Chapter 369: Undercurrents

On the same Sunday in Los Angeles, Michael Ovitz had breakfast while watching James Raybuld's "Today Show" interview in its entirety. He did not believe James's ambiguous responses for a second, as recent inquiries had confirmed that Daenerys Entertainment was indeed preparing to bid for MCA.

Originally planning to spend the weekend with his family, Ovitz found himself working due to the sudden exposure by "The Hollywood Reporter" of Daenerys Entertainment's intent to purchase MCA and today's interview.

The CAA team had been busy with the MCA acquisition for a full year since last fall. A failure now would not only waste a year of effort but also mean tens of millions in consultancy fees lost, outcomes Ovitz was not willing to see.

However, Ovitz acknowledged the serious challenges he faced. Initially, during early discussions last year, Panasonic had expressed willingness to bid up to $90 per share for MCA, which, given MCA's nearly one hundred million shares, valued the deal at about $9 billion.

Yet, as Japan's economy continued to deteriorate over the past six months, Panasonic became increasingly conservative. Furthermore, the outbreak of the Kuwait War triggered a downturn in the U.S. stock market, and by last Friday, MCA's stock had fallen to $36 per share. Under these circumstances, Panasonic was unlikely to stick to a $90 per share bid.

The immediate task was to expedite the acquisition and press Panasonic to raise its offer for MCA. Before 8:00 AM, Ovitz arrived at CAA's Century City headquarters where the core team for the MCA deal and the representative from Panasonic, Keiguya Yoneko, were also present.

The strategy meeting lasted all morning, and by midday, Ovitz had a phone conversation with Panasonic's President, Furui Akio, in Osaka. Since becoming president in 1986, Furui had been eager to penetrate the U.S. market, a move previously stalled by Panasonic's conservative founder, Konosuke Matsushita.

To Ovitz's disappointment, Furui did not accept his suggestion to quickly close the deal by raising the bid to $75 per share, nor did he decide to withdraw from the acquisition despite Daenerys Entertainment's competition.

The morning's efforts culminated in an agreement to engage MCA in a new round of negotiations on Wednesday to further discuss acquisition details.

After lunch and Yoneko's departure, the core members of the MCA acquisition team—Michael Ovitz, CAA's CFO and co-founder Bob Goldman, and senior executives Sandy Kliman and Ray Kurtzman—gathered again.

Panasonic's lack of decisiveness was frustrating for everyone involved. Once the secretary left after delivering coffee, Bob Goldman commented, "Many in Hollywood probably don't want to see Daenerys Entertainment expand further."

Sandy Kliman, who had helped Ovitz establish CAA's corporate agency business, replied, "So what? Do you think Warner, Fox, MGM, or Columbia would step out against this acquisition now?"

That summer, Daenerys Entertainment's films "Sleeping with the Enemy" and "The Hand That Rocks the Cradle" had been successful. Not only had Fox and Disney benefited, but Warner, MGM, and Columbia also had close collaborations with Daenerys Entertainment.

Ray Kurtzman interjected, "Paramount hasn't collaborated with Daenerys Entertainment. Plus, after the failures of 'The Rocketeer' and 'Fire Birds', Martin Davis must be very unhappy with Westeros."

Sandy Kliman retorted, "Paramount alone isn't enough."

Bob Goldman added, "You're all missing one thing. It doesn't have to be industry competitors that stop a studio from being acquired. I mean, the big three Hollywood guilds could."

At this realization, everyone around the table appeared enlightened.

Two years ago, Daenerys Entertainment had clashed with the American Screenwriters Guild over a strike, and now Simon Westeros was pressing down on star salaries with long contracts and keeping a tight budget on movie production costs. These moves, while beneficial for production companies, clearly harmed the interests of the Hollywood guilds for writers, directors, and actors.

Moreover, with Daenerys Entertainment occupying most of the top ten slots in the U.S. box office for two consecutive years, such market dominance, if extended by acquiring MCA, clearly suggested a monopoly.

If the three major guilds united to bring a lawsuit to the Department of Justice with support from studios like Paramount, the possibility of stopping Daenerys Entertainment's acquisition could be significant.

"I remember last Wednesday's proposal from Texas Senator Peter Briggle," Ray Kurtzman quickly brought up another point. After some confused looks from the others, he added, "I'll have someone compile some information for you guys. In short, the White House probably isn't too fond of Westeros right now, which means the Department of Justice might not

 easily approve Daenerys Entertainment's acquisition of MCA."

"And there's the matter with Dustin and those guys last year."

"Matthew Broderick, that young man, remember?"

The discussion continued for several more minutes before Michael Ovitz made a decision, "Bob, you know Martin Davis well, talk to him soon. Sandy and Ray, you two handle our connections in Washington. I'll personally speak with the three guilds and Dustin and his group."

With their plans set, the four men quickly began to take action.

As the weekend passed quickly, Monday, September 10th arrived.

Following the Saturday revelation by "The Hollywood Reporter" about Daenerys Entertainment's interest in acquiring MCA, "The Wall Street Journal" also disclosed on Monday that Panasonic's acquisition team would formally negotiate with MCA on Wednesday.

After "The Wall Street Journal" broke the news, Michael Ovitz immediately called Lou Wasserman at home, accusing him of leaking information to the media and threatening to cancel Wednesday's meeting. Wasserman vehemently denied the accusations, and after several exchanges, the Wednesday meeting was confirmed to proceed as planned.

However, following continuous media coverage, the news of Daenerys Entertainment and Panasonic's potential bid for MCA was fully public.

On Monday morning, as the North American stock market opened, MCA's stock price began to rise sharply. By the close of trading that day, MCA's stock had surged from $36.75 to $41.25, a 12% increase. By Wednesday's close, the stock had risen to $46.75, essentially returning to its pre-Kuwait War level.

Due to the time difference between the coasts, when Panasonic and MCA executives concluded their negotiations at Universal Studios in Burbank on Wednesday, the East Coast markets had already closed. However, the meeting took a dramatic turn.

At the post-negotiation press conference, MCA President Sid Sheinberg openly criticized Panasonic's bid as insincere, stating that MCA's recent stock undervaluation was due to uncontrollable factors. If Panasonic refused to raise its offer, the deal would have to be shelved.

Sheinberg also expressed that MCA was an excellent company and looked forward to interest from other corporations, clearly hinting at further developments.

The media continued to expose more details of the negotiation. Sheinberg was expecting $80 per share, while Panasonic was only willing to offer $60, a substantial gap that led to the talks ending without agreement.

Due to the unsuccessful negotiations, MCA's stock rally slowed the following day.

Although it was clear that Panasonic would not easily give up on the acquisition and MCA would not quickly dismiss such a potentially stock-boosting competitor, many eyes turned to Daenerys Entertainment, anticipating Simon's move.

After dodging the intense media scrutiny following the release of the Forbes billionaires list, Simon remained in New York this week.

When news of the stalemate between Panasonic and MCA reached him, Simon finally relaxed, patiently waiting for the right moment. Janet had personally arranged a series of meals, receptions, and parties for him.

Rapidly amassing a substantial fortune without an adequate network of connections was not feasible, and leaving the networking entirely to company executives was not wise.

Every time Simon visited Melbourne, the Johnston family arranged similar events for him. Janet had fully inherited her family's insight and skills in networking. She instinctively helped Simon avoid many pointless social engagements, sparing him from blindly fumbling through various circles like many new wealth holders.

To further confuse the media and the public, Simon conspicuously attended a party hosted by Steve Ross in East Hampton, Long Island.

Following this, the media speculated about a possible merger between Daenerys Entertainment and Time Warner.

Those in the circle knew Steve Ross had a strong desire for power, and Simon was unlikely to relinquish control of Daenerys Entertainment, making a merger between the two companies highly unlikely. However, the world always had more people who were uninformed.

After the news broke, Time Warner's stock also began to rise.

Neither Daenerys Entertainment nor Time Warner clarified the situation, as Simon aimed to mislead, and Steve Ross hoped to generate positive news for Time Warner, even if it was false, to alleviate some of the pressure he faced as head of Time Warner.

After the challenges of finalizing the Time Warner merger earlier this year, due to internal management struggles, worsening external economic conditions, and significant increases in corporate debt, the synergistic effect of "1+1>2" expected before the merger of Time and Warner Brothers had not materialized, leading to a continuous decline in Time Warner's stock price.

Currently, Time Warner, a media behemoth with total assets nearing $25 billion, had a market value of just over $8 billion and debts exceeding $10 billion. This was a stark contrast to before the merger, when Paramount Communications had attempted to intercept the acquisition with a bid of $10.7 billion just for Time.

In recent months, some media had

 begun comparing the Time Warner merger unfavorably with the Reynolds-Nabisco merger from the previous year.

Frankly, due to the highly complex internal situation at Time Warner, even if Steve Ross was willing to sell the company, Simon would not easily take over.

After a tumultuous two weeks, Simon left New York on September 17th and flew to San Francisco on the West Coast.

Recently, leveraging his support for Larry Ellison's control over Oracle in exchange for a board seat at the company, which he had Carol Bartz from Igret, who handled software operations, fill, was not without purpose.

Database software was extensively used on internet sites, and having Carol Bartz on Oracle's board could further strengthen the link between Oracle's database software and Igret's web technology.

On the other hand, Oracle's upcoming layoffs were concentrated in its software sales department. Conveniently, Carol Bartz was building a software sales network for Igret, allowing her to "locally" recruit a group of capable sales staff from Oracle.

Despite significant missteps in sales strategy over the past two years, Oracle's rapid performance growth was unquestionable, largely credited to its software sales team.

Furthermore, inspired by Simon's memorandum on the concept of 'cloud computing,' Carol Bartz hoped to transform Igret's software division into a one-stop web-based technology support company for users wishing to set up websites, offering complete hardware and software solutions, rather than merely selling software products.

Unlike in the original timeline, Igret nearly monopolized the patents related to web technology at this time.

Although Simon maintained an open licensing stance, considering the explosive growth of web-based sites in the coming years, he realized how vast the benefits would be if Carol Bartz's vision materialized.

However, this was not a task Igret could accomplish alone; it required the integration of all the new technology resources under the Westeros Corporation umbrella.

Of course, this plan could not be realized overnight.

Upon arriving in San Francisco, besides reviewing Carol Bartz's business proposals, Simon had to mediate again between her and Jeff Bezos.

The $50 million Simon had recently injected into Igret had seen $35 million allocated primarily to the network department. Carol Bartz believed her software department was more crucial at this stage and deserved more funding. After Simon's departure, she had argued with Jeff Bezos to split the funds equally.

Both Carol Bartz and Jeff Bezos were strong personalities who, in a few months, had inadvertently marginalized Tim Berners-Lee, the CEO, to a chief technical officer role.

Like Apple co-founder Steve Wozniak, Tim Berners-Lee was a tech-focused individual who, realizing he couldn't manage his two nominal subordinates, simply opted out of their disputes and focused solely on developing web technology projects.

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