TWC and Miramax

ETC creates and distributes entertainment through push through the world. Miramar Is part of the conglomerate, Colony Capital and Qatar Holding, which creates movies, among other(a) fruits. By virtue of a contract, ETC has exclusive rights to distribute Miramar movies in the U. S. , the largest market (in name of revenue). ETC uses its monopoly power to pay a lower price for Miramar movies than do other distributors. Is this sufficient justification for Colony Capital and Qatar Holding to buy out ETC?Expiate. (1 point) This is not sufficient justification. It certainly is an avenue to consider, however, the only way to authentically Justify purchasing ETC is to weigh the other option available which is to commencement their own distribution order. If the call up of starting their own distribution company teamed with a high cost to distribute the movies brings In a higher revenue than the cost of purchasing ETC teamed with distributing the movies at a lower cost than It would be better to start their own distribution company and debility versa. . In all(prenominal) of the following situations, why are firms likely to derive from vertical integration? (1 point each) a. A scrap elevator is primed(p) at the terminus off cartroad line. Owning scintilla elevator(s) is beneficial to the rail line because it allows the rail line to a greater extent control over the grain elevator which in deal allows for more efficient planning and sprout lined logistics as oppose to attempting to plan along with a collapse company. B.A manufacturer of a product with a national brand-name reputation uses distributors that practise for advertising and promotional activities In local markets. Vertical integration in this respect can allow the company to gain valuable sharpness onto the markets and in learning what they want through advertising and promoting can turn around and update their product or create new products to put up the various market needs. C. A biote ch firm develops a new product that will be produced, tested, and distributed by an established pharmaceutical company.The vertical integrating of a biotech firm owning a pharmaceutical company Is similar to the grain elevator and rail line In that communication, planning and logistics becomes easier and possibly more cost effective by owning the established pharmaceutical company. ND delivering each outcome of the 1st season of the new series based on Shakespeare in Love. Suppose further that the contract included certain manus requirements for background music decided upon by Miramar, and ETC spent an additional $20,000 per chronological sequence to meet those requirements.Then suppose that after pre-screening 3 episodes, Miramar claimed that Tics efforts failed to live up to their contractual agreements. (2 points each 1 for explaining the concept, and 1 for applying it correctly) a. Was either party earning rent? What assumptions do you have to make to assert this? ETC woul d be earning the rent. Their rent would be the moolah ($20 million less the cost of producing the episodes, including the additional cost per episode to meet the musical requirement. ) b.Was either party earning quasi-rent? What assumptions do you have to make to assert this? ETC would be earning quasi-rent assuming that they are able to see the episodes to some other company or if they are able to come to an agreement with Miramar at a lower price than the original $20 million that they earlier concord upon. Their quasi-rent would be the difference between their rent (question a) and their new rear of revenue. C. Could ETC have held up Miramar? And/or could Miramar have held up ETC?Explain. ETC could definitely contrive up Miramar by turning around and refusing to provide them with the episodes at the agreed upon price. This leaves Miramar to consider the costs and time involved with getting another sort to complete the Job or paying ETC the requested amount. Miramar can to o hold up ETC through refusing to pay the agreed upon price. This leads ETC to choosing between providing the episodes at a lower price or seeking another emptor who may not pay as much as they hoped.