The Fashion Channel

Topics: Revenue, Income statement, Profit margin Pages: 8 (411 words) Published: June 28, 2015
THE FASHION CHANNEL
A TIME FOR CHANGE
Implementing Sustainability through Targeted Marketing

THE DATA – STRATEGIC MARKETING
RESEARCH
The Fashion Channel Ad Revenue Calculator

 

 

 

Multi Segments

One Segment

Two Segments

 

Current

2007 Base

Strategy

Strategy

Strategy

 

 

 

 

 

 

TV House Holds

110,000,000

110,000,000

110,000,000

110,000,000

110,000,000

Average Rating

1.00%

1.00%

1.20%

80.00%

1.20%

Average Viewers (thousands)

1,100

1,100

1,320

880

1,320

Average CPM

$2.00

$1.80

$1.80

$3.50

$2.50

$2,200.00

$1,980.00

$2,376.00

$3,080.00

$3,300.00

2,016

2,016

2,016

2,016

2,016

52

52

52

52

52

$230,630,400.
00

$207,567,360.00

$249,080,832.00

$322,882,560.00

$345,945,600.00

0

15,000,000

20,000,000

 

 

 

Average revenue per Ad minute
Ad minites per week
Weeks per year
Ad revenue per year
Incremental program expenses

 

 

 

FORECAST – REVENUE AND EXPENSES
 
 

TFC Estimated Financials for 2006 and 2007
 
 
 
2006 Actual

2007 Base

Multi Segments

 

One Segment

 
 

 
Two Segments

Assumptions

Revenue
$230,630,400.0 $207,567,360.0
0
0 $249,080,832.00 $322,882,560.00 $345,945,600.00
$80,000,000.00 $81,600,000.00 $81,600,000.00 $81,600,000.00 $81,600,000.00 $310,630,400.0 $289,167,360.0
0
0 $330,680,832.00 $404,482,560.00 $427,545,600.00

2% growth

Cost of Operations

$70,000,000.00 $72,100,000.00

$72,100,000.00 $72,100,000.00 $72,100,000.00

3% growth

Cost of Programming
Ad Sales Comissions

$55,000,000.00 $55,000,000.00
$6,918,912.00 $6,227,020.80

$55,000,000.00 $70,000,000.00 $75,000,000.00
$7,472,424.96
$9,686,476.80 $10,378,368.00

3% of Ad Sales Revenue

Ad Sales
Affiliate Fees
Total Revenue

Expenses

Marketing and Advertising $45,000,000.00 $60,000,000.00 $60,000,000.00 $60,000,000.00 $60,000,000.00 SGA
$40,000,000.00 $41,200,000.00 $41,200,000.00 $41,200,000.00 $41,200,000.00 $216,918,912.0 $234,527,020.8
Total Expense
0
0 $235,772,424.96 $252,986,476.80 $258,678,368.00

Net Income
Margin

$93,711,488.00 $54,640,339.20
30%

19%

$94,908,407.04 $151,496,083.20 $168,867,232.00
29%

37%

39%

Increase expending $15,M
3% growth

SCENARIO ONE
Scenario 1:
• Multi segments
• Targeting 3 groups (excluding Basics)
• Increase in ratings
• Decrease in ad unit pricing (average CPM)

Offers no advantage in regards to sustainable growth
Harder to achieve competitive advantage over CNN and Lifetime Ignores market developments

SCENARIO TWO
Scenario 2:
• One segment
• Fashionista: drop in ratings
• Increase in ad unit pricing (average CPM)

Focuses on a smaller audience (only 15% of the
households)
Risks affiliate support with programming changes
Can affect customer satisfaction in a negative way

SCENARIO THREE
Scenario 3:
• Two segments - Fashionista and Shopper/Planner
• Increase in ratings
• Increase in ad unit pricing (average CPM)






Higher revenue ($427,545,600)
Higher net income ($168,867,368)
Higher profit margin (39%)
Targeting audience = 50% of the total viewership

OUR DECISION
SCENARIO THREE
Two Segment Marketing
Why?

1. Best response to competition
2. Increased revenue
3. Happier affiliates
4. Promotes necessary change
5. Adds to customer retention
6. Increased CPM pricing

IT’S WORTH IT
Risks
• Risk of no change is greater than the risk of strategic marketing • Best chance at creating barriers to entry

Implementation

Teamwork
Results

Sustainability

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