According to the article “Hollywood Rushes to Beat a Strike,” Business Week, January 8, 2001, reportedly the movie star, Will Smith will earn a $20 million salary, plus 20 percent of the studio’s revenues after the film Men in Black was released.What type of cost behavior pattern does this actor’s compensation represent? What other actor compensation arrangement does the article discuss and what cost behavior pattern is represented? Inc. began selling subscriptions for its numerous to build a U.S. satellite presence under amagazines on AOL. In five months, 500,000 sub- planned worldwide satellite unit. But Viacom,scriptions had been sold. Likewise, Viacom has Comeast, and General Electrie are possible bid-been quick to exploit its cache of media proper- ders, too. Cablevision's Rainbow Media Hold-ties. Its CBS Sports channel rebroadeasts boxing ings Inc., which operates cable channels Ameri-matches that are originally shown on its Show- can Movie Classies, Bravo, and the Independenttime premium cable service. Nickelodeon, an- Film Channel, is also attracting interest. Theseother Viacom unit, supplies CBS with its Saturday assets might fit well with Viacom, NBC, moviemorning lineup. And the MTV Networks unit is studio MGM, or Barry Diller's USA Networks,providing material for the ever popular SuperBowl halftime show this year, which will be mogul to make a run at GE's NBC, especiallybroadeast on corporate crown jewel CBS.Not only are there synergies to be mined on billion sale of several television stations. John F. tOthe production side, but on the ad side as well. Welch Jr.'s heir, Jeffrey R. Immelt, has saidProgramming across several media channels can NBC isn't for sale-but he may get an offer hebe bundled and sold as packages to advertisers. can't refuse. A broadeast network is alluring to 0Viacom boasts that the company's octopus-like any number of the emerging media juggernauts.reach extends "from [radio host] Don Imus atbreakfast to Letterman before bed and every- Warner that will steal the show. While forced, asthing in between: on the Web, on cable, on terms of the merger, to open up its high-speedbroadcast TV, on radio, on buses, and billboards." pipes to competitors and concede some of itsHIGH HURDLES. Media companies are also look- monolithic clout, the mega-company is still po-ing to extend their reach through broadeast sitioned to generate mega-revenues.outlets. Under George W. Bush, many hope reg-ulations will be eased-particularly Federal 2001, here's one more: Big music companiesCommunications Commission rules limiting the have to deal with Bertelsmann's plans to turnnumber of TV stations one company ean operate Napster into a paid-subscriber service. Last TOin a market. Expect, also, to see a push for year, millions of kids helped themselves toless stringent antitrust reviews in reaction to the free music using file-sharing technology de-hurdles AOL and Time Warner had to clear.While 2001 may not equal last year's over- While Bertelsmann ponders how to makeheated pace, there are still big deals to be made. money from Napster, other media executivesGeneral Motors Corp.'s Hughes Electronics must be wondering when the next ShawnCorp. is the most closely watched for its satellite Fanning will unleash some new scheme tobusiness, Direcrv. One likely bidder is News turn their businesses upside down.Corp.'s Rupert Murdoch, who could use DirecrvTISpeaking of Diller, some people expect thenow that he's cash rich from the recent $1.1juNIBut at least in the short term, it's AOL-TimeAs if there weren't enough subplots for saveloped by Napster founder Shawn Fanning.By Tom Lowry in New York HOLLYWOOD RUSHES TO BEAT A STRIKEWill Smith figures to make a quick changefrom boxing trunks to a black suit and shadesthis spring. With Hollywood bracing for anexpected strike this summer, studios and net-works will spend much of the first half of 2001rushing films and TV shows into production.For Smith, that means finishing up Ali, theboxing film he's making for Sony Corp.'sColumbia Pictures, then rushing to the set ofthe sequel to his 1997 smash Men in Black.By late June, Hollywood's writers and actorsmay both be walking picket lines. So TVexecutives are rustling up new episodes forexisting shows and polishing up falteringseries for another try. Studios already haveincreased by 20% the number of films they Tim Robbins back the union lion payday for his role in Phone Booth afterplan to make in 2001, according to filmtracking site IFilm.com. But signs of a crisis loom every-where. NBC ordered extra episodes of Friends, Will & Grace, Warner Brothers' sequel to the The Matrix and chose the latter.and Law & Order, but was unable to get more of West Wing, As for Will Smith, Sony's rush to start production of its Men inER, and Third Watch. The reason: Those shows' creator, John Black sequel came with an especially hefty payday. On top ofWells, is president of the Writers Guild. "There is little rea-son to be optimistic," says News Corp. President PeterChernin, who openly worries that network TV's annual lossof viewers to cable will accelerate if viewersare exposed to more reruns than usual.Fresh from the actors' six-month strikeagainst makers of TV commercials, Hollywoodunions are now seeking more money for use oftheir work in foreign outlets and on cable. Theyalso want a piece of the profits when theirworks go digital and wind up on the Net. To befinished by summer, films need to be in pro-duction by April. That's already putting pres-sure on studio execs to cut short their powerlunches so they can hustle projects along.All of this is good news for actors. Up-and-coming trish actor Colin Farrell went from thelittle-seen war movie Tigerland to a $2.5 mil-PROUDUNIONACTORLOYAL: Susan Sarandon andJim Carrey pulled out. Martial arts star Jet Lihad his choice between Universal Pictures' Green Hornet andhis $20 million salary, the actor will take home 20% of the rev-enues that the studio collects once the film hits the theaters.By Ronald Grover in Los Angeles

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Answered: What type of cost behavior pattern does…

What type of cost behavior pattern does this actor’s compensation represent? What other actor compensation arrangement does the article discuss and what cost behavior pattern is represented?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter22: International Financial Management

Section: Chapter Questions

Problem 9P

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