Valuation 3:D - 1(25) Entertainment and Media: Markets and Economics Franchise Valuation

Valuation 3:D - 2(25) Valuation

3:D - 3(25) Valuation in Theory Twitter, February 2014

Valuation 3:D - 4(25) Employing a well known theorem: $240M/0.016 = $15.0B

Valuation 3:D - 5(25) Facebook $104B IPO At $38/sh $224B A fortuitous bet by Microsoft valuation is as much as $224B. Apx 1,500% return in 7 years.

Valuation 3:D - 6(25) The Discounted Stream of Profits Model Is So 20 th Century Aswath Damodaran (Stern School of Business, NYU, March 7, 2014) A couple of weeks ago, Facebook announced that it was acquiring WhatsApp for $19 billion. That sounded like an astoundingly high price to pay for a company with 55 employees and very little revenue in the most recent time period. While WhatsApp's messaging service has almost 450 million users, growing significantly by the day, the business model for WhatsApp, which emphasises that it accepts no advertising and charges users $1/year (after an initial year of free service) seems incapable of delivering the earnings that you would need to sustain the price paid by Facebook. Or is it? Facebook is valuing the increased user base. Facebook knows almost a billion phone numbers. How do we translate that into increases in the value of Facebook (not of WhatsApp)?

Valuation 3:D - 7(25) $135 Million =5088&partner=rssnyt&emc=rss Klimt, to Ronald Lauder

Valuation 3:D - 8(25) Uncertainty in Valuation: Valuation is a forecast

Valuation 3:D - 9(25) Sometimes the forecast is incorrect. Yahoo Valuation  Yahoo! 2004 Gross Revenue: 3.60 billion  Yahoo! 2004 Net Income: 0.84 billion  Microsoft Price: $45B  Yahoo! Revenue about $7B in 2008  If Yahoo! were essentially the same company in 2008, we’d expect ($7B/$3.6B)$0.84B = 1.63B profit per year. $45B offer = 27.6 times earnings! But, in first quarter 2008:

Valuation 3:D - 10(25) Markets Move Quickly to 2012 Yahoo was once the leading internet company but has been forced to watch as relative upstarts like Google (NASDAQ: GOOG) and Facebook race past it. Things have gone downhill for Yahoo ever since it unwisely rejected a $45 billion buyout offer from Microsoft (NASDAQ: MSFT) four years ago. Its current market valuation is now just barely over a third of the generous Microsoft offer. Unwise in retrospect. Was it unwise at the time?

Valuation 3:D - 11(25) Valuation Matters

Valuation 3:D - 12(25) Valuing “The Right” Viacom had the value of the Google purchase as a foundation for its claim.

Valuation 3:D - 13(25) That Viacom Lawsuit  Real lawsuit for damages?  Gambit for establishing bargaining position?  Warner Music – YouTube, 2005, revenue sharing arrangement. A share of the ad revenues Warner “channels” set up on YouTube.

Valuation 3:D - 14(25) 6/23/10 -- Safe Harbor Defense

Valuation 3:D - 15(25) A Bid that Seemed Too High *

Valuation 3:D - 16(25) This is Vertical Integration

Valuation 3:D - 17(25) Realized Market Valuation

Valuation 3:D - 18(25) NHL 2005,2009,2014 – Value Seems Disconnected From Income Team/Principal Owner Value ($M) Income ($M) New York Rangers/Cablevision Systems $ Dallas Stars/Thomas Hicks Toronto Maple Leafs/Larry Tanenbaum Philadelphia Flyers/Comcast-Spectacor Detroit Red Wings/Michael Ilitch ,300 1,100 1,

Valuation 3:D - 19(25) Baseball 2009, 2014 Note the large variance of the valuations.

Valuation 3:D - 20(25) National Football League (2009,2014) ,200 2,400 2,600 2,100 1,800 1,850 1,750 1,225 1,700 1,450 1,500 1,250 1,120 1,100 1,400 1,350 1,375 1,300 1,160 1,330 Spectacular brand new city owned stadium

Valuation 3:D - 21(25) MLB vs. NFL (2009) The interesting comparison is the variance, not the mean.

Valuation 3:D - 22(25) Basketball 2009, ,500 2,600 2, ,250 1, ,700 1, , , Franchise values have exploded. New $24 billion television contract

Valuation 3:D - 23(25)

Valuation 3:D - 24(25) Not Just an American Thing Manchester United: English Premier League Soccer: Revenue - $225million: Value - $1000m (2002) And Manchester United can count a world-wide fan base of over 50 million zealots recruited to the cause. The Manchester United Food & Beverage Group (MUFB) has opened a restaurant in the Chinese city of Chungdu. Eventual plans could see up to as many as 100 restaurants opened in the Asia market over the next ten years. MU branded football (soccer) restaurants selling shirts, posters,videos and novelty gifts - as well as food - are planned for Singapore, Malaysia, Hong Kong, Thailand, Taiwan, South Korea, the Philippines, Indonesia, Japan, India and Brunei with the stated aim of cashing in on the lucrative interest many Asian nations (estimated at 17 million fans) hold for the English game.

Valuation 3:D - 25(25) World Football: 2010, ,810 3,440 1,331 1, , … …