What’s a Movie Worth? Determining the Monetary Value of Motion Pictures’ TV Rights

Abstract

Motion pictures remain among the most valuable products for broadcast by television (TV) stations around the globe. As a result, TV broadcast rights generate more revenues than the theater box office for the movie studios that own these assets and are often a crucial element in a film’s financing. A key managerial challenge for studios and for TV broadcasters is to determine the monetary value of the TV rights for a movie. This research develops a multi-equation model of a movie’s monetary TV rights value that accounts both for the differences in value-related information over time and for the differences in project-related risk associated with the varying information availability. Drawing on a large data set of U.S.-produced movies that aired on German TV, the authors estimate the model parameters simultaneously through partial least squares modeling as a prediction tool. This approach allows them to separate direct and indirect effects among value drivers and to estimate the monetary value of the German TV rights for individual movies for different points in time. Sellers and buyers can use the model to increase the efficiency and reduce the riskiness of price negotiations for the right to broadcast a particular film on TV.