Chapter 158: Future Plans

The situation with the Abu Dhabi Investment Authority didn't cause Michael Davenport much trouble. Three days after Michael firmly declined their offer, Salih and Aziz returned to the UAE. Before leaving, Michael had another detailed conversation with Salih, ensuring there wouldn't be any further issues from the Investment Authority.

Michael had considered the possibility of exposing the acquisition attempt if the Abu Dhabi Investment Authority pressed too hard. Presenting himself as a victim in such a case could leverage the generally unfavorable sentiment in North American media towards Arabs, putting the Investment Authority under significant pressure.

However, such a course of action would inevitably make the Abu Dhabi Investment Authority an adversary. Fortunately, the final outcome showed that Michael had been overthinking it.

The Abu Dhabi Investment Authority, managing assets worth over a trillion dollars, valued Hollywood's promotional power and influence but didn't take Michael and Relativity Entertainment too seriously.

From the information Michael received from Salih, Sheikh Mansour had already left Abu Dhabi for Manchester, England, intending to purchase Manchester United and face a formidable competitor, Rupert Murdoch's News Corporation.

It seemed that Sheikh Mansour wouldn't have the time or inclination to deal with Relativity Entertainment for now.

Michael knew, however, that the entanglement between Relativity and the Abu Dhabi Investment Authority wasn't completely over. The financial accounts for Kingsman: The Secret Service had yet to be settled.

Embassy Pictures' negotiations with Sony Entertainment for the overseas distribution rights of Kingsman: The Secret Service and Final Destination were in the final stages. Gramercy Pictures offered similar terms, but under Michael's guidance, Embassy Pictures chose Sony Entertainment as their partner.

The primary reason for this choice was that the representative from Sony Entertainment was still Chris.

Chris had played a crucial role in securing Polygram Filmed Entertainment's distribution department. Michael's decision to collaborate with Sony Entertainment was partly to reciprocate the favor. Besides, Sony Entertainment was one of the top bidders.

In Embassy Pictures' conference room, Chris and Garcia signed the contract, finalizing the licensing agreement between their companies.

Chris didn't leave immediately. Instead, he sought out Michael.

"We're old friends," Chris began, somewhat complainingly. "After all these collaborations, you still drive such a hard bargain."

Michael called for someone to bring Chris a cup of coffee and said, "Kingsman is only $10 million, a very reasonable price for such an excellent action film with a broad overseas market."

Chris thanked the person who brought his coffee

and then turned to Michael, "The film made only $10.6 million at the North American box office, and the overseas situation is still uncertain. If this goes wrong, I might not keep my job at Sony Entertainment."

Michael laughed, "My team has conducted market research. The Middle East alone can generate $10 million in revenue. This film will definitely be more popular overseas."

After all, without proper market estimates, would Sony Entertainment have paid $10 million?

Chris sighed, "I hope so."

Michael continued, "Come on, stop complaining. Didn't I also sell you the overseas rights for Final Destination?"

"Yes, Final Destination is great," Chris raised two fingers in approval. "But that wasn't just one film; it was a package deal, including two older direct-to-video movies. How many years have they been sitting on the shelf?"

The contracts were signed, so Michael was straightforward, "They were filmed four years ago when my father was still alive." He added quickly, "Chris, these two films may be old, but I assure you, the chance of finding their pirated copies overseas is extremely low."

Chris, more knowledgeable about the industry, asserted, "There definitely aren't any pirated copies abroad. I am sure of that because even I, a professional in the field, hadn't heard of these two films!"

Michael, well-prepared for such situations, responded smoothly, "Three films for $5 million in total. The overseas box office for Final Destination alone will make you your money back."

Typically, the revenue split for box office receipts in North America is around 50/50, while overseas it is roughly one-third. Revenue from DVDs, VHS, and TV broadcast rights mainly comes from countries with strong copyright protection.

Chris finished his coffee and prepared to leave. "I won't keep you any longer."

Michael personally escorted him out of Embassy Pictures.

In the future, Michael might not collaborate with Sony Entertainment as often. Embassy Pictures' overseas distribution channels were being integrated, and with the next film, they could potentially distribute it themselves.

Additionally, Embassy Pictures recently hired suitable staff to split into two teams and establish offices in the Middle East and Africa, opening up market channels there.

Since there would be no immediate overseas film releases, the experienced Alan Albert also went to help establish these markets personally.

Robert Lee and Danny Donald, currently on a global inspection tour, reported smooth progress in setting up offices due to adequate funding. Key personnel from Polygram's former local offices also transitioned to Embassy Pictures.

Michael instructed Mary to train new finance personnel, appointing a CFO for each major region.

The company structure was being built, with Michael delegating appropriately while ensuring no single person or department held too much power.

Michael also acknowledged his limitations in daily company operations, which was natural. One person can't handle everything perfectly.

He discussed with Mary, Robert, and George—his key trusted team members—the need for an external hire. Mary suggested that once the company grew larger, they could hire a professional manager or someone suitable as the CEO.

Michael considered this option. When the company reaches a significant size, hiring a CEO while having a CFO, a president, and himself as chairman could form a balanced top management structure.

Michael also thought about his future role. He couldn't completely detach from the company's daily operations, so he would take on the role of chairman. To maximize his foresight advantage, he could also serve as the Chief Creative Officer and be part of the project review committee, a crucial department in medium to large Hollywood companies.

The project review committee might have its downsides, but it filters out numerous bad projects, overall providing more benefits than drawbacks.

For now, these plans were for the future. Relativity Entertainment was still an independent production company within the independent film sector, which is traditionally more chaotic and less regulated.

With the overseas rights of Kingsman: The Secret Service and Final Destination sold, Michael directed Mary to finalize the accounts and prepare for tax season in April.

In a country that prides itself on tax collection, taxes are more certain than death.

Fortunately, Embassy Pictures and Sand Sea Entertainment would soon invest in new films, providing tax-deductible opportunities.

For sequels of successful films, especially low-budget ones, Michael planned to fund them internally, except for the $1.5 million investment promised to Tom Cruise for

the sequel of The Purge. The rest of the investment would come from within the company.

Unlike original films and the first films in a series, sequels to successful movies carry much lower investment risks.

For larger, original projects, Michael still planned to use financing to spread out the risk.

Embassy Pictures' acquisitions department had also been re-established. Currently, it consisted of five professional film buyers who were seasoned veterans from Embassy Pictures, familiar with scouring global film festivals for small productions.

Their main target was low-budget independent films with investments under $200,000.

Given the current state of the North American film market, particularly the home entertainment sector, purchasing such small productions meant that out of every four films, if one turned a profit, it would generally cover the costs.

This strategy had been Embassy Pictures' survival tactic for over a decade before Michael's acquisition.

Michael also had the team prepare for the Cannes Film Festival. Held every May, the Cannes Film Festival was the most commercially driven among the three major European film festivals. In Michael's view, the essence of the festival lay not in its competition section but in the film market.

The festival's greatest function was providing a platform for buyers and sellers to conduct transactions.

These plans filled Michael's schedule for the coming months.

The affairs with the Abu Dhabi Investment Authority did not have a significant impact on Michael. Three days after his firm refusal, Salih and Aziz returned to the UAE. Before leaving, Michael had another in-depth discussion with Salih, confirming that there would be no further complications from the Investment Authority.

Michael had considered revealing the acquisition attempt

if the Abu Dhabi Investment Authority pressured him too much. Presenting himself as a victim could leverage the generally negative sentiment in North American media towards Arabs, putting the Investment Authority under significant pressure.

However, this would inevitably make the Abu Dhabi Investment Authority an adversary. Fortunately, the final outcome showed that Michael had been overthinking it.

The Abu Dhabi Investment Authority, managing assets worth over a trillion dollars, valued Hollywood's promotional power and influence but didn't take Michael and Relativity Entertainment too seriously.

From the information Michael received from Salih, Sheikh Mansour had already left Abu Dhabi for Manchester, England, intending to purchase Manchester United and face a formidable competitor, Rupert Murdoch's News Corporation.

It seemed that Sheikh Mansour wouldn't have the time or inclination to deal with Relativity Entertainment for now.

Michael knew, however, that the entanglement between Relativity and the Abu Dhabi Investment Authority wasn't completely over. The financial accounts for Kingsman: The Secret Service had yet to be settled.

Embassy Pictures' negotiations with Sony Entertainment for the overseas distribution rights of Kingsman: The Secret Service and Final Destination were in the final stages. Gramercy Pictures offered similar terms, but under Michael's guidance, Embassy Pictures chose Sony Entertainment as their partner.

The primary reason for this choice was that the representative from Sony Entertainment was still Chris.

Chris had played a crucial role in securing Polygram Filmed Entertainment's distribution department. Michael's decision to collaborate with Sony Entertainment was partly to reciprocate the favor. Besides, Sony Entertainment was one of the top bidders.

In Embassy Pictures' conference room, Chris and Garcia signed the contract, finalizing the licensing agreement between their companies.

Chris didn't leave immediately. Instead, he sought out Michael.

"We're old friends," Chris began, somewhat complainingly. "After all these collaborations, you still drive such a hard bargain."

Michael called for someone to bring Chris a cup of coffee and said, "Kingsman is only $10 million, a very reasonable price for such an excellent action film with a broad overseas market."

Chris thanked the person who brought his coffee and then turned to Michael, "The film made only $10.6 million at the North American box office, and the overseas situation is still uncertain. If this goes wrong, I might not keep my job at Sony Entertainment."

Michael laughed, "My team has conducted market research. The Middle East alone can generate $10 million in revenue. This film will definitely be more popular overseas."

After all, without proper market estimates, would Sony Entertainment have paid $10 million?

Chris sighed, "I hope so."

Michael continued, "Come on, stop complaining. Didn't I also sell you the overseas rights for Final Destination?"

"Yes, Final Destination is great," Chris raised two fingers in approval. "But that wasn't just one film; it was a package deal, including two older direct-to-video movies. How many years have they been sitting on the shelf?"

The contracts were signed, so Michael was straightforward, "They were filmed four years ago when my father was still alive." He added quickly, "Chris, these two films may be old, but I assure you, the chance of finding their pirated copies overseas is extremely low."

Chris, more knowledgeable about the industry, asserted, "There definitely aren't any pirated copies abroad. I am sure of that because even I, a professional in the field, hadn't heard of these two films!"

Michael, well-prepared for such situations, responded smoothly, "Three films for $5 million in total. The overseas box office for Final Destination alone will make you your money back."

Typically, the revenue split for box office receipts in North America is around 50/50, while overseas it is roughly one-third. Revenue from DVDs, VHS, and TV broadcast rights mainly comes from countries with strong copyright protection.

Chris finished his coffee and prepared to leave. "I won't keep you any longer."

Michael personally escorted him out of Embassy Pictures.

In the future, Michael might not collaborate with Sony Entertainment as often. Embassy Pictures' overseas distribution channels were being integrated, and with the next film, they could potentially distribute it themselves.

Additionally, Embassy Pictures recently hired suitable staff to split into two teams and establish offices in the Middle East and Africa, opening up market channels there.

Since there would be no immediate overseas film releases, the experienced Alan Albert also went to help establish these markets personally.

Robert Lee and Danny Donald, currently on a global inspection tour, reported smooth progress in setting up offices due to adequate funding. Key personnel from Polygram's former local offices also transitioned to Embassy Pictures.

Michael instructed Mary to train new finance personnel, appointing a CFO for each major region.

The company structure was being built, with Michael delegating appropriately while ensuring no single person or department held too much power.

Michael also acknowledged his limitations in daily company operations, which was natural. One person can't handle everything perfectly.

He discussed with Mary, Robert, and George—his key trusted team members—the need for an external hire. Mary suggested that once the company grew larger, they could hire a professional manager or someone suitable as the CEO.

Michael considered this option. When the company reaches a significant size, hiring a CEO while having a CFO, a president, and himself as chairman could form a balanced top management structure.

Michael also thought about his future role. He couldn't completely detach from the company's daily operations, so he would take on the role of chairman. To maximize his foresight advantage, he could also serve as the Chief Creative Officer and be part of the project review committee, a crucial department in medium to large Hollywood companies.

The project review committee might have its downsides, but it filters out numerous bad projects, overall providing more benefits than drawbacks.

For now, these plans were for the future. Relativity Entertainment was still an independent production company within the independent film sector, which is traditionally more chaotic and less regulated.

With the overseas rights of Kingsman: The Secret Service and Final Destination sold, Michael directed Mary to finalize the accounts and prepare for tax season in April.

In a country that prides itself on tax collection, taxes are more certain than death.

Fortunately, Embassy Pictures and Sand Sea Entertainment would soon invest in new films, providing tax-deductible opportunities.

For sequels of successful films, especially low-budget ones, Michael planned to fund them internally, except for the $1.5 million investment promised to Tom Cruise for The Purge 2. The rest of the investment would come from within the company.

Unlike original films and the first films in a series, sequels to successful movies carry much lower investment risks.

For larger, original projects, Michael still planned to use financing to spread out the risk.

Embassy Pictures' acquisitions department had also been re-established. Currently, it consisted of five professional film buyers who were seasoned veterans from Embassy Pictures, familiar with scouring global film festivals for small productions.

Their main target was low-budget independent films with investments under $200,000.

Given the current state of the North American film market, particularly the home entertainment sector, purchasing such small productions meant that out of every four films, if one turned a profit, it would generally cover the costs.

This strategy had been Embassy Pictures' survival tactic for over a decade before Michael's acquisition.

Michael also had the team prepare for the Cannes Film Festival. Held every May, the Cannes Film Festival was the most commercially driven among the three major European film festivals. In Michael's view, the essence of the festival lay not in its competition section but in the film market.

The festival's greatest function was providing a platform for buyers and sellers to conduct transactions.

These plans filled Michael's schedule for the coming months.