Chapter 233: ABC's Rebound

In a private airport south of Chicago.

After the Falcon, a corporate jet of Daenerys Entertainment, landed, Robert Ager and Ella Deutschman warmly saw off a couple they had just flown in. The company's team assisting John Hughes in filming "Uncle Buck" even sent a car to pick up the couple, showing great attention to detail.

Once the couple left, Ager and Deutschman re-boarded the plane, and the Falcon took off again, heading east.

Inside the cabin, once the plane stabilized, Deutschman pulled out a thick Oscar jury member list from her briefcase. She found a name, marked a few comments next to it, and closed the directory.

It was Monday, January 23rd.

Over the past weekend, Deutschman had not only secured the adaptation rights to six stage plays but had also hosted hospitality receptions for three consecutive days starting from Friday, aimed at awards season public relations.

After the couple they had just flown had expressed a desire to return to Chicago on Saturday, Deutschman quickly offered them a ride on the company's private jet. Such small favors didn't cost much but left a deep impression on the couple.

This year's Oscar nominations hadn't been announced yet, but Daenerys Entertainment's PR offensive had already begun.

With Robert Lem busy expanding Daenerys Entertainment's international distribution channels and the nature of Gaomon Pictures relying on various film awards for survival, Simon had assigned the task of awards season public relations for last year's films to Deutschman.

After failing to secure "Sex, Lies, and Videotape," Deutschman realized that her strategy of buying completed films for distribution wouldn't be easy. Adjusting her plan, this awards season's PR success became key to her gaining Simon's approval during her trial year.

During her last trip to the UK and this trip to New York, Deutschman tirelessly visited contacts related to awards, while remotely managing the professional PR and awards marketing teams hired by the company, leaving no stone unturned.

With the Golden Globes, a bellwether for the Oscars, taking place this Saturday, the related PR work had ended. Deutschman's next focus was the Oscars.

"Rain Man," given its current reputation, would normally be a big winner this awards season. However, Simon didn't want "Rain Man"'s director, Barry Levinson, and lead actor, Dustin Hoffman, to win awards. He aimed to ensure Best Picture while hoping "Dead Poets Society" would win Best Director. This was the biggest challenge of this year's PR campaign.

Ager and Deutschman both strongly agreed with Simon's proposed mechanism of cooperative synergy and were committed to it, leading to a very good working relationship. Two of the three weekend receptions were held at Ager's home.

As they discussed work, the Falcon landed again after more than two hours. This time, the destination was Salt Lake City, Utah, not Los Angeles.

The 5th Sundance Film Festival had already started the previous Friday. Despite knowing that any film Daenerys Entertainment showed interest in might be snapped up by other studios, Deutschman still planned to see if there were any outstanding films or promising new filmmakers at the festival.

Additionally, the festival was likely to have Oscar jurors whom they could personally connect with.

Simon's instruction to Deutschman was to proceed cautiously.

With over 3,000 Oscar jurors, building connections with each one, one at a time, would eventually cover them all.

In the original timeline, the Weinstein brothers' dominance at the Oscars wasn't because they personally lobbied each juror every year. It was mainly due to years of gradually built solid connections and profound influence.

The Falcon finally arrived at Santa Monica Airport in Los Angeles around 11:30.

Ager sent two accompanying staff to Burbank and went to the Daenerys Entertainment headquarters himself, where Amy's assistant, Vanessa, was waiting for him.

After a brief greeting, Vanessa said, "Please come with me, Mr. Ager. Ms. Pascal is in a meeting, but she said you could go directly to the meeting room."

Ager, somewhat puzzled, followed Vanessa to a small conference room in the office building.

Entering the room, Nancy Brill, who was presenting in front of a projection screen, paused her presentation to greet Ager, "Good morning, Bob."

"Good morning," Ager nodded to Nancy, shook hands with Amy, and sat down beside her. He then said to Nancy, "Sorry to interrupt, Nancy, please continue."

Vanessa handed a document to Ager, and Nancy resumed, "Two years ago, Blockbuster won a lawsuit against Nintendo for game rental rights, obtaining the right to sell and rent game cartridges. After 'Teenage Mutant Ninja Turtles' development is completed, we can use Blockbuster's channels for distribution, taking control of both the domestic channel and marketing."

Ager listened to Nancy while quickly flipping through the document Vanessa handed him.

It was a development plan for a 'Teenage Mutant Ninja Turtles' video game for the Nintendo FC platform. The plan reminded Ager of Atari's collapse a few years ago.

Atari, originally a Warner Bros subsidiary, was a game console and software development company.

In 1977, Atari's 2600 console quickly became popular in the United States, reaching a peak where one in every three American households owned an Atari console.

However, following the success of Atari 2600, Warner started to exploit the platform for profits unrestrainedly, allowing a flood of developers to create numerous low-quality games.

The market was saturated with subpar games, gradually exhausting consumers' patience.

Finally, Warner's hastily developed 'E.T. the Extra-Terrestrial' game in 1982 became the catalyst for a massive crash. The game's abysmal quality, including basic bugs not even found in the worst games, led to only 1.5 million of the 4 million produced cartridges being sold, with the rest destroyed.

But the worst was yet to come. Consumers completely abandoned Atari.

Atari's console and software sales plummeted in subsequent years. The early 1980s North American gaming market, once worth over $3 billion, shrank to just $100 million by 1985.

Some analysts believed the North American video game market would need at least 20 years to recover.

However, following this brief 'Ice Age,' Nintendo, learning from Atari's collapse, gradually filled the void in the North American market with strict quality control measures like the royalty system.

In recent years, the North American video game market had begun to recover, sadly becoming a domain dominated by Japanese companies.

Nancy finished her presentation and discussed with Amy for a few moments, then humbly sought Ager's opinion.

Ager, pondering the 28-page plan with a total budget of just $2 million, asked, "Nancy, buying the rights to 'Teenage Mutant Ninja Turtles' requires $200,000, but you plan to spend only $500,000 on the game's development. Can quality be assured?"

The total budget of $2 million included $200,000 for the game's development rights, $500,000 for production, $300,000 for maintaining the game company's operations, and the remaining $1 million for production and marketing expenses post-development.

Nancy confidently nodded, "The main expenditure in game development is labor. As it's our first venture into this field, I only plan to establish a studio of about 10 people. The $500,000 budget is sufficient."

Ager then inquired, "Marvel's 'Spider-Man' and 'Fantastic Four' are also very suitable for game adaptations, and their fame exceeds 'Teenage Mutant Ninja Turtles.' Why choose the latter?"

Nancy shook her head, "I tried discussing this with Simon, but he refused."

Ager, puzzled, asked, "Hmm?"

Nancy, somewhat helplessly, said, "Simon seems to value Marvel highly and gave me no room for negotiation. I also discussed 'The Lord of the Rings' with him and was rejected. Even 'Run Lola Run,' whose merchandising rights he's already sold off. Luckily, the company recently greenlit a live-action 'Teenage Mutant Ninja Turtles' movie. After researching, I found its character design highly suitable for a side-scrolling fighting game. Phantom Studio had not yet sold the game development rights, so I bought them."

Not being familiar with the gaming industry, Ager didn't hastily offer any suggestions, considering that Nancy had already addressed the issues he could think of.

After some more discussion, it was already noon, so they headed to a nearby restaurant for lunch.

Recently having completed an investment in Blockbuster, Nancy quickly presented another plan, bringing considerable pressure to Amy.

Amy had considered venturing into game development but lacked the time to push it forward.

Now, with Nancy's proposal and the subsequent establishment of the game studio, which would be under the Consumer Products division rather than a direct subsidiary like Daenerys Effects or Pixar Animation, Nancy stood to gain the most credit in case of success. Even if it failed, a $2 million loss was insignificant for Daenerys Entertainment at this point.

Thus, during lunch, although Amy tried not to show it, she inevitably felt closer to Ager.

Ager's mild personality was far from Nancy's energetic and aggressive demeanor.

Of course, Amy couldn't know Simon's expectations for Ager.

Nancy's Consumer Products division, even with several years of growth, couldn't compare to the Television division in terms of revenue scale. Moreover, being in Los Angeles, it was always under the parent company's control, whereas Ager, leading the Television division on the East Coast, was practically a high-ranking official in his own right.

After some casual conversation, they quickly turned to work matters, despite being at lunch.

With the spring TV season approaching, Ager was starting his weekly trips to Los Angeles. Besides preparing several TV shows, he had something even more important to discuss.

"Regarding 'Who Wants to Be a Millionaire,' Tom had a detailed talk with me over lunch yesterday. He said if we aren't willing to make concessions, ABC would have to reduce the number of episodes ordered for the second season and adjust the airing slot," Ager explained, noticing Nancy's confused look. "Tom Murphy, the chairman of ABC."

Nancy nodded, not interrupting.

Amy asked, "What are the conditions?"

Ager replied, "Halving the price per episode, and ABC also wants to share in the profits from in-show advertising."

Amy frowned, "Simon probably won't agree to that."

Seeing Nancy's curiosity, Ager elaborated, "The profit from 'Who Wants to Be a Millionaire' for us is about $180 million. Considering the whole first season, it's roughly $250 million."

Nancy's eyes widened in surprise, and she took a deep breath, struggling to believe, "How is that possible?"

Ager explained with a smile, enjoying the moment of surprise, "Compared to TV series with only about 13 or 26 episodes per season, 'Who Wants to Be a Millionaire' had 69 episodes in its first season, with each episode priced at $2 million. For the first season, ABC had already paid us $83 million after the winter break, plus an additional $30 million for 15 extra episodes before the season, bringing the total revenue from this part alone to $110 million. Additionally, in-show advertising brought in $56 million, with syndication and international licensing revenues around $27 million."

Nancy quickly calculated, "Total revenue of $196 million, net profit of $180 million. It makes sense. No wonder our boss spends so lavishly while his companies' finances are always stable. He's really good at making money."

But as she delved deeper into thought, Nancy spotted a problem.

From what she knew, NBC had the best operating performance among the four major networks.

The fiscal year for the networks typically starts in the last quarter of each year.

According to General Electric's public financial data, impacted by last year's writers' strike, NBC's 1987-1988 fiscal year total revenue was $3.3 billion, but net profit was only $310 million, a significant decline from the previous year's $380 million, with a profit margin of less than 10%.

Carefully considering, Nancy confirmed that 'Who Wants to Be a Millionaire' bringing in $250 million in net profit for Daenerys Entertainment in one season seemed reasonable.

TV networks operate seven days a week, with about 20 to 30 prime time shows.

Like Hollywood film studios, only a few of these shows turn a profit or break even, with most just covering costs. Combined with the huge operational costs of a national TV network, earning $310 million a year like NBC is impressive.

In contrast, 'Who Wants to Be a Millionaire' occupied the most prime slot, three nights a week for an hour each. Due to phenomenal viewership, its advertising revenue matched that of the most profitable blockbuster films of production studios.

Compared to ABC's comprehensive investment in operating a national network, Daenerys Entertainment only had to cover around $20 million in production costs and initial marketing expenses.

Thus, for Daenerys Entertainment, the first season of 'Who Wants to Be a Millionaire' brought in about $280 million in total revenue, less than 10% of a network's annual revenue. But like a blockbuster low-cost, high-box office film, the profit margin for Daenerys Entertainment was close to 90%.

Owning the best resources and reaping the richest profits without sharing ABC's enormous operational costs and loss-bearing projects, Daenerys Entertainment naturally made money hand over fist.

Realizing this, Nancy quickly asked Ager, "Bob, how much does ABC make from this project?"

Ager thought for a moment, "Just from this show, about $80 million."

Upon hearing this, Nancy glanced between Amy and Ager, making a quirky, silent grimace.

Amy and Ager also exchanged glances.

Daenerys Entertainment earning a whopping $250 million, while platform owner ABC, supposedly in a strong position, only made $80 million in profits, less than a third of Daenerys Entertainment's share. It's no wonder anyone would be upset.

Tom Murphy being patient enough to negotiate with Daenerys Entertainment was mainly because ABC couldn't afford to lose 'Who Wants to Be a Millionaire.'

Despite average viewership figures being firmly suppressed by 'Survivor,' compared to 'Survivor's' 13 episodes per season, 'Who Wants to Be a Millionaire' aired three times a week.

Thanks to the high viewership of 'Who Wants to Be a Millionaire,' ABC, originally only slightly better than the emerging FOX among the four major networks, had shown a potential to surpass NBC after last autumn's season.

In such a favorable situation, ABC wouldn't dare abandon 'Who Wants to Be a Millionaire' recklessly.

But at the same time, if Daenerys Entertainment wasn't willing to compromise and the imbalance in profit distribution continued, ABC's management, if slightly visionary, would definitely try to reduce dependence on 'Who Wants to Be a Millionaire' at all costs.

After a moment of silence, Amy finally said, "We'll have to let Simon decide on this matter. Bob, continue your discussions with ABC, then write a report and send it to Melbourne."

Ager nodded, understanding the gravity of the situation; for now, this was the only way.

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