Arundel Partners Case AnalysisExecutive Summary:A group of investors (Arundel Group) is considering purchasing the sequel rights associated with films produced by one or more major motion picture studios. Film rights must be purchased before films are made. Arundel wants to decide whether to buy all sequel rights to a studio's entire output during a certain time period or buy a certain number of major films. Arundel's profitability depends on the price it pays for a portfolio of sequel rights. Our analysis of Arundel's proposal includes a calculation of the net present value of each film production company. Deciding whether Arundel can make money by buying sequel rights to films depends on whether the net present value of the production company's films is more than the estimated $2 million per film needed to buy the rights. Problem Identification: How are the principals at Arundel Partners planning to make money by buying the rights to sequels? They would be interested in purchasing the sequel rights to one or more studios¡¦the entire production for an extended period of no less than a year. If a particular film was a success and Arundel felt that a sequel would be profitable, he would exercise his rights by producing the sequel. Alternatively, they can sell the rights to the highest bidder. Inevitably, the performance of the original films would not justify sequels, and sequel rights would simply not be exercised for the latter. For most films it becomes pretty clear after the first few weeks in theaters whether a sequel would be cheap or not, based on each film's box office performance. Why partners want to buy a portfolio of right films... paper ......purchase response. As you can see in the table of solution 2, we have estimated the value per film of each production company. MCA Universal, Warner Brothers and Walt Disney Co are the only production companies providing a positive value per film, with values ​​of 9.89, 1.92 and 12.56 million respectively. This value is calculated by dividing the net present value of all films by the total number of films. We also calculated the average value of each production company based on its share of the total number of films produced. Companies with positive values ​​were MCA Universal, Warner Brothers and Walt Disney Co, which is also the only production company to provide a positive value per film, with values ​​of 1.40, 0.37 and 1.40 million respectively . These values ​​are based on the average value per film multiplied by the company's average share in the industry.