Amortization

This section provides an area to enter in the amortization of the program – how much it will cost the station over a certain period of time for each episode

There are six methods of Amortization:

Cost Ratio – The Cost Ratio method calculates the depreciation on the predicted ratio of revenue from the purchase of the program. The ratio is spread out over a number of years, ex: 3 years at 70%, 20%, 10% for each year respectively - in year 1 70% of the cost of acquisition is amortized, 20% of the cost of acquisition in year 2 and 10% in year 3.

Straight Line – The Straight Line amortization method deducts an equal amount of depreciation over the specified number of years. Example: a show with a cost of $1,000 amortized over 5 years would result in expensed depreciation of $200 per year.

For this option only the number of years is required.

The Straight Line method is based on time not use for amortization.

Activity Day – All Activity methods of amortization are based on the number of plays, expensed over varying percentages per play. For example, Program A is amortized over three plays, with depreciation of 80% on the first play, 15% on the second play, and the final 5% on the third play.

For Activity Day, plays within a 24-hour period of each other are not counted in the amortization calculations. If more than one play occurs within 24 hours, only one play is counted for the purposes of calculation. This is to reflect the terms of a program contract where unlimited plays in one day are permitted by the broadcaster.

Activity Week – All Activity methods of amortization are based on the number of plays, expensed over varying percentages per play. For example, Program A is amortized over three plays, with depreciation of 80% on the first play, 15% on the second play, and the final 5% on the third play

For Activity Week, plays within a 7-day period of each other are not counted in the amortization calculations. If more than one play occurs within 7 days, only one play is counted for the purposes of calculation. This is to reflect the terms of a program contract where unlimited plays in one week are permitted by the broadcaster. This depends on the calculation.

Program Plays – this option will amortize based on each individual program play regardless of the episode or cable day definition. The amount amortized per play will be the Total Program Cost / Number of Plays.

When this option is selected the screen will display the field Number of Plays to Amortize Over, this value will be the default value of the Total Plays as entered in the Program Tab however this can be changed. This value in the Amortization Tab will not affect the Contracted Plays as entered in the Program Tab nor will the number of Total Plays affect the value in the Amortization screen other than to give it its default value.

Episode Plays – this option will amortize based on the episode plays regardless of the cable day definitions. The amount amortized per play will be the Total Program Cost multiplied by the Number of Episodes divided by the Number of Plays