The Fashion Channel Student Spreadsheet Supplement

Harvard Business School Brief Case 2075

Courseware 9-920-569

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Exhibit 1 Viewer Demographics and Competitor Comparison (% Viewers; Adults over 18 years of age)

The Fashion Lifetime: CNN: Fashion

All TV Viewers Channel Fashion Today Tonight
Time Period 24 x 7 24 x 7 M-F, 9-11 pm M-F, 8-9 pm
Sat.-Sun, 10-11 pm
Male 49% 39% 37% 45%
Female 51% 61% 63% 55%
18-34 30% 33% 43% 27%
35-54 41% 45% 42% 40%
54-74 21% 20% 14% 26%
>74 8% 2% 1% 2%
Income over $100,000 16% 18% 19% 17%

Average rating NA 1.0 3.0 4.0

Average Households 110M 1.1M 3.3M 4.4M

Fashion news
Fashion news, and features with
features, and Fashion news celebrity focus
Programming profile All information and information available

References: U.S. Census, business cocuments, casewriter estimates

Rating -- % TV households watching on average during measured viewing period
Total TV Households = 110 million
Exhibit 2 GFE Associates: National Consumer Survey (Exerpts)

Strongly
Agree
agree
1. It is important to me to know the most up to date fashion trends 16% 20%
2.
3. II rely
rely on
on television
television reports
reports on
on fashion
fashion to
to plan
plan what
what II will
will wear
wear to
onwork
special 6 11
occasions 10 20
4. I like to watch special tv programs on current fashion 15 20
5. TFC is my favorite channel on cable 15 10
6. Shopping for new clothes is one of my favorite leisure activities 15 20
7. I like to shop for clothes for parties and special activities 20 21
8. I don’t really enjoy shopping for clothes and only do it when necessary 15 15
9. I don’t need information on fashion, I just wear what feels comfortable 20 15
10. I use fashion information to be sure my family is well dressed for special
occasions 10 15
11. I like to know what people are wearing in other parts of the country 15 10
12. Fashion is more interesting than many things on television 15 12
13. I am willing to spend money on special clothes for special occasions 15 20
14. I shop around to find the best value on clothes 14 25
15. I like to talk to my friends and family about fashion 20 10
17. I participate in hobbies and sports that require special apparel 20 15
18. I like to plan what to wear in advance of work days and special events 15 20
19. I am more interested in fashion than most people 20 24
20. Watching fashion programs on television is very entertaining 25 20
21. TFC is the best place on television for fashion information 9% 21%
Somewhat Somewhat Strongly
Disagree
agree disagree Disagree
19% 20% 15% 10%
20 25 18 20
25 25 15 5
30 15 15 5
20 16 16 23
25 10 15 15
20 15 10 14
21 20 15 14
20 15 15 15

23 22 20 10
20 15 20 20
15 24 19 15
20 20 15 10
20 20 15 6
14 25 11 20
20 19 15 11
10 20 20 15
15 11 15 15
10 10 20 15
28% 20% 12% 10%
Exhibit 3 GFE Associates: Analysis of Attitude Clusters in U.S. Television Households for The Fashion Channel

Index: Interest in
Involvement in Size of Cluster (% Fashion on TV (100=All
Cluster Fashion HH) Viewere Average)

Highly engaged in
Fashionistas fashion 15% 140

Participate in fashion
Planners & Shoppers on a regular basis 35% 110

Participate in fashion
Situationalists for specific needs 30% 105

Basics Disengaged 20% 50

olds for The Fashion Channel
Demographic Highlights
Female, 61%; Income > $100k, 30%_x000D_
18-34, 50%
Female, 53% 18-34, 25%
Female, 50% Children in HH, 45%_x000D_
18-34, 30%
Female, 45% Male, 55%
Attitude Drivers
Anticipate trends, Stay up to date_x000D_
Think a lot about fashion_x000D_
Enjoy shopping_x000D_
Develop fashion expertise to share_x000D_
Fashion is entertaining
Stay up to date_x000D_
Enjoy shopping_x000D_
Fashion is practical_x000D_
Interested in value
Enjoy shopping for specific needs_x000D_
Think about fashion for specific situations_x000D_
Fashion is both entertaining and practical_x000D_
Interested in value
Do not enjoy shopping_x000D_
Do not spend much time thinking about what to
wear_x000D_
Interested in value
Exhibit 4 Ad Revenue Calculator
Ad Revenue Calculator
Current 2007 Base Scenario 1
TV HH 110,000,000 110,000,000 110,000,000
Average Rating 1.00% 1.00% 1.20%
Average Viewers (thousand) 1100 1100 1320
Average CPM $ 2.00 $ 1.80 $ 1.80
Average Revenue/Ad Minute $2,200 $1,980 $2,376
Ad Minutes/Week 2,016 2,016 2,016
Weeks/Year 52 52 52
Ad Revenue/Year $230,630,400 $207,567,360 $249,080,832
Incremental Programming Expense $ - $ - $ -
Scenario 2 Scenario 3
110,000,000 110,000,000
0.80% 1.20%
880 1320
$ 3.50 $ 2.50
$3,080 $3,300
2,016 2,016
52 52
$322,882,560 $345,945,600
$ 15,000,000.00 $ 20,000,000.00
$ (307,882,560.00) ($325,945,600)
Exhibit 5 TFC Estimated Financials for 2006 and 2007

2006 Actual 2007 Base Scenario 1

Revenue
Ad Sales $230,630,400 ₹207,567,360.00 ₹249,080,832.00
Affiliate Fees $80,000,000 $81,600,000 $81,600,000
Total Revenue $310,630,400 $289,167,360 $330,680,832

Expenses
Cost of Operations $70,000,000 $72,100,000 $72,100,000
Cost of Programming $55,000,000 $55,000,000 $55,000,000
Ad Sales Commissions $6,918,912 $6,227,021 $7,472,425
Marketing & Advertising $45,000,000 $45,000,000 $60,000,000
SGA $40,000,000 $41,200,000 $41,200,000
Total Expense $216,918,912 $219,527,021 $235,772,425
Net Income $93,711,488 $69,640,339 $94,908,407
Margin 30% 24% 29%
Scenario 2 Scenario 3 Assumptions

₹322,882,560.00 ₹345,945,600.00 Insert scenario results from revenue calculator

$81,600,000 $81,600,000 Grows 2% per year with population
$404,482,560 $427,545,600

$72,100,000 $72,100,000 Grows 3% per year with inflation

$70,000,000 $75,000,000 Add incremental programming expense
$9,686,477 $10,378,368 3% of ad sales revenue
$60,000,000 $60,000,000 Reflects increased spending of $15M
$41,200,000 $41,200,000 Growing with inflation 3%
$252,986,477 $258,678,368
$151,496,083 $168,867,232
37% 39%
 Cross Segment Multi Segment Dual Segment
Rating 1.2 0.8 1.2
CPM $ 1.80 $ 3.50 $ 2.50
Promotion Cost(in Mn) Same as Current Year $ 15 $ 20
Demographic Present in all three Higher Number Average Population