Justification

 

Justification to part 1

 

The cost of completing 54/56 minutes of a drama programme varies between £300,000 and £500,000 (£393,000 last year). The new drama series is supposed to be shown in 8 weeks from the 1^st of April 2012. Drama is usually shown once a week. Therefore, VYP has 8 programmes to produce. Given the maximum cost of one programme (taking into account increased expenditures on the prominent actors and screenwriters) total costs sum up to £500,000×8 = £4m. It gives VYP £1m extra. The decent profit of 10 % on the revenue of £5m equals 500,000.

 

Thus, £1m-£500,000=£500,000 which is the maximum to be spent on getting John Strong (meaning his payment + the penalty to GGG for non-fulfillment of the contract). So, in fact there is nothing to be done here, no negotiations with the BBC about the 10 % discount are needed. VYP ultimately receives minimum profit of £500,000 (10 % margin). Maximum profit here depends on the payment needed for John Strong’s playing in the drama. That is the case only if this drama series is supposed to be shown once a week.

 

Justification to part 2

 

If the programme is shown twice a week the maximum profit to be made is 200,000 (4 % margin), which is less margin than last year. It can be estimated that, allowing for some cost savings (such as, studios already built and set, no need to conduct any research or castings, etc.) the series can be made at least prices of £300,000 each (given the fact that last year it was £393,000 each). The total costs then sum up to £4,8m.

But it is worked out without taking into account the additional cost of having John Strong released from the contract with GGG and getting him to play in the drama and the increased fees of now prominent actors and screenwriters. Moreover, if the programme should be shown more than twice a week, no margin at all will occur.

 

Furthermore, if John Strong can play only sharply before the 1^st of April (regardless of whether he can play for the entire 4 months or for only 2 months left after he’s fulfilled his previous contract), the cost of the shooting will rise as hiring the cast beforehand and making them wait for 8 months allegedly doubles the costs (as the cast have to be pre-contracted and won’t be able agree for any other job in 4 months’ advance before the 1^st of April).

 

Since VYP films a drama about the rowers and the hardships of their life outside filming may be required, which surely raises the costs. Plus, some computer graphics may be needed, which also adds to the value of the film.

 

Finally, this drama series should coincide with the rowing championship, which means more sets on during the week. Therefore, the series will be shown in prime-time, and BBC might as well take this into account when considering our request of more revenue, especially if they are interested in high-quality programmes.

 

The proposal to expand into the market of corporate advertising videos which came from Zubinos coffee shops company gives us a wonderful opportunity to suggest another idea both to BBC and Zubinos. Zubinos wants us to make corporate videos and show them either on YouTube or some local TV channels. Nonetheless, in a short-term perspective the margin made on the revenue offered by Zubinos equals approximately -2,9 % (a more detailed report on that was given below), so in the short-term is won’t bring any income. Although in the long-term there is a wonderful opportunity to get significant profit by showing his advertising video on a prominent TV channel such as BBC as we could first demand more money from Zubinos and second, get additional reward from BBC.