Chapter 549: New Proposal

[Chapter 549: New Proposal]

"Let's establish a brand-new production company, where everyone holds shares and invests in movie production together, and sign a long-term distribution agreement with MGM. This way, we can leverage MGM's distribution channels while avoiding getting ensnared in their debt issues, ensuring that investors' interests are fully protected." Eric stated this in the Seydoux family's mansion in the western suburbs of Paris while addressing several representatives from European film companies.

This approach resembled the previous collaboration between Carolco Pictures and MGM. However, due to the box office failures of two summer blockbusters, there was likely no need for either side to continue their partnership.

After hearing Eric's suggestion, most of the people in the meeting room neither shook their heads nor nodded. It was Marcel Novare, a representative from Lyon Credit Bank, who seemed somewhat disappointed. However, Eric had already communicated with him earlier; these people had shown little willingness to agree to the initial proposal, and Eric had no intention of forcing these European film entities into MGM's offenses.

Sitting on Eric's left was Nicolas Seydoux, CEO of Gaumont, who was the first to ask, "Eric, so, does Firefly plan to participate in this company in a cooperative manner?"

"Firefly will participate in holding shares and provide relevant hardware support for film production, such as studios and post-production," Eric replied. "Additionally, I will personally select ten films as the production plan for the next three years. As for the equity distribution among everyone in this company, that will be resolved through negotiation."

Once Eric finished speaking, the seven or eight people seated in the meeting room immediately began whispering to each other. Eric, meanwhile, leisurely sipped his coffee.

After a brief discussion, Marcel Novare asked, "Eric, can MGM hold cross shares in this company?"

Eric glanced at the people around him and smiled, "If everyone agrees, I personally have no objections."

Establishing cross shares would definitely increase the operational risk of this new production company. Still, Eric wasn't particularly worried. As long as they followed the planned proposal, MGM's operational status would definitely improve in the coming years. After exchanging shares, the new production company might even share a portion of MGM's distribution profits. Moreover, this cooperation method would facilitate Firefly's direct or indirect acquisition of MGM in the future. After careful consideration over time, Eric had become increasingly envious of MGM's film library.

Everyone was also quite aware of the stakes involved. Hearing what Eric said, they all remained silent.

At this moment, Daniel Essinger, the representative from Constantin Film, asked in slightly awkward English, "Eric, MGM's management philosophy is quite outdated. More importantly, what about the weak profitability of film peripheral development? How do you plan to address that?"

Eric looked at Marcel Novare and replied, "Firefly would be very willing to handle that part of the business."

Sensing Eric's gaze, Marcel Novare also stated, "MGM has no objections on our end."

The ultimate goal for Lyon Credit Bank was to revitalize MGM and, within a few years, cash out at a reasonably favorable price, without any intention of continuing long-term operations. Therefore, Marcel Novare was able to easily represent Lyon Credit Bank in making this decision.

At this point in the discussion, it seemed almost settled. Everyone present recognized that Eric had made up his mind not to let them invest directly in Firefly Pictures. If they insisted on doing so, Eric might not reject them, but it was uncertain whether they could secure a good cooperation plan. As industry insiders, they understood that Hollywood had a hundred ways to ensure their investments would tank. Still, after years of collaboration, these individuals had also become adept at sidestepping most traps set by Hollywood.

Of course, some still harbored a sense of unwillingness. Daniel Essinger, who had just spoken up, said again, "Eric, you mentioned a production plan of ten films over three years. Can you share what types of films these might be or the scale of investment? Do you have suitable projects in mind right now?"

Eric looked at him and suddenly recalled that he still held the rights to a novella associated with Constantin Film, which was Resident Evil. In the original timeline, the Resident Evil series was indeed funded by Constantin Film, and it was only large-pocketed investors like those from Germany who would continue to produce a film series that was not particularly profitable for six installments.

"A few years ago, I wrote a novella called Resident Evil. If the new company is set up, I could license the rights to this novella as part of the production company," Eric said.

The globally dominant box office hit Jurassic Park had been based on Eric's initial novella. Less than two months after its release, it had grossed over six hundred million dollars worldwide, and had shown no signs of slowing down. Furthermore, given that it hadn't even been released in Japan -- a major box office territory -- the global total for Jurassic Park surpassing a billion dollars over the ensuing months seemed nearly inevitable. Thus, hearing Eric's statement caused an electrifying surprise among those present.

However, they quickly recalled the information regarding Resident Evil. After Jurassic Park was released, many had inquired about news of Eric's other two novellas, The Matrix and Resident Evil. They were all too aware that if these were to be developed, those two novellas would certainly remain Firefly's proprietary projects, leaving outsiders little chance of getting involved.

Resident Evil was a restricted horror novella with a very narrow audience demographic. Even with Eric already being a globally renowned director, he couldn't change that reality. Moreover, adapting such a horror story into a film would guarantee an R rating, and its audience would still be limited. Although Eric's personal star power would help profitability, it would definitely not compare to Jurassic Park.

"Eric, I think your other novella, The Matrix, is quite good too. Why not consider licensing that for adaptation?"

Eric shook his head slightly and smiled, "The current special effects technology doesn't meet my requirements, so I won't consider adapting The Matrix for the next couple of years."

The previous year's Twister and this year's Jurassic Park had showcased special effects that could only be described as stunning. The special effects in Digital Domain were undoubtedly the industry's best, and many in attendance vaguely knew the contents of The Matrix. Given today's technological capabilities, producing it wouldn't be too difficult; it was primarily a question of production costs. For wealthy European film entities, especially German film funds, money was not an issue. After all, Carolco Pictures had invested one hundred fifty million dollars in their two major flops last summer. If Eric's adaptive project required them to invest one hundred fifty million per film, hardly anyone would refuse.

Therefore, hearing Eric make such claims, most of those in the meeting room couldn't help but roll their eyes.

Eric understood these individuals were astute negotiators, and without presenting some solid benefits, they wouldn't easily capitulate. After considering it, he said, "How about this: Firefly is currently preparing a film, which is an adaptation of a 1970s TV series. I could license this project to be included in the production company."

Many of those present were well-informed, and Nicolas Seydoux immediately probed, "Eric, is it the Charlie's Angels?"

Eric nodded. Due to Firefly's plans for multiple blockbusters in next year's summer schedule, forcing Charlie's Angels into that time frame wouldn't yield sufficient promotional resources. Therefore, Eric hadn't been in a hurry to produce it, intending to give it thorough treatment. If all else failed, he could release it next New Year, which would extend the investment timeline but would also allow Charlie's Angels to benefit from ample promotional resources for better box office performance.

By bringing Charlie's Angels into the new production company, he could utilize MGM's resources to release the film in the next summer slots. As for Drew, there were no issues there; she had always been amenable to Eric.

Seeing the satisfied expressions on the faces of those in the meeting room, Marcel Novare from Lyon Credit Bank eagerly suggested, "In that case, Eric, let's discuss the specific equity distribution plan for the new production company."

Before Eric could respond, Daniel Essinger from Constantin Film jumped in again, "Eric, what's the projected total investment for the ten films you have in mind?"

"That question, I can't answer for now," Eric replied with a smile and a shake of his head. "However, the budget for Charlie's Angels is roughly sixty million dollars. If you're all looking to play big, the investment for the remaining nine films would likely sustain a similar scale."

"Sixty million isn't enough. Let's average it at eighty million," Daniel Essinger said, waving his hand with some exuberance. "At eighty million, for ten films, that totals eight hundred million. We in Germany can handle four hundred million of that, which gives us a 50% stake. How does that sound?"

After Daniel Essinger finished speaking, representatives from several other German companies nodded in agreement.

Eric couldn't help but sigh. At this point, the Germans seemed as loaded as the Japanese, who were attempting to buy up the world. If the Germans took 50%, then what about France? Not to mention, there was also a British film company that couldn't just go home empty-handed.

Nicolas Seydoux shrugged humorously. Since Eric had already promised so many benefits, Firefly Pictures' stake in the production company would certainly not be less than 30%. If they gave the Germans 50%, that would leave only 20% for others -- hardly enough to make a decent offering, let alone exchange some shares with MGM. "Daniel, giving you 50% is definitely out of the question. If it were only a matter of funds, while we might not have your depth, we can still come up with eight hundred million."

Eight hundred million effectively meant they would acquire the entire new production company.

"Nicolas, our company is larger, thus we should have a larger share," Daniel Essinger argued with what he deemed a reasonable rationale.

Immediately, Nicolas Seydoux countered, "This isn't about company size. Who doesn't know that you Germans typically register several companies to invest in a Hollywood picture?"

Eric remained quiet as the meeting room momentarily transformed into a noisy marketplace. He wasn't at all worried about the profit distribution issue. If Firefly didn't participate, the proposal wouldn't be feasible, so he was the one most at ease at the moment.

After nearly ten minutes of shouting and arguing, they finally settled down. Eric said, "The specific terms of cooperation can be discussed in detail. However, we can't dilly-dally too long, as that would benefit no one. As for Firefly, aside from the rights to Resident Evil and Charlie's Angels, I will be fully involved in the production of all ten films. Firefly would share 30% of the company's equity and 30% of the gross profits from the films after costs are deducted. As for the peripheral rights development for the related films we just discussed, Firefly will assign dedicated personnel to negotiate with MGM."

Eric didn't mention anything about investment, but upon hearing about the 30% profit share, everyone in the meeting room looked very satisfied. After all, Eric generously allowed them to deduct production costs, significantly reducing everyone's investment risks. Moreover, Eric would surely be heavily invested in the production company, as this profit share would only be realized if the films turned a profit; once the films incurred losses, Firefly wouldn't get a dime.

Seeing that no one raised any objections, Eric continued, "How the remaining 70% of the shares will be distributed, along with the cross-shareholding proportions with MGM, will be for you to negotiate among yourselves."

Just as everyone was about to nod in agreement, Eric added, "Oh, by the way, it's best if negotiations conclude within a month. I want to start production on Charlie's Angels as soon as possible so that we can comfortably arrange for its release during next year's summer slate."

"Eric, how should we allocate the cross-holding ratio between the new company and MGM?" Marcel Novare inquired again, fully aware that despite differing main goals, Lyon Credit Bank should not miss out on the opportunity to participate in the production company.

Eric pondered for a moment and replied, "Let's go with what we just discussed: valuing the production company at eight hundred million dollars, calculating MGM's valuation at about twelve hundred million. After everyone here divides their shares in the new production company, the remaining shares can be exchanged for proportional ones with MGM."

*****

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