1: What is expected outcome of each of the targeting scenarios? (complete both the Ad Revenue and Financial calculators to fully understand the financial impact of the scenarios)

Exhibit 4: Ad Revenue Calculator TV HH Average Rating Average Viewers (thousands) Average CPM1 Average Revenue/Ad Minute2 Ad Minutes/Week Weeks/Year Ad Revenue/Year Incremental Programming Expense 1 Revenue/Thousand Viewer 2 Calculated by multiplying Average Viewers by Average CPM

Current 2007 Base Scenario 1 110,000,000 110,000,000 110,000,000 1.0% 1% 1.2% 1,100 1,100 1,320 $2.00 $1,80 $1,80 $2,200 $0 $0 2,016 2,016 2,016 52 52 52 $230,630,400 $0 $0 $0 $0

Scenario 2 110,000,000 0.8% 880 $3,50 $0 2,016 52 $0 $15.000.000

Scenario 3 110,000,000 1.2% 1,320 $2,50 $0 2,016 52 $0 $20.000.000

Exhibit 5: TFC Estimated Financials for 2006 and 2007 Revenue Ad Sales Affiliate Fees Total Revenue Expenses Cost of Operations Cost of Programming Ad Sales Commissions Marketing and Advertising SGA Total Expense Net Income Margin

2006 Actual

2007 Base

Scenario 1

Scenario 2

Scenario 3

Assumptions
Insert scenario results from revenue calculator Grows 2% per year with population

$230,630,400 $207,567,360 $249,080,832 $323,882,560 $345,945,600 $80,000,000 $310,630,400 $81,600,000 $81,600,000 $81,600,000 $81,600,000 $81,600,000 $81,600,000 $81,600,000 $81,600,000

$70.000.000 $72,100,000 $55.000.000 $55,000,000

$72,100,000 $55,000,000 $7,472,425 $60,000,000 $41,200,000

$72,100,000 $70,000,000 $9,686,477 $60,000,000 $41,200,000

$72,100,000 $75,000,000 $10,378,368 $60,000,000 $41,200,000

Grows 3% per year with inflation Add incrementa l programming expense 3% of ad sales revenue Reflects increased spending of $15M Growing with inflation 3% Spradsheet calcuates automatically Spradsheet calcuates automatically Spradsheet calcuates automatically

$6,918,912 $45,000,000 $40,000,000

$6,227,021 $60,000,000 $41,200,000...
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