Chapter 156: What’s the Cost?

At the InterContinental Hotel in Century City, Los Angeles.

Salih walked into a meeting room and saw Samir and Aziz. He asked with concern, "Has Michael arrived yet?"

Samir and Aziz both greeted Salih with a bow, "Your Highness."

"This is not Abu Dhabi," Salih waved his hand dismissively. "Let's keep it simple."

Aziz checked the time and replied, "Our meeting with Michael is scheduled for ten in the morning. We still have an hour."

Salih invited them to sit down, "Please, have a seat and let's talk."

Once seated, Salih asked, "I just arrived in Los Angeles yesterday and am not fully briefed on the situation. Can one of you update me?"

The two exchanged glances, and Aziz took the lead, "Since December, we have been discreetly assessing Michael and his company for over a month. Combining this with opinions from some Hollywood market research firms, we have evaluated Michael Davenport and his Relativity Entertainment as highly valuable assets."

Salih furrowed his brow, appearing a bit worried.

Aziz continued, "Last year, after Michael successfully secured financing from Abu Dhabi, he acquired a small film distribution company, Embassy Pictures. Combined with the existing Sandsea Entertainment, he formed Relativity Entertainment. Moreover, last month, he poached the entire distribution department from Polygram Entertainment, which was acquired by Universal Pictures, and is currently integrating their overseas distribution channels."

He glanced at Salih and went on, "Relativity Entertainment is now a film company with independent production and distribution capabilities, which is quite rare in Hollywood."

Having been in Los Angeles for over a month, Aziz had done considerable groundwork, though he didn't expect Salih, a member of the royal family, to fully grasp all these details.

Salih, however, was full of doubts. Educated in the UK, he felt there was a fundamental difference in how Arabs and Westerners approached problems.

Samir also supported Aziz's assessment, "During my time in Los Angeles, I witnessed firsthand the miraculous success of The Blair Witch Project and Final Destination under Michael's direction."

Salih remained silent. This trip from Abu Dhabi to Los Angeles was not just about acquiring Relativity Entertainment; he had serious reservations about this acquisition.

"Is it really appropriate for us to just acquire Michael's company like this?" Salih couldn't help but ask. "Won't Michael refuse?"

Aziz bowed slightly, "Your Highness, there's no need to worry. In my judgment, Michael will not refuse."

Salih's brow furrowed even deeper. Unlike these two, who were thoroughly embedded in Arab society, he had studied in the UK and always felt there was a fundamental difference in how Arabs and Westerners viewed problems.

Samir, too, agreed with Aziz, "Relativity Entertainment needs strong backing to grow. Hollywood's six major studios dominate the industry, and other moderately-sized companies either belong to these six or struggle to survive between them. Michael is talented and ambitious; partnering with us is his best option."

Salih thought of his sincere friendship with Michael and still felt uneasy, "Is this fair to Michael?"

Aziz replied, "Your Highness, we've already planned this out. The Investment Authority only seeks a controlling interest. We can retain enough shares for Michael, and in the acquisition, we won't shortchange our friend from Abu Dhabi."

Aziz had a poor impression of Salih, considering him an empty-headed royal, but due to Salih's high status, he had to endure any dissatisfaction and continued, "Once the acquisition is completed, the Investment Authority will inject funds into Relativity, quickly turning it into a major studio comparable to the big six. Is it better to be a full shareholder in a million-dollar company or a shareholder in a billion-dollar company?"

Salih considered this, finding the argument persuasive, and said nothing more. If he were in Michael's position, he would undoubtedly choose to become a millionaire overnight.

This would also strengthen the bond between Michael and Abu Dhabi...

A knock on the door interrupted the conversation, and someone came in to inform them that Michael had arrived. Salih hurriedly instructed them to invite Michael in, personally standing at the door to greet him.

As Michael entered the lavishly decorated meeting room, he saw Salih and immediately put on a look of surprise, stepping forward to embrace him lightly, "When did you arrive in Los Angeles? Why didn't you call me?"

Salih smiled, "I arrived yesterday and rested for a day. I intended to call you. Since Samir and Aziz had already scheduled a meeting with you today, I thought it best to meet in person."

Michael patted his arm, "Stay a few more days this time."

Then, he shook hands with Samir and Aziz.

Samir was already somewhat familiar, having met several times in Los Angeles. Aziz, too, was not a stranger; Michael remembered him as the thin assistant by Mansour's side.

After brief pleasantries, Michael got straight to the point, "So, what brings you to me?"

Having received their call, he had speculated and prepared himself. After all, this was Los Angeles, not Abu Dhabi.

Salih looked at Samir and Aziz, remaining silent.

Aziz, smiling broadly, began, "Michael, I heard you've integrated Polygram Entertainment's distribution channels?"

Surprised, Michael realized these Arabs had been learning about Hollywood. "Yes, last month, a group of former Polygram employees joined Embassy Pictures."

Samir asked, "Can Embassy Pictures distribute films outside North America?"

"Not yet," Michael maintained the stance of an old friend from Abu Dhabi, "We're still adjusting. It will take a few months to complete the integration."

Their questions raised Michael's awareness. It seemed Abu Dhabi had started paying attention to Hollywood, gathering information on its operations.

During the production and distribution of The Purge, the Abu Dhabi Investment Authority had little understanding of the distinction between North American and overseas distribution.

Hollywood wasn't the CIA; secrets and operational rules were only relative. It was the asymmetry of information that provided such great investment opportunities before.

Once they actively sought understanding, the Investment Authority, with its resources, could quickly grasp Hollywood's rules.

Aziz said, "Michael, you're remarkable. In just three short years since taking over Sandsea Entertainment, you've developed rapidly in production and established North American and overseas distribution channels, outpacing many mid-sized Hollywood studios."

Michael continued to play the humble card, "Thanks to the strong support from the Investment Authority, I and my company have achieved what we have today."

If possible, Michael preferred to part amicably with the Abu Dhabi Investment Authority. After all, their relationship was purely a commercial investment.

"Relativity Entertainment can produce and distribute films, making it a competitive force in Hollywood," Aziz said, steering the conversation towards the main point. "Michael, I think you should accelerate the growth of Relativity Entertainment, turning it into a top-tier Hollywood studio."

This was indeed Michael's goal, but he wouldn't openly admit it, "Hollywood is highly competitive. Relativity started late; I'm already very satisfied with our current situation."

He was subtly hinting that he had no grand ambitions and hoped they wouldn't push further.

Aziz, not catching the hint, continued, "Are you worried about funding?"

Michael smiled without replying, sensing that things wouldn't go as he hoped. The Arabs had their considerations.

Aziz took Michael's silence as agreement, "Michael, don't forget, you are a friend of Abu Dhabi. The Investment Authority has always supported you and will provide the funding you need. With your capability and our support, Relativity Entertainment will certainly grow."

But what's the cost? Michael thought of deals with dubious strings attached.

"Investment Authority has ample funds. As long as you're willing, large sums can be transferred to Relativity," Aziz continued, believing his friend from Abu Dhabi wouldn't refuse the offer. "Michael, we can create a new landscape in Hollywood!"

Michael set aside his smile, carefully considering. Accepting the Investment Authority's funds would undoubtedly speed up development, but such a partnership differed significantly from individual film investments. It would be inviting a powerful entity into his company, one that would be hard to expel.

If it were a private entity, he could find ways to maneuver, but the Abu Dhabi Investment Authority was an official institution backed by a country!

Seeing that subtle hints were ineffective, Michael decided to lay it all out. Business cooperation required mutual consent.

He asked directly, "What's the cost? What do I need to give up?"

Aziz was taken aback, this response wasn't what he expected, but he quickly adjusted, smiling, "The Investment Authority will invest in Relativity Entertainment, acquiring 80% of the company for $100 million. After the acquisition, an additional $300 million will be injected without diluting your shares. However, there is one condition: Michael, you must remain as CEO of Relativity Entertainment."

The terms were indeed very generous, tempting even to Michael, who had previously considered turning Sandsea or Relativity into a shell company and selling it to the Investment Authority.

But he quickly abandoned the idea, knowing the Investment Authority wasn't ignorant of Hollywood's dynamics.

A shell company without key personnel, film library, or distribution channels wouldn't be a viable purchase.

Aziz's offer was very tempting, "Michael, continue working with the Investment Authority."