You are the CEO of a media company deciding what to do with a current TV show called Analyst. Analyst has about two years of remaining commercial life. You could keep it, cancel it, improve it, or sell it. Another project, Shark Bank, competes for management attention and capital. An exhibit provides success/failure payoffs and probabilities for both projects, but it is not reproduced here. Do not assume a 50/50 probability unless explicitly given. Answer the following. ### Constraints & Assumptions - Treat subscriber value as contribution profit over the relevant horizon. - Separate revenue, contribution profit, cash flow, and strategic value. - Ignore sunk costs; focus on avoidable future costs and opportunity cost. - If comparing Analyst and Shark Bank, ask whether they are mutually exclusive and whether capital is constrained. - State any missing data needed before calculating expected value. ### Clarifying Questions to Ask - Are the exhibit numbers revenue, profit, cash flow, or NPV? - What are the success and failure probabilities for each project? - Are costs already included? - Can the company fund both projects, or must it choose? - What subscriber churn impact would cancellation or sale cause? - Are there rights, licensing, tax, or competitor restrictions if Analyst is sold? ### Part 1 - Cancel, Keep, Improve, or Sell Framework Describe factors the company should consider when deciding whether to cancel or keep Analyst. #### What This Part Should Cover - Standalone economics. - Subscriber acquisition, retention, and engagement impact. - Avoidable costs versus sunk costs. - Strategic value, market trends, and portfolio fit. - Opportunity cost versus Shark Bank. ### Part 2 - Expected Return and Profit Improvement Explain how to compare Analyst and Shark Bank using expected value or NPV, and list ways to improve Analyst profitability. #### What This Part Should Cover - Expected value formula using success/failure probabilities. - Discounting and risk adjustment if cash flows occur over time. - Revenue levers versus cost levers. - Sensitivity analysis for key assumptions. ### Part 3 - Sale Offer Analysis Suppose an acquirer offers $51M for Analyst. If sold, the company expects to lose 1.5M subscribers, and each lost subscriber is worth $32 in contribution profit over the horizon. Shark Bank is expected to generate $22M total profit after two years. Evaluate whether to sell Analyst now, and explain how the recommendation changes if the company is highly cash-constrained. #### What This Part Should Cover - Lost subscriber contribution calculation. - Net sale value before additional adjustments. - Whether Shark Bank profit should be included. - Liquidity value under cash constraints. ### What a Strong Answer Covers - A portfolio-allocation view, not just one show's P&L. - Correct expected-value framework. - Separation of direct cash, subscriber impact, strategic value, and opportunity cost. - Awareness of causal uncertainty in subscriber-loss estimates. - A clear recommendation conditional on capital constraints. ### Follow-up Questions - How would you estimate causal subscriber impact from removing Analyst? - What if Analyst strengthens a competitor after sale? - What sensitivity would change your recommendation? - How would you value retained rights or partial licensing?