[Chapter 582: Very Safe]
After enjoying a Thanksgiving dinner with the ladies in Malibu, Eric took Drew and headed to New York.
East Hampton was better suited as a summer getaway; in winter, it bore a desolate landscape, overrun with weeds and devoid of life. A heavy snowfall would only add to the bleakness. Once winter set in, Virginia and Joanna moved with the two little ones to the more populated and well-equipped Southampton.
Thanksgiving evening remained lively. Although the two women had given the household staff time off, Chris and Emily showed up, along with Ewa Pacula and Drew with her two twin companions, filling the dining room with a large party.
"In college, I specifically studied Buffett's story," Chris enthusiastically began discussing the recent media buzz surrounding Firefly's acquisition of ABC. "The main reason Buffett accumulated his wealth through diversified investments is his purity of purpose. He was able to dedicate himself entirely to perfecting his investment strategies.
Anyone familiar with Buffett knows that he treats investing as the singular pursuit of his life. Despite being a billionaire, he refuses to spend more than a penny to improve his lifestyle; he leads an incredibly modest life, his eating habits shockingly simple. The core of his existence revolves around sifting through countless financial reports, identifying suitable companies for investment.
This approach, which analyzes a company's fundamentals rather than relying solely on stock market trends, maximizes his ability to assess a company's growth potential. That is how Buffett consistently navigated the correct path for decades."
Everyone listened intently to Chris, but the little girl who sat next to Eric gnawed on turkey and suddenly exclaimed, "I heard he took down Solomon!"
In the 1980s, Solomon Brothers was indeed the king of Wall Street. While Solomon was at its peak, firms like Goldman Sachs, Morgan Stanley, and Lehman Brothers seemed like mere junior partners. However, in 1990, Solomon faced an SEC investigation due to a false bid scandal, leading to a swift decline. Less than four years later, Solomon Brothers had become a second-tier investment company. At the time of the scandal, Buffett's Berkshire Hathaway happened to be Solomon's largest shareholder. During the investigation, Buffett took over all management responsibilities for Solomon. On the surface, it seemed that Solomon had indeed collapsed under Buffett's stewardship.
Hearing the little girl's comment, Chris shook his head and chuckled, "It's not as simple as you think. The main issue was Solomon's overexposure. Take the false bid case from three years ago as an example. The Federal Securities Act dictated that an investment bank could underwrite a maximum of 35% of each national bond issue, yet Solomon managed to secure 85% of that distribution through false bidding, flipping them to other investment banks for hefty profits.
Such antics were common throughout the '80s, which led to the SEC investigation prompting other capital forces to strike back. Of course, Buffett's later handling of the situation was also a significant misstep.
Just after Solomon came out from the SEC inquiry, Buffett eagerly wanted to disrupt Wall Street's rules by slashing employee salaries and bonuses, causing a mass exodus of talent. Without those people, Solomon found it practically impossible to make a comeback. I've heard that Solomon has now become a target for Citibank and probably won't last much longer."
After Chris finished speaking, a brief silence fell over the dining room, even the two little ones sensed the unusual atmosphere, staring wide-eyed at their mother.
Eventually, the blunt Emily chimed in with a smirk, "Eric, you'd better be careful; the Firefly hype seems a bit much."
Eric took a casual sip of red wine and shrugged, "There are small and large investment firms going belly-up on Wall Street every year, but have you ever seen a major film studio toppled by its peers?"
Emily retorted without hesitation, "Isn't Orion, Universal, and even MGM about to go under?"
Chris turned toward his girlfriend, unable to hold back. Eric grinned at Emily and said, "True, but they had their own internal issues that prevented them from thriving in Hollywood."
Chris added, "Most of the business of investment banks deals with virtual financial products, which mostly come from other companies. They earn profits through commissions from stock issuance, bond underwriting, and mergers and acquisitions but produce little themselves.
When an investment bank faces a crisis, external companies usually withdraw their business to avoid risk, triggering a domino effect that can lead to rapid decline. However, companies like Time Warner, Firefly, and Viacom, which just acquired Paramount, have already formed comprehensive industry chains. They won't easily be taken down by outside forces unless a massive project leads to bankruptcy."
"I've recently seen some news," Emily argued a bit defensively. "A New York Times article from two years ago analyzed that if Firefly continues to expand, it might violate federal antitrust laws and face mandatory break-up."
If a company were to be broken up due to antitrust laws, the major shareholders would have to choose to retain shares in one company while being forced to sell shares in the other, instead of holding stakes in both like Eric could.
Emily's comment seemed to strike a chord, and Chris wore a worried expression as he looked at Eric and said, "I think this is indeed an issue that needs careful consideration, Eric. Before acquiring ABC, you must be completely sure that it won't lead to this problem."
Eric had also researched the relevant antitrust laws, but he understood the trends of media consolidation over the next decade in America. He relaxed and replied, "Don't worry, there won't be a problem. I actually think that integrating media channels aligns more with federal government interests, don't you think?"
No government wanted to relinquish control over public discourse. Any supposed freedom of speech was relative. Being immersed in the intense information clashes of Wall Street, Chris was well aware of this truth, so he nodded and smiled, "That does seem accurate."
Virginia noticed Eric and Chris engaging in some cryptic conversation and complained, "Gentlemen, if this goes on, we won't understand a thing. How about we switch to a lighter topic?"
Eric nodded, "Alright, well, the turkey tasted great today, better than... uh, it tasted pretty good."
Eric almost blurted out about the 'weird turkey' the ladies had concocted the previous night but caught himself just in time. However, Virginia still picked up on something and shot Eric an exaggerated glare. The others in the restaurant chuckled at Eric's struggling attempt to swallow his words.
Though it was only 9 PM after dinner, snow had started to fall outside without anyone noticing. The drive back from the easternmost part of Long Island to Manhattan usually took two hours, but during snowy conditions with slippery roads, it would clearly take longer -- and be very unsafe. So, Eric invited Chris and Emily to stay over.
The house was large, the rooms ample, and Chris and Emily didn't mind at all.
...
After dinner, the women scattered to their activities; some watched TV, others cleaned up the dining area, while a few kept an eye on the little ones. Eric and Chris settled by the vintage fireplace in the villa, discussing the acquisition of Victoria's Secret's parent company, LTD.
Chris had been quietly acquiring LTD stock during this period and anticipated that after the New Year, he could officially take his place on the LTD board and launch an aggressive acquisition campaign.
Leslie Wexner, the largest individual shareholder in LTD, held 35% of the stock, so the likelihood of success wasn't guaranteed. Although Chris felt confident, he honestly admitted to only a 70% chance of success. If Wexner managed to secure support from shareholders amounting to over 51%, Chris would have to retreat. However, this uncertainty fueled Chris's ambition; if everything were easy, it would likely be too boring. Besides, even if the acquisition failed, LTD would have to pay a price if it wanted to buy back shares held by Firefly Investments, implying that no real losses would befall Firefly.
The two continued their discussion late into the night, and it wasn't until then Eric finally retired to the bedroom.
...
In the center of the large bed lay a tiny figure. Joanna lay on her side next to Hawaii, propping her head up with one hand, reading softly from a book. Upon noticing Eric enter, Joanna set the book aside and said, "You should sleep with Vicki tonight. With Emily here, we can't have any embarrassing moments."
"Alright, let me give our little princess a kiss first," Eric smiled and lay down next to Hawaii, planting a kiss on the little one's cherubic cheek. He then picked up the book Joanna had been reading, realizing it was a collection of Hans Christian Andersen's fairy tales.
Shaking the book playfully, Eric asked, "Why are you reading that to our little princess?"
Joanna retrieved the book from Eric's hands and replied, "What else should I read?"
Eric nestled closer to the little one, watching as Hawaii's beautiful blue eyes darted between him and her mother, continuing with a laugh, "Anything is fine, but it's probably best to avoid fairy tales. I would go crazy if my daughter grew up wanting to run away with a prince like in those stories."
"You always think up such ridiculous scenarios," Joanna playfully patted Eric's shoulder, glancing at the book in her hands. Raising her perfectly-shaped eyebrows, she said seriously, "Then I'll check out a bookstore tomorrow to see what's suitable for her."
"Are you serious?" Eric raised his head. "It was just a joke. Besides, the little one probably can't even understand it yet, right?"
Joanna countered, "Of course she can understand. Elia is very smart."
Remembering Hawaii's reaction when Joanna read aloud, Eric agreed and nodded. He took the copy of Andersen's fairy tales from Joanna and said, "Let me read a passage to the little one. Let her hear Daddy's voice."
Joanna grabbed a pillow and placed it next to Hawaii. She relaxed and lay down, smiling, "Aren't you afraid she'll learn bad things?"
"Not at all. If a prince ever tries to seduce my daughter, I'll break all his legs," Eric chuckled.
"Ha ha..."
As Eric flipped to the story of The Snow Queen, one about friendship between boys and girls, he thought, yes, this theme is pure and wholesome -- very safe, this is the one.
...
After Thanksgiving, the media campaign kicked off in Los Angeles. It seemed that suddenly, the previously discreet Firefly Films became quite ostentatious. Michael Lynn, the CEO of Firefly Films, even broke convention by appearing on an NBC financial talk show, discussing some 'unknown' secrets behind Firefly's growth. Variety magazine even published an article valuing Firefly Films at an astonishing $25 billion. Seeing this piece, Eric couldn't help but mutter to himself, why 25 billion? Couldn't it be a bit more or a bit less? But he knew this figure was provided by Firefly, and since the piece was already published, he chose not to correct anything.
Meanwhile, Katzenberg kept close contact with Buffett. Within just a week, they met three times in Los Angeles. However, based on the emails Katzenberg sent to Eric, the negotiations showed little progress. Following the sudden media outburst, Buffett seemed to enter a wait-and-see phase.
Due to Eric and Katzenberg's continued high-profile engagement with Buffett, the shares of the three major television networks, which had started rising in tandem, began to diverge. NBC and CBS experienced significant drops, dragging the stock of News Corp, which owned the Fox network, down as well.
Eric continued to stay in Southampton with the women and children, occasionally making trips to Manhattan for parties. The little girl, who had been with him, couldn't bear the dullness of Southampton and ran off to Manhattan the next day with her two companions. Eric knew the girl had friends everywhere and a place to stay in Manhattan, so he didn't pry.
Though Thanksgiving had passed, the festive atmosphere showed no signs of fading, as Christmas was fast approaching. Compared to Thanksgiving, Christmas felt even more exuberant.
*****
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