1. Analysis of “The Interview” JESSICA MATHES, HARSH MOTA, RUSSELL PANG, JEFFREY MARSCHKE

2. Task 1: Dec 31, 2013

3. Data Chosen for Use * Ferrari, Mark J., and Andrew Rudd. "Investing in Movies." Journal of Asset Management 9.1 (2008): 22-40. JSTOR. Web. 7 Feb. 2015

4. Data Chosen for Use

5. Data Chosen For use

6. Calculating Multiple Average Worldwide Box Office Revenue Earned Per Dollar Invested (AWBOREDI) Broke data into three categories and calculated average multiple within each ◦Bear, Base, Bull

7. Revenue Streams and Percentages Worldwide Box Office (50%) Other (50%) ◦DVD ◦Blue Ray ◦DVD Rental ◦Blue Ray Rental ◦EST ◦VOD/PPV

8. Revenue Streams and Percentages *Palank, Michael. "2012 State of Media Presentation." 2012 State of Media Presentation. N.p., 11 Jan. 2013. Web. 07 Feb. 2015..

9. Revenue Attribution Per Year

10. Weighted Average Cost of Capital (WACC) Used industry averages CAPM model for Return on Equity ◦Risk Free rate – 3.6% ◦Beta – 1.57 ◦Market Risk Premium – 5% Cost of Debt ◦Moody’s bond rating Baa3 – 7% WACC – 8.63% rounded to 9%

11. Assigning Probabilities Ballpark Figure for Box Office Revenue: ◦$ 100-140 million

12. Assigning Probabilities

13. Net Present Value NPV: $ 116,810,395

14. Task 2: Dec 16, 2014

15. Task #2: Threats from North Korea Specific Threats Adjust WACC to 10% ◦Reflect the additional uncertainty ◦Risk averse movie goers ◦Age groups ◦Recent events Alter the proportions relating to the scenarios ◦Reflect a higher chance of not earning incomes

16. Net Present Value NPV: $ 23,022,110

17. Task 3: Dec 20, 2013

18. Task 3: No Movies in Theaters Do not change ticket prices for movies Increase the DVD Prices Projected NPV is -$34million

19. Net Present Value NPV : ($34,324,099)

20. Questions? Any additional questions, feel free to contact us: Jeffrey.Marschke@SPE.com Jessica.Mathes@SPE.com Harsh.Mota@SPE.com Russell.Pang@SPE.com