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DISCOP EVENTS AND INTELLIGENCE DEDICATED TO M. Mark RUTLEDGE
Paris 11 March 2002 Dear Sir, Following our correspondence and my meeting with Rob K. MacLean, I hereby confirm that we are ready to provide members of the DISCOP community with the possibility to access referenced discounted TV Program & Films via an online service available on www.discop.com. We understand that we will together develop the most appropriate online solutions on the basis of your technical experience mixed with our own appreciation of our community's needs, buyers and sellers included. The general idea remains to provide producers, distributors and buyers of television content with an online information and promotional tool that offers:
As stated in the sales project memo presented to Robert on the 7th of March, our main concern is not to cannibalize our face-to-face industry business events by initially strictly promoting low-cost products for non-prime time programming periods. Our general objective is to adapt the successful '99 CENTS STORES' marketing concept to the sale of programs and films whose licensing fees are extremely attractive, and set-up on www.discop.com a section providing listings of companies offering programs under $500 per hour with in some instances a video presentation of these programs. This section (as described above) would also assist BUYERS and SELLERS wanting to do business online by providing online business and logistical support to facilitate the sale. In regards to our existing services, this would not jeopardize our position as a facilitator of face-to-face business as this new section would be perceived as an added value service in sync with our strategy to initiate and promote business opportunities for television processionals in emerging marketplaces. market potential Following the initial results of our on-going research there are about (200 TELEVISION OPERATORS) (excluding cable and satellite Pay TV services) active in the (41 COUNTRIES) that the DISCOP Organization covers and about (est. 350 QUALIFIED BUYERS) representing these television forces. The 41 countries are:
On the basis of our understanding of the market and the fair assumptions which can be made, the needs for these operators for non-prime time programming could be evaluated as follows:
The average licensing cost for non-prime time programming is about $350 per hour (low estimate) which comes out to a total market potential of over est. $500 million per year. We see our plan develop in two distinct stages:
Over the course of this 2-year plan, we are prepared to direct our own resources to the sales and marketing of this online service by providing the following support:
We evaluate the DISCOP goodwill investment at about $60,000 over this 2-year period. PRE-DISCOP Budapest 2002 PLANNING Our objective is to set this online service up between MIPTV in mid April and DISCOP Budapest 2002 at the end of June. We would like to officially launch this service at the time of DISCOP Budapest 2002 and deploy at that time a marketing campaign aimed at presenting the online service to the +/- 750 television professionals attending the 3-day event in Budapest. Initially, the most adequate set-up would be the following:
These initial targeted SELLERS will be companies with extensive libraries whose business with emerging television markets has become more important that ever considering the fact that most of them have to find ways to offset the business downturn in more developed markets. These initial targeted 10 SELLERS will be offered a FREE license to place 10 products or groups of products and 20 x 30 min video trailers, for an initial period of 6 months. These initial targeted 10 SELLERS will be chosen on the basis of the following criteria:
We will select these SELLERS primarily from the United Kingdom, Germany, France, the United States, India, China, and we will also select national TV stations from Central & Eastern Europe, as these broadcasters have massive amounts of programs that they hardly sell. cost structure for the seller We believe that the following 2-stage cost structure would be the most appropriate: During the first 1-year period:
During the second 1-year period:
revenue sharing On the basis of our various conversations, we agree on the fact that our combined goodwill amounts to $185,000 and we also agree on the fact that his investment should be 'reimbursed' to each party involved on the pro-rata of our respective goodwill i.e. $125,000 for OFTVS (67%) and $60,000 for the DISCOP Organization (33%). We also assume that reimbursements should be made after the sales and technical costs of setting up each new subscriber have been paid for. Specifically:
Our objective is to recover the costs of our respective goodwill investments after the 1st year period, and from then on split the net revenues in half (50/50) assuming that all revenues derived from www.discop.com generated sales (after the 1st year period) will be considered as net revenues altogether with no other costs associated. We understand that there is no cash investment involved or expected from either party to further develop the service other than the expenses associated to each party's efforts to successfully fulfill its obligations as described in this proposal. We also understand that neither party will be authorized to provide a comparable online TV programs and Films sales service in one form or another without the prior consent of each party involved in this joint partnership. Should you find this proposal suitable, I would welcome your soonest response so that we could begin the implementation of this new service. Best regards, /s/Patrick JUCAID Agreed to and accepted this 20th day of March, 2002 /s/Mark Rutledge |
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