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Backing into a pure play beta: Studio Entertainment

Aswath Damodaran

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1. Start with the regression beta (equity beta) of 1.572. Unlever the beta to get the beta for the movie company

Unlevered beta = 1.57/ (1+ (1-.4) (.5389)) = 1.18643. Get the beta for the movie business

0.9107 (Beta of movie business) + 0.0893 (0) = 1.1864Beta of movie business = 1.1864/(1-.0893) = 1.3027

D/E = 35.02/64.98 = 53.89%