[Chapter 894: It's Probably Not That Easy]
Kensington Garden Street was undoubtedly one of the most private neighborhoods in London. Even though Elisabeth excitedly called from Los Angeles that night to gossip about the circumstances of how Eric threw Diana out the door, this incident would ultimately only circulate within a very small circle, creating little stir.
After calming down, Diana didn't do anything outrageous. Instead, she quietly flew to Eastern Europe to continue her efforts in her charity work. The media mainly reported on the sudden heartbreak of the Princess of Wales. Although some tabloids occasionally published suggestive articles, the major gossip newspapers were rather vague about the reasons behind Diana's heartbreak, meaning it didn't have much impact on Eric.
...
The next day, Simon Fuller called to agree to the Firefly Group's acquisition of the entertainment company he had founded, 19 Entertainment.
Although 19 Entertainment had been established for twelve years, it hadn't accumulated any valuable assets, and many of the signed artists faded into obscurity without success. Eric held no great expectations for the company; he was primarily interested in Simon Fuller's creativity and his experience in the recording industry.
After the Firefly UK office conducted a brief assessment of 19 Entertainment, Eric offered $3 million, with $1 million for the complete equity acquisition of 19 Entertainment and an additional $2 million intended as startup funds to create a girl group. Eric also included a provision in the contract for Simon Fuller to receive 10% of the company's equity options over five years.
Knowing he had no room to negotiate, Simon Fuller didn't fuss over the details, and he was very content with the 10% equity option.
While nominally connected to Firefly Group's subsidiary, Firefly Records, 19 Entertainment was essentially a European branch of Firefly Records due to the latter's limited operations in the UK and Europe. As long as the Firefly Group provided adequate support, 19 Entertainment would surely grow rapidly, and those 10% options would become a significant asset.
Considering the massive scale of the Firefly Group, the $3 million acquisition seemed trivial.
However, once the news of the deal surfaced, and it became known that Eric was the driving force behind it, the entire European recording industry turned its attention to what was once an obscure 19 Entertainment. No one could believe that Firefly's expansion into Europe would be minor, and mainstream media began to speculate on the intentions behind Firefly or Eric's move. Simon Fuller suddenly found himself a sought-after figure, as executives from old-school record companies, who had previously ignored him, started calling to gather intel and explore potential collaborations.
...
Truth be told, the plan to acquire 19 Entertainment and the creation of a girl group was merely a trivial side project for Eric during his downtime. However, most people didn't see it that way, especially given that Casino Royale was raking in box office worldwide. Even without mentioning Eric's immense wealth, consecutive blockbuster hits grossing over a billion dollars had already elevated his influence in the entertainment industry to an unprecedented height. Not only did Jeffrey Katzenberg call to inquire about Eric's detailed plans, but Firefly Records President Barry Weiss even wanted to fly to the UK in person, only to be stopped by Eric.
...
After spending two days preliminary discussing the girl group project with Simon Fuller, 19 Entertainment quickly announced an open call for girls aged 18 to 23 to form the group in The Times.
Unlike the Firefly's acquisition of 19 Entertainment, which remained largely within professional circles, the recruitment notice sparked excitement among countless aspiring girls eager for fame. Within just three days, 19 Entertainment received over 1,000 applications, and various record companies attempted to place their artists directly into the group, causing a frenzy throughout the British entertainment scene.
...
In San Francisco, at Firefly Electronics' Fireflyer player assembly plant in northern Oakland, Jeff Kleber, the vice president who had been brought over from Nokia three months prior to oversee the supply chain and production for Firefly Electronics, suddenly felt someone tap him on the shoulder. He jolted upright, realizing he had fallen asleep at his desk.
Today was July 10th, the planned launch date for Fireflyer.
To ensure everything went smoothly, Jeff Kleber had been virtually glued to the factory floor for the past few days. Just a week earlier, he had returned from Malaysia, where, in addition to two domestic assembly plants, Firefly Electronics was also initiating a larger-scale factory capable of producing 500,000 units monthly in Southeast Asia. However, that plant would take at least three more months to go into production, and ramping up output would be a gradual process.
Rubbing the sleep from his eyes, Jeff finally recognized the two standing before him, Victor McNally and Bill Olson. Victor McNally was smiling and handed him a breakfast sandwich.
After spending months together, the three had become quite familiar. Jeff didn't hesitate, tearing open the packaging and taking a big bite of the sandwich, before glancing at his watch and noting, "It's already a quarter past eight."
"Yes," Victor McNally nodded as he and Bill Olson pulled up chairs. "We got here at seven and didn't want to wake you."
"Oh, so you two must have already been to the assembly line," Jeff chewed and added, "last night was terrible. A robot malfunctioned, and we didn't fix it until 4 AM. I'm going to have a serious talk with Epson's Hamada about this. If he doesn't give me a satisfactory answer, he can forget about the order for 100 robots for our Malaysia plant."
Victor McNally and Bill Olson watched as the thirty-something Jeff Kleber sprang back to life after a few bites of his breakfast, feeling somewhat envious.
Three months ago, when they first met Jeff, they were skeptical about whether this energetic yet somewhat flamboyant young man could manage the supply chain and production for Firefly Electronics competently. But now, they had completely abandoned their initial doubts. Under Jeff's management, Firefly Electronics's component supply chain and product production line had undergone a remarkable transformation in just three months.
Hearing Jeff complain, Bill Olson chuckled, "Remember, Jeff, we need to focus on other things today."
"Of course," Jeff nodded, "Amazon's pre-sale opens at 10 AM, so we have one hour and forty minutes left."
Although they decided to start sales today, it would still take time to distribute Fireflyer to retail channels.
In this situation, gauging the genuine market demand for Fireflyer after three months of hunger marketing would certainly be best done using the sales data from Amazon's online store. Thus, Amazon was set to open Fireflyer pre-sales today at 10 AM Pacific Time. Once users placed their orders online, Amazon would begin shipping within 7 to 15 days.
Noticing Jeff's calm demeanor, Victor McNally asked, "Aren't you nervous at all?"
"Why should I be nervous? Besides, you two don't seem too anxious either," Jeff joked. "Just in the first half of this year, PC sales in North America reached 14.3 million units. This year, the total PC sales could approach 30 million. All the consumers buying PCs are potential customers for Fireflyer. Based on that standard, Fireflyer's potential sales could reach at least 30 million, which equates to about 2.5 million units per month. Even if the factory in Malaysia is fully operational, our capacity will only reach 1 million units per month, which wouldn't even meet North America's demand, let alone the even larger overseas market."
Victor McNally watched as Jeff gulped down the rest of his breakfast before standing up. "Alright, if that's the case, let's step outside for a breather. The air is nice out there."
"Sure, I happen to want to check today's newspaper," Jeff said. "Speaking of which, today is Friday; last week's box office data should be out. What do you think our boss's movie earned this week?"
Bill Olson chuckled, "Unfortunately, I already saw it, no need to guess. It's..."
Jeff raised a finger, "Stop, don't tell me. I want to see for myself."
"Ha ha."
The three of them laughed as they left Jeff's office together and walked outside.
...
In Los Angeles, Santa Monica.
In a restaurant, Amy Pascal's husband, Bernard Weinraub, looked at the Hollywood Reporter in his hand, shaking his head in disbelief. "Incredible, just incredible. The drop was only 34%, which is almost lower than all the analysts predicted. At this rate, the North American box office could even exceed $350 million."
Amy Pascal sat across the table, with a similar newspaper spread out beside her.
In its second week of release, Casino Royale's box office drop was lower than many had anticipated, coming in at just 34%, securing $77.55 million in revenue and bringing its cumulative total to $195 million. The success of Casino Royale affected Ice Age, which initially forecasted a first-week box office of $60 million but only managed to collect $57.23 million.
Another new release, Bad Boys II, was even more impacted, with a first-week box office of just $23.15 million, falling short of New Line Cinema's original $35 million estimate, and it didn't even reach third place on the weekly box office chart; instead, it landed behind Finding Nemo, which was already in its fourth week.
As for Batman & Robin, which had been released the week before Casino Royale, it had become a nightmare for Warner Bros.
Due to its atrocious reviews, Batman & Robin's first-week box office was $59.47 million, but in its second week, it plummeted by 65% to only $20.81 million. To make matters worse, the industry initially thought that the film would begin to stabilize in its third week, but after the impact of Casino Royale, Batman & Robin's third-week box office drop remained steep at 61%, leaving a mere $8.11 million.
After three weeks of release, while Batman & Robin had a cumulative total of $88.39 million, at the current rate of drop, if next week's earnings were to be halved again, it would end up with under $4 million for the week, concluding at around $95 million. Ultimately, this meant that for Warner Bros. to break even, they would have to cough up the losses themselves.
Batman & Robin had a total investment of $125 million, plus a similar promotional budget of $50 million to that of Casino Royale. Even if it made over $200 million globally, Warner Bros. would only recoup around $90 million in box office returns. The film's terrible reception meant that future earnings from video and television rights would also take a hit. Altogether, the direct losses for Warner Bros. on this project could amount to $80 million, but that wasn't the worst of it. The more severe consequence was that the Batman brand might be irreparably damaged, making it hard for Warner to relaunch this superhero series for at least a decade.
As she looked at the box office data in the newspaper, reflecting on these matters, Amy Pascal replied, "So, what did you say last week? A slew of bad films hitting the market would only increase the audience's thirst for high-rated commercial films. It really does seem you were right. Many people are feeling quite astonished."
Bernard Weinraub nodded, "So the next 007 should be initiated immediately, right?"
Hearing her husband bring that up, Amy Pascal paused as she spread jam over her bread, smiling wryly, "It won't be that easy."
"True," Bernard Weinraub chuckled. "Knowing Williams, he probably won't continue with the next 007 film. Finding a director able to take the reins of this series is going to be a lot of work. Williams laid such a great foundation; it would be a shame if the follow-up film fails due to a rookie director."
"Honestly, it's not just about the director," Amy Pascal shook her head. "The real issue revolves around Brosnan."
"About his pay?"
Amy Pascal nodded, "That's been a real headache. You should know about Mr. & Mrs. Smith, right?"
"Of course."
Amy Pascal elaborated, "Before Mr. & Mrs. Smith, Pierce was barely even considered a mid-tier actor. To star in the mainstream hit Mr. & Mrs. Smith, he signed a three-film bundled deal with Columbia Pictures, stipulating that the salary for each film couldn't increase by more than 50%. In Mr. & Mrs. Smith, Pierce earned $3 million. Then, under Eric's guidance, that option contract was transferred to MGM so that Pierce could star as Bond. Given the outstanding box office of Mr. & Mrs. Smith, Pierce's salary bumped up slightly to $5 million for GoldenEye. Then came Casino Royale, where he earned $7 million."
As Bernard listened to his wife, he understood. According to Hollywood star salary standards, after Mr. & Mrs. Smith, Pierce Brosnan's worth should have hit $10 million. But due to the contract limitations, he had taken low salaries for two movies. Now, with Casino Royale aiming for a worldwide box office of a billion, Brosnan found himself at the end of his three-movie contract, and while everyone knew that Eric had played a huge role in Casino Royale's success, that wouldn't stop Brosnan from demanding a hefty paycheck for the upcoming sequels.
Setting the newspaper down, Bernard couldn't help but ask with curiosity, "So, how much does he want this time?"
Amy Pascal replied, "$20 million plus 20% of the worldwide box office."
Hollywood stars' agreements with studios for profit-sharing structures often varied greatly, and Bernard was a bit confused. He pressed on, "What are the specific terms?"
"The $20 million is straightforward, but the 20% of the worldwide box office means he'd get 20% of the profits remaining after expenses for production and distribution are deducted from the global box office receipts. If we take Casino Royale's global $1 billion benchmark, our share of the box office is around $400 million. After deducting the total production costs of $165 million, that leaves a profit of $235 million, from which Pierce wants to take 20%."
Bernard calculated briefly and couldn't help but suck in a breath, "So if the next sequel hits the same level as Casino Royale, that's nearly $70 million, wow, he's really bold with that ask."
Amy Pascal chuckled ruefully, "Based on the company's planned spy universe storyline, the next 007 is still expected to be a high point for the series. Even if it doesn't reach the global billion mark, it won't be too far off."
Bernard Weinraub responded, "What are you planning to do about it?"
Amy Pascal shrugged, "Continue negotiating. That kind of salary is out of the question. Eric set the rule that anyone who wants a share can't have a fixed salary over $10 million. I heard even James Cameron's contract for Spider-Man with Firefly didn't exceed that limit, so MGM will definitely follow suit. It's up to Pierce whether he chooses to take the direct $20 million or the $10 million plus a share. After all, even with profit sharing, there's no way we could give him 20%. Besides, we have leverage."
"Oh, really?"
Amy Pascal replied, "Pierce initially signed that packaged contract with Columbia for three films, and similarly, his contract with MGM also stipulates three films. Although there's no limit on pay for this last one, he can't take on other films until completing this contract. If this drags out, it won't be good for anyone involved."
Bernard added, "But even so, what happens after this? The spy universe should have more to offer, right?"
"Yeah," Amy Pascal recalled Eric's memo from last month, "we've been discussing that lately. There's definitely a solution."
*****
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