Investment Analysis of Arundel PartnersEXECUTIVE SUMMARYForewordThe proposed business venture, Arundel Partners, is an investment group that would purchase the sequel rights associated with all films produced by 1 or more studios of US film productions selected for a specified period of time or a specific number of films. As investment analysts, our goal is to evaluate the value of the sequel rights to enable a determination of the value of the overall investment, as well as a reasonable price per film for the sequel rights. Arundel Partners plans to pay to secure ownership of sequel rights to a film series before production. It is assumed that only a small percentage of films produced by a studio will be sequel candidates, based on the profitability of the film's initial release. It is also recognized that the profitability of a sequel is generally lower than that of the initial release. This estimated profit will determine the contract offer proposed by Arundel Partners to the selected firm. Sequence of Events**Note: The diagram in Figure 1.1 outlines the timeline as it applies to the Arundel investment described. Prior to the proposal, Arundel will need to determine which studio they believe offers the best potential for success and propose the contract before knowing the films to be produced during the contract period. Arundel will then own the rights to the sequels as defined in the contract. The story suggests that a studio might consider an offer of around $2 million per film for the sequel rights to every film it produces that year. FIGURE 1: SUM...... half of the sheet...... 3) performance rights; 4) public display rights; and 5) the right to prepare derivative works. It is important that Arundel understands how this may impact the long-term viability of its investment and that all criteria required as part of the transaction are incorporated into the proposal agreement. Major movie studios may impose restrictions on the transfer of ownership of copyrights on highly profitable films. Arundel's partners should insist on a contract whereby purchasing subsequent rights also transfers the copyright. Such a clause included in the contract would protect Arundel's rights from diminution or deterioration and avoid disputes over literary ownership. By choosing to acquire sequel rights, Arundel Partners should be free to transfer the rights to third parties to make a profit. agreement and this clause should be included in the contract.