Decide whether to renew or sell a TV series
Company: Capital One
Role: Data Scientist
Category: Analytics & Experimentation
Difficulty: Medium
Interview Round: Technical Screen
You are advising the CEO of a streaming TV company about a 2‑year contract decision for two series: Show A ("The Analyst") and Show B ("Shark Bank"). Answer all parts precisely.
Given/assumptions:
- Horizon: 2 years.
- Net incremental profit contributions (after all production, marketing, residuals, and distribution costs) expected over the next 2 years: Show A = $0 total; Show B = $22,000,000 total.
- If Show A is sold today, the platform is expected to lose 1,500,000 viewers; each viewer is worth $32 in 2‑year incremental value to the platform (subscription uplift + ads + cross‑sell). Assume the $32 is the 2‑year present value unless otherwise stated.
- If not sold, both shows continue as planned with the above contributions (assume no other changes unless you state them).
- Discount rate: 10% annually. If you need to allocate a total 2‑year figure by year and no split is provided, assume an even split realized at the end of each year.
Tasks:
1) List and prioritize the top 8 quantitative and qualitative factors you would evaluate before renewing a new 2‑year contract for Show A, and specify the exact metric and data you would use for each (e.g., incremental subs retained, ad ARPU uplift, episode completion rate, churn reduction, contractual exit penalties, windowing/licensing options, cannibalization/halo on other shows, schedule risk). For each factor, state how you would estimate causal impact within 2 years.
2) Compute the 2‑year NPV of the stated net contributions for Show A and Show B under the 10% discount rate, assuming even end‑of‑year realization. Show your formulas and final NPVs.
3) Minimum sale price (base case): If the $32 per viewer is already a 2‑year present value, what is the minimum upfront sale price today that makes you economically indifferent to selling Show A now? Show your calculation.
4) Minimum sale price (timing variant): If instead the $32 per viewer is an undiscounted total paid 60% at end of Year 1 and 40% at end of Year 2, recompute the minimum upfront sale price using the 10% discount rate.
5) Offer evaluation: Another company offers $60,000,000 upfront today to buy Show A. Provide a sell vs. keep recommendation with a clear decision rule. Include a sensitivity table or thresholds covering: viewer loss from 1.2M to 1.8M (step 0.1M) and LTV per viewer from $25 to $40 (step $5). Identify the break‑even frontier.
6) Spillover risk: Describe how you would test whether selling Show A changes Show B’s 2‑year contribution (e.g., halo or cannibalization). Outline a feasible measurement strategy (e.g., geo holdouts, staggered rollout, synthetic control) and what magnitude of spillover would overturn your base‑case recommendation.
7) Improve Show A profit if kept: Propose three concrete initiatives (e.g., release timing, episode count optimization, marketing reallocation, tiered licensing) with a back‑of‑the‑envelope incremental profit impact each and the KPIs you would track to verify uplift.
8) Additional information request: List the 10 most critical missing data points or contract terms you would seek before making a final decision (be specific about fields, time granularity, and acceptable data quality).