[Chapter 648: You're Fired]
Amidst a stunned silence, Roger Allers, the director of The Lion King, reluctantly asked, "Mr. Williams, did you really just say that you plan to change the head of Disney's animation department?"
"It's not Disney's animation department," Eric emphasized the word "Disney." "To be precise, I plan to sell the entire traditional animation division. The Disney brand belongs to Firefly; no one can take that away."
Once again, silence fell over the room. Peter Schneider suddenly felt a strong sense of crisis. If Eric didn't care about the Disney animation department, then what significance did all the things he and Roy Disney previously did hold? More importantly, without the Disney animation department as their support, what would they have?
His concerns gradually morphed into fear. Peter Schneider suddenly stood up and pointed at Eric, shouting, "No, you won't! Eric Williams, you absolutely will not sell off the Disney animation department! You just want to force us to concede, and we will not concede, absolutely not!"
Eric looked at the somewhat hysterical Peter Schneider with a blank expression and said to his assistant, "Kelly, go get security."
Kelly glanced at Peter Schneider before standing up and leaving the conference room.
After she left, Eric addressed Peter Schneider, "Either sit down and continue this meeting, or leave. If you don't, I'll have security throw you out."
Peter Schneider gritted his teeth, his face flushed with embarrassment. He held his ground for a few seconds before slumping back down into his seat.
Comparing his breakdown to Peter Schneider's unhinged reaction, Roy Disney felt even more shocked. However, believing he had seen his share of storms, Roy understood that the calmer one could remain in situations like this, the better. He also thought Eric might just be trying to intimidate the animation department into submission. After a moment of thought, Roy Disney asked, "Mr. Williams, do you think Disney can still be called Disney without the animation department?"
Eric sighed; after this long, these people still hadn't grasped his intentions. "Disney will always have an animation department; it just won't be producing animated films in a hand-drawn format anymore. Plus, Disney will maintain cartoon studios in Canada, Australia, and a few other places to continue providing animated television content for Disney Channel. However, Disney's animated films will fully transition to 3D digital production."
When Roy Disney heard Eric calmly outline his plans, he felt a tightness in his chest, though he maintained a composed demeanor as he gestured to the dozen or so people in the conference room and said, "So, you intend to entirely package and sell us -- over 700 people from the traditional animation department? Hah, even if you genuinely do not plan to keep the hand-drawn animation department, do you think we would readily let you sell us off like bargaining chips?"
Roy Disney's words immediately served as a shot of adrenaline to the dejected crowd. All the leaders from the animation department looked intently at Eric, as if any misstep from him would prompt them to resign and turn the animation department into a worthless shell.
Hand-drawn animation vastly differed from computer animation. Creating computer-animated films required not only skilled digital animators but also the technology, software tools, and technical support that came with many patents, making it a tough transition for digital animators. On the other hand, hand-drawn animation was a less technically demanding industry; an animator could jump into production after just a few years of training, and even if they left the original company, they could pursue their careers seamlessly.
Eric certainly understood this. Looking at the dozens of eyes fixed on him, he smiled and ran his fingers over a folder on the table, saying, "You all don't need to test each other anymore. The decision to eliminate Disney's hand-drawn animation department has already received approval from Warren Buffett, Tom Murphy, and David West -- three directors outside of Firefly's system. Therefore, this resolution won't be overturned."
A wave of unease rippled through the conference room again. However, ultimately no one was angry enough to storm out -- even Peter Schneider, who had just been infuriated, merely gaped at Eric in disbelief.
Eric patiently waited for everyone to quiet down before continuing, "Now, let me discuss the downsides of your voluntary resignations. You all could leave, turning the animation department into a worthless shell, which wouldn't harm Firefly at all. But then, let's make the best possible assumption: you find a new employer that fully agrees with the generous terms you proposed to Firefly, with an average monthly salary exceeding $10,000 and shiny new office spaces. That negotiation would take at least six months.
After those six months, you'd need to start everything from scratch, setting up a new animation production department and drafting development plans, which will take another six months.
Then, project planning... everyone knows how long that can take and how uncertain it is. Perhaps it'll be two years before your first animated project is underway, and production will take at least another two years. By that time, your new animation department's first film may not arrive until four years later. Don't doubt it; if you have a good memory, you should remember that it took Michael Eisner five years to revive the animation department into releasing The Little Mermaid. I even helped you shorten the timeline by a year.
So, based on the salary conditions you proposed, the entire animation department will need at least $100 million per year to operate. Over four years, that totals $400 million -- enough to fund five major films. If, after waiting four years and investing so much, your animated film doesn't reach the stunning impact of The Lion King, imagine how your new employer will feel, considering their significant investment and the long wait. You all should know that The Lion King was a fluke; the average output of Disney's animation department should meet the standards of films like Aladdin and Beauty and the Beast. So, there's a 90% chance that they would be exceedingly disappointed. Then, they'd start slashing budgets, affecting the quality of animated films, leading to a common vicious cycle."
Having said that, Eric paused, perhaps anticipating how the deflated attendees would react. But he was quite confident that no one would flare up again; everything he had just stated was fact-driven. In the original timeline, after Katzenberg departed Disney to establish DreamWorks Animation, he poached several people from Disney Animation, and it took precisely four years from the founding of DreamWorks Animation to the release of their first film, The Prince of Egypt. The film's box office performance had been lukewarm, and it took another three years before the release of DreamWorks' second film, Shrek. Had Shrek not become a surprising box office hit, DreamWorks would have had to shut down.
After waiting a moment, Eric softly clapped his hands together. "Apologies for sounding like a verbose villain -- oh, wait, I suppose I really am the verbose villain today. Yet I need to add one more point: if you change jobs, it's a violation of your labor contracts. Consequently, the year-end bonuses you would have received due to The Lion King's box office success will disappear. This year-end bonus would amount to half a year's salary for most of you."
Roger Allers, sitting near Eric, asked hoarsely, "Mr. Williams, may we know why you are so adamant about discontinuing 2D animation production?"
"Just as the steam loom replaced hand looms and electric looms replaced steam looms, this is an inevitable trend of technological development. 3D animated films possess far too many advantages; only time can prove this. If in a few years you all discover that I was wrong, then feel free to come mock me. But for now, I'm firm in my judgement, and I've given everyone ample time to adjust. However, recent events lead me to believe it's best that everyone continue on their own paths."
Roger Allers glanced at the silent Roy Disney and Peter Schneider, sighed, and refrained from saying anything more.
Of course, Eric wouldn't lay out the extensive data for them to see. Seeing no one had any further questions, he continued, "Now, let's discuss the benefits of selling the animation department as a package. First, even if you leave, your share of The Lion King's profit dividends will still be paid to you. Next, you'll be able to negotiate your terms with the new employer uniformly; I'm confident you'll negotiate much better treatment together rather than individually. Furthermore, you can take with you several 2D animation projects that are already prepared and ready to enter production. Let's see, oh, there's Pocahontas, Mulan, and Tarzan -- these are all fantastic ideas. Moreover, you'll secure the production rights for sequels to The Lion King, Beauty and the Beast, and Aladdin. This will greatly reduce the time you'll need to show results."
Amidst the astonished looks, Roger Allers asked incredulously, "Mr. Williams, are you certain you're not joking?"
If Eric's firm decision to sell off Disney's animation department had already made the crowd feel he was out of his mind, then letting them walk away with The Lion King's rights gave off an impression that he had completely lost it.
Yet Eric was not insane; he calmly clarified, "I'm absolutely not joking. However, what you can take with you are merely the rights to produce sequels to The Lion King -- same for those few films. Your new employer would only have the right to create and profit from sequels; the rights to the cartoon characters and peripheral development from The Lion King and other films would still belong to Firefly."
In the original timeline, The Lion King's global box office had exceeded $900 million, and sequels would still be directly released on videotape.
However, Eric believed that now, if the sequel production rights were secured, even without the peripheral development rights, under the influence of The Lion King's staggering $900 million earnings, other production companies would undoubtedly rush to develop sequels. At that point, Firefly could still benefit greatly from the marketing power of those sequels.
Given The Lion King's current trend of global box office success, Roger Allers could understand the intricacies of Eric's proposition -- both the harshness and allure. Simultaneously, his mind couldn't help but begin to ponder the plotlines for The Lion King sequels.
"Lastly, once the animation department's sale is successfully completed, you will receive 5% of the total transaction as a bonus; this has no precedent and serves as Firefly's compensation for your willingness to be the bargaining chips in this deal."
Had Eric proposed this condition outright, it would have surely sparked strong resentment. However, now the group was less resistant. Peter Schneider, who had remained silent for a long time, finally spoke up, "Mr. Williams, that 5% bonus is too little."
"The average annual salary for an animation department employee is about $50,000. If this animation department sells for $1 billion, your average compensation will amount to $70,000 -- equivalent to sixteen months of salary. If you add in The Lion King's reward dividends, each of you would effectively receive two years' worth of pay," Eric explained while smirking at Peter Schneider. "Moreover, Schneider, you and Mr. Roy Disney are not part of this bonus list. This is also the final decision I am announcing today: from now on, you are both fired!"
...
That afternoon, news of Firefly Group's plan to package and sell the hand-drawn animation department swept through Hollywood. The next day, it received official confirmation in the Los Angeles Times, stating that Firefly would conduct a public auction for the division in a month.
Following that, Firefly responded to the creditors' alliance's demands to join the company's board of directors with unprecedented firmness.
After releasing Firefly Group's financial report for the first half of 1994, projections for the second half earnings, and the massive $1.52 billion deal with Conde Nast regarding print media assets, a spokesperson for Firefly publicly stated that, including the funds from the impending sale of the hand-drawn animation department, the expected non-operating free cash flow at the end of 1994 would not be less than $3 billion, highlighting Firefly's excellent operational and financial status.
Firefly Group would regularly disclose relevant operational and financial information to the creditors. However, there was no need for creditor board members to participate in managing the company. If creditor organizations remained concerned about the safety of their investments, Firefly Group was very willing to initiate bond repurchase measures proactively.
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