Chapter 107: Buying In

Simon listened to Eisner's offer but did not rush into discussing the distribution terms for "When Harry Met Sally." Instead, he brought up another point, "Michael, as far as I know, Disney doesn't prioritize its animation department and there were even rumors that you planned to stop producing animated films. Given that, why not consider producing 'The Lion King' for Daenerys Productions?"

"Rumors are just rumors, Simon," Michael Eisner shook his head, "Honestly, I did consider closing the animation department. However, if I had done that, you wouldn't be sitting here discussing this with me today. Our animation department is led by Roy Disney. So, you understand, right?"

Simon paused thoughtfully, then nodded reluctantly.

Roy Disney, the nephew of Disney founder Walt Disney, and the Disney family still held substantial shares in Disney Studios.

After Walt Disney's death, the overall quality of Disney's animated films had declined significantly. In recent years, the brand had relied more on re-releasing classic animations to maintain its image.

However, as animation was the cornerstone from which Disney had grown, the company's leadership would unlikely shut down the animation department purely for business reasons without considering the Disney family's feelings.

Moving Disney's animation operations to an old warehouse in Glendale to save costs might already be at the limit of what the Disney family would tolerate. If Michael Eisner pushed to turn the animation department into a 'contract factory,' it's uncertain how the Disney family would react.

Understanding these complexities, Simon said, "If that's the case, Michael, let's drop the matter of 'The Lion King.' I'll find another way. I definitely won't sell the script to you."

Michael Eisner responded, "Simon, you should realize, you don't have many options outside of Disney."

"I remember that Universal just released 'An American Tail' last year, which grossed over $50 million, double what Disney's 'The Great Mouse Detective' made."

"That film," Michael Eisner chuckled, "included directors and main animators who had left Disney. And Simon, if you're thinking they'll produce 'The Lion King' for you, that's even less likely."

Simon didn't fully grasp the implications but shrugged, "There's always another way."

Eisner tapped his memo pad indifferently, "Well then, good luck."

Although Simon's scripts were highly sought after in Hollywood, Eisner didn't press further, aware of the unique challenges in animation production, which typically spanned two to three years and involved high costs.

Who knew what the situation would be like in three years?

Seeing that there was no turning the situation around with 'The Lion King,' Simon shifted the conversation back to 'When Harry Met Sally,' "Michael, about the two directorial contracts you mentioned, I'm sorry, but I can't agree. At most, I can commit to one, which might be the last one I sign before I focus entirely on producing films for my own company."

Michael Eisner, smiling at Simon's resolve, remarked, "Simon, Coppola probably thought the same after 'The Godfather.' But after the huge losses with 'The Cotton Club,' he ended up making 'Peggy Sue Got Married' for TriStar."

Francis Ford Coppola's 'The Cotton Club,' released three years ago, was a disaster. Due to conflicts between the director and lead actors, constant script changes, and budget overruns from $25 million to $58 million, it only earned back $25.92 million at the North American box office. Coppola's ambitions after the success of 'The Godfather' led to his company Zoetrope Studios nearly going bankrupt. 'The Cotton Club' was distributed by Orion Pictures.

The fact that Simon didn't consider the relatively successful Orion Pictures, preferring to work with larger studios, was because Orion was too ambitious at the moment and couldn't offer a good release slot for 'When Harry Met Sally.'

Orion's financial situation had improved after successful box office hits last year, with nine self-financed film projects lined up, reaching a distribution scale comparable to the major studios.

However, Orion lacked the deep resources of the major studios.

Understanding this, Simon realized why Orion, despite frequent successes in both box office and awards, would soon find itself in trouble over the next few years.

One hit film couldn't cover losses from multiple failures.

"Maybe I'll end up like Coppola," Simon thought to himself, smiling slightly, "But Michael, people should have dreams, right? What if they come true? So, just one film."

Eisner, pondering Simon's words, insisted, "Simon, without two films, Disney can't give you the Easter slot."

Simon thought for a moment, then offered, "Michael, I can concede more on the commission—18%. What do you think?"

Eisner still shook his head, "I've seen the writer of 'When Harry Met Sally's last work

 'Heartburn,' starring Jack Nicholson and Meryl Streep—$25 million production cost, $25 million box office. Simon, I don't think this film will perform any better than 'Heartburn,' so 18% isn't much different from 15%."

"Michael, I think you're missing something. 'Heartburn' only made $25 million precisely because it starred Nicholson and Streep. I still can't understand who thought it was a genius move to cast them together in a romance—they had no chemistry on screen. 'When Harry Met Sally' will definitely perform much better than 'Heartburn.'"

"Simon, your confidence doesn't change the facts."

"Or, Michael, how about Daenerys Productions buys Disney's Easter slot next year outright?" Simon suggested.

"What do you mean?" Eisner was perplexed.

Simon looked at Amy, who had been quietly listening to their negotiation, "Could you give me last week's box office report?"

A bit confused, Amy pulled out a page from her bag and handed it to Simon.

After a quick glance at the report, Simon passed it to Eisner, explaining, "Disney re-released 'The Aristocats' this Easter, starting April 10th on over 1,400 screens, with current box office earnings of $13 million and likely to maintain for a few more weeks. Let's calculate a total gross of $16 million, a 50% box office share, with marketing costs at $2 million, leaving Disney a profit of $6 million. Michael, Daenerys Productions offers $6 million as a fixed distribution fee, and all Disney has to do next Easter is give us 1,000 screens. What do you think?"

Eisner reviewed the box office report and considered Simon's novel proposal.

A $6 million fixed fee, equating to a 15% distribution fee, meant Simon valued 'When Harry Met Sally's' North American box office at $40 million.

If 'When Harry Met Sally' indeed grossed $40 million, including subsequent distribution revenues, it would be a lucrative deal.

As he mulled over this, Eisner responded, "Simon, it's not as simple as that. 'The Aristocats' doesn't just generate box office revenue; its re-release also boosts sales of VHS and merchandise, bringing in more than $6 million for Disney."

Simon acknowledged, "I'm aware of that, Michael. Besides the $6 million, Disney could also have the first option to buy the distribution rights for other channels for 'When Harry Met Sally.' The rights for 'Run Lola Run,' which Orion holds for North America—VHS and TV broadcast—will bring them substantial income over the next few years. Additionally, you would get one of my directorial contracts."

"Two films," Eisner countered.

"Only one, Michael. If you insist on two, then I regret we can't proceed."

Eisner, still holding the box office report, weighed his options again before saying, "Simon, if 'When Harry Met Sally' grosses under $40 million in North America, Daenerys Productions will pay a fixed $6 million commission. If it exceeds $40 million, Disney takes an 18% cut. Agree to this, and I accept your other terms."

Amy looked worriedly at Simon, concerned he might agree.

For Simon, paying a fixed commission of $6 million for earnings under $40 million was already a significant risk. There was no reason for Disney to earn a higher commission if the film performed better.

Disappointingly for Amy, Simon stood up, reached across the table, and offered his hand to Eisner, "It's a deal."

Eisner was surprised by Simon's decisiveness. As they shook hands, he felt like he might have missed something.

Yes.

Two directorial contracts.

Before this meeting, securing Simon's next two films had been his higher priority.

Compared to 'When Harry Met Sally,' which wasn't very promising in appearance, the young man's two film contracts seemed far more valuable, especially given his profound filmmaking skills demonstrated in 'Run Lola Run,' which many well-established Hollywood directors couldn't match.

Now.

Just one film.

Eisner indeed guessed Simon's intentions, though he hadn't planned to compromise on the number of contracts. Simon had cleverly diverted Eisner's attention.

Signing an additional film contract was Simon's limit; he didn't want to end up like Spielberg, perpetually tied to major studios.

If Columbia Pictures, which had offered an additional $3 million without conditions and a negotiable release slot, had proposed a slightly higher buyout price, Simon would have preferred to work with them. But at $3 million, it was too far from his expectations.

As for the deal with Disney, Simon's initial maximum was to raise the commission to 20%. Now, though he would pay $6 million for earnings below $40 million, the commission above that was only 18%, which didn't exceed

 his upper limit.

Regardless, if 'When Harry Met Sally' didn't reach its expected performance, Simon could afford a failure. But if the film succeeded like the original, although the distribution fee was higher, Daenerys Productions still had a good chance to recoup its $15 million production cost just from North American revenues.

As the head of a major film company, once Eisner had made a promise, he wouldn't back out, especially not with a young filmmaker. But as they shook hands, he added, "In that case, Simon, Daenerys Productions must pay the $6 million commission upfront upon signing the contract."

Cash was always tight for any film company.

Typically, distributors settled commissions after the film's theatrical run, but receiving $6 million in advance would allow Disney to produce an additional movie.

However, Simon immediately shook his head, "Sorry, Michael, Daenerys Productions doesn't have the money."

Eisner, listening to Simon's quick-witted but somewhat evasive responses, reminded him, "Simon, unless I'm mistaken, you recently received a significant buyout for 'Run Lola Run.'"

Simon shook his head again, "Michael, then you must also know that due to uneven profit sharing, I'm preparing for a lawsuit with my girlfriend, and I can't touch that money for now."

Although Amy was somewhat annoyed at Simon's recent decision, she nearly laughed out loud at his blatant excuse.

Eisner, now clearly exasperated, pointed out, "Simon, did you just reveal a major inconsistency? You just referred to her as your 'girlfriend.'"

Calmly, Simon corrected himself, "Oh, sorry, my ex-girlfriend."

Finally, Eisner laughed, shaking his head, "Alright, for the sake of that not-so-funny joke."

With the basic framework of their contract set, the three discussed some details.

Despite often hearing about him, Eisner was deeply impressed by Simon's maturity and decisiveness, far beyond his years, and even invited both to lunch to continue their discussion.

Having secured a deal with Disney, Simon naturally wouldn't consider MGM anymore.

Compared to the ambitious Disney under Eisner and Jeffrey Katzenberg, MGM, bought by casino magnate Kirk Kerkorian in the '70s, had nearly become a real estate and hotel company.

Over the years, MGM had sold off its studios, built hotels, auctioned off many valuable props from its golden era, and Kerkorian, feeling the company had been drained of profits, had sold MGM to CNN owner Ted Turner in March of that year.

Turner was still raising funds to meet Kerkorian's $1.5 billion asking price.

However, in Simon's memory, Turner ultimately didn't come up with the money. The media mogul was mainly interested in the thousands of film rights MGM had accumulated over half a century.

Turner Broadcasting was preparing to launch a new basic cable channel and needed a vast content library.

Eventually, after retaining the most valuable films from the MGM library and some back-and-forth, MGM returned to Kerkorian's hands.

The casino magnate would spend the following years using MGM for capital operations.

In short, the once mightiest film company in Hollywood was now least interested in making movies.