Chapter 695: Almost Got into a Fight

[Chapter 695: Almost Got into a Fight]

The merger deal involving an amount that could reach $4 billion was far beyond what Elisabeth could decide, and even Rupert Murdoch had to be cautious about it. While the News Corporation had been firmly in the hands of the Murdoch family, this was primarily due to Rupert's excellent management skills that continuously brought profits to shareholders. If Rupert acted recklessly, shareholders would definitely turn against him.

Upon hearing Eric's thoughts on acquiring Hasbro, which he relayed through Elisabeth, Rupert made a special trip from New York to Los Angeles. He spent the entire day discussing the matter with Eric, but unfortunately, the negotiations did not go as hoped. The News Corporation had always focused on the media sector and had not ventured into other areas for decades, while Hasbro was primarily a toy company with little connection to media.

Although Eric painted a tempting picture, Rupert was not one to be easily swayed. As someone who had not personally witnessed the box office miracle of Transformers, he was very cautious about relying on just a conceptual 'pie' diagram. In the end, they decided that Fox would first acquire the rights to Transformers, and in the coming years, Firefly could initiate the acquisition of Hasbro, with both parties planning to co-develop the film series.

In the evening, Eric and Rupert walked out of the Liberty City Manor side by side, accompanied by Jeffrey Katzenberg, Elisabeth, and Kelly. Rupert had to catch a flight back to New York, and Elisabeth made a hand gesture signaling Eric to contact her while she climbed into Rupert's luxury car. As a dutiful daughter, she naturally intended to personally drive her father to the airport.

...

Watching as Rupert's car pulled away, Jeffrey turned to Eric and said, "If Fox could independently realize the profit potential you've described for Transformers, I bet Rupert would not hesitate to acquire Hasbro and wouldn't even need us to collaborate. Unfortunately, he doesn't have that kind of confidence. Eric, I think there's no need to complicate this further. We can just buy Hasbro outright now -- Firefly has enough funds."

"Jeffrey, let's put that idea on hold for now," Eric chuckled and shook his head. "Besides, Firefly is already way ahead of other media groups in Hollywood -- we should slow our pace a bit."

Jeffrey seemed to understand and didn't press Eric further. He was also aware that it was indeed time for Firefly to pause and reassess.

...

In recent days, Firefly's 1994 annual financial report had been released, showing that its businesses in film, television, merchandise, and theme parks generated a staggering $18.7 billion in operational revenue. Although it hadn't quite broken the $20 billion mark, the figures were impressive enough to leave many astonished. Meanwhile, the group achieved a net profit of $1.67 billion, marking increases of 62% and 40% respectively compared to 1993. This remarkable growth largely stemmed from the previous year's acquisition of ABC, which had added $7.5 billion in operational revenue to Firefly.

After acquiring ABC, it had taken nearly a year for business integration and downsizing. Firefly was expected to surpass $20 billion in revenue and $2 billion in net profit for the 1995 fiscal year. Such robust revenue and profitability allowed Firefly to pull far ahead of its competitors in Hollywood. The most notable contrast had been with Time Warner, which had previously overshadowed Firefly.

Although Time Warner had shrouded their financial performance from 1994, Eric had managed to obtain the relevant data. For the entire year, Time Warner's film segment had only generated $3.3 billion in revenue, a staggering 40% decline from 1993. Warner Bros. Entertainment's top-grossing film, Natural Born Killers, brought in just $105 million -- far below Firefly's North American blockbuster, The Lion King, which raked in $310 million. Globally, Time Warner's box office shares could not compete with Firefly's.

In 1994, the entire Time Warner group brought in just $8.3 billion, leaving it $10.4 billion behind Firefly. Moreover, compared to the stable profitability enjoyed during Steve Ross's time, Time Warner had experienced its first loss in years. While the loss of $91 million seemed insignificant against $8.3 billion in revenue, it served as a dangerous warning sign, indicating that Time Warner was beginning to decline without Steve Ross at the helm.

Besides Time Warner, Viacom, the parent company of Paramount, News Corporation's Fox, and Universal's parent MCA were nowhere near Firefly's level. Sony, the parent company of Columbia, was indeed much stronger than Firefly, but Columbia had suffered a $2.1 billion asset write-down at the end of last year, dropping its market value to below $3 billion -- less than one-tenth of what the media estimated Firefly to be worth. As for MGM, it had virtually no presence.

One could say that Firefly was clearly ahead of the pack in Hollywood at this point.

...

Reflecting on this invigorating data, Jeffrey couldn't help but glance at Eric standing beside him. Everything Firefly had achieved stemmed from this young man's keen insights in film and media. Although Eric had increasingly stepped back from direct management of the Firefly Group, everyone within the organization understood that he was the true soul of Firefly. Without him, Firefly's miraculous rise would have been impossible.

Despite being the CEO of Firefly, Jeffrey was well aware that he was better suited for micro-management. He lacked the decisive judgment and control over the group's overall direction that Eric possessed. Whether it was the acquisition of Disney years ago or last year's merger with ABC, Eric's wildly ambitious moves had drawn numerous criticisms. Many speculated that the relatively young Firefly might collapse under such aggressive expansion. Ultimately, however, Firefly not only assimilated these industry giants but also successfully integrated them into its operational structure.

At this moment, Eric's decision to pause on expansion stemmed not only from the investments in high-tech industries like the internet that had drained Firefly's financial resources, but also from the challenges created by the two substantial mergers. While those problems had not yet surfaced, they were there, merely masked by Firefly's strong profitability.

After Rupert left, Jeffrey didn't rush away. Instead, he returned to the villa with Eric and began talking about a recent problem at ABC that had everyone concerned.

"During the prime time from 8 p.m. to 11 p.m., NBC and CBS both aired late-night talk shows. NBC's The Jay Leno Show consistently generated a profit of $150 million a year, while CBS's David Letterman Show pulled in $50 million annually. In contrast, ABC's 11 p.m. news program, Nightline, only averaged a $10 million profit per year. Previously, we had few good options, but now that David Letterman's contract with CBS is nearing its end, Robert suggested we bring him to ABC. David is very interested in the idea. Our prime time ratings are very strong and could serve as a great lead-in for his late-night show. However, just when Robert put forth this proposal, the president of the news department, David Weston, barged into his office, and they got into a heated argument that almost turned into a fight."

*****

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