Entertaniment Industry Economics

Preface = xvii Part Ⅰ. Introduction = 1 Chapter 1. Economic perspectives = 3 1.1. Time concepts = 3 Leisure and work = 3 Recreation and entertainment = 4 Time = 5 Expansion of leisure time = 5 1.2. Supply and demand factors = 9 Productivity = 9 Demand for leisure = 10 Expected-utility comparisons = 12 Demographics and debts = 13 Barriers to entry = 16 1.3. Primary principles = 16 Marginal matters = 16 Price discrimination = 18 Public good characteristics = 18 1.4. Personal-consumption expenditure relationships = 18 1.5. Overview of industry segments = 22 1.6. Concluding remarks = 27 Selected additional reading = 27 Part Ⅱ Media-dependent entertainment = 29 Chapter 2. Movie macroeconomics = 31 2.1. Flickering images = 32 2.2. May the forces be with you = 36 Evolutionary elements = 36 Technology = 36 Capital = 37 Pecking orders = 37 Exhibition = 37 Production and distribution = 38 2.3. Ups and downs = 39 Admission cycles = 39 Prices and elasticities = 41 Production starts and capital = 42 Releases and inventories = 44 Market-share factors = 45 Exchange-rate effects = 50 Financial aggregates = 52 2.4. Markets primary and secondary = 52 2.5. Assets = 56 Film libraries = 56 Technology = 56 Utilization rates = 56 Interest and inflation rates = 59 Collections and contracts = 59 Library transfers = 62 Real estate = 62 2.6. Concluding remarks = 62 Selected additional reading = 63 Chapter 3. Making and marketing movies = 65 3.1. Properties physical and mental = 65 3.2. Financial foundations = 67 Common-stock offerings = 67 Combination deals = 68 Limited partnerships and tax shelters = 69 Bank loans = 72 3.3. Production preliminaries = 72 The big picture = 72 Labor unions = 74 3.4. Marketing matters = 75 Distributors and exhibitors = 75 Sequencing = 75 Distributor-exhibitor contracts = 76 Release strategies, bidding, and other related practices = 79 Exhibition industry characteristics = 80 Home video and merchandising = 83 Home video = 83 Merchandising = 85 Marketing costs = 85 3.5. Profitability synopsis = 86 3.6. Concluding remarks = 88 Selected additional reading = 88 Chapter 4. Financial accounting in movies and television = 92 4.1. Dollars and sense = 92 Contract clout = 92 Orchestrating the numbers = 93 4.2. Corporate overview = 93 Revenue-recognition factors = 94 Inventories = 95 Amortization of inventory = 96 Unamortized residuals = 96 Interest expense and other costs = 98 Calculation controversies = 99 Merger and acquisition issues = 101 4.3. Big-picture accounting = 101 Financial overview = 101 Participation deals = 105 Pickups = 105 Coproduction-distribution = 105 Talent participations and break-even = 107 Producers’ participations and cross-collateralizations = 108 Home-video participations = 108 Distributor-exhibitor computations = 109 Distributor deals and expenses = 110 Studio overhead and other production costs = 113 Truth and consequences = 113 4.4. Television-programming accounting = 114 Feature licensing = 117 Program production and distribution = 118 Development and financing processes = 118 Syndication agreements = 120 Costs of production = 122 Costs and problems of distribution = 123 Timing troubles = 125 4.5. Weak links in the chain = 127 Exhibitors: the beginning and the end = 127 Distributor-producer problems = 129 4.6. Concluding remarks = 130 Selected additional reading = 130 Chapter 5. Music = 132 5.1. Feeling groovy = 132 5.2. Size and structure = 135 Economic interplay = 135 The American scene = 135 The global scene = 139 Composing, publishing, and management = 140 Royalty streams = 140 Performances = 140 Mechanical royalties = 141 Synchronization fees = 141 Copyright = 142 Guilds and unions = 142 Concerts and theaters = 143 5.3. Making and marketing records = 144 Deal maker’s delight = 144 Production agreements = 144 Talent deals = 145 Production costs = 145 Marketing costs = 146 Distribution and pricing = 147 5.4. Financial accounting and valuation = 149 Artists’ perspective = 149 Company perspective = 151 Valuation aspects = 152 5.5. Concluding remarks = 153 Selected additional reading = 153 Chapter 6. Broadcasting = 155 6.1. Going on the air = 155 Technology and history = 155 Basic operations = 158 Regulation and technology = 161 Organizational patterns and priorities = 162 Networks and affiliates = 162 Ratings and audiences = 164 Inventories = 166 Independent and public broadcasting stations = 167 6.2. Economic characteristics = 168 Macroeconomic relationships = 168 Microeconomics considerations = 170 6.3. Financial-performance characteristics = 171 Variable cost elements = 171 Financial-accounting practices = 172 6.4. Valuing broadcast properties = 174 6.5. Concluding remarks = 176 Selected additional reading = 177 Chapter 7. Cable = 181 7.1. From faint signals = 181 Pay services evolve = 182 7.2. Cable industry structure = 183 Operational aspects = 183 Franchising = 187 Revenue relationships = 188 7.3. Financial characteristics = 190 Capital concerns = 190 Accounting conventions = 193 7.4. Development directions = 194 Pay-per-view = 194 Cable’s competition = 195 MMDS = 195 SMATV = 196 DBS／DTH = 196 STV = 196 Telephone companies = 196 7.5. Valuing cable-system properties = 196 7.6. Concluding remarks = 198 Selected additional reading = 199 Chapter 8. Publishing and new media = 202 8.1. Gutenberg’s gift = 202 8.2. Rules of the road = 203 Laws of media = 203 Operating characteristics = 205 8.3. Segment specifics = 206 Books = 206 Educational／Professional = 206 Trade = 207 Periodicals = 208 Newspapers = 208 Magazines and other periodicals = 211 8.4. New Media = 212 Multimedia = 212 Developer／publisher issues = 212 Distribution issues = 212 Internet = 213 8.5. Accounting and valuation issues = 213 Accounting = 213 Valuation = 214 8.6. Concluding remarks = 214 Selected additional reading = 215 Chapter 9. Toys and games = 217 9.1. Not just for kids = 217 Financial flavors = 218 Building blocks = 220 9.2. Chips ahoy! = 222 Slots and pins = 223 Pong: pre and apres = 223 9.3. Structural statements = 224 Home video games = 224 Coin-op = 225 Profit dynamics = 227 9.4. Concluding remarks = 228 Selected additional reading = 228 Part Ⅲ. Live entertainment = 231 Chapter 10. Gaining and wagering = 233 10.1. From ancient history = 233 At first = 233 Gaming in America = 234 Preliminaries = 234 The Nevada experience = 235 Enter New Jersey = 236 Horse racing = 237 Lotteries = 238 Indian reservations, riverboats, and other wagering = 239 10.2. Money talks = 244 Macroeconomic matters = 244 Funding functions = 244 Regulation = 246 Financial performance and valuation = 248 10.3. Underlying profit principles and terminology = 249 Principles = 249 Terminology and performance standards = 250 10.4. Casino management and accounting policies = 253 Marketing matters = 253 Cash and credit = 255 Procedural paradigms = 256 10.5. Gambling and economics = 257 10.6. Concluding remarks = 259 Selected additional reading = 259 Chapter 11. Sports = 263 11.1. Spice is nice = 263 Early innings = 263 The broadcast and cable connection = 265 The wagering connection * = 267 11.2. Operating characteristics = 267 Revenue sources and divisions = 267 Labor issues = 269 11.3. Tax-accounting and valuation = 270 Tax issues = 270 Historical development = 271 Current treatments = 271 Asset valuation factors = 273 11.4. Sports economics = 273 11.5. Concluding remarks = 274 Selected additional reading = 274 Chapter 12. Performing arts and culture = 279 12.1. Audiences and offerings = 279 Commercial theater = 280 On and off-Broadway = 280 Circus = 282 Orchestras = 286 Opera = 286 Dance = 287 12.2. Funding sources and the economic dilemma = 287 12.3. The play’s the thing = 290 Production financing and participations = 290 Operational characteristics = 292 12.4. Economist echoes = 294 Elasticities = 294 Price-discrimination = 294 Externalities = 295 12.5. Concluding remarks = 296 Selected additional reading = 296 Chapter 13. Amusement／theme parks = 299 13.1. Flower power = 299 Gardens and groves = 299 Modem times = 300 13.2. Financial operating characteristics = 301 13.3. Economic sensitivities = 306 13.4. Valuing theme-park properties = 307 13.5. Concluding remarks = 308 Selected additional reading = 308 Part Ⅳ. Roundup = 311 Chapter 14. Epilogue = 313 14.1. Common elements = 313 14.2. Guidelines for evaluating entertainment securities = 316 14.3. Final remarks = 319 Notes = 320 Appendix A: Sources of information = 387 Appendix B: Major games of chance = 389 Blackjack = 389 Craps = 391 Roulette = 393 Baccarat = 396 Slots = 399 Other casino games = 400 Poker = 400 Keno = 440 Big Six wheel = 401 Bingo = 401 Pai Gow, Fan Tan, Sic Bo = 401 Pan = 403 Trente-et-quarante (Rouge et Noir) = 404 Lotteries = 405 Tracks = 406 Sports book = 408 Appendix C: Supplementary data = 411 Glossary = 442 References = 463 Index = 476

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