Movie Case

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Question 1

1A What is the timeline of events for a movie that results in a sequel?

A producer can only start with the production of a movie when he owns the film rights of a literary property, by purchasing the rights or by creating the property on their own.The sequel rights are purchased before the production of the original movie starts. Theproduction will take one year time. The 1st movie will be released 1 year after start of production. The sales/revenues realized in the first month after release date of the 1stmovie in the US movie theaters determine the possible success of the sequel (the proof of the pudding is in the eating). Right then Arundel Partners (AP) decides whether tokeep the sequel rights or sell the sequel rights in the market. If AP decides to keep thesequel rights we assume that AP must exercise the option to produce the sequel (medianrelease date of the sequel) within three years after the start of the production of the 1stmovie. Depending on the terms of the purchase contract agreed upon with the studio theexpiration time of the option can differ. According to the case information the expirationtime differs from 1 to 5 years.

When doe Arundel Partners (AP) buy the sequel rights? Why?

AP will buy the sequel rights when the studio owns the rights for the first movie and justbefore the start of the production, so at the end of the pre-production phase.AP would contract to purchase all the sequel rights for a studio's entire production duringa specified period (1 to 2 years) or alternatively for a specified number of major films (15To 30).The reasons to buy exactly at this moment are the following:

-the studio has decided to exercise the option to produce the 1st movie; if AP wouldbuy sequel rights before the studio actually owns the producing rights (option phase)it