[Chapter 738: Debt Issues]
Regarding the acquisition of MGM, Flower Films initially quoted $1.5 billion, but Credit Lyonnais Bank aimed to sell its shares for $1.8 billion. Credit Lyonnais Bank had made up its mind to completely distance itself from Hollywood and would not engage in any more financial ties with the industry after the deal closed. Therefore, both parties' negotiations primarily focused on the final transaction price.
Negotiations began in early June and lasted until the end of July. The inability to reach an agreement stemmed mainly from Credit Lyonnais Bank waiting for the box office results of GoldenEye, which featured Eric's involvement and in which they had high hopes. However, despite GoldenEye receiving favorable reviews upon its release, its box office didn't explode, especially in comparison to Night at the Museum, which left Credit Lyonnais Bank feeling less confident.
After the opening weekend box office results of GoldenEye came in, both parties took a step back and settled on a final intent of $1.6 billion. Of course, after the transaction was completed, Flower Films would assume MGM's existing $1.7 billion debt, bringing the total transaction amount to $3.3 billion.
...
The day after the deal was finalized, The Los Angeles Times featured an interesting cartoon on its front page.
A giant, anthropomorphized firefly, adorned with a small flower on its head, rampaged through the streets marked with 'Hollywood,' much like the Tyrannosaurus Rex in The Lost World: Jurassic Park. Buildings on either side lay in ruins, with flashy logos from Warner Bros., Paramount, Universal, and Columbia hanging down.
Beneath this cartoon, The Los Angeles Times boldly titled the piece "Firefly Takes Hollywood."
"Seven years ago, Home Alone emerged on the scene, grossing over $500 million globally on a shoestring budget of just $1 million, capturing the attention of all of Hollywood.
But perhaps no one could have predicted that today, seven years later, the young mastermind behind Home Alone has built his own media empire at an astonishing pace. This emerging empire is rapidly expanding, having already swallowed New Line, Disney, and ABC. Now, this firefly, which seemingly will never slow down, has also 'planted' a dazzling flower beyond its own system.
Before the MGM acquisition, we saw that Flower Films released its first film, Mission: Impossible, last year, which garnered close to $500 million worldwide with a production cost of $70 million.
This summer, Flower Films' two productions, Forrest Gump and Night at the Museum, have collectively grossed $190 million and $130 million in North America so far. While both films have much more box office potential, from when the summer season kicked off on May 26 until now, North America's summer box office has totaled $1.68 billion over the past ten weeks. The relatively new player, Flower Films, has inadvertently captured 19% of the market share.
When we widen our view a bit, we can find that the three films released by Firefly Group -- Jurassic Park 2, Independence Day, and Toy Story 2 -- have also collectively grossed $690 million domestically. These films similarly still have box office potential left untapped. However, the combined box office of these two companies has already occupied 61% of the total summer box office over the ten weeks, leaving less than 40% of the market share for all other Hollywood competitors, which is truly astonishing.
It's easy to envision that when Eric Williams personally nurtures this flower to complete the acquisition and integration of MGM and DreamWorks, leveraging a wealth of profitable movie projects including the Mission: Impossible series, the 007 series, the Charlie's Angels series, and the Night at the Museum series, at the very least, it will soon reach parity with Firefly Group in the film business. We can almost foresee the bleak future for other Hollywood film companies over the coming years."
...
While the article in The Los Angeles Times was slightly exaggerated, it still caught the attention of many.
The seven major film companies in Hollywood all had their own production and distribution systems, and many resources were exclusive to these studios, such as Paramount's theater resources. So, for Firefly and Flower Films to completely monopolize Hollywood's film market, they would have to absorb all seven major companies; otherwise, it would be nearly impossible to achieve such astonishing market shares yearly. The fact that these two companies garnered 60% of the market this year can be attributed, in many people's eyes, to luck; Firefly and Flower Films just happened to strike it lucky while companies like Warner Bros. had no major box office blockbusters this year.
However, that didn't stop Flower Films' acquisition of MGM from raising awareness among the other studios. Executives from Warner Bros., Universal, Paramount, and Columbia all understood that the best way to thwart Flower Films' expansion was to do whatever it took to sabotage this deal.
But wishes are easy, and the reality was that none of the other major companies were willing to take the plunge.
After all, attempting to disrupt the deal would not only require exorbitant costs but would also completely alienate Firefly. While everyone knew this was about "sacrificing the present to invest in the future," there wasn't a single Hollywood executive brave enough to make that sacrifice.
As for forming a coalition, they might as well forget it. By the time the companies with conflicting interests negotiated conditions for collaboration, Flower Films could very well have grown into a towering tree.
Although privately some people tried to leverage their resources to play tricks, aiming to ensure that even if they couldn't stop the acquisition, they would force Flower Films to pay a higher price, these tricks were often easily neutralized by the other side. After all, in this world of capital, capital was the ultimate power, and right now, Firefly was undeniably Hollywood's most financially robust media group.
...
Los Angeles.
In Drew's Beverly Hills mansion, the girl stood by a clothes rack filled with little dresses, changing outfits while chattering away. "I really don't know what they were thinking, sending someone to check my taxes. Haha, that trick is so old-school. My tax returns are whiter than Natasha's! There's no way they can find any issues there. Hmph! If I find out who's behind this, I'm definitely going to teach them a lesson."
It was already the end of July, and Flower Films had signed acquisition agreements with Credit Lyonnais Bank and DreamWorks in the prior two weeks.
The MGM shares held by Credit Lyonnais Bank were acquired for cash, while under Eric's strong push, the merger with DreamWorks employed a mix of cash and stock, amounting to a billion dollars. Previously involved in the MGM acquisition, Vivendi contributed $300 million to obtain 30% of DreamWorks' shares, while Firefly completely withdrew; the European stakeholders of DreamWorks exchanged their shares for equity in the merged company.
After the integration, for ease of equity operations, the new company would still primarily operate under MGM. Flower Films, DreamWorks, and the company that held the rights to 007, United Artists, would gradually integrate into MGM's production department over the next few months. The MGM label would mainly be used for film distribution in the future.
In the new MGM Group, Drew held 40% as the largest shareholder, Vivendi had 20%, LTD held 10%, DreamWorks' original European stakeholders held 18%, and the remaining 12% were in circulating shares.
Eric sat on the living room sofa, waiting for Drew to finish changing so they could head to the new MGM's first press conference together.
Listening with a smile to Drew's chatter, Eric flipped through the balance sheet of the new company.
After the integration was complete, Eric believed the most valuable assets of the new MGM would undoubtedly be the rights to several blockbuster films, alongside MGM's vast film library.
Although MGM lost the film rights to movies produced before 1948 due to the sale between Kirk Kerkorian and Ted Turner in the 1980s, the remaining catalog from 1948 onward still boasted over 4,000 films, placing it among the largest in all of Hollywood. In the original timeline, to push MGM's catalog in promoting its high-definition Blu-ray format, Sony had once foolishly spent $5 billion in 2004, showcasing the immense value of MGM's film library.
Unfortunately, over the years, MGM had consistently struggled, lacking the necessary resources to monetize its film library, relying instead on crude licensing to external video tape distributors and cable networks, which people had to admit was a pity. Now that he had acquired these resources, Eric certainly wouldn't allow that situation to continue.
As Eric pondered how to manage MGM's vast library of resources, he heard the girl exclaiming that her tax returns were whiter than Natasha's, causing him to raise his head. The twins were dressed in simple black T-shirts and washed-out jeans, quietly helping Drew pick out outfits. Their exposed faces and arms boasted that characteristic stunning paleness unique to Slavic beauties.
Noticing Eric's gaze, Drew flashed a smile. "Eric, they're even whiter when they're not wearing clothes!"
As Drew spoke, a faint blush appeared on the twins' cheeks, and they stole a shy glance at Eric.
Eric chuckled and shifted his gaze back to Drew, who was wearing nothing but her underwear. Even though she had passed her 20th birthday, she hadn't changed much over the years, thanks to having kicked her previous bad habits. Standing at 5'3", she had smooth, radiant skin, a petite frame with a touch of softness, utterly tempting.
Sensing Eric's lingering gaze, the girl shot him a playful look, suggesting, "Eric, there's still time, you know."
"Come on, hurry up and get dressed. We need to get there early."
"Then let's do it in the car."
"Stop joking around."
"Hehe..."
"Let's get back to business," Eric said, momentarily serious, "Even though your finances are in order, owning such a substantial stake in the company still looks a bit conspicuous. I plan for MGM to issue an additional 20% of its shares -- around 70 million shares -- and based on the current stock price, we can raise about $1 billion. At that point, when your shares and LTD's are factored together, we'll still maintain about 40% ownership and won't lose control of the company. Plus, this would allow for more financial flexibility for the company in the coming years. What do you think?"
The girl ultimately settled on a pink little dress. Once she got it on, she fluttered over to Eric, snuggling into him. "Eric, you really don't need to ask me about these kinds of things. Everything I have is yours; just make the decision."
"Heh, actually, I'm not very good at making decisions for others," Eric said, wrapping his arms around her waist.
"But I'm not just anyone, Eric. Without you, I might have died by now."
Feeling the small body pressed up against him, Eric joked, "Hmm, that line is starting to sound more like a soap opera. Ouch, watch the neck; I didn't list you in my will!"
"Well, I'd die with you."
"Is this the second episode of a soap opera now?"
"Woah, I'm serious."
"Alright, alright, it's time. Let's get moving."
...
MGM's headquarters was located in Century City. Although the original film lot was sold off by Kerkorian in the 80s, the headquarters building still stood. As an established film company for over half a century, MGM had begun to decline, yet its headquarters building still appeared far more impressive compared to Flower Films' offices on Venice Beach.
At that time, Flower Films and DreamWorks hadn't yet moved their offices there, but the press conference was arranged for the largest conference hall at MGM's headquarters.
When Eric and Drew arrived at MGM's headquarters, the plaza outside was already packed with reporters. As soon as they spotted the duo's vehicle, a swarm of journalists rushed toward them. The company's security team quickly cleared a path for the two.
"Mr. Williams, will Firefly acquire MGM in the future?"
"Eric, Drew, are you planning to get married?"
"Eric, why did you completely separate MGM from Firefly's system -- is it due to monopoly concerns?"
"Will MGM expand as aggressively as Firefly?"
"Eric, how do you plan to resolve MGM's debt issues?"
Amid the blinding flashes of cameras and a barrage of questions from reporters, Eric held Drew's waist tightly, navigating through the crowd with the assistance of security until they finally entered the building.
Once inside, high-ranking company executives like Amy Pascal and Frank Mancuso, as well as several stars who were going to attend the press conference, greeted them. Under Eric's instructions, executives from Firefly Group did not attend this press conference.
After greeting everyone, they all walked to the press conference venue, where staff were still making final adjustments to the equipment. The conference hall, over 200 square meters, featured a small stage with a backdrop showcasing posters for the company's franchises, including 007, Charlie's Angels, and Night at the Museum.
*****
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