At Seashore Entertainment, in Michael Davenport's office.
Facing Navis, who came to discuss the sequel rights for "The Blair Witch Project," Michael said regretfully, "It's not that I don't want to work with Lionsgate, but $8 million for the sequel rights to a film that grossed $150 million in North America is too low."
Navis stood up, shaking hands with Michael as he left. "That's my highest authorization. Mr. Davenport, I'll reconsider."
Michael nodded, "That's fine."
He saw Navis out of Seashore Entertainment.
Navis was the third person that morning to discuss the sequel rights to "The Blair Witch Project." Before him, a representative from Warner Bros. and Tom Cruise's agent had visited.
Tom Cruise was not looking to buy the sequel rights but wanted to co-produce the sequel with Michael. Michael knew better than to fall into that trap. Co-producing was not on the table, as it could lead to financial pitfalls, especially since Tom Cruise was not an overseas investor. Michael preferred not to risk complications.
Despite the apparent success of "The Blair Witch Project," Michael knew that its success could not be replicated. Warner Bros., the best-performing film company in Hollywood, offered only $5 million for the sequel rights, an unreasonably low price.
Michael would not sell at such a low price unless he had no other options. This was not typical market value in Hollywood. Even popular novels or other works, untested by the film market, often fetched over $5 million for their film rights.
With robust North American copyright laws that value and protect intellectual property, prices were only going up.
If no satisfactory offer comes in, Michael can always seek overseas investment. While capital operations were sometimes more attractive than making films, Michael was aware of the associated risks and the need to balance them.
Returning to his office, Michael reviewed Seashore Entertainment's promotional and distribution plans for "Kingsman" and "Final Destination." He received a call from Susan Arnold of DreamWorks, confirming her visit at 1:30 PM.
Michael also sent a message to Carmen Kass to confirm she was not working, then called her to arrange dinner plans.
Throughout the morning, Michael stayed busy with work, approving the termination of three employees at Seashore Entertainment. The company had sped up its pace, and some long-time employees struggled to keep up or lacked the necessary skills. Such employees were no longer suitable and were let go following legal procedures, including severance pay.
In this labor-friendly environment, involving unions could incur even higher costs if the process was mishandled.
Additionally, Mary suggested terminating a new hire whose impressive resume and skills were overshadowed by irresponsibility.
Every business owner dreams of having hard-working, dedicated employees, but such ideal workers are rare, especially in a city like Los Angeles.
Reflecting on this, Michael found himself missing the fictional city of Gotham, known for its resilience.
At 1 PM, Susan Arnold arrived at Michael's office with her assistant, and they got straight to business regarding the sequel rights for "The Blair Witch Project."
"DreamWorks is not the first company interested in the sequel rights," Michael said pointedly. "If it weren't for needing funds and the director Daniel Malick ending his collaboration with Relativity, I wouldn't be selling the rights."
Susan Arnold asked with a smile, "Mr. Davenport, what price are you considering?"
Michael calmly replied, "Twenty-five million dollars."
Susan's eyes twitched at the number, and she responded slowly, "DreamWorks is willing to pay forty million dollars for all rights to 'The Blair Witch Project' series. Of course, excluding your upcoming North American box office revenue."
Michael rejected the offer without hesitation, "The film has already been a huge success. I won't sell the rights to the current earnings. If DreamWorks wants to buy the rights to 'The Blair Witch Project,' we have nothing to discuss."
Susan had only been probing. Securing the full rights would be more profitable, but it was a negotiation tactic to lower Michael's expectations.
"Only the sequel rights..." Susan Arnold seemed troubled. "That's quite different from DreamWorks' initial intentions."
Michael remained silent, watching her.
His first choice was DreamWorks, but he was open to other offers. If DreamWorks insisted on buying the full rights, he would sell to another company.
Susan Arnold had done extensive research on Michael before the meeting. She knew his company had ongoing cash flow issues, relying heavily on financing for operations and film production. While leveraging finances was smart, overdoing it could destabilize the company's finances, leading to potential collapse with any mishap.
In her view, the sale of the sequel rights was both a necessary step due to losing the director and a strategic move to restructure the company.
Michael's successive successes indicated his capability, and he must have been aware of the financial challenges.
Susan drummed her fingers on the armrest, saying, "For the sequel rights alone, five million dollars." She seemed dismissive. "This is just acquiring a film subject. Market scripts or other literary works' rights seldom exceed a few million dollars."
Michael agreed, "Hollywood indeed never lacks subjects and scripts."
This was a fact no one could deny. Any sizeable film company had hundreds of scripts in their archives.
"But those subjects and scripts are not 'The Blair Witch Project!'" Michael stressed. "They don't have a $150 million North American box office! They lack the name recognition and market validation! They don't come with an established audience base!"
He softened his tone, "Ms. Arnold, I'm young but aware that sequels to successful films have a high success rate and are replicable. The name and recognition of 'The Blair Witch Project' alone are worth more than five million dollars! Additionally, 'The Blair Witch Project' brings not just the name but also a successful model and a North American audience base of nearly 30 million!"
Susan Arnold knew well why Hollywood favoured sequels.
She did not argue but took a different approach, "With the 'The Blair Witch Project' model, the sequel's production budget would only be a few million dollars. Spending far more than that on the rights would make DreamWorks a laughingstock in the industry."
Michael laughed, "The value of rights lies in the potential revenue, not external opinions. Even if everyone laughs, would they still be laughing when DreamWorks rakes in hundreds of millions at the box office?"
Susan pondered his point.
Michael continued, "When I bought the rights to 'The Blair Witch Project' and the website, many didn't understand, including many within my company. But now? They're glad I went ahead with the purchase despite opposition."
Susan Arnold frowned. Michael's arguments were logical and straightforward, grounded in undeniable industry truths. Refuting them would seem foolish.
The current $150 million North American box office gross of 'The Blair Witch Project' was Michael's most robust bargaining chip.
Hollywood's ultimate goal in filmmaking was always commercial profit, and the film's massive success overshadowed all counterarguments.
"This morning, Tom Cruise's representative, a Warner Bros. executive, and Mr. Navis from Lionsgate all visited," Michael said truthfully. "They are all interested in the sequel rights, and Lionsgate made a very high offer, but I didn't accept immediately because I promised to meet with you first."
Michael said sincerely, "I greatly admire Director Steven Spielberg, so I want to prioritize working with DreamWorks."
Susan Arnold replied, "DreamWorks also wants to work with you, but your asking price is too high."
"Let's compromise," Michael suggested. "Let's set the price at one-tenth of the current North American box office gross."
"Fifteen million dollars?" Susan Arnold still frowned.
Yesterday, she had sought approval from Spielberg, who managed DreamWorks' live-action film business. This price far exceeded the upper limit.
Susan Arnold said, "This is only for the sequel rights. My budget is only eight million dollars."
Michael knew she was lying. DreamWorks wanted to replicate the success of 'The Blair Witch Project' by securing Daniel Malick.
Negotiations continued all afternoon, eventually settling at $12 million.
However, Susan Arnold lacked final decision-making authority. The result had to be approved by DreamWorks' top management. Michael agreed to wait for three days but made it clear he wouldn't delay negotiations with other companies for an uncertain deal.
"This is just procedural," Susan Arnold assured him.
With the DreamWorks deal nearly in hand, Michael freshened up after work and headed out to meet Carmen Kass for their dinner date.