Chapter 753: That's just unreasonable

[Chapter 753: That's just unreasonable]

"...After signing the contract, for the next eight years, ESPN will secure exclusive broadcasting rights for the NFL weekly games, as well as the rights to broadcast the Super Bowl in 1998 and 2001. Furthermore, ESPN will also hold official rights to air event programming, which means that viewers can legally record NFL games using their VCRs. We will be able to promote this power publicly through our channels," said ESPN President Steve Bornstein as he concluded his briefing on the negotiations with the National Football League to the assembled team.

While he had already secured Eric's support, he still needed to convince the other stakeholders in Firefly. Although Eric had absolute control, he wanted to avoid any significant discord with the other shareholders since it could jeopardize Firefly's stable development.

Tom Murphy, who had just stepped down as the CEO of the television division, was quietly reading documents when Steve finished. He raised his head and was the first to speak. "Steve, ESPN already holds a dominant market share in the industry and has become the go-to channel for sports fans. So, do you think it's necessary for us to pay more than a 50% premium to enter into a high-risk eight-year contract for exclusive NFL broadcasting rights?"

Steve Bornstein replied, "Mr. Murphy, while ESPN currently enjoys a leading market share, that doesn't mean we can be complacent. In recent years, competitors like NBC, CBS, and FOX have ramped up their investments in sports channels. Even though ESPN has a significant advantage, if we allow this situation to continue, our market share could gradually be eaten away by other networks, and we may lose our absolute edge."

Tom Murphy shook his head slightly. "Steve, I haven't seen any reports that support this. It sounds more like your personal speculation and a bit alarmist. The industry dominance of a cable channel isn't easily dismantled."

Steve Bornstein countered, "Mr. Murphy, I'm not being alarmist. There's a very clear example from recent years. Since its inception in the 1980s, CNN's position in the news channel sector is very similar to ESPN's in the sports channel arena. However, in recent years, Fox News has come up fast. Founded less than five years ago, this news channel, backed by News Corporation's extensive global media network, has achieved a market share of 50%. At this growth rate, Fox News could match CNN before the year 2000. The industry position of ESPN can be broken more easily.

If other media groups possess the guts to aggressively snatch broadcasting rights away from us, a decline for ESPN is entirely foreseeable. Therefore, securing an exclusive eight-year broadcasting rights agreement can effectively cut off the possibility of other sports networks competing for our resources, ensuring we won't have to worry about competitive threats for the next eight years."

Warren Buffett chimed in, "Steve, let's discuss expected revenues. You mentioned in your report that after securing exclusive NFL broadcasting rights, ESPN's average annual subscription revenue would increase by 20%. With that growth rate, ESPN's average user subscription price would exceed $2 in less than five years, which is already ten times the average subscription price of standard cable channels. Do you think viewers would accept that?"

"Mr. Buffett, this price increase is a long-term process. Moreover, we're not dealing directly with subscribers; our partners are cable operators. On the other hand, our negotiations with operators primarily hinge on viewership ratings. If we obtain exclusive broadcasting rights, viewers will have no other choice but to watch NFL games on ESPN. Therefore, as ESPN's viewership rises, a corresponding increase in subscription revenue is inevitable, and operators will have no other options."

Buffett nodded with a smile. He glanced at another external board member from Firefly, David West, president of State Street Global Advisors. David shrugged with a smile and said, "After hearing Steve's presentation, I find it hard to oppose this agreement."

Eric finally turned to Tom Murphy, who also nodded slightly. Though he had always been a cautious operator and still thought the plan was too risky, he realized that, compared to the potential rewards, this risk was worth taking.

"Well then, it's settled. We'll proceed with this plan, and the company will inform everyone about the subsequent signing matters in a timely manner," Eric stated. He added, "Now that we're all here today, let's take this opportunity to discuss the group's financial situation for the first three quarters. Carolyn?"

As Eric spoke, he looked toward the group's CFO, Carolyn Elliott, who nodded as she opened the prepared documents.

...

As the morning meeting concluded, Eric and Katzenberg hosted Buffett and his group for lunch at the ABC headquarters restaurant. As they were leaving, Buffett pulled Eric aside. "Eric, do you have time next Thursday?"

Eric looked puzzled for a moment, then realized that Thursday, November 2, was still open on his calendar. He nodded and replied, "Sure, Warren. I'll probably be in New York until November 10, as you know, after the Victoria's Secret Fashion Show wraps up."

"Great. There's a gathering then, and some of my old friends are all eager to meet you. I hope you're interested?"

Warren Buffett's old friend gathering immediately made Eric think of the renowned Graham's disciples meeting. Benjamin Graham, an esteemed economist, was known as the "father of modern security analysis," much like Einstein in the realm of physics. Buffett had been one of his students during Graham's teaching tenure at Columbia University and had subsequently organized these gatherings, which included top-tier entrepreneurs, bankers, and fund managers capable of influencing the country's economic direction.

Eric understood that as his personal business expanded, it was inevitable that his companies would intersect with these major capital players. Buffett wouldn't casually invite outsiders to such elite gatherings, and given that he'd extended an invitation, Eric certainly wouldn't be foolish enough to refuse. Even if a collaboration didn't materialize later on, meeting these people would undoubtedly be beneficial.

After a moment of thought, Eric asked, "Warren, can I bring someone along?"

Buffett laughed, "Of course! It's not too formal; everyone will bring someone along."

Eric replied, "No, I meant a good friend of mine, Chris Hansen, who currently manages my Firefly Investment Company."

While this meeting of investment tycoons might not directly benefit Eric, it would definitely give Chris access to invaluable connections. That's why Eric quickly thought of him.

Buffett pondered for a moment before nodding. "No problem. He's a very promising young man."

With that, Buffett pulled out a notepad and quickly jotted down an address, handing it to Eric. "Next Thursday at 7 PM."

Eric accepted the note and tucked it away. "Absolutely, we'll be there on time."

After seeing Buffett and the others off, Eric returned to the ABC headquarters building with Katzenberg.

...

After spending two more days in Manhattan, on October 31, the day before Halloween, Eric promptly headed back to the Hamptons.

East Hampton was essentially a vacation town. After the summer and fall seasons, most people returned to their residences in Manhattan, and women and children moved back to the populous Southampton just before Halloween. Although the estates here were much smaller than those in East Hampton, there were many full-time neighbors, and holiday festivities would be quite lively.

As he drove into his estate, Eric got out and walked into the villa. The twins, sitting on the living room couch watching TV, got up to greet him; it seemed Drew had come to New York as well. MGM's stock was set to be reissued on December 9, so MGM President Frank Mancuso had been staying in New York during this period, and Drew had come today not only for Halloween but likely also to discuss this matter.

With the twins helping him take off his coat, Eric looked at the two girls and asked, "Why is it so quiet? Where's Drew? Are there any others?"

"The boss and Ms. Pacula went shopping, and Ms. Madsen is upstairs with the kids," they replied.

"Oh well, you all keep watching TV," Eric said, switching shoes as he headed upstairs.

On the second floor, the door of a sunlit lounge room was ajar. Eric walked in to see Virginia facing away from him, seemingly engrossed in a book, surrounded by three little ones.

He smiled and approached, giving Virginia a quick kiss, eliciting a light gasp from her.

"Oh, you scared me," Virginia said, playfully hitting Eric and laughing.

Eric leaned over the armrest of the couch to see what book Virginia was reading. "What are you reading?"

Virginia gesture to the cover, revealing it was yet another volume of the Encyclopedia Britannica.

Shaking his head, Eric looked at the three kids. Hawaii, sitting closest to Virginia, had bright, sparkling eyes, as if she eagerly awaited Virginia to continue reading. The other two looked rather wilted, with Emma casting a desperate glance at Eric, her large eyes glistening with tears, as if she was on the verge of crying.

"Do you not want to listen? Come on, Daddy will take you to play," Eric said, stretching his hands towards the kids. While Hawaii remained still, Emma and Kevin cheered and rushed over.

Virginia was not having it, holding Eric back. "Hey, you can take Emma to play, but Kevin stays with me! I've only read three pages!"

Eric felt a little helpless. "Do you think my son can understand?"

Virginia still wouldn't let go. "But Elia can read on her own; Kevin can't fall too far behind."

"Don't fuss over the kid. A little two-year-old doesn't understand anything; you aren't expecting Kevin to ace Harvard by three, are you?"

"But Elia can read already," Virginia muttered again, her eyes suddenly expressing some grievance as she glared at Eric. "You play favorites; Elia is so smart."

Eric sighed, feeling exasperated. "Now, that's just unreasonable! How am I supposed to control that?"

"Anyway, you're being biased!" Virginia protested more plaintively, tossing the Encyclopedia Britannica at Eric's feet and turning away from him, curling up on the couch.

*****

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