[Chapter 991: A Strong Start]
At the end of May, the last major release was The Truman Show, starring Jim Carrey and produced and distributed by Paramount Pictures. Following that was Firefly Group's The Day After Tomorrow, so Eric was keenly interested in this movie due to Jim's involvement.
Despite the failure of The Cable Guy, Jim Carrey had remained firmly at the top tier in Hollywood over the recent years. Even with the more artsy angle of The Truman Show, Jim still commanded a salary of $12 million, setting the bar high and making The Truman Show a $60 million production.
On Monday, Eric relaxed on a flight to New York, looking over last weekend's box office report in his hands.
The Truman Show made $31.19 million in its opening weekend, matching the performances of the previous two weeks' releases, Lethal Weapon 4 and The Patriot, and estimates suggested it could reach around $50 million in its first week.
As long as it maintained a solid box office trend, Paramount would still see a tidy profit. As for Lethal Weapon 4 and The Patriot, they had already suffered weekly drops of around 40%, posing no real threat to the upcoming release of The Day After Tomorrow on Friday.
The new version of The Day After Tomorrow was directed by Michael Bay. Eric had already seen the finished product and, since he had written the script himself, it was no longer as drawn-out as Roland Emmerich's version. Furthermore, Bay's knack for bursting with visual effects made the imagery of North America being covered in ice more striking. This also marked Firefly Group's sole major summer blockbuster of the year, garnering most of the company's marketing resources, leaving no doubt that this effects-laden giant would be the highlight of the summer.
...
At 4 PM, Eric's Boeing 767 landed at MacArthur Airport in central Long Island. As usual, he sent Caroline and Meyer off to Manhattan while he headed to East Hampton. He planned to spend two weeks in New York -- one week for business and the other for some quality time with the women and kids.
However, although he wanted to take a break, Chris rushed over from Manhattan the following day.
...
On the lawn in the mansion, the weather was quite nice.
Chris was led to the backyard lawn by Joanna, where he spotted Eric with three kids making insect specimens. Kevin and Emma were joyfully engaged, while Hawaii was noticeably distracted. When she saw her mother arrive with Chris, Hawaii quickly stood up and sweetly greeted, "Good morning, Uncle Chris! Are you going to talk business with Dad?"
The little girl blinked her big eyes, almost saying, "Please take my dad away!"
Chris smiled and shook his head seriously, "No, I came to join you in making insect specimens."
At this response, Hawaii frowned in annoyance. How could these adults be so boring? Even worse, they wanted to drag her into it.
Eric put down his tools and stood up, giving Chris a hug. He said to Joanna, "Joan, why don't you play with them for a while?"
Joanna nodded and, watching Eric leave with Chris, sat down at the spot he just vacated, affectionately rubbing her restless daughter's back. "Elia, you promised Mommy you would get along with Daddy and not act so impatient all the time."
"But, Mom, this is really boring. Can I go back and read now?"
Joanna shook her head. "No, you can't. I spoke with Manny; she won't be coming to help you with lessons this week. I've put away your books, along with the little keyboard Steve sent you. You've already scared your dad enough, so at least this week, be good."
"Mmm."
The five-year-old girl, with her beautiful big eyes, sighed in frustration and lazily laid her head on the table piled with crafting supplies, finding life rather dull.
...
Meanwhile, Chris followed Eric back to the living room of the villa. Once seated on the couch, he smiled and asked, "Did you get another big surprise this time?"
"If you're talking about seeing a five-year-old girl engrossed in a book on Differential Topology," Eric shrugged and forced a smile. "Absolutely, if it weren't for Elia's tutor explaining what Differential Topology is, I wouldn't have had a clue what my daughter was studying. Although, fine, even with that explanation, I still don't really understand what it is."
"Ha ha," Chris burst into laughter, then after a moment added, "I'm really looking forward to seeing what Elia will be like when she grows up. Maybe I should start letting Daniel spend more time with her; he could marry her someday."
Eric smiled helplessly. He certainly hoped his child would be very smart, but this felt a bit excessive.
After sharing a few laughs, the two quickly turned to business.
"Counting our initial stock holdings and the purchases made by Firefly Investment and Clover Fund in the first half of the year, we currently hold a total of 35.7% of AOL's shares. The free-floating shares of AOL have basically been swept up by various investment funds, and our holdings will not increase. During this time, I've been in touch with the other AOL shareholders, but the results haven't been great. The achievements of Steve Case are evident to all, and most shareholders prefer the current management's development strategy."
Since its inception, AOL had been raising funds from various investment companies. It wasn't until Firefly Investment stepped in that AOL's stock structure stabilized. The situation now was that the combined stock holdings of AOL's management, including Steve Case, was less than 10%. Outside of Firefly being a major shareholder, the remaining ownership was concentrated in a handful of investment funds.
Based on yesterday's closing price, AOL's market value had reached $39.6 billion, up 1.77 times from the start of the year. This means that right now, 1% of AOL's shares was worth nearly $400 million. Even if the investment funds were willing to offload more shares, Firefly couldn't muster enough funds to make large-scale purchases.
Gently tapping his fingers on the couch armrest, Eric pondered for a moment and asked, "If we go all in now, how likely are we to take control of AOL?"
Chris thought it over and answered, "About 50%. There are already rumors about AOL merging with Time Warner. If that news gets confirmed, our chances of losing are greater since many people would be very eager to see AOL merge with Time Warner."
Although Firefly was AOL's largest shareholder, controlling 35.7% of the stock, under the current favorable circumstances for AOL, the chance of ousting the existing management via a shareholder vote was quite slim. Most of AOL's shareholders were institutional investors, and there weren't many. Gathering a united front against Firefly, the major shareholder, would be relatively easy.
Of course, Firefly had its trump card as well -- threatening to sell off stocks to persuade other shareholders to side with them. If Firefly significantly sold off its holdings in AOL, it could potentially crash AOL's stock price.
However, Eric was definitely against using that method unless it was absolutely necessary. Such an act would harm everyone involved and could set off a chain reaction impacting the entire Nasdaq market.
The Nasdaq index was now nearing 2000 points. While this seemed far from the once lofty heights of 5000, the stock index was filled with bubbles.
Take Microsoft as an example: back in 1995, when the Nasdaq hovered around 1000 points, Microsoft's market value was only around $40 billion. Now, as the index hit 2000 points, Microsoft's market cap had surpassed $250 billion -- more than six times what it was three years ago.
If Firefly Investment were to try to break down AOL shares to make AOL shareholders yield, Eric worried that a drop in AOL's stock price could serve as a trigger for the entire Nasdaq market's collapse. If that happened, Firefly would be facing the hostility of Wall Street.
As for why he insisted on having AOL follow a path as an Internet service provider, Eric had already gone over the details with Chris.
AOL's user growth had surged in recent years, and it was expected that by around 2000, AOL would have 20 million broadband users -- far exceeding traditional telecom operators like AT&T and Verizon.
This was the essential foundation of AOL's operations. As long as they could secure 20 million users, with an average monthly fee of $30, these users would bring $7.2 billion in stable annual revenue.
Under such favorable conditions, further consolidating their position by merging with a traditional telecom operator could expand their service offerings. Even if the Internet bubble burst in the future, AOL could remain stable.
However, Steve Case's vision of transforming AOL into the biggest Internet media giant was essentially sacrificing the core for the sake of a less relevant goal.
History had proven this time and again; when the Internet bubble burst, AOL's media empire quickly fell apart. The fallout led to a myriad of personnel and financial crises. The disregard for core network services, along with a coalition of major traditional players vying to eliminate AOL, caused AOL's 20 million-plus users to swiftly migrate to competitors. Eventually, when Time Warner sold AOL again, the internet giant, which once had a peak market value of $180 billion, could only fetch a paltry $4 billion.
Eric believed that AOL shareholders had been quite lucky during that previous transaction; at the peak of the company's stock price, they exchanged their shares for 'AOL-Time Warner' stock. So when AOL vanished, they still held stakes in Time Warner, leaving them not totally empty-handed. As for the original Time Warner shareholders, well, that was a different story.
If this time around the acquisition of Time Warner by AOL went through, even at a 50-50 split, Firefly Investment's stake in Time Warner would eventually be close to 18%. That would surely position them as the largest shareholder of the new 'AOL-Time Warner', aligning perfectly with Eric's ambition to expand in Hollywood.
Nevertheless, passing up the chance to become America's leading Internet service provider in exchange for an 18% stake in Time Warner seemed like a major miscalculation. Eric was determined to avoid such a misstep.
"50% it is then," Eric finally said. "Time Warner has already been in frequent contact with AOL's upper management, so we need to make a decision quickly. We can't keep dragging this out indefinitely."
Chris nodded and added, "Well, Eric, succeeding would be great, but if it doesn't work out, what do you plan to do?"
This time, Eric didn't hesitate much. "If we fail, we'll start gradually pulling out from now on. We'll sell as many shares as we can."
Chris understood the implication; the Nasdaq market would inevitably crash one day. As soon as that came, AOL -- an avant-garde star stock on the Nasdaq -- would be hit first. Firefly could only liquidate as much stock as possible before that day came.
As for becoming a shareholder of the new AOL-Time Warner, Eric was not interested at all.
Once the Nasdaq market crumbled, Time Warner would become a complete quagmire. Even if Time Warner's valuation was calculated at $50 billion, holding an 18% stake would only be worth about $9 billion. Even now, Firefly's share in AOL at 35.7% already greatly surpassed that value, let alone the 18% not enough to seize control of Time Warner.
...
Unconsciously, the two chatted away the morning. After lunch, Chris hurried off to prepare for the showdown planned for the end of the month, at which point Eric might come back to New York.
As Eric stayed in East Hampton, hoping to prevent his daughter from becoming a problem, a workweek quickly passed.
On June 5, Friday, the first big effects-heavy film of the summer, The Day After Tomorrow, officially premiered across 3,370 screens in North America.
The film took in $23.5 million on its opening day. Eric's well-crafted script, combined with Michael Bay's expertise in visual effects, led to a positive reception, with most media giving it an 8 out of 10 -- far exceeding Roland Emmerich's previous version.
After the successful opening day of $23.5 million, the film would gross a total of $73.75 million over its opening weekend, becoming the first smash hit of the summer season. Based on the weekend box office performance data, Michael Bay would undoubtedly achieve his first film to cross $100 million in its opening week.
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