Chapter 655: A Return to Reason

[Chapter 655: A Return to Reason]

Sensing the tension in the room, Tina decided to break the ice. "Eric, I have a meeting with Mr. Katzenberg at 2:30 this afternoon to discuss some details regarding Yahoo's collaboration with Firefly. Before that, can I interview you on a few questions in my capacity as Yahoo's Editor-in-Chief?"

Eric realized that Tina's inquiry wasn't just spontaneous; she was serious. He admired her ability to seize the moment. As the owner of Yahoo, he didn't mind providing some exclusive news for his media platform, so he nodded pleasantly. "Of course, go ahead and ask."

Tina was well-prepared. She swiftly pulled out a notebook from her briefcase, wasted no time, and asked her first question, "Eric, after The Lion King, Firefly has continued to reform Disney's animation division. Beyond the reasons that have already been announced, does Firefly have any deeper strategic considerations?"

Eric hadn't expected Tina's first question to be so spot-on. The industry had been buzzing with speculation about the real reasons behind Firefly's decision to sell their hand-drawn animation department, with countless insider analyses but no one hitting the nail on the head.

Having been a media queen for years, Tina had a keen sense for these trending issues, which wasn't surprising at all.

Eric replied honestly, "Yes, but that involves confidential information about Firefly Group, so I can't discuss it."

Tina smiled and marked an x next to her first question, then thought for a moment before changing it to a question mark. She looked up and asked, "In that case, Eric, can Yahoo invite professional analysts to write a commentary based on your answer?" After a beat, she added, "I mean, after the animation department is auctioned off."

"Sure," Eric nodded, knowing that both sides were aware this was just a clickbait article. The true reason behind Firefly's reduction of their hand-drawn animation department could only be deduced in hindsight years later with the decline of 2D animation. So Eric wasn't worried about any insights the Yahoo analyst could extract from his affirmative answer.

"Well, the second question," Tina continued, "Many people want to know about the sequel to Men in Black. Rumor has it that Firefly has temporarily rejected the idea of restarting the Men in Black sequel to retain the rights. Is that true?"

Eric chuckled, "Tina, that's quite a bold question."

"Boss, I didn't bring a tape recorder," Tina deliberately changed her address, smilingly explaining.

Eric knew her comment signified that his reply wouldn't be verbatim on the website. Moreover, he sensed that she was testing whether he could handle negative news about Firefly Group appearing on Yahoo.

As a broad-spectrum media platform, Yahoo's credibility would falter if all news about Firefly was positive.

"The true insider story is this," Eric pondered for a moment before saying, "After the success of the first Men in Black film, the actors including Will Smith and Tommy Lee Jones, along with the directors and producers, demanded significant increases in salaries and profit-sharing. If Firefly and Columbia acquiesced, we'd have to pay the main creators a total of $35 million in fixed salaries and a 30% profit share, bringing the sequel's production costs to $120 million. Factoring in substantial distribution and marketing expenses, total project costs could approach $200 million."

He paused, allowing Tina to take notes, then continued, "Although the first Men in Black grossed nearly $600 million worldwide, sequels often don't surpass the original. Our box office forecast for the sequel is about $200 million in North America and $200 million internationally, based on the average profit-sharing rate for North American and international revenues. This means the company would only recoup about $140 million in box office."

Eric explained that typically, Hollywood box office revenue amounted to one-third of total income, meaning that Firefly and Columbia could expect to recover about $280 million from home video and merchandise sales over the following years. Not to mention the lengthy time involved, after tapping into all potential profit points, the total earnings from the sequel would be $220 million, of which 30% would go to the creators, amounting to $66 million.

"So, in this scenario, the few who merely participated in the film's production would take over $100 million, while Firefly and Columbia, who invested countless resources into production, marketing, and distribution, would only end up with $150 million to split. Tina, do you really think it's worthwhile to develop a sequel under these conditions?"

Tina shook her head with a smile. According to Eric's analysis, if a sequel went into production, Firefly and Columbia would effectively be working for a handful of creators, which was clearly not cost-effective.

Diane Kruger and Tyra Banks listened with curiosity, satisfied by Eric's casual revelations of Hollywood's inner workings, but they refrained from making any comments.

Cindy, having found her earlier tactic effective, boldly asked, "Why not develop a sequel? Even if the leads get a bigger cut, isn't Firefly still making money?"

Eric merely rolled his eyes at her, showing no intention to explain. He took small sips of his coffee.

Tina noted some of Eric's figures, then smiled at Cindy. "Cindy, here's an example: if you opened a business and hired a CEO to manage it, and the company earned $10 million a year, but you found that the CEO's salary was nearly $10 million, would you still want to keep him?"

Cindy opened her mouth to argue but realized that if it were her, she would definitely fire that CEO and hire someone for $1 million or even less.

"Surely you wouldn't," Tina observed Cindy's expression and continued. "The situation with Men in Black is similar to the CEO I just mentioned. This CEO can only yield $10 million for the company but takes home a $10 million salary. No company would allow such a situation.

Of course, specifics can vary in real Hollywood film studios. If we're discussing MGM or Columbia, they might have to offer high salaries to the creators if they don't greenlight a Men in Black sequel. However, Firefly, with more choices, doesn't have to do that, particularly considering the time constraints. The annual film slate is limited, and Firefly will likely opt for higher-margin projects, such as this year's The Lion King, which is projected to yield $1 billion in profits over the next several years. If they exchanged The Lion King's slot for Men in Black 2, Firefly's ultimate profit might fall under $100 million. Eric, is that right?"

Tina directed that last question at Eric.

Eric nodded, "I must say, Tina, your understanding is quite remarkable."

Tina smiled politely, saying, "Thank you for the acknowledgment, Eric. However, without your figures, I wouldn't have been able to analyze these points. But do you think I should publish these figures on Yahoo? This topic might provoke hostility from Hollywood stars toward Firefly."

"The issue of inflated salaries for Hollywood stars needs to be addressed, or it will impact Hollywood's sustainable development in the future. When you're at Firefly Headquarters later, you might ask Katzenberg for some materials. He's been advocating for a return to reason in star salaries for years. So, take this opportunity to create a feature on the topic. Firefly's major films in recent years have relied entirely on non-superstars and will continue to do so," Eric shrugged. "I'm not worried about their hostility at all."

Tina nodded slightly, clearly excited. She recognized that this subject would spark a heated discussion. Correspondingly, Yahoo news would see increased attention due to this debate, akin to the boost in sales she once experienced with magazines she ran.

With this matter on her mind, Tina quickly finished the remaining questions, handed out her business cards to Cindy and the girls, and arranged to discuss online publicity strategies with them that evening before she hurried out of Firefly Studios.

...

Though Tina was in Los Angeles, the next day, the discussion regarding inflated Hollywood star salaries hit Yahoo's homepage, using the delayed production of the Men in Black sequel as a springboard. The topic section extensively addressed the reasons behind the surge in star salaries and the various impacts it had on Hollywood over recent years through multiple highly specialized articles.

Since Michael Ovitz's establishment of CAA, debates regarding inflated Hollywood star salaries had never ceased, but with Firefly's vigorous support and Tina's astute maneuvering, this topic's popularity far surpassed any previous instances.

Yahoo's related articles were quickly republished by over 300 newspapers and media outlets across North America and Europe within just a few days.

...

Subsequently, the big four movie studios -- Firefly, Fox, Columbia, and MGM -- quickly released statements indicating they would gradually adjust their production strategies to address the issue of excessive actor salaries. While Warner, Paramount, and Universal were not part of the Firefly alliance, they soon issued similar statements underlining shared interests.

...

The united statement from the seven studios sent shockwaves through the industry. The American Actors' Union immediately protested, stating that if the seven studios were to cut actor salaries, they would resist through a work stoppage. Some stirred-up actors began to show signs of restlessness, seemingly ready to initiate an "immediate vacation."

...

In the face of this situation, Yahoo News swiftly published a rebuttal article asserting that the cost-cutting strategies of the seven studios targeted only a small number of stars with inflated salaries and did not apply to the majority of regular actors. The actors' union evidently was controlled by a select group seeking to mislead the public through such confusion.

After Hollywood had just experienced a bountiful summer box office, no one wished to see a work stoppage emerge.

Firefly and several other major studios quickly clarified that they would not reduce the wages of ordinary actors. Moreover, with the overall expansion of Hollywood's film industry, the incomes of regular actors would not decrease; in fact, they were expected to rise gradually.

Thus, the ordinary actor class was pacified, while the superstars perched atop Hollywood's pyramid began to express their dissatisfaction.

*****

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