Chapter 624: A Reasonable Explanation

[Chapter 624: A Reasonable Explanation]

Following the box office successes of Saving Private Ryan and True Lies in June, the nervous shareholders and creditors of Firefly Group found their worries eased. The astonishing $46 million box office in the opening weekend of The Lion King had them reassessing the value of their stocks and bonds.

The production cost of The Lion King was only $45 million. Even though its marketing expenses reached similar heights, the expected North American revenue of $300 million already promised substantial profits for Firefly. Future income from sequels, international box office receipts, video sales, and merchandise licensing would continue to generate over $1 billion in profit. Some in Hollywood believed the golden age of hand-drawn animation was upon them again. The initial reaction of the small shareholders and creditors of Firefly was a hope that the company would increase its investments in hand-drawn animation, raising the production rate from one every two years to one -- or even multiple -- films annually.

Therefore, when news appeared in the paper that Eric Williams was set to close the Disney Animation division after The Lion King, no one believed it to be true. When a recording played, featuring Eric answering a reporter's question at the premiere of The Lion King, the world was left in shock, convinced that Eric Williams must have lost his mind.

In the following days, all the offices and private lines of Firefly executives, including Jeffrey Katzenberg and Michael Lynn, were flooded with calls from shareholders, creditors, and the media. Naturally, Eric was not spared either. However, when some people reached out to him, their calls were directed to his assistant's office. Any inquiries regarding Disney Animation were met with affirmations, but no further explanations were given.

Agitated small shareholders even put pressure on the Firefly executives through public statements in the newspapers. The sale of Firefly's long-term bonds began to slow once again. In just a few days, the topic of closing the Disney Animation division garnered worldwide attention, and rumors even surfaced claiming Disney was on the brink of bankruptcy.

...

At the Firefly studios, in the preparation area for the Victoria's Secret Fashion Show, Eric was deeply engrossed in a hushed discussion with a designer about a new Angel costume.

Outside the studio, a woman in her thirties, dressed in a black business suit and with brown hair, approached the entrance. After briefly showing her credentials, she was admitted inside. She scanned the area filled with designers, costumers, and fitting models, quickly moving through the bustling crowd to reach Eric.

The woman was named Kelly Haynes. She had started as an assistant in Eric's office. While Eric had agreed to let Caroline and her roommate, Melanie Gleason, work for him after they completed their courses at Harvard, they wouldn't be available for some time. After returning from Boston and through a recommendation from Allen, Eric chose Kelly to be his first assistant.

Noticing the hurried approach of Kelly, Eric looked up and asked, "Kelly, what's up?"

Kelly had been with Eric in the assistant's office for several years, but being so suddenly in front of the big boss felt a bit daunting. After calming herself, she said, "Mr. Williams, Mr. Buffett just called. He said he'll arrive in Los Angeles at 4 PM and wants to invite you to dinner. Also, Mr. Murphy and Mr. West are coming from New York."

Warren Buffett, Tom Murphy, and David West, president of State Street Global Advisors, were all board members representing that 25% minority stake in Firefly.

Eric had previously given a brief explanation to these men over the phone, but it was clear they weren't ready to let the matter go.

Pausing from his work, Eric replied, "Please let them know I'm available. By the way, is the information I requested ready?"

"Yes," Kelly said, pulling a document from her bag and handing it to Eric.

Eric smiled and shook his head, saying, "While this information isn't classified, it shouldn't leave the office without my request. Plus, I don't have time to look at it now; please give it to me before dinner."

Kelly's cheeks reddened. She intended for Eric to see her work immediately but forgot important office protocols. She put the document away and said earnestly, "I'm sorry, Mr. Williams, that was my mistake."

"No problem. Is there anything else?"

Kelly produced a memo, saying, "Hearst, Conde Nast, News Corp, and Knight Ridder have all made bids on the print media assets spun off from ABC..." She paused, glancing at the designer next to Eric, who seemed absorbed in his drawings. The designer sensed Kelly's gaze and awkwardly made an apologetic gesture towards Eric before moving to another workstation.

This minor interruption didn't affect their conversation. Kelly continued, "As of now, Hearst's highest bid is $1.35 billion, followed by News Corp at $1.3 billion, Conde Nast at $1.28 billion, and Knight Ridder at $1 billion. During this morning's meeting, Mr. Lynn and the others felt these bids were merely initial gauging, estimating the final price should settle between $1.5 billion and $1.6 billion."

Eric nodded, indicating he understood. Kelly didn't expect him to discuss anything with her. If Eric had thoughts on a decision, he usually consulted with Michael Lynn or others; she was just responsible for compiling the information for him.

Turning the memo page, Kelly couldn't help but glance at Eric's expression, saying, "Mr. Schneider, the head of the animation department, and Mr. Roy Disney would like to speak with you in person. They say this invitation represents the 758 employees of Disney's hand-drawn animation division and they hope you will take it seriously."

"Didn't expect Roy Disney to jump in like this. He really sees himself as the grandmaster of Disney, doesn't he?" Eric chuckled with a hint of sarcasm. Both from memory and his impressions of Roy, Eric didn't think much of Roy's penchant for manipulating power.

In the original timeline, in the mid-1980s, Roy Disney had aligned with shareholders to oust Walt Disney's son-in-law, effectively erasing the influence of Walt's bloodline on the company. The mid-1990s saw Katzenberg's resignation, and Michael Ovitz's departure, both linked to Roy Disney's actions. In the early 2000s, Roy again initiated a shareholder vote to oust Michael Eisner, marking his presence in every turbulent time for Disney post-Walt's death. While some of these moments had positive impacts on Disney, with Disney now part of Firefly, Eric simply wouldn't allow Roy Disney to remain a destabilizing factor.

Thus, not long after acquiring Disney, and once the situation stabilized, Eric used Roy's age as an excuse to remove him from the animation division's leadership, only keeping a nominal title as an artistic advisor.

After a moment of thought, Eric said, "Let them know I'll be in my personal office at the studio tomorrow at 9 AM."

Hearing Eric's nonchalant tone, Kelly worried he might not fully grasp the chaotic external circumstances. After a brief hesitation, she quietly jotted this down in her memo, then asked, "Mr. Williams, is there anything else you need us to take care of?"

"No, just arrange for a car to pick me up for dinner tonight," Eric replied, shaking his head. Just as he was about to let Kelly leave, another thought occurred to him. "I haven't had a chance to look at last weekend's box office report. How did Warner's Wyatt Earp do?"

Kelly answered, "$7.5 million. It ranked fifth for the weekend box office, behind The Lion King, True Lies, Star Trek VII, and Saving Private Ryan. The movie's reception has also declined, with estimates suggesting total earnings between $25 million and $30 million. After accounting for costs, Warner will shoulder a loss of $70 million in the short term. The detailed report has been sent to your email."

Given that no one had brought this up with him specifically, Eric had already anticipated Wyatt Earp's fate. He couldn't help but smirk, saying, "Warner won't be looking forward to any westerns after this."

"Yeah, Warner's total box office for the year currently ranks behind Firefly and Universal. However, they have a release schedule of 29 films this year, one more than Firefly. Their upcoming film revenues could very well place them second, as all the other major studios are reducing output: Firefly with 15 films, Universal with 16, Paramount with 15, Fox with 13, and Columbia and MGM with fewer than 10. While some lesser studios may release a lot of films, they haven't achieved notable box office success."

"You seem quite savvy with numbers," Eric laughed. "I like women who are good with figures."

"Thank you, Mr. Williams," Kelly said, feeling flustered in front of the ten years younger man's smile. She quickly added, "If there's nothing else..."

Realizing he had blurred a line, Eric wondered if Kelly was married, making his playful comments seem too forward. Collecting himself, he said, "You can head back to work. If I need you, I'll reach out."

...

"During the premiere of The Lion King last Thursday, Firefly Group's chairman Eric Williams unexpectedly confirmed a long-rumored piece of Hollywood gossip: the closing of Disney Animation Studio, citing plans to fully digitize animation production. However, soon after, the dramatic turn of events caught everyone off guard. The Lion King, which had not been initially viewed as a big contender, not only shattered Disney Animation's first-day box office record by more than double but also earned an astounding $46 million in its opening weekend, breaking multiple records for Disney's 2D animations. The projected total revenue might far exceed Firefly's previously released 3D animated films, Toy Story and A Bug's Life. Following this, our reporter contacted Firefly Group's CEO Michael Lynn, who confirmed that the company would continue with its animation production transition plan. What kind of impact will this have on Firefly and other Hollywood studios? Let's turn to Mr. James Hilt of Variety for his insights..."

On the screen, the host of an NBC finance show stood to welcome the guest entering the studio, while sitting before the television, David West, president of State Street Global Advisors, sighed to Tom Murphy beside him. "Young folks, always so reckless. Tom, do you think we can persuade that little brat Eric Williams to change his mind?"

Tom Murphy glanced out the window of the private plane at the clouds and shook his head. "If he's determined, it seems no one can stop him. I spoke with Warren last night; he seems to have heard something from Eric that's making him uncertain."

"This is an animation department capable of producing films grossing $300 million. Even if Williams were to make such a decision, canceling the original plans wouldn't earn him any blame. I don't understand why he insists on sticking to a clearly flawed plan."

Tom Murphy suddenly asked, "What will you do if he remains stubborn?"

David West paused, chuckled wryly, and shook his head. "What can I do? Should I file a lawsuit against him in federal court to prevent this?"

Eric's stock holdings represented his absolute control over Firefly. As long as he remained within legal boundaries, he could adjust his subsidiary businesses at will. Closing the hand-drawn animation division out of skepticism for 2D animation's future might generate controversy but would not violate any laws.

Both men fell silent, aware of another option: selling their Firefly stocks to cash out. If they chose this route, both Eric and Wall Street would be more than willing to buy their shares. However, with Firefly having eclipsed Time Warner and become the largest media group in North America, only the shortsighted would consider selling their stocks now.

Listening to the heated debates between the host and guests on the in-flight TV, Tom Murphy finally said, "Let's hope Eric Williams gives us a reasonable explanation."

*****

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