Copyright

Arundel Partners: The Sequel Project

Harvard Business School Case 9-292-140
Case Software 2-293-716

Copyright © 1992 by the President and Fellows of Harvard College

William A. Teichner, Charles M. Williams Fellow, prepared this case under the supervision of
Professor Timothy A. Leuhrman. HBS cases are developed solely as the basis for class discussion.
Cases are not intended to serve as endorsements, sources of primary data, or illustrations of
effective or ineffective management.

1
Exhibit 1        Selected Motion Picture Industry Data, 1980­1991

North American Theatrical Film Rental Shares of Major Film Distributorsa,b

20th Metro­
Century Goldwyn MCA Warner Buena
Sonyc Fox Mayer Paramount Universal Brothers Vistad

1991 20% 12% 2% 12% 11% 14% 14%

1990 14% 13% 3% 15% 13% 13% 16%
1989 16% 7% 6% 14% 17% 17% 14%
1988 10% 12% 10% 15% 10% 11% 19%
1987 9% 9% 4% 20% 8% 13% 14%
1986 16% 8% 4% 22% 9% 12% 10%
1985 20% 11% 9% 10% 16% 18% 3%
1984 21% 10% 7% 21% 8% 19% 4%
1983 14% 21% 10% 14% 13% 17% 3%
1982 10% 14% 11% 14% 30% 10% 4%
1981 13% 13% 9% 15% 14% 18% 3%
1980 14% 16% 7% 16% 20% 14% 4%

Sources:   Goldman Sachs Investment Research, Movie Industry Update 1992; MPAA, 1991 U.S. Economic
Review; and industry sources.

a
Several companies have undergone various transformations since 1980.  The chart shows the company's current name.
b
Includes re­releases of films that were first released in earlier years.
c
Includes films distributed by Columbia and Tri­Star.  Tri­Star began operations in 1984.
d
Buena Vista distributes films by The Walt Disney Company, and includes films produced by the Disney, Touchstone, and
Hollywood Pictures studios.
e
Excludes re­releases of films first issued in prior years.
f
Excludes independent films.
 Exhibit 1 (continued)

Total
Orion Majors Aggregate Box Office Data
Number of Films Released U.S. and
9% 94% in the U.S. by Major and Canada
6% 93% Independent Distributorse Gross
4% 95% Major Independent Box Office U.S. Rentals
5.5 637% Releases Releases (millions) (millions)f
10% 87%
7% 88% 1991 150 274 $4,803 $2,160
5% 92% 1990 158 221 5,022 2,260
5% 95% 1989 157 292 5,033 2,165
4% 96% 1988 153 319 4,458 1,920
3% 96% 1987 122 365 4,253 1,830
1% 86% 1986 133 286 3,778 1,650
2% 93% 1985 138 251 3,749 1,635
1984 152 256 4,031 1,800
1983 166 230 3,766 1,700
1982 150 211 3,453 1,555
1981 145 NA 2,967 1,335
1980 134 NA 2,749 1,235

ny's current name.

ney, Touchstone, and
ate Box Office Data

U.S. Average
Theater
Ticket Price

$4.89
4.75
4.45
4.11
3.91
3.71
3.55
3.36
3.15
2.94
2.78
2.69
Exhibit 2        Revenue and Cost Estimates for "Typical" Film Distributed by a Major Studioa,b
(in millions of 1991 $)

Percent of
U.S. Percent of
Theatrical Total
Rental Revenue

Revenue Collected by Distributor

U.S. theater rentals $10.0 100% 22%
Non-U.S. theater rentals 9.0 90% 19%
Worldwide home video 15.0 150% 32%
Worldwide pay TV 5.5 55% 12%
Worldwide TVc 7.0 70% 15%
Total $46.5 465% 100%

Distribution Fees
Worldwide theater $5.0 50% 11%
Worldwide home video 4.0 40% 9%
Worldwide pay TV 1.5 15% 3%
Worldwide TV 2.0 20% 4%
Total $12.5 125% 27%

Distribution Expenses
Worldwide theater $12.0 120% 26%
Worldwide home video 3.5 35% 8%
Worldwide pay TV ? ? ?
Worldwide TV ? ? ?
Total $15.5 155% 34%

Negative Costd
Story rights/script development $0.5
Actors/director 6.0
Production management 1.0
Production crew 1.0
Set design/construction 2.0
Transportation/locations 1.5
Wardrobe/makeup/hair 0.5
Extras/props 0.5
Lighting 0.3
Special effects 0.3
Other principal photography 1.0
Film editing 0.7
Music 0.4
Other postproduction 0.8
All other 1.5
Total negative cost $18.0
Pretax net profitse $0.5

a
The figures represent estimates of a typical film, not the average film
b
Fee structure assumes film is independently financed.
In this chart, worldwide TV includes U.S. network, U.S. syndicated, and non­U.S. television.
c

d
The negative cost breakdown is shown for illustrative purposes only, and provides 
one possible breakdown of a film's cost.
e
Excludes interest charges.  Assumes no gross participations.
Exhibit 6        Estimated Revenues and Costs for Films Released in 1989 by Six Major Studios and Hypothetical Sequelsa
(in millions of 1991 $)

First Film Hypothetical Sequel
U.S.  U.S. 
Theater  Other Distribution Distribution Negative Theater  Other Distribution Distribution Negative
Studio/Movie Title Rentals Revenue Fees Expense Cost Rentals Revenue Fees Expense Cost

MCA UNIVERSAL
1 PARENTHOOD $55.0 $146.1 $53.6 $43.1 $22.0 $38.5 $106.1 $38.5 $32.6 $26.4
2 BORN ON THE FOURTH OF JULY 40.5 110.9 40.3 33.1 19.8 28.4 81.4 29.2 26.0 23.7
3 FIELD OF DREAMS 33.6 94.1 34.0 31.6 17.6 23.5 69.7 24.8 22.9 21.1
4 UNCLE BUCK 33.3 93.6 33.8 30.2 16.5 23.3 69.3 24.7 22.8 19.8
5 SEA OF LOVE 31.5 89.0 32.1 32.0 27.5 22.0 66.1 23.5 22.0 33.0
6 ALWAYS 22.0 66.1 23.4 28.0 34.1 15.4 50.4 17.4 17.7 40.9
7 K-9 20.5 62.3 22.0 20.9 13.2 14.3 47.5 16.4 17.0 15.8
8 THE 'BURBS 19.0 58.9 20.7 22.9 18.7 13.3 45.0 15.5 16.4 22.4
9 THE DREAM TEAM 15.8 51.1 17.8 19.0 16.5 11.1 39.6 13.5 14.9 19.8
10 DO THE RIGHT THING 14.6 48.2 16.7 14.6 7.7 10.5 37.6 12.7 14.4 9.2
11 DAD 11.9 41.5 14.2 20.0 20.9 8.3 32.9 11.0 13.1 25.0
12 SHOCKER 8.3 32.7 10.9 14.6 6.6 5.8 26.7 8.6 11.5 7.9
13 THE WIZARD 5.5 26.1 8.4 9.5 8.8 3.9 22.1 6.9 10.3 10.5
14 RENEGADES 4.6 23.9 7.6 13.1 13.2 3.2 20.6 6.3 9.9 15.8

PARAMOUNT PICTURES
15 HARLEM NIGHTS $36.3 $100.8 $36.5 $41.7 $33.0 $25.4 $74.4 $26.6 $24.1 $39.5
16 PET SEMATARY 29.1 83.2 29.9 27.1 12.1 20.3 62.0 21.9 20.9 14.5
17 BLACK RAIN 27.5 79.4 28.5 31.6 33.0 19.3 59.4 20.9 20.2 39.5
18 MAJOR LEAGUE 23.7 70.1 25.0 26.1 13.2 16.6 52.9 18.5 18.4 15.8
19 COUSINS 11.0 39.4 13.4 14.4 14.3 7.7 31.4 10.4 12.8 17.1
20 WE'RE NO ANGELS 5.5 26.1 8.4 19.9 24.2 3.9 22.1 6.9 10.3 29.0
21 LET IT RIDE 2.3 18.3 5.5 10.8 19.8 1.6 16.7 4.8 8.8 23.7
22 SHIRLEY VALENTINE 2.3 18.3 5.5 5.6 8.8 1.6 16.7 4.8 8.8 10.5
23 FAT MAN AND LITTLE BOY 1.5 16.5 4.8 9.2 20.9 1.1 15.3 4.3 8.5 25.0
24 THE EXPERTS 0.0 12.7 3.4 0.8 13.2 0.0 12.7 3.4 7.8 15.8

SONY PICTURES ENTERTAINMENT

25 LOOK WHO'S TALKING (TS) $75.8 $196.5 $72.6 $51.7 $11.0 $53.1 $141.4 $51.8 $41.9 $13.2
26 WHEN HARRY MET SALLY (C) 46.1 124.5 45.4 38.1 20.9 32.3 91.0 32.8 28.5 25.0
27 STEEL MAGNOLIAS (TS) 44.0 119.4 43.5 35.9 24.2 30.8 87.4 31.5 27.6 29.0
28 SEE NO EVIL; HEAR NO EVIL (TS) 22.5 67.1 23.8 23.1 19.8 15.7 50.8 17.7 17.9 23.7
29 THE BEAR (TS) 14.9 48.7 16.9 22.5 23.1 10.4 37.9 12.8 14.5 27.7
30 GLORY (TS) 14.3 47.4 16.4 14.5 23.1 10.0 37.0 12.5 14.2 27.7
31 LOOK UP (TS) 8.8 34.1 11.4 16.1 18.7 6.2 27.7 9.0 11.8 22.4
32 CASUALTIES OF WAR (C) 8.1 32.5 10.8 17.1 27.5 5.7 26.6 8.6 11.5 33.0
33 CHANCES ARE (TS) 7.2 30.1 9.9 15.4 19.8 5.0 24.9 7.9 11.0 23.7
34 (FAMILY BUSINESS (TS) 6.6 28.7 9.4 16.5 19.8 4.6 23.9 7.6 10.8 23.7
35 SHE'S OUT OF CONTROL (C) 5.7 26.6 8.6 12.2 16.5 4.0 22.4 7.0 10.4 19.8
 First Film Hypothetical Sequel
U.S.  U.S. 
Theater  Other Distribution Distribution Negative Theater  Other Distribution Distribution Negative
Studio/Movie Title Rentals Revenue Fees Expense Cost Rentals Revenue Fees Expense Cost

36 WHO'S HARRY CRUMB? (TS) 5.0 24.7 7.9 13.2 15.4 3.5 21.1 6.5 10.0 18.5
37 ADVENTURES OF BARON MUNCHAUSEN (C) 4.3 23.1 7.3 7.8 57.1 3.0 20.0 6.1 9.7 68.5
38 TRUE BELIEVER (C) 4.1 22.6 7.1 12.8 15.4 2.9 19.6 6.0 9.6 18.5
39 TROOP BEVERLY HILLS (C) 4.0 22.3 7.0 11.5 19.8 2.8 19.5 5.9 9.6 23.7
40 TAP (TS) 3.9 22.1 6.9 11.4 16.5 2.7 19.3 5.8 9.5 19.8
41 DEEPSTAR SIX (TS) 3.4 21.0 6.5 10.0 8.8 2.4 18.5 5.5 9.3 10.5
42 JOHNNY HANDSOME (TS) 2.9 19.7 6.0 9.7 22.0 2.0 17.6 5.2 9.1 26.4
43 MUSIC BOX (TS) 2.8 19.4 5.9 8.4 19.8 1.9 17.4 5.1 9.0 23.7
44 IMMEDIATE FAMILY (C) 2.3 18.3 5.5 12.1 15.4 1.6 16.7 4.8 8.8 18.5
45 LISTEN TO ME (C) 2.0 17.5 5.2 12.0 16.5 1.4 16.1 4.6 8.7 19.8
46 PHYSICAL EVIDENCE (C) 1.7 16.7 4.9 9.2 18.7 1.2 15.5 4.4 8.5 22.4
47 OLD GRINGO (C) 1.5 16.5 4.8 6.6 37.3 1.1 15.3 4.3 8.5 44.8
48 LOVERBOY (TS) 1.5 16.5 4.8 10.5 11.0 1.1 15.3 4.3 8.5 13.2
49 SING (TS) 1.0 15.1 4.3 9.0 15.4 0.7 14.4 4.0 8.2 18.5
50 WINTER PEOPLE (C) 0.8 14.6 4.1 6.3 17.6 0.5 14.0 3.8 8.1 21.1
51 WELCOME HOME (C) 0.4 13.8 3.8 4.9 15.4 0.3 13.5 3.6 8.0 18.5
52 ADVENTURES OF MILO AND OTIS (C) 0.1 13.0 3.5 6.0 8.8 0.1 12.9 3.4 7.8 10.5
53 THE BIG PICTURE (C) 0.1 13.0 3.5 0.8 8.8 0.1 12.9 3.4 7.8 10.5
54 SLAVES OF NEW YORK (TS) 0.1 13.0 3.5 1.5 6.6 0.1 12.9 3.4 7.8 7.9
55 EAT A BOWL OF TEA (C) 0.1 13.0 3.5 0.8 2.2 0.1 12.9 3.4 7.8 2.6
56 TO KILL A PRIEST (C) 0.0 12.7 3.4 0.8 11.0 0.0 12.7 3.4 7.8 13.2
57 ME AND HIM (C) 0.0 12.7 3.4 0.8 8.8 0.0 12.7 3.4 7.8 10.5
58 BLOODHOUNDS OF BROADWAY (C) 0.0 12.7 3.4 0.8 3.3 0.0 12.7 3.4 7.8 4.0

TWENTIETH CENTURY FOX

59 THE WAR OF THE ROSES $45.6 $123.2 $44.9 $39.1 $27.5 $31.9 $90.0 $32.5 $28.3 $33.0
60 THE ABYSS 31.6 89.3 32.2 37.2 49.4 22.1 66.3 23.5 22.0 59.3
61 WEEKEND AT BERNIE'S 15.4 50.1 17.4 16.3 11.0 10.8 38.9 13.2 14.7 13.2
62 SAY ANYTHING 9.8 36.5 12.3 15.2 14.3 6.9 29.4 9.6 12.2 17.1
63 SKIN DEEP 9.4 35.4 11.9 15.0 11.0 6.5 28.6 9.3 12.0 13.2
64 THE FABULOUS BAKER BOYS 8.8 34.1 11.4 16.1 14.3 6.2 27.7 9.0 11.8 17.1
65 MILLENNIUM 2.6 19.1 5.8 7.1 16.5 1.8 17.2 5.0 9.0 19.8
66 WORTH WINNING 1.7 16.7 4.9 10.5 14.3 1.2 15.5 4.4 8.5 17.1
67 GLEAMING THE CUBE 1.2 15.7 4.5 6.5 12.1 0.8 14.8 4.1 8.3 14.5
68 HOW I GOT INTO COLLEGE 0.6 14.1 3.9 8.8 13.2 0.4 13.7 3.7 8.0 15.8
69 WHEN THE WHALES CAME 0.0 12.7 3.4 1.4 4.4 0.0 12.7 3.4 7.8 5.3

WARNER BROTHERS
70 BATMAN $165.6 $414.2 $154.5 $102.0 $54.9 $115.9 $293.7 $109.2 $82.3 $65.9
71 DRIVING MISS DAISY 55.6 147.4 54.1 43.3 8.8 38.9 107.0 38.9 32.8 10.5
72 TANGO & CASH 33.1 93.0 33.6 40.4 60.4 23.2 68.9 24.5 22.7 72.5
73 LEAN ON ME 15.8 51.1 17.8 17.7 16.5 11.1 39.6 13.5 14.9 19.8
74 HER ALIBI 10.1 37.3 12.6 16.6 22.0 7.1 29.9 9.8 12.4 26.4
75 NEXT OF KIN 7.7 31.4 10.4 14.3 13.2 5.4 25.8 8.3 11.3 15.8
 First Film Hypothetical Sequel
U.S.  U.S. 
Theater  Other Distribution Distribution Negative Theater  Other Distribution Distribution Negative
Studio/Movie Title Rentals Revenue Fees Expense Cost Rentals Revenue Fees Expense Cost

76 PINK CADILLAC 7.5 30.9 10.2 16.8 20.9 5.2 25.4 8.1 11.2 25.0
77 YOUNG EINSTEIN 6.6 28.7 9.4 11.3 4.4 4.6 23.9 7.6 10.8 5.3
78 DEAD-BANG 3.9 22.1 6.9 11.4 15.4 2.7 19.3 5.8 9.5 18.5
79 DEAD CALM 3.6 21.5 6.7 10.1 9.9 2.5 18.9 5.7 9.4 11.9
80 SECOND SIGHT 2.8 19.4 5.9 9.7 11.0 1.9 17.4 5.1 9.0 13.2
81 SEE YOU IN THE MORNING 2.4 18.6 5.6 9.6 18.7 1.7 16.8 4.9 8.9 22.4
92 IN COUNTRY 1.8 17.0 5.0 9.3 19.8 1.2 15.7 4.5 8.6 23.7
83 COOKIE 1.1 15.4 4.4 5.1 14.3 0.8 14.6 4.1 8.3 17.1
84 HOW TO GET AHEAD IN ADVERTISING 0.2 13.3 3.6 0.9 5.5 0.2 13.3 3.5 7.9 6.6
85 POWWOW HIGHWAY 0.1 13.0 3.5 0.8 4.4 0.1 12.9 3.4 7.8 5.3
86 BERT RIGBY, YOU'RE A FOOL 0.0 12.7 3.4 1.4 14.3 0.0 12.7 3.4 7.8 17.1
87 PENN & TELLER GET KILLED 0.0 12.7 3.4 0.8 8.8 0.0 12.7 3.4 7.8 10.5
88 CHECKING OUT 0.0 12.7 3.4 0.8 5.5 0.0 12.7 3.4 7.8 6.6

THE WALT DISNEY COMPANYb

89 HONEY, I SHRUNK THE KIDS (W) $80.0 $206.7 $76.4 $58.6 $24.2 $56.0 $148.5 $54.5 $43.8 $29.0
90 DEAD POETS SOCIETY (T) 53.3 141.8 52.0 46.2 22.0 37.3 103.1 37.4 31.8 26.4
91 THE LITTLE MERMAID (W) 44.2 120.0 43.7 38.6 22.0 31.0 87.8 31.6 27.7 26.4
92 TURNER AND HOOTCH (T) 38.8 106.9 38.8 32.5 19.8 27.2 78.6 28.2 25.3 23.7
93 THREE FUGITIVES (T) 20.4 62.1 21.9 22.2 18.7 14.3 47.3 16.4 17.0 22.4
94 AN INNOCENT MAN (T) 11.6 40.7 13.9 17.2 18.7 8.1 32.3 10.7 13.0 22.4
95 BLAZE (T) 9.9 36.7 12.4 17.8 19.8 6.9 29.5 9.7 12.3 23.7
96 NEW YORK STORIES (T) 5.2 25.3 8.1 10.7 20.9 3.6 21.5 6.7 10.1 25.0
97 GROSS ANATOMY (T) 5.1 25.0 8.0 13.2 13.2 3.5 21.3 6.6 10.1 15.8
98 DISORGANIZED CRIME (T) 4.4 23.4 7.4 11.7 12.1 3.1 20.2 6.2 9.8 14.5
99 CHEETAH (W) 4.4 23.4 7.4 10.4 7.7 3.1 20.2 6.2 9.8 9.2

AVERAGES $14.9 $48.8 $17.0 $17.4 $17.7 $10.4 $38.0 $12.9 $14.5 $21.2

a
Metro­Goldwyn­Mayer and Orion are excluded.  Fees assume films were financed by an independent producer.  Costs exclude gross participations and interest charges.
b
C=Columbia Pictures, TS=Tri­Star W=Walt Disney; T=Touchstone
101.5 77.98 21.38 28.03
75.8 57.85 19.24 25.16
60.13 48.16 17.1 22.4
60.98 47.72 16.03 21.02
54.48 45.06 26.72 35.04
35.16 32.4 33.13 43.43
38.61 29.94 12.83 16.78
32.99 27.8 18.17 23.78
29 23.44 16.03 21.02
30.56 22.06 7.48 9.77
18.17 17.9 20.31 26.55
14.74 12.89 6.41 8.39
13.16 9.05 8.55 11.15
7.18 7.77 12.83 16.78
Exhibit 7        Estimated Expected Present Values and One­Year Holding Period Returns Based on Data in Exhibit 6
(in millions of dollars)

First Film Hypothetical Sequel
PV of PV of
PV of Negative PV of Negative
Net Inflows Cost at One­Year Net Inflows Cost at One­Year
Studio/Movie Title at Year 1a Year 0 Returnb at Year 4a Year 3 Returnb
24 THE EXPERTS 8.2 12.9 (0.36) 1.1 16.9 (0.94)
86 BERT RIGBY, YOU'RE A FOOL 7.5 14.0 (0.46) 1.1 18.3 (0.94)
47 OLD GRINGO (C) 6.0 36.6 (0.84) 3.2 48.0 (0.93)
56 TO KILL A PRIEST (C) 8.2 10.8 (0.24) 1.1 14.1 (0.92)
50 WINTER PEOPLE (C) 4.4 17.2 (0.74) 2.1 22.6 (0.91)
51 WELCOME HOME (C) 5.1 15.1 (0.66) 1.7 19.7 (0.91)
37 ADVENTURES OF BARON MUNCHAUSEN (C) 11.6 55.9 (0.79) 7.0 73.4 (0.90)
57 ME AND HIM (C) 8.2 8.6 (0.05) 1.1 11.3 (0.90)
87 PENN & TELLER GET KILLED 8.2 8.6 (0.05) 1.1 11.3 (0.90)
52 ADVENTURES OF MILO AND OTIS (C) 3.1 8.6 (0.64) 1.2 11.3 (0.89)
53 THE BIG PICTURE (C) 8.4 8.6 (0.02) 1.2 11.3 (0.89)
68 HOW I GOT INTO COLLEGE 1.3 12.9 (0.90) 1.8 16.9 (0.89)
23 FAT MAN AND LITTLE BOY 3.3 20.4 (0.84) 3.2 26.8 (0.88)
49 SING (TS) 2.2 15.1 (0.85) 2.4 19.7 (0.88)
46 PHYSICAL EVIDENCE (C) 3.6 18.3 (0.80) 3.4 24.0 (0.86)
92 IN COUNTRY 3.8 19.4 (0.80) 3.5 25.4 (0.86)
83 COOKIE 6.4 14.0 (0.54) 2.6 18.3 (0.86)
54 SLAVES OF NEW YORK (TS) 7.8 6.5 0.20 1.2 8.5 (0.85)
88 CHECKING OUT 8.2 5.4 0.53 1.1 7.1 (0.85)
21 LET IT RIDE 3.6 19.4 (0.82) 4.3 25.4 (0.83)
42 JOHNNY HANDSOME (TS) 6.0 21.5 (0.72) 5.0 28.2 (0.82)
45 LISTEN TO ME (C) 1.6 16.1 (0.90) 3.8 21.2 (0.82)
66 WORTH WINNING 2.2 14.0 (0.84) 3.4 18.3 (0.82)
67 GLEAMING THE CUBE 5.3 11.8 (0.55) 2.7 15.5 (0.82)
81 SEE YOU IN THE MORNING 5.1 18.3 (0.72) 4.4 24.0 (0.82)
43 MUSIC BOX (TS) 7.1 19.4 (0.63) 4.9 25.4 (0.81)
69 WHEN THE WHALES CAME 7.5 4.3 0.75 1.1 5.6 (0.81)
84 HOW TO GET AHEAD IN ADVERTISING 8.6 5.4 0.61 1.4 7.1 (0.80)
44 IMMEDIATE FAMILY (C) 2.2 15.1 (0.85) 4.3 19.7 (0.78)
65 MILLENNIUM 8.2 16.1 (0.49) 4.7 21.2 (0.78)
 First Film Hypothetical Sequel
PV of PV of
PV of Negative PV of Negative
Net Inflows Cost at One­Year Net Inflows Cost at One­Year
Studio/Movie Title at Year 1a Year 0 Returnb at Year 4a Year 3 Returnb
24 THE EXPERTS 8.2 12.9 (0.36) 1.1 16.9 (0.94)
85 POWWOW HIGHWAY 8.4 4.3 0.96 1.2 5.6 (0.78)
48 LOVERBOY (TS) 2.0 10.8 (0.81) 3.2 14.1 (0.77)
39 TROOP BEVERLY HILLS (C) 6.9 19.4 (0.64) 6.5 25.4 (0.74)
58 BLOODHOUNDS OF BROADWAY (C) 8.2 3.2 1.54 1.1 4.2 (0.74)
20 WE'RE NO ANGELS 2.1 23.7 (0.91) 8.7 31.0 (0.72)
40 TAP (TS) 6.7 16.1 (0.58) 6.4 21.2 (0.70)
96 NEW YORK STORIES (T) 10.7 20.4 (0.47) 8.2 26.8 (0.69)
78 DEAD-BANG 6.7 15.1 (0.55) 6.4 19.7 (0.68)
38 TRUE BELIEVER (C) 5.8 15.1 (0.61) 6.7 19.7 (0.66)
32 CASUALTIES OF WAR (C) 11.4 26.9 (0.57) 12.3 35.3 (0.65)
80 SECOND SIGHT 5.8 10.8 (0.46) 4.9 14.1 (0.65)
22 SHIRLEY VALENTINE 8.9 8.6 0.04 4.3 11.3 (0.62)
34 (FAMILY BUSINESS (TS) 8.3 19.4 (0.57) 10.2 25.4 (0.60)
36 WHO'S HARRY CRUMB? (TS) 7.6 15.1 (0.49) 7.9 19.7 (0.60)
35 SHE'S OUT OF CONTROL (C) 10.5 16.1 (0.35) 9.0 21.2 (0.58)
76 PINK CADILLAC 10.1 20.4 (0.51) 11.4 26.8 (0.58)
33 CHANCES ARE (TS) 10.8 19.4 (0.44) 10.9 25.4 (0.57)
14 RENEGADES 6.9 12.9 (0.46) 7.4 16.9 (0.56)
55 EAT A BOWL OF TEA (C) 8.4 2.2 2.92 1.2 2.8 (0.56)
98 DISORGANIZED CRIME (T) 7.8 11.8 (0.34) 7.1 15.5 (0.54)
79 DEAD CALM 7.6 9.7 (0.22) 6.1 12.7 (0.52)
97 GROSS ANATOMY (T) 7.8 12.9 (0.39) 8.1 16.9 (0.52)
41 DEEPSTAR SIX (TS) 7.1 8.6 (0.17) 5.8 11.3 (0.49)
74 HER ALIBI 16.8 21.5 (0.22) 15.0 28.2 (0.47)
31 LOOK UP (TS) 14.1 18.3 (0.23) 13.2 24.0 (0.45)
95 BLAZE (T) 15.0 19.4 (0.22) 14.7 25.4 (0.42)
72 TANGO & CASH 48.9 59.1 (0.17) 46.7 77.6 (0.40)
11 DAD 17.7 20.4 (0.13) 17.4 26.8 (0.35)
75 NEXT OF KIN 13.2 12.9 0.02 11.7 16.9 (0.31)
30 GLORY (TS) 29.3 22.6 0.30 20.8 29.6 (0.30)
60 THE ABYSS 48.4 48.4 0.00 44.6 63.5 (0.30)
94 AN INNOCENT MAN (T) 19.7 18.3 0.08 17.0 24.0 (0.29)
 First Film Hypothetical Sequel
PV of PV of
PV of Negative PV of Negative
Net Inflows Cost at One­Year Net Inflows Cost at One­Year
Studio/Movie Title at Year 1a Year 0 Returnb at Year 4a Year 3 Returnb
24 THE EXPERTS 8.2 12.9 (0.36) 1.1 16.9 (0.94)
6 ALWAYS 34.3 33.3 0.03 31.4 43.7 (0.28)
64 THE FABULOUS BAKER BOYS 14.1 14.0 0.01 13.2 18.3 (0.28)
99 CHEETAH (W) 9.2 7.5 0.22 7.1 9.9 (0.28)
29 THE BEAR (TS) 22.4 22.6 (0.01) 21.5 29.6 (0.27)
13 THE WIZARD 12.7 8.6 0.48 8.7 11.3 (0.23)
62 SAY ANYTHING 17.5 14.0 0.25 14.6 18.3 (0.21)
19 COUSINS 21.2 14.0 0.52 16.2 18.3 (0.11)
17 BLACK RAIN 44.1 32.3 0.37 39.0 42.3 (0.08)
63 SKIN DEEP 16.6 10.8 0.54 14.0 14.1 (0.01)
9 THE DREAM TEAM 28.4 16.1 0.76 22.9 21.2 0.08
73 LEAN ON ME 29.8 16.1 0.85 22.9 21.2 0.08
8 THE 'BURBS 32.2 18.3 0.76 27.3 24.0 0.14
15 HARLEM NIGHTS $55.4 $32.3 $0.7 $51.1 $42.3 $0.2
93 THREE FUGITIVES (T) 36.3 18.3 0.98 29.1 24.0 0.21
5 SEA OF LOVE 53.5 26.9 0.99 44.4 35.3 0.26
28 SEE NO EVIL; HEAR NO EVIL (TS) 40.5 19.4 1.09 32.0 25.4 0.26
12 SHOCKER 14.3 6.5 1.22 12.4 8.5 0.47
61 WEEKEND AT BERNIE'S 30.2 10.8 1.81 22.3 14.1 0.58
7 K-9 37.8 12.9 1.93 29.3 16.9 0.73
77 YOUNG EINSTEIN 13.6 4.3 2.17 10.2 5.6 0.80
59 THE WAR OF THE ROSES $80.8 $26.9 $2.0 $63.8 $35.3 $0.8
18 MAJOR LEAGUE 40.3 12.9 2.12 33.7 16.9 0.99
27 STEEL MAGNOLIAS (TS) 80.4 23.7 2.40 61.7 31.0 0.99
3 FIELD OF DREAMS 59.1 17.2 2.44 47.3 22.6 1.10
10 DO THE RIGHT THING 30.0 7.5 2.98 21.2 9.9 1.15
92 TURNER AND HOOTCH (T) 71.2 19.4 2.68 54.6 25.4 1.15
91 THE LITTLE MERMAID (W) 78.1 21.5 2.63 62.0 28.2 1.20
4 UNCLE BUCK 60.0 16.1 2.72 47.0 21.2 1.22
2 BORN ON THE FOURTH OF JULY 74.5 19.4 2.85 56.8 25.4 1.24
26 WHEN HARRY MET SALLY (C) 83.3 20.4 3.08 64.6 26.8 1.41
90 DEAD POETS SOCIETY (T) 92.5 21.5 3.30 74.4 28.2 1.64
16 PET SEMATARY 52.6 11.8 3.45 41.1 15.5 1.65
 First Film Hypothetical Sequel
PV of PV of
PV of Negative PV of Negative
Net Inflows Cost at One­Year Net Inflows Cost at One­Year
Studio/Movie Title at Year 1a Year 0 Returnb at Year 4a Year 3 Returnb
24 THE EXPERTS 8.2 12.9 (0.36) 1.1 16.9 (0.94)
1 PARENTHOOD $100.1 $21.5 $3.7 $76.8 $28.2 $1.7
70 BATMAN $311.5 $53.8 $4.8 $229.1 $70.5 $2.3
89 HONEY, I SHRUNK THE KIDS (W) $145.5 $23.7 $5.2 $111.2 $31.0 $2.6
71 DRIVING MISS DAISY 101.2 8.6 10.76 77.6 11.3 5.87
25 LOOK WHO'S TALKING (TS) $142.3 $10.8 $12.2 $105.5 $14.1 $6.5

MCA UNIVERSAL

PARAMOUNT PICTURES

SONY PICTURES ENTERTAINMENT

TWENTIETH CENTURY FOX

WARNER BROTHERS

THE WALT DISNEY COMPANY

Average: $27.5 $17.0 $0.7 $21.5 $22.3 ($0.06)

Median: $10.5 $16.1 ($0.02) $8.7 $21.2 ($0.54)
Standard deviation: $41.4 $10.1 $2.1 $31.5 $13.3 $1.2

Interquartile range: $6.9 to $10.8 to (.55) to $3.4 to $14.1 to (.82) to

$34.30 $20.40 0.99 $29.10 $26.80 0.21

a
Net inflows consist of all revenues minus associated distribution fees and expenses.
b
One­year return is defined as:  [PV of net inflows minus PV of negative cost] divided by [PV of negative cost].
c
C=Columbia Pictures;  TS=Tri­Star;  W=Walt Disney;  T=Touchstone.
101.5 101.99
75.8
60.13
60.98
54.48
35.16
38.61
32.99
29
30.56
18.17
14.74
13.16
7.18
Exhibit 9        Summary Statistics for Samples of Films Released in 1987 and 1988a
(dollar figures in millions)

Table A 1987 Data

First Film Hypothetical Sequel
U.S.  U.S. 
Theater  Other Distribution Distribution Negative Theater  Other Distribution Distribution Negative
Studio/Movie Title Rentals Revenue Fees Expense Cost Rentals Revenue Fees Expense Cost

Average (in 1991 $): $21.3 $64.4 $22.8 $21.5 $26.3 $14.9 $48.9 $17.0 $17.4 $31.6

First Film Hypothetical Sequel
PV of PV of
PV of Negative PV of Negative
Net Inflows Cost at One­Year Net Inflows Cost at One­Year
at Year 1a Year 0 Returnb at Year 4a Year 3 Returnb

Average: 39.40 25.80 0.71 30.40 33.80 0.01

Median 30.9 22.3 0.04 24 29.3 (0.39)
Standard deviation: 38.4 9.4 2.05 29.4 12.3 1.20

Interquartile range: $11.10 $18.80 0.60 $8.80 $24.60 (0.75)

to to to to to to
$52.10 $29.30 1.22 $40.20 $38.50 0.31

Table B 1988 Data

First Film Hypothetical Sequel
U.S.  U.S. 
Theater  Other Distribution Distribution Negative Theater  Other Distribution Distribution Negative
Studio/Movie Title Rentals Revenue Fees Expense Cost Rentals Revenue Fees Expense Cost

Average (in 1991 $): $19.7 $60.5 $21.3 $20.5 $24.4 $13.8 $46.1 $15.9 $16.7 $29.2

First Film Hypothetical Sequel
PV of PV of
PV of Negative PV of Negative
Net Inflows Cost at One­Year Net Inflows Cost at One­Year
at Year 1a Year 0 Returnb at Year 4a Year 3 Returnb

Average: $36.4 $23.8 0.48 $28.2 $31.3 (0.13)

Median 22.4 20.3 0.01 17.5 26.6 0.40
Standard deviation: 38.2 11.4 1.37 29.3 14.9 0.80

Interquartile range: 9.3 16.9 (0.48) 7.5 22.2 (0.69)

to to to to to to
42.1 24.8 0.93 32.5 32.5 0.14

a
One-year return is defined as: [PV of net inflows minus PV of negative cost] divided by [PV of negative cost].
 1 PARENTHOOD $100.1 $21.5 $3.7 $76.8 $28.2
2 BORN ON THE FOURTH OF JULY 74.5 19.4 2.85 56.8 25.4
3 FIELD OF DREAMS 59.1 17.2 2.44 47.3 22.6
4 UNCLE BUCK 60.0 16.1 2.72 47.0 21.2
5 SEA OF LOVE 53.5 26.9 0.99 44.4 35.3
7 K-9 37.8 12.9 1.93 29.3 16.9
8 THE 'BURBS 32.2 18.3 0.76 27.3 24.0
9 THE DREAM TEAM 28.4 16.1 0.76 22.9 21.2
10 DO THE RIGHT THING 30.0 7.5 2.98 21.2 9.9
12 SHOCKER 14.3 6.5 1.22 12.4 8.5
15 HARLEM NIGHTS $55.4 $32.3 $0.7 $51.1 $42.3
16 PET SEMATARY 52.6 11.8 3.45 41.1 15.5
18 MAJOR LEAGUE 40.3 12.9 2.12 33.7 16.9
25 LOOK WHO'S TALKING (TS) $142.3 $10.8 $12.2 $105.5 $14.1
26 WHEN HARRY MET SALLY (C) 83.3 20.4 3.08 64.6 26.8
27 STEEL MAGNOLIAS (TS) 80.4 23.7 2.40 61.7 31.0
28 SEE NO EVIL; HEAR NO EVIL (TS) 40.5 19.4 1.09 32.0 25.4
59 THE WAR OF THE ROSES $80.8 $26.9 $2.0 $63.8 $35.3
61 WEEKEND AT BERNIE'S 30.2 10.8 1.81 22.3 14.1
70 BATMAN $311.5 $53.8 $4.8 $229.1 $70.5
71 DRIVING MISS DAISY 101.2 8.6 10.76 77.6 11.3
73 LEAN ON ME 29.8 16.1 0.85 22.9 21.2
77 YOUNG EINSTEIN 13.6 4.3 2.17 10.2 5.6
89 HONEY, I SHRUNK THE KIDS (W) $145.5 $23.7 $5.2 $111.2 $31.0
90 DEAD POETS SOCIETY (T) 92.5 21.5 3.30 74.4 28.2
91 THE LITTLE MERMAID (W) 78.1 21.5 2.63 62.0 28.2
92 TURNER AND HOOTCH (T) 71.2 19.4 2.68 54.6 25.4
93 THREE FUGITIVES (T) 36.3 18.3 0.98 29.1 24.0
$1.7 1 PARENTHOOD $76.8 $28.2
1.24 2 BORN ON THE FOURTH OF JULY 56.8 25.4
1.10 3 FIELD OF DREAMS 47.3 22.6
1.22 4 UNCLE BUCK 47.0 21.2
0.26 5 SEA OF LOVE 44.4 35.3
0.73 7 K-9 29.3 16.9
0.14 8 THE 'BURBS 27.3 24.0
0.08 10 DO THE RIGHT THING 21.2 9.9
1.15 12 SHOCKER 12.4 8.5
0.47 15 HARLEM NIGHTS $51.1 $42.3
$0.2 16 PET SEMATARY 41.1 15.5
1.65 18 MAJOR LEAGUE 33.7 16.9
0.99 25 LOOK WHO'S TALKING (TS) $105.5 $14.1
$6.5 26 WHEN HARRY MET SALLY (C) 64.6 26.8
1.41 27 STEEL MAGNOLIAS (TS) 61.7 31.0
0.99 28 SEE NO EVIL; HEAR NO EVIL (TS) 32.0 25.4
0.26 59 THE WAR OF THE ROSES $63.8 $35.3
$0.8 61 WEEKEND AT BERNIE'S 22.3 14.1
0.58 70 BATMAN $229.1 $70.5
$2.3 71 DRIVING MISS DAISY 77.6 11.3
5.87 77 YOUNG EINSTEIN 10.2 5.6
0.08 89 HONEY, I SHRUNK THE KIDS (W) $111.2 $31.0
0.80 90 DEAD POETS SOCIETY (T) 74.4 28.2
$2.6 91 THE LITTLE MERMAID (W) 62.0 28.2
1.64 92 TURNER AND HOOTCH (T) 54.6 25.4
1.20 93 THREE FUGITIVES (T) 29.1 24.0
1.15 $57.2 $24.5
0.21
1 PARENTHOOD $76.8 $28.2
4 UNCLE BUCK 47.0 21.2
12 SHOCKER 12.4 8.5
16 PET SEMATARY 41.1 15.5
18 MAJOR LEAGUE 33.7 16.9
25 LOOK WHO'S TALKING (TS) $105.5 $14.1
70 BATMAN $229.1 $70.5
89 HONEY, I SHRUNK THE KIDS (W) $111.2 $31.0
91 THE LITTLE MERMAID (W) 62.0 28.2
92 TURNER AND HOOTCH (T) 54.6 25.4
$773.4 $259.5