-200-
tend to influence their distribution to the sell-through market
at lower price points as opposed to the rental market with its
higher price points. For this reason, Mr. Wagner’s expert report
grossly overstates the income projections for the EBD film
titles.
We were also troubled by Mr. Wagner’s assumptions that 80
percent of the projected revenues from the EBD film library would
be generated in the film title’s first year of release and 20
percent would be generated in the second year of release. Mr.
Wagner’s assumptions effectively frontload his unit projections
into the first 2 years of distribution. In combination with his
3-year release pattern, these assumptions have the effect of
projecting all cashflows for the EBD film library into a 4-year
period (1997, 1998, 1999, and 2000). Since we are not persuaded
that the hypothetical willing buyer of the EBD film library would
distribute all the EBD film titles in so short a period, we are
led to conclude that Mr. Wagner’s revenue assumptions overstate
the present values of projected cashflows from the EBD film
library.
Mr. Wagner assumed a median $59 wholesale price for the
rental market, whereas Mr. Medress used a $45 wholesale price at
the lower end of the spectrum of wholesale prices. Given the age
and nature of the EBD film rights, Mr. Medress’ lower wholesale
price is more reasonable.
Page: Previous 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 NextLast modified: May 25, 2011