INTERGALACTICFINANCE:VALUINGTHESTARWARSFRANCHISE

Valuethestarwarsfranchise,youmust…

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MovieHistory

$3,905

$2,070

$1,658$1,469

$1,267$1,035

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Episode4:ANewHope Episode5:EmpireStrikesBack

Episode6:ReturnoftheJedi

Episode1:ThePhantomMenace

Episode2:AWackoftheClones

Episode3:RevengeoftheSith

StarWarsMovies:BoxOfficeReceipts(inmillionsofUSdollars)

DomesZcBoxOffice(in2015$) WorldwideBoxOffice(in2015$)

Year:2005MovieBudget:$138mil

Year:2002MovieBudget:$152mil

Year:1999MovieBudget:$165mil

Year:1977MovieBudget:$43mil

Year:1980MovieBudget:$52mil

Year:1983MovieBudget:$77.7mil

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TheAdd-Ons

¨  VHS/DVD/Rentals:StarZngwithvideotapes(VHS)salesandrentalsinthe1970s,morphingintoDVDsalesinthelastdecadeandconZnuingintostreamingintoday'senvironment.

¨  ToysandMerchandise:AcZonfiguressoldbyKenner(1978-1985)andHasbro(1995-2011)amountedtoalmost$10billion(unadjustedforinflaZon).OthertoysandcollecZblesaswell.

¨  Gaming:StarZngwithanunlicensedgamefortheAppleIIonacasseWetape,followedbytable-topgamebyKennerandgamesfortheAtari.StarZngin1992,thegamesshiiedawayfromthefilmstotheexpandedStarWarsuniverse,firstwiththeX-wingcomputergamesandlaterwithDarkForces,ashootergame.

¨  Books:Therehavebeenalmost360books,with76authors,intheStarWarsseries.

¨  TVSeries/Other:ThelongestlivedTVseries,CloneWars,hasbeenrunningforsevenseasonsandanewone,StarWarRebels,hasbeenproducedbyDisneyfortwoyears.TherearerumorsthatNeklixisplanningthreelive-acZonseries.

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TheAdd-Ons’Numbers

Revenues As%oftotal

Movies $6,739.33 20.06%

DVDs/Video/Rentals $7,673.40 22.84%

Toys/Merchandise $12,107.00 36.03%

Books $1,820.00 5.42%

Gaming $3,400.00 10.12%

Other $1,860.00 5.54%

Total $33,599.73

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TheStarWarsPie

Movies20%

DVDs/Video/Rentals23%

Toys/Merchandise36%

Books5%

Gaming10%

Other6%

StarWarsFranchiseRevenues

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Add-onDollar/BoxOfficeDollar

Revenues As%ofMovieRevenues

DVD&Video $7,673 $1.14

Toys&Merchandise $12,107 $1.80

Books $1,820 $0.27

Gaming $3,400 $0.50

Other $1,860 $0.28

Total $3.99

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TheDisneyAcquisiZon

¨  In2012,Disney,acquiredtheStarWarsfranchisefor$4billion,fromGeorgeLucas,withplanstoproducethreemoreStarWarsmovies.

¨  Disney’splansatthatZmeweretoproducethreemoremoviesintheseries,withspinoffsandtobuildonthefranchise’sadd-ons(TV.Merchandiseetc.).

¨  AttheZmeoftheacquisiZon,Iarguedthatitwasafairprice,givenDisney'shistorywithdeveloping,maintainingandmerchandisingfranchises,buthadtodrawonthepotenZalforsynergytojusZfythenumber.

¨  WiththereleaseofStarWars:TheForceAwakensjustabouttendaysago,Disneyseemstobemorethandeliveringonitspromise,asthemoviehasbrokenboxofficerecordsandisonitswaytodeliveringaglobalboxofficeof$2billionormore.

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ProjecZngFutureRevenues

MainStarWarsMovies StarWarsSpinoffsStarWarsVII

StarWarsVIII

StarWarsIX RogueOne

HansSolo?

BobaFeQ?

Yearsfromnow 0.0 2.0 4.0 1.0 3.0 5.0

Revenues Revenues Revenues Revenues Revenues Revenues

Movies $2,000.00 $2,080.80 $2,164.86 $1,020.00 $1,061.21 $1,104.08

Streaming/Video $2,400.00 $2,496.96 $2,597.84 $1,224.00 $1,273.45 $1,324.90

Toys&Merchandise $4,000.00 $4,161.60 $4,329.73 $2,040.00 $2,122.42 $2,208.16

Books/eBooks $400.00 $416.16 $432.97 $204.00 $212.24 $220.82

Gaming $1,000.00 $1,040.40 $1,082.43 $510.00 $530.60 $552.04

Other $1,000.00 $1,040.40 $1,082.43 $510.00 $530.60 $552.04

Total $10,800.00 $11,236.32 $11,690 $5,508.00 $5,730.52 $5,962.04

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OperaZngIncomeandPresentValue

MainStarWarsMovies StarWarsSpinoffsStarWarsVII

StarWarsVIII

StarWarsIX RogueOne

HansSolo?

BobaFeQ?

Yearsfromnow 0.0 2.0 4.0 1.0 3.0 5.0

Aier-taxOperaZngIncome(movies) $281.96 $293.35 $305.20 $143.80 $149.61 $155.65Aier-taxOperaZngIncome(non-movies) $924.00 $961.33$1,000.17 $471.24 $490.28 $510.09

PresentValue $1,205.96 $1,083.50 $973.47 $571.55 $513.51 $461.36

ValueofnewStarWarsmovies= $4,809.34

ValueofconZnuingincome= $5,162.92!Valuedasagrowingperpetuity

ValueofStarWars= $9,972.26

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ValuingtheFranchise

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TheRestoftheStory

¨  IfmyesZmateofthevalueofthefranchiseholdsup,thishasbeenagreatdealforDisney,sinceitdoesnotincludeanyofthepotenZalsynergiesfromthedeal.

¨  CoupledwiththepayoffthatDisneygotfromtheMarvelacquisiZon,itsuggeststhatDisneyhasasignificantadvantageincreaZngvaluefromatleastsomeestablishedmoviefranchises.

¨  Basedonmysmallsamplesize(anecdotalmorethanstaZsZcalevidence),IwouldarguethatDisneyshouldbelookingatfranchisesthat•  Arefamily-oriented•  Areextendable•  HavesignificantmerchandizingappealAnysuggesZonsforwhatshouldbenextonthelist?