Chapter 634: Wasn't That a Bit Too Generous?

[Chapter 634: Wasn't That a Bit Too Generous?]

It was hard to tell how much time had passed. A certain ambiguous warmth lingered in the office as Kelly Haynes sat gracefully across from Eric, pencil in hand, assisting him with the score based on her memory from earlier. She occasionally answered questions posed by the man sitting across from her.

Regarding Eric's discovery that Ron Perelman had purchased bonds from Firefly Group in that morning's Los Angeles Times, both Katzenberg and Chris from New York concluded there was no need for concern. Warren Buffett, sharing the same opinion, even went out of his way to send Eric a detailed handwritten letter, attempting to put his mind at ease.

Given the many precedents, Ron Perelman's intentions weren't too difficult to fathom. This Wall Street wolf likely aimed to capitalize on the internal reforms within Firefly's animation department, uniting with other creditors to gain a seat on the Firefly board and partake in the group's operational and management decisions.

Considering a longer-term perspective, this was merely the first step of Ron Perelman's plan. Once he secured a position on the Firefly board, all he would have to wait for was the moment the company faced difficulties.

The entertainment industry was known for its high risks. Despite Hollywood's ups and downs over a century, there remained a handful of major film companies. In truth, ownership had changed hands countless times. Whenever a film company faced bankruptcy due to an unsuccessful project, the original owners could either willingly or under duress pass the reins to the next owners.

Following the completion of this bond issuance, Firefly Group's total debt would reach $10 billion. Considering various interest formulas for different bonds, the total repayment amount was expected to hover around $15 billion. With an average ten-year bond term, Firefly Group would have to spend around $1.5 billion each year on debt service. Of course, these were merely theoretical figures. While it appeared this debt surpassed Firefly's profits from the previous few years, based on Firefly's anticipated growth in market value and revenue, along with a complicated system of tax reliefs, this expense wouldn't weigh heavily on Firefly.

However, all of this hinged on one critical condition: Firefly's operational performance maintained good standing. Among industry professionals, the consensus was that a media group focused on film would find it nearly impossible to sustain steady performance levels indefinitely. A few big-budget films or TV series flopping within a year or two could push Firefly's finances into a tight spot. Moreover, in the absence of a strong "engine," the resulting domino effect could lead to malaise in other businesses, creating a vicious cycle.

What Ron Perelman awaited was that inevitable moment. Once Firefly Group stumbled into difficulties, creditors could wave the flag of protecting their own financial interests and convey demands for debt-to-equity swaps to the Federal Trade Commission and the Firefly board, thereby transforming from creditors into owners of Firefly Group.

In the original timeline, MGM, burdened with massive debt, had hovered precariously on the edge of being overtaken by creditors more than once. In Warren Buffett's handwritten note, the sharp-eyed investment mogul analyzed Ron Perelman's attack strategy, noting that his most substantial leverage could very well be a collaboration with Disney's traditional animation division, pressing Firefly's shareholders together. Buffett mentioned that had he not known the projections for that evening's data concerning The Lion King -- expected to generate immense profits -- he would have determined that Eric would stop at nothing to safeguard the Disney animation division's interests, a potential bargaining chip for creditors wanting board representation.

However, since Eric had ample reasons to be resolute about reforming Disney's animation division, Ron Perelman's leverage had been undermined from the outset. Buffett also earnestly stated that, should other circumstances arise, Berkshire Hathaway would remain firmly on Eric's side, providing maximal support.

After reading several documents, Eric looked up at Kelly and asked, "Have you seen Buffett's letter?"

Kelly shook her head, wondering, "What's the matter?"

"Take a look for yourself," Eric handed over Buffett's handwritten letter.

Kelly quickly scanned the contents of the letter, and after a moment of contemplation, she replied, "I think there's no problem; what Buffett said makes a lot of sense."

"I'm not talking about that. Look at the last paragraph."

Kelly read the final paragraph, her attractive brows furrowing slightly. After considering, she said, "Buffett promised that Berkshire Hathaway would steadfastly support Firefly. That doesn't seem problematic; I consider it a good thing."

"Given Buffett's instinct for profit maximization, don't you think that promise is a bit too generous?"

Kelly chuckled, "Eric, you're being paranoid. I actually think Mr. Buffett is doing this because he values your talent and wants to draw you into Berkshire Hathaway as a successor, haha."

Hearing Kelly's joke, Eric laughed along, letting go of his concerns.

After quickly reviewing the documents again, Eric suddenly thought of how Peter Schneider had stood him up that morning and asked, "Did you see Peter Schneider at the executive meeting today?"

Kelly replied, "No, weren't he and Roy Disney supposed to meet with you?"

Eric frowned, then quickly said, "Kelly, could you find out where they are?"

Kelly noticed Eric's suddenly serious demeanor, "Now?"

"Yes, right now. Immediately."

Kelly nodded, taking out her mobile phone and address book to start making calls.

...

Eric picked up a pen and swiftly noted down information on Firefly Group, Disney's animation division, Ron Perelman, Chris, Buffett, David West, and other relevant names, connecting them with lines he frequently used, quickly forming a web.

In the central empty spaces of this web, Eric soon filled in another word.

Before long, Kelly hung up the phone and told Eric, "I couldn't get through to their personal numbers, but I found out that Peter Schneider and Roy Disney went to New York. The details are unclear."

Hearing "New York," Eric already had an idea of what was happening. "No need to investigate further; they must have gone to see Ron Perelman."

Kelly immediately grasped the intention behind the executives visiting Ron Perelman and asked, "So what do we do now?"

Eric's smile took on a mysterious quality. "This is a perfect opportunity for a tit-for-tat."

Kelly looked a bit puzzled, and Eric continued, "Tomorrow's the premiere of Charlie's Angels, right?"

Kelly recalled Eric's schedule and asked, "Didn't you say you weren't planning to go?"

"Of course we're going! We must all go," Eric gently tapped the table. "The three old guys still in Los Angeles, Chris from New York, have him come over tomorrow as well, oh, and Katzenberg and Michael Lynn..."

After a moment of thought, Eric decided against adding anyone else.

The above-mentioned individuals were all deeply connected to Firefly Group's interests. As for Buffett's trio of shareholders, their roles spoke for themselves; Chris was certainly trustworthy, and Katzenberg was to be the next CEO of Firefly. If Eric couldn't trust him, then he had no reason to stay in Hollywood any longer. Lastly, Michael Lynn, though soon to leave, remained a small shareholder in Firefly.

As for the other executives, Eric set aside the thought of informing them, as the fewer people who knew about his plans, the better.

Oh, there seemed to be one more person in the know.

The original article analyzing the 2D animation industry was a collective effort led by Eric, where he had specifically tasked different staff in his office to gather disparate information. Kelly had personally completed the final compilation, thus she was the only one privy to the "chain of evidence." Furthermore, given her role as Eric's first assistant and their current close relationship, he didn't wish to exclude her from the fold.

Eric glanced at Kelly Haynes across from him and smiled, "You should come along tomorrow too. After the movie, we can chat."

At that moment, Kelly realized tomorrow would undoubtedly be more than just watching a movie; something significant was bound to happen. However, Eric's unwavering trust filled her with warmth.

"Shall I notify them first?"

Eric shook his head, "I'll make those calls myself. Just prepare a few premiere invitations. Also, don't forget to send a car to pick up Buffett and the others tomorrow. With Buffett there, the three old guys surely won't want to spend their money. If they arrive in a cab on the red carpet, I could never live that down."

"Alright, I'll take care of it."

...

After its historic opening weekend with over $46 million in box office receipts, The Lion King had grossed an astonishing $69 million over its first week. Meanwhile, the Western film Wyatt Earp, with a production cost exceeding $63 million, only managed a meager opening of just over $10 million. Warner's big-budget film, originally planned to take on The Lion King, not only failed to fulfill its 'mission' but also fell behind The Lion King and other films like True Lies, Star Trek: Generations, and Saving Private Ryan, becoming fodder for this scorching summer season.

Faced with direct losses exceeding $70 million, in order to provide shareholders with an explanation, Warner's directors, producers, and several executives involved with Wyatt Earp became the unlucky second batch of the Hollywood 'firing season' after Paramount's Beverly Hills Cop III.

Eric hadn't anticipated that Kevin Costner had already experienced a quiet flop before Waterworld. The first installment of Mission: Impossible was in its post-production phase, and Eric had detailedly reviewed the footage. He was satisfied with Costner's portrayal of Ethan Hunt and Brian De Palma's direction.

Thus, Eric's only concern following Wyatt Earp was whether Waterworld would also falter; if that film didn't succeed, Kevin Costner would likely find himself at the mercy of Flower Films for the Mission: Impossible sequel.

On the first day of July, Eric discreetly oversaw a grand premiere for his revamped version of Charlie's Angels in Los Angeles.

Since the release of Rain Man in 1988, MGM had remained in relative silence for six years, during which it had released no more than ten films in most years, and had failed to produce a single film that grossed over $100 million. After numerous setbacks, last year's new leaders, CEO Frank Mancuso and president John Calley, had attempted to revive the studio with the releases of Cliffhanger and Last Action Hero. However, these efforts flopped.

Now, with DreamWorks' ten-film production slate and the relaunch of the 007 series, the stakes had risen for MGM. If they suffered another failure, bankruptcy would be their only option, and their assets would be auctioned off to satisfy debts exceeding $1 billion. The 75% shares held by French bank Credit Lyonnais would be reduced to worthless paper.

In contrast to the various thoughts -- tension, anxiety, or anticipation -- gripping MGM executives, Credit Lyonnais, and major European shareholders of DreamWorks, Eric felt remarkably relaxed. He had invested enough effort into this film. From script to casting, directing to producing, Eric had personally selected each aspect based on his memory, far exceeding the usual involvement he had in film projects.

Based on the responses from several test screenings for the revamped Charlie's Angels, both participants and general viewers had given strong approval. If the movie still flopped, it would just mean that fate had turned against MGM.

As for Eric, since his rebirth, he had experienced so much glory. Although he'd not changed enough to expect failure, he certainly wouldn't fear it.

Though initially not planning to attend the premiere, Eric decided to make an appearance. He fulfilled his duties with aplomb, participated in red carpet interviews, and gathered the three girls for a series of photos to satisfy the media's gossiping nature.

Once Buffett and his two companions emerged from a luxury RV at the far end of the red carpet, Eric quickly approached them, exchanged greetings, and then ignored the media frenzy stirred up by Buffett's presence, leading the trio into the cinema.

*****

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