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1
IM Internationalmedia AG Press Conference, 18 November 2002
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3
> Agenda
Introducing Comments This presentation is intended as a guidance for the conference call. It
focuses on the company’s efforts to adapt its cost structure to the
current filmed entertainment’s market conditions. Therefore it omits a
detailed description about the company’s history. An initial forecast for
2003 will also be provided. The presentation should only be interpreted
with the help of oral comments from the management board. The
presentation addresses the following topics:
Future Strategy Business Outlook 2003
Market Acceptance
Overhead Requisites
Development Costs
Film slate
Revenues/Costs
Cash Projection
4
Internationalmedia Strategy
5
> Internationalmedia Strategy
IM
Development
Demand Supply
IM will find a balanced market position
IM is in the fortunate position to be able to cut back on film development as it already has several promising projects ready for greenlighting over the next two years
IM will adapt its overhead cost structure as development and distribution face strategic operative changes, e.g. one or several domestic / foreign distribution deals
Enhancing market acceptance through one or several domestic / foreign distribution deals
OverheadMarket
Acceptance
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Internationalmedia StrategyMarket Acceptance
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Company Production FinancingDomestic Foreign
Features Studio Bank Soft
MoneyStudio Deal
Foreign Output Deals
Foreign Sales
Sales Servicing
Intermedia
Spyglass
New Regency
Mandalay
Beacon
Revolution
Distribution
Strategic opportunity if closing a distribution deal
Competitive Advantage: Intermedia differentiates itself through soft money (e.g. tax funds in Germany and Netherlands, Sale-and-Leasebacks and Government Subsidies in multiple foreign jurisdictions) and its foreign sales/servicing and has produced studio level films without the benefit of a studio deal
Competitive Disadvantage: White spots are competitive disadvantages, especially under difficult market conditions, as it is hard to push film projects into the market. A domestic/foreign distribution deals would significantly increase its competitive position in the market
> Market Acceptance
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IM focuses on the profitable low and high budget films
Internationalmedia will provide its distribution partners with two targeted slates of films
Rationale: Films with budgets over 75 million US$ and under 25 million US$ prove to have higher profit potential than films with budgets in between
• Event/Tentpole Slate: Intermedia will produce two to four high concept, star driven films annually with budgets greater than 75 million US$
• Genre/Concept Slate: Intermedia will produce or acquire two to four films annually with budgets less than 25 million US$, targeted by genre (Scream) or concept/demographic (American Pie)
> Market Acceptance
9
Internationalmedia’s distribution strategy has three primary elements:
1. Domestic: Secure a multi-picture distribution deal for four to five films per year. The balance will be distributed on a case by case basis.
2. Foreign: Negotiate selective distribution deals in two key territories with guaranteed TV revenues
3. Foreign: Continue to pre-sell films in other territories on an individual or small package basis; alternatively, sell all foreign rights to a single studio
Other elements include:• IEG will produce and distribute one to two films each year • Intermedia will be opportunistic in acquiring and distributing third party
produced films• The distribution group will service 3-5 non-Intermedia films annually
Distribution strategy secures constant output
> Market Acceptance
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Internationalmedia StrategyDevelopment Cost Reduction
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> Development Cost Reduction
5
10
15
20
25
30
2001 2002 2003 2004 2005
Overhead Deals
Overhead producer deals will be reduced significantly.
Development Projects
Development spending can be reduced as a large number (over 50) of projects are already in the pipeline at an advanced stage.
In million US$
Cost cutting results in 17 million US$ in yearly savings
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Internationalmedia StrategyOverhead Cost Reduction
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Overhead will decrease significantly
Q4Q1
Q2Q3 Q4 Q1 Q2 Q3 Q4
Overheads by Quarter
0
2.000
4.000
6.000
8.000
10.000
12.000
2001 2002
´000
US
$
> Overhead Cost Reduction
2003
14
Internationalmedia Outlook 2003
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> Film Outlook 2003
Major US-releases in each of the four quarters
Financial Planning 2003Revenue and Assumptions
US Releases 2003
Quarter 1 National Security (Martin Lawrence, Steve Zahn) 01/17/2003
Life of David Gale (Kevin Spacey, Kate Winslet) 02/21/2003
Dark Blue (Kurt Russell, Ving Rhames) 02/21/2003
Quarter 2 Basic (John Travolta) 04/18/2003
Quarter 3 Terminator 3 (Arnold Schwarzenegger) 07/02/2003
Mindhunters (Val Kilmer, Christian Slater) Summer 2003
Quarter 4 Suspect Zero (Ben Kingsley) Fall 2003
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Terminator 3 with outstanding potential
> Film Outlook 2003
Terminator 2 snap shot
205 m $ US B.O. + 312 m $ B.O. rev. = 517 m $ tot. B.O. *) #1 film in 1991 US Box office Film release date: 4 July 1991
Terminator 3 potential
Terminator still one of the top franchise names Ancillary rights such as video games through
Infogrames, theme parks, etc. IM participates 50% in worldwide theatrical and video
gross revenues
Current market characteristics
Sequels are latest winners in US Box office No sales fading at sequels with
o special effects
o strong marketing campaign Old 2/3 rule of thumb not valid anymore
o Rush Hour II (+21%)
o Mission Impossible II (+46%)
*) in 1991-dollar-value
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> Revenue Outlook 2003
IM continues to drive up revenues in 2003
Production Volume Overages and Library
• Production Start for 5 – 7 films
• Total Production Volume of approx. US$ 400m – 450m
• Traffic
• Iris
• The Wedding Planner
• Sliding Doors
• Largo and MEI library
Financial Planning 2003Revenue and Assumptions
(T3 overages expected but not included)
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225
Revenue CAGR bigger than 35%
> Revenue Outlook 2003
Revenue Outlook 2003
RevenuesIn million €
Source: IM Internationalmedia AG
1997 1998 1999 2000 2001 2002e 2003e0
50
100
150
200
250
300
350
400
150200
250
300
375
0
100
200
300
400
500
600
700
Low Medium High
Terminator 3 Potential
International B.O.Domestic B.O.
Box Officein million €
19
Cash position stabilizes due to cost cutting efforts
> Cash Outlook 2003
Cash position controlled in 2003
Source: IM Internationalmedia AG
55.4 18.1
12.8
4.0
14.0
55.4
3.546.0
DevelopmentRecoupment
DevelopmentSpent
Overhead
CashJanuary 1,
2003 Overages,Ancillary
Rights
Library,Servicing
Fees
UPSIDE:Financing
Fees
20
Internationalmedia will return to profitability in 2003
> Summary Outlook 2003
Profit and Loss Outlook 2003
Revenues 330.0 – 350.0 million US$
Company Overhead 18.1 million US$
Development Costs 11.0 – 13.0 million US$