Chapter 169: Circling

[Chapter 169: Circling]

Sitting quietly beside Eric, Aniston began feeling a bit dazed. When she came in, Eric had not hidden the purpose of inviting Robert Shay from her. However, as dinner progressed and they devoured most of their meal, they hadn't touched on the subject of the film company acquisition at all.

Instead, they meandered through various industry tidbits -- talking about MGM's colossal losses, the box office miracle when Robert Shay was born in 1939, the meteoric rise of Disney, and the truth behind the bankruptcy of RKO Pictures. There was a complete absence of any discussion relating to the film company acquisition. At least, the not-so-bright young girl had not noticed any signs of that nature.

At first, Aniston listened with keen interest, but as time went on, her enthusiasm faded. Still not wanting to seem rude or embarrass her boyfriend, she sat up straight and pretended to listen attentively, even though her mind had already drifted far away.

It wasn't until the waiter cleared away the plates and brought coffee for the group that Eric and Robert Shay's 'casual chat' still hadn't ended.

"... A recent magazine article published some figures suggesting that from next year onward, revenue from video tape sales and television broadcasting rights will surpass box office earnings, and the development of various peripheral rights for films has become increasingly diversified. Therefore, the role of distribution in the film industry chain is going to become more important. In the future, it will be tough for movie content providers to survive without effective distribution channels."

"That's somewhat one-sided. Without quality productions, there's nothing to discuss about expanding distribution. Hollywood has cultivated its overseas market with one high-quality film after another. If our films behave like European films and lack ambition, with only a few good movies, we'd surely be confined to a small circle of self-entertainment.

Highways are certainly important, but without cars, highways serve no purpose. Moreover, the salaries of Hollywood movie stars have increased more than tenfold compared to a decade ago; they are even starting to share in the profits from films, which is the most direct reflection of content's importance in the film market," Eric said.

After finishing his statement, he calmly sipped his coffee and glanced at Robert Shay. Not long after dinner started, they exchanged a few pleasantries, and without realizing it, they began an under-the-table battle. Though neither had mentioned anything about company buyouts, they had been embroiled in a debate over whether film content or distribution held more weight.

The discussion on this topic had been initiated by Robert Shay. From that moment on, he was already at a disadvantage. By bringing up the subject, Eric understood that Robert Shay was particularly interested in the acquisition of New Line by Firefly. If Shay had no intention of selling New Line, he wouldn't have wanted to bring it up at all.

...

Sitting opposite, Robert Shay felt somewhat bitter. He noticed he had underestimated the perspective and insight of the young man sitting across from him.

Having been in Hollywood for more than twenty years, he certainly understood that once a topic like that was introduced, it could easily lead the other party to see through his intentions. Robert originally thought that since Eric was only nineteen, he might have some talent in film production but would likely know little about other aspects of the industry.

Having more than thirty years of experience, Robert felt confident in his ability to keep Eric in check. If he could plant the seed of "distribution channels are key" in Eric's mind, he could later hold the upper hand in negotiations.

Eric had already produced a string of films that had achieved box office miracles. Thus, after Eric sent out invitations and hinted at some information, Robert Shay's mind sparked to life. The acquisition of New Line by Firefly felt certain.

Robert Shay didn't even consider the possibility of a reversal of roles; although he was already fifty, he still brimmed with ambition. He didn't care much about the vast amounts of capital from Firefly's purchase of New Line; his goal was to merge both companies and secure as much equity as possible in the new firm.

New Line had developed to a bottleneck stage. Among the secondary film companies, it had emerged as a leader, boasting solid franchises and a good distribution network within the U.S. market. Internationally, it had stable partners, and even more notably, New Line had managed to thrive without attaching itself to any major studio, maintaining a completely independent operation.

However, compared to the six major studios, New Line still faced a considerable gap. The most significant disparity lay in the lack of blockbuster films, or more precisely, the absence of any such titles. As of now, New Line's best-performing series had topped out at only over forty million, while a true blockbuster in North America needed to approach the hundred million mark.

The 80/20 rule was particularly evident in the Hollywood box office market, with twenty percent of films claiming over eighty percent of box office revenue each year. The box office hit list's top ten films had always been the monopoly of the six major studios, which meant that over eighty percent of box office earnings belonged to them.

In fact, during these years, the six majors' share had slightly declined due to the rapid growth of various distribution channels, granting independent film companies substantial room for development. Therefore, each year, the six major studios captured only about eighty-five percent of the box office total, leaving fifteen percent for other Hollywood companies.

Although this percentage seemed small, it was significantly larger compared to over a decade ago when the six majors scooped up nearly all box office sales, leaving a pitiful one percent for smaller companies.

If New Line wanted to break into the ranks of the giants to share in that over eighty percent of profits, before encountering Eric, it had only two paths.

One was to pool resources and take a gamble on a high-investment film, which could potentially yield blockbuster success, but this came with immense risk; failure would inevitably lead to New Line's bankruptcy.

The other option involved a slow and steady approach, hoping for the day when some small film they invested in suddenly achieved unexpected blockbuster success, rapidly assembling a significant financial foundation. If combined with wise leadership, subsequent films could also succeed, creating a virtuous cycle that might elevate them into the ranks of the larger companies.

In an alternate timeline, Lionsgate had managed to ascend through luck, starting in 1997. Despite being far inferior to veteran secondary companies like New Line or Miramax in terms of experience and strength, it achieved remarkable success when a low-budget documentary it released in 2004, under intense political pressure, inadvertently grossed $224 million globally, quickly amassing sufficient capital. Following that, they developed a series of super successful films, momentarily outpacing Universal and Paramount, falling just behind Warner, Disney, Columbia, and Fox in box office rankings, later exceeding them also temporarily.

After Eric threw out the suggestion of an acquisition, Robert Shay saw another broad avenue; one that required no risky gambles or waiting for luck to shine but rather allowed for a steady entry into the ranks of the movie giants. Eric's early films all being box office hits proved he had the ability to do this. With the emergence of MGM-UA as a colossal entity among the six, another partnership like New Line-Firefly would surely arise. Well, let's call it Firefly-New Line.

...

After a cup or two of coffee, Robert Shay could hardly tolerate delaying the conversation with Eric any longer. The young man's patience was truly remarkable. Even though he didn't want to admit it, Robert had to face the fact that he had already lost this round. If he didn't bring up the main topic soon, Eric might genuinely perceive this meeting as mere casual chat and stand up to bid farewell. Their next meeting might only be at the negotiation table.

"Eric, I heard that Firefly is planning to expand its distribution channels?" Robert Shay casually stirred his coffee, asking as if it were a normal question.

A smile crept across Eric's face; it seemed Robert couldn't hold back any longer. Dinner had nearly spanned two hours, and Eric was losing patience with Robert Shay. The young girl had sent several glances his way, hinting she wanted to leave. He decided that if Robert didn't bring it up after finishing his coffee, he would head back to bed with Aniston, leaving the rest to Firefly to formally express its intention to acquire New Line.

The reason for this dinner was that Eric wanted to gauge Robert Shay's willingness to sell New Line. From memory, he recalled that Robert has a strong desire for control. In the previous life, though New Line had been taken under Warner's wing, Robert had still held tightly to its reins. It seemed that it wasn't until nearly two decades later, after massive losses, that he was begrudgingly forced to step down under immense pressure.

Robert Shay had initially started discussions on topics and argued with Eric for long enough that his stance had become clear. Therefore, continuing the dialogue didn't hold much necessity.

Regardless, even if they reached a preliminary intention, specific terms would require long negotiations. Sony had taken over Columbia after more than six months of planning, which combined to take at least a year. While the Firefly-New Line acquisition wouldn't be nearly so complicated, it certainly wouldn't be completed in under a month or two.

*****

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