Chapter 324: Going Public

Following its debut week, due to New Year's Day falling on a Monday just like the previous Christmas, the second weekend for the release of "Batman: The Moment of Battle" also spanned four days.

This week's new release, "Rocket Expert" starring Tom Cruise and Meg Ryan, had a production budget of $45 million. Paramount had acquired the project from Daenerys Entertainment under less than favorable circumstances, indicating their full confidence in its success. Consequently, they invested $20 million in its marketing.

However, despite apparent PR efforts, "Rocket Expert" only managed to achieve mediocre ratings, receiving harsh criticism from mainstream print media platforms like The New York Times, Entertainment Weekly, and The Washington Post.

Simon knew that Paramount had postponed the release of "Born on the Fourth of July," another Tom Cruise vehicle directed by Oliver Stone, to Easter of the following year to clear the schedule for "Rocket Expert."

Yet, despite a total investment of $65 million, the most popular Christmas slot, and stars like Tom Cruise and Meg Ryan, all these favorable factors failed to win market approval for "Rocket Expert." The audience did not appreciate its unconventional retro sci-fi style.

Compounded by the overwhelming success of "Batman: The Moment of Battle," "Rocket Expert" only managed to gross $11.98 million in its opening week from December 29 to January 4, ranking second at the box office but far behind "Batman: The Moment of Battle."

Another new release, Steven Spielberg's "Until Forever," told the story of a pilot who returns to his girlfriend as a ghost after a plane crash, beginning a different kind of life with her. Although the premise was similar to "Ghost," the plots were distinctly different.

In its opening week, this fantasy comedy only garnered $7.18 million at the box office, placing fourth for the week.

The third spot on the chart was still occupied by the Easter release "Flight of Innocence," which saw an 11% drop this week, earning $9.68 million and bringing its cumulative gross to $135.77 million.

As for "Batman: The Moment of Battle," it not only set a record with its $82.39 million opening week but also broadened its audience much more than Simon's previous works. The film saw an 8% increase in its second week, adding $88.79 million to its earnings.

In just two weeks, "Batman: The Moment of Battle" amassed an unprecedented $171.18 million in box office receipts.

Such a performance indicated that "Batman: The Moment of Battle" would easily surpass the $400 million domestic gross milestone.

"Star Wars" and "E.T. the Extra-Terrestrial," past blockbuster phenomena, had not achieved such figures without multiple re-releases. Therefore, "Batman: The Moment of Battle" was expected to become the first film in North American history to break $400 million in domestic box office.

Amid media astonishment and fan celebrations, major Hollywood studios quickly shifted their focus to superhero comics suitable for film adaptations.

It was then that most realized that the two major American comic publishers, Marvel and DC, were already out of their reach.

Even more disheartening was the fact that nearly all of these publishers were under the control of Daenerys Entertainment.

Marvel had already become a fully owned subsidiary of Daenerys Entertainment, and Simon Westeros had secured the rights to Superman, Batman, and Wonder Woman, effectively controlling DC's most vital assets.

Given the box office success of "Batman: The Moment of Battle," the recently announced DC Cinematic Universe plan by Daenerys and Warner Brothers alone seemed sufficient to sustain Daenerys Entertainment for a decade.

Beyond just box office receipts, expected revenues from video sales and television broadcasts, "Batman: The Moment of Battle's" merchandise sales after the first week totaled $130 million and continued strongly with $150 million in the second week.

Industry analysts predicted that merchandise related to "Batman: The Moment of Battle" could generate up to $2 billion in sales over the next year.

Given the high margins typically associated with branded merchandise, where retail prices can reach ten times the production costs, even after concessions to manufacturers, distributors, and retailers, rights holders typically receive between 10% and 20% of these sales.

With an anticipated $2 billion in merchandise sales for the next year, Daenerys Entertainment and Time Warner could expect about $300 million in revenues, virtually all of it pure profit due to minimal upfront investment.

Following the film's explosive box office success, Time Warner management quickly moved from excitement to regret.

Even though they recognized that Simon Westeros' direct oversight had created the box office miracle of "Batman: The Moment of Battle," Warner had initially had the opportunity to invest in the film itself.

Now, according to the original agreement, Warner Brothers only received a 15% commission from distribution. The substantial revenue from merchandise, now consolidated within Time Warner, would only yield a 10% profit share to the company as DC Comics.

While these sources of income were expected to bring in no less than $200 million for Time Warner in the coming years, the total earnings Daenerys Entertainment would draw from the project were staggering by comparison.

And the more they calculated, the more disheartened they became.

If they had been dealing with a lesser Hollywood studio, Warner Brothers might have used typical Hollywood accounting strategies to squeeze more profits from the deal, or in more extreme cases, even attempted to renege on contracts to reclaim rights such as the "Batman" franchise.

However, dealing with Daenerys Entertainment, this was not an option.

From the start of "Batman: The Moment of Battle's" distribution, Daenerys had deployed a dedicated accounting team to oversee the entire project, making it difficult for Warner to manipulate financial details.

And while it wasn't impossible for Warner to attempt such maneuvers, they dared not do so.

Daenerys Entertainment's handling of a royalties dispute during "The Bodyguard" soundtrack sales had left a profound impression on Hollywood. When Arista Records tried to withhold rightful earnings, Simon Westeros halted sales of the record, ignoring the significant losses from stock shortages.

Arista not only failed in its attempt but also paid a penalty twice the disputed amount, and its president lost his job.

If Warner Brothers attempted similar tactics, Terry Semel believed Simon Westeros would not hesitate to halt all further development of the DC Cinematic Universe until Warner coughed up every cent.

In that case, he, as the CEO of Warner Brothers, would likely be the perfect scapegoat.

Now that the situation was set, Time Warner's goal was to expedite the development of the DC Cinematic Universe.

In Santa Monica, inside the conference room at Daenerys Entertainment headquarters, it was already January 5, 1990, a Friday.

After a full day of meetings, teams from both companies, led by Amy Pascal and Terry Semel, discussed their ongoing partnership and plans for the DC Cinematic Universe.

The initial contract allowed for renegotiation of many details following the first "Batman" film, such as Warner's commission on future films.

A 15% commission across all channels was quite high.

Due to the vast interests involved in the DC Cinematic Universe, the day's discussions, aside from a preliminary list of ten films scheduled over the next five to seven years, only tentatively settled on future distribution commissions.

Terry Semel did not make significant concessions, only adjusting the domestic and international distribution commissions to 

12.5% and 10% respectively, and 12.5% for revenues from video sales and television broadcasts.

Of course, marketing costs for each channel were still to be deducted separately from the costs. However, due to Daenerys Entertainment's strict financial oversight, it was difficult for Warner to manipulate these expenses.

Additionally, some projects distributed by Daenerys Entertainment would also adhere to these commission rates.

At five o'clock in the afternoon, the meeting concluded.

Terry Semel and Amy Pascal exited the conference room together, with Semel asking the question he was most concerned about: "When is Simon planning to return?"

Amy handed a folder to her assistant, Vanessa, and replied, "I'm not sure. I called him after the first week's box office came out, and he said he was taking Jenny to Antarctica."

"Antarctica?" Semel raised an eyebrow.

"Yes, Antarctica. It's relatively close from Melbourne, though I'm not too clear on the details. But it's summer in the Southern Hemisphere, and it's the warmest time of the year in Antarctica, oh, and it's polar day, which makes it a great time for a trip."

"And then?"

Amy shrugged, "I haven't been able to contact him directly for the past few days. He didn't say when he'd be back, probably not until the end of the month."

Semel smiled wryly, "So he definitely won't be attending the weekend celebration party."

"Right," Amy nodded, "Also, there's one more thing. 'The Moment of Battle' did very well, and Simon had me draft a reward plan. Approximately $3 million each for the two leads, $1 million for several supporting actors, and awards for other crew members, totaling about $20 million in expenses. This time, Warner doesn't need to share these costs, but for future projects, these rewards will need to be accounted for in the total budget."

Semel nodded, "Twenty million dollars is not much compared to what Daenerys is earning from this project."

Amy laughed, knowing Semel had been uneasy these past days, so she didn't press further.

After seeing off the Warner delegation, Amy headed to her office.

Nancy Brill was already there, waiting in Amy's office lounge, browsing through a document.

As Amy entered, Nancy stood up and they embraced. Nancy asked, "How did the meeting with Warner go?"

"It's going to be a drawn-out process; there's too much to discuss," Amy replied, then asked, "How about you? Did you get things sorted out in Rhode Island?"

Nancy had just returned from Rhode Island, where she had been dealing with issues at a toy factory owned by Daenerys Entertainment.

The development of merchandise for "Batman: The Moment of Battle" had assigned the production of the most profitable action figures to the Rhode Island factory. Due to inexperience, all toys from the factory sold out during the first week of release.

Nancy's trip was to reorganize toy production and also to leverage her old contacts at Hasbro to outsource some of the orders that their own factory couldn't fulfill.

Hasbro's headquarters is also located in Rhode Island.

"It's all settled," Nancy said. "Actually, the sell-out was a good outcome. After restocking, those toys sold even better. Simon mentioned hunger marketing a few times before, and it really works well. By the way, I brought back some limited-edition toys; do you want to give them to someone?"

"Of course, keep some for me. My niece and nephew asked for them during Christmas, and I couldn't deliver, which earned me a scolding from their parents."

The two laughed, and Amy gestured for Nancy to sit back down while she went to her desk to retrieve an envelope from the safe, handing it to Nancy. "Simon asked me to give this to you."

Nancy opened the envelope, finding a check for $5 million inside. "What's this?"

"A bonus," Amy sat next to Nancy as Vanessa brought in coffee. Amy continued, holding the coffee, "You know Simon; your contract can't be changed in the short term, so consider this extra compensation."

Nancy unceremoniously tucked the check into her purse and asked Amy, "Did he give this voluntarily, or did you have to ask for it?"

"I mentioned it, but it was his idea," Amy replied. "He really does care about you."

Nancy knew Amy meant nothing romantic by 'cares,' but still playfully responded, "That sounds rather ambiguous."

"Alright, I forgot you're single," Amy laughed. "Actually, it's good not to rush changing the contract. When it expires in three years, the company will probably go public, and you can get a new contract with options then."

Nancy's interest piqued, "Has Simon talked to you about going public?"

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