Chapter 686: We'll Have Nothing

[Chapter 686: We'll Have Nothing]

Eric didn't expect the Firefly management to act so decisively. They had just discussed matters in the morning meeting and by the afternoon, they already moved to engage with JIVE Records. However, he wasn't too surprised. JIVE had seen its glory days around 2000, and at that moment, with Teen-Pop still so far away, JIVE's market value was hardly more than ten million dollars, a negligible amount in the grand scheme of the Firefly Group.

When Eric heard that Howard Stringer was using JIVE Records as a bargaining chip, he merely chuckled and said, "Howard, it's true that Katzenberg plans to acquire some promising record labels soon to strengthen Firefly Records. Since you've mentioned it, I guess it must be true. But unless Firefly intends to buy all of Sony Records, I won't be getting involved with these minor issues. If you have any questions, feel free to call Katzenberg and his team."

Howard Stringer certainly couldn't know that Eric had instructed this himself. Hearing Eric's words made him a bit uneasy.

Upon receiving news from JIVE, Howard quickly gathered information on the unassuming subsidiary. He found that JIVE had focused on Black Hip-Hop music and had previously missed the chance to sign Will Smith, which had become a notable industry gossip. Over the years, JIVE had failed to nurture any heavyweight Black artist, and perhaps as a result of their stagnation in Hip-Hop, the management team at JIVE was now trying to pivot.

Despite researching the company multiple times, Howard couldn't find anything particularly appealing about JIVE that would attract Firefly. Although he hadn't pinpointed the crucial factors, he didn't believe things would be as simple as Eric suggested. Observing Eric's calm demeanor across the table, Howard finally decided to lay his cards on the table, saying, "Eric, how about this: the distribution contract between Flower Films and Columbia remains unchanged. In return, I can ensure that JIVE Records gets sold to Firefly."

Compared to a subsidiary record company with mediocre performance, if they lost Night at the Museum and Forrest Gump, Columbia would struggle to find two films that could fill the summer slots. Columbia's situation was dire; if they couldn't maintain even superficial success, Sony would undoubtedly face greater pressure from investors in their film business.

Nevertheless, Eric just shook his head dismissively, saying, "Howard, I've said it before, I'm not at all interested in acquiring the insignificant JIVE Records, and don't think you can use this as a bargaining chip. I reiterate, it was Columbia that instigated this matter. If you're unwilling to cooperate properly, then let's go our separate ways."

Eric's cold dismissal ignited a spark of anger within Howard. He retorted, "Eric, the contract between Columbia and Flower Films is still active. If Flower Films attempts to terminate it unilaterally, Columbia may not hesitate to pursue legal action to protect its interests."

Eric suddenly leaned forward slightly, his eyes radiating danger, saying, "Howard, listen to me, don't do that. Otherwise, you'll find that the trouble Columbia faces will far exceed that of Flower Films."

Howard retorted just as sharply, "Eric, Columbia is already facing enough trouble. If we have no other choice, we won't mind incurring a bit more."

"And then what?" Eric continued, picking up where Howard left off without waiting for him to respond. "Then you'll discover that Columbia's business will get worse. You're from a media background. When Idei Nobuyuki hired you, it was to revitalize Sony's entertainment sector in the U.S. If you can't achieve that, you won't hold much value for Sony. As Columbia continues to decline, Sony will certainly seek another scapegoat, and that scapegoat will most likely be you. But now, you have another choice: swallow this matter. Columbia will only lose one summer slot, but things won't continue to deteriorate. The responsibility for losing that summer period will ultimately fall back on a higher-up at Sony, at Idei Nobuyuki's level. So, Howard, what do you plan to do?"

Leaning back in his chair, Howard's eyes flickered, and he remained silent for quite some time.

Eric chose not to engage further. Feeling the warm evening sun wash over him, he called over a waiter to bring a menu. After discussing with Elisabeth in low tones and ordering dinner, he handed the menu back to the waiter and asked Howard, "So, Howard, do you want to stay and have dinner with us?"

Startled as if awakened from a daze, Howard shook his head slightly and chose not to say anything more, leaving with a polite goodbye.

Eric simply nodded, showing no intention of seeing him off. It was Elisabeth who watched Howard's retreating figure and asked, "Eric, aren't you afraid of pushing him too hard?"

"If he's managed to climb to the position of CEO of Sony's American division, he's not likely to act rashly. However, he will soon realize that the CEO position doesn't live up to his expectations. It's natural for him to feel a bit down for a while."

Although they had ousted Peter Guber from Columbia, the company would still have to survive under the shadow of Firefly for a few years due to projects like Men in Black. Unless Howard Stringer was willing to drastically cut ties with Firefly and develop his own film business independently, he certainly lacked the capability; Columbia was currently without a single outstanding manager.

...

In the following days, Columbia ultimately accepted the reality of dissolving the distribution contract with Flower Films. Between fighting for Sony's profits and protecting his own position, Howard Stringer clearly chose the latter.

Meanwhile, Firefly encountered trouble in the process of acquiring JIVE Records, as Sony Records decisively refused Firefly's offer.

However, what Eric was after wasn't necessarily a particular signed artist or the music rights owned by JIVE. He was focused on the JIVE management team that had created the peak era of Teen-pop in his previous life.

With JIVE Records acquisition falling through, Firefly swung its "axe" at the entire JIVE management team, offering JIVE's CEO, Barry Weiss, the position of president of Firefly Records. Although Sony became acutely aware of this move and increased their focus on JIVE, Barry Weiss had no hesitation in choosing between the presidency of Firefly Records and a subsidiary of Sony Records. He swiftly led the entire management team of JIVE away from Sony to join Firefly.

...

Los Angeles International Airport.

The bumps during the plane's landing jolted Irwin Jacobs awake from his slumber. After over twenty hours of flight, he felt utterly exhausted.

After more than three years of operations -- and after ceding significant technical rights -- Qualcomm had finally gained support from the South Korean government for CDMA. However, with the rise of GSM and its widespread adoption in Asia, the Korean side was starting to waver. Irwin Jacobs had to personally rush to Korea to handle the crisis.

Reflecting on Qualcomm's position in North America, Irwin felt a wave of confusion rise within him. The largest telecom operator in the U.S., AT&T, had settled on GSM as its mobile communication standard, leading a wave of smaller operators to follow suit. Qualcomm was now teetering on the brink of survival; if they couldn't quickly gather support for CDMA in America, even their advanced technology wouldn't save them from bankruptcy.

Currently, a meeting with that young man had become a crucial opportunity for Qualcomm.

Stepping out of the airport with his assistant, Irwin enjoyed a moment of ease in the bright Los Angeles sun. Scanning the crowd, he soon spotted one of Qualcomm's partners, Andrew Viterbi, making his way toward him.

The two embraced, and Andrew led Irwin into a black car, instructing Irwin's assistant to drive while they settled into the back seat.

As soon as they got comfortable in the car, Irwin eagerly asked, "Andrew, have you been in contact with Eric Williams?"

"Of course," Andrew replied, nodding. "Tomorrow at noon, at the Malibu Liberty City estate, Eric Williams has invited us for lunch."

Irwin was a bit impatient: "Tomorrow at noon? It's only ten o'clock in the morning. Why didn't you schedule it today?"

Andrew patted his old buddy on the shoulder and said, "Hey, Irwin, relax. You've been on a plane for more than twenty hours; you need some rest. You wouldn't want to meet Eric Williams in this state, would you? Besides, we still need to discuss the plan. This might be our last chance, and if we miss it, a decade of hard work could go down the drain."

Hearing his friend's words, Irwin managed to calm down and nodded.

...

They drove to a hotel in Santa Monica, where Andrew had arranged rooms for Irwin and his assistant. After a quick freshen-up, Irwin went to Andrew's room.

Andrew seated Irwin on the couch and turned to brew some coffee.

As soon as Irwin sat down, his eye was caught by a copy of Fortune magazine on the coffee table, the cover featuring a candid shot of Eric on a movie set. Picking up the magazine, Irwin discovered a bookmark tucked within it. Curious, he flipped to that page and found an article introducing the Firefly Group.

Glancing through a few lines quickly drew him in.

As the new year began, countless media outlets reflected on the past while looking ahead.

For financial media, the start of a new year was the peak season for reporting on various economic statistics from the previous year. The Firefly Group, which had been making headlines with various big moves last year, was undoubtedly the focus of American financial media. Although Firefly hadn't yet released its fourth quarter financial report and its annual report, based on the data disclosed in the first three quarters, Fortune predicted that the Firefly Group's revenue for 1994 might reach $18 billion, with an operating profit of around $1.5 billion. Additionally, Firefly had seen two significant non-operational revenues last year: $1.5 billion from divesting print media assets and $2.5 billion from the auction of Disney's animation division. With this robust profitability, Firefly had surpassed Time Warner to become the largest media giant in Hollywood.

After patiently allowing Irwin to finish the article, Andrew Viterbi remarked, "Surprised?"

Irwin nodded, saying, "Over $10 billion in cash reserves and $2.5 billion in free cash flow. It's hard to imagine such a profitable enterprise exists in Hollywood. Eric Williams is only 25 years old this year, right?"

"Yes, indeed," Andrew replied. "This young man seems almost like a miracle worker in this world. Just like the annual Victoria's Secret Fashion Show that received so much media buzz last year. Eric spent $20 million in six months to operate the Victoria's Secret brand for that glamorous lingerie showcase. Many thought that Eric would only recoup that spending through brand appreciation and product sales profits, but after the fashion show released its videotape, sales skyrocketed. They projected the $29.9 videotape would sell over 20 million copies, generating $300 million in revenue for Eric. Subsequently, Eric returned the rights of the fashion show back to LTD, gaining over $200 million in equity," Andrew said, a hint of admiration in his voice. He clearly had done significant homework about Eric.

Irwin felt a mixture of astonishment and awe. Yet at 62, having experienced much of life's ups and downs, he maintained a sense of calm despite his excitement.

After finishing a cup of coffee, they turned to business matters.

...

Andrew handed a prepared document to Irwin, saying, "Here's the detailed plan. Take a look."

As Irwin flipped through the materials, he noted that the FCC had recently conducted a spectrum auction for established telecom companies. For these companies that had secured A and B block licenses, Qualcomm's influence was quite limited; it couldn't dictate which mobile technology the established operators would opt for. Thus, Qualcomm had initially focused its attention on the C block licenses.

While the A and B block licenses were simply limited offerings for a few companies, the C block auction attracted numerous bidders, leading to fierce competition. Those small to medium-sized telecom companies, having spent heavily to acquire spectrum licenses, would likely lean toward more economical mobile communication technology. Compared to GSM, CDMA had significant advantages in network construction costs and spectrum utilization efficiency.

Qualcomm's worst-case scenario from the onset was that if CDMA was rejected by all established telecom operators, they would then seek commercial opportunities from C block license winners.

However, after Eric expressed interest in Qualcomm, Andrew had developed a bold idea. They planned to secure enough financial support from Eric and then swiftly acquire all the C block licenses. They would then bundle CDMA technology and offer those spectrum licenses at a lower price to smaller telecom operators. Even if CDMA technology failed to gain traction with mainstream telecom operators, it could still capture one-third of the mobile communication market through promotion within the C block.

"I've already registered a company called Wave. If I can get funding from Eric Williams, I'll step back from Qualcomm and focus entirely on Wave, preparing to acquire all the C block licenses," Andrew declared.

Irwin set the plan aside. Although Andrew's voice was filled with anticipation, he knew full well that both of them lacked confidence in this matter.

Due to their tacit understanding, competition for A and B block licenses hadn't been intense. Nevertheless, the FCC still auctioned off a staggering $3.75 billion in total. To acquire all the licenses in the competitive C block auction, they would at least need to set aside double the premium compared to A and B blocks, which conservatively estimated would also require $4 billion.

After a moment's hesitation, Irwin asked, "Andrew, how likely do you think Eric Williams would be to provide us with $4 billion in support? Don't forget, Qualcomm is barely worth $400 million as a whole now."

Supporting a company valued at under $400 million to execute a $4 billion plan seemed like a madman's idea to most.

Despite having prepared a set of carefully deliberated remarks, neither Irwin nor Andrew felt any assurance regarding the outcome. The only reason they put forth such an unrealistic plan was that Qualcomm had run out of options.

"Since Eric Williams reached out to us, we're sure to gain some support from him. Perhaps Eric can help us persuade a mainstream telecom operator to embrace CDMA technology too. As for the plan," Andrew reassured Irwin, attempting to comfort himself as well, "if we try, we may have a 1% chance of success. But if we don't try, we'll have nothing."

*****

https://www.patreon.com/Sayonara816.