Sony Pictures Entertainment: Fallout from the Hacking Scandal Jessica O’Donnell, Chipo Runesu, Sam Gray, Brooke Katzmarek

Mock Portfolio Categories O Comedy, Same Director, Same Actors O Comedy, 1 actor O Comedy with similar budget (35-60M) O Comedy with dissimilar budget Categories Weighted and Used to Calculate O Total Expected Worldwide Box Office Revenues O Number of Theaters O Average Revenue per Theatre

Schedule of Revenues O Growth Assumptions O 2015 monthly rate: -15% O 2016 monthly rate: -25% O Growth in perpetuity

Schedule of Revenues

WACC 12/31/2013 WACC Inputs Rm8.13% Rf1.50% Beta1.102 Re8.81% Tax Rate31.2% Rd6.19% E65.63% D34.37% WACC7.25%

December 31 st, 2013 PV of Revenues $149,569,202 Budgeted Costs$44,000,000 Overall Profitability $105,569,202

December 16 th, 2014 Assumptions O Revenue Alterations O 30% overall decrease in box office attendance O 5% increase in electronic viewing O Additional Costs O PR Consultant: $1,000,000 O Cyber Security Increase: $96,154 O Additional Marketing: $5,000,000 O WACC Adjustments O 6.02%

December 16 th, 2014 PV of Revenues $103,947,016 Budgeted Costs + Additional Costs $44,000,000 + $6,096,154 = $ 50,096,154 Overall Profitability $80,850,862 Time Value of Money Adjusted Profitability$78,200,230

December 20 th, 2014 Assumptions O Revenue Alterations O Eliminate DVD sales O 300 theaters screening O 10% decrease in expected theater revenues O 5% discount for electronic viewing sites O Additional Costs O No change O WACC Adjustments O 6.02% (no change)

December 20 th, 2014 PV of Revenues $50,146,082 Budgeted Costs + Additional Costs $44,000,000 + $6,096,154 = $ 50,096,154 Overall Profitability $49,928 Time Value of Money Adjusted Profitability$ (2,600,704)

Conclusion O Heavy losses for SPE due to terrorist threat O Loss of Revenues and Additional Costs O Mitigated losses by increase of electronic revenues O Early release date and increased publicity

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