Chapter 683: I'm a Capitalist After All

[Chapter 683: I'm a Capitalist After All]

After a morning packed with meetings and a lunch with Katzenberg, during which they discussed various trivialities, it wasn't until the afternoon that Eric found time to look into the mobile communication license auction he had stumbled upon the previous day.

Every country had regulations governing radio broadcasting. Whether it was television broadcasting or mobile communication, they relied on radio wave transmission. Just as different TV stations operated on different radio frequencies, various telecom operators were also restricted to certain frequency bands. The permits that American TV stations or telecom operators obtained from the FCC (Federal Communications Commission) to conduct business within specified frequency bands were known as "licenses."

In Eric's office at Firefly's headquarters, he observed Kelly sitting across the desk, quietly explaining, "In the 1980s, mobile communication frequencies were applied for by operators to the FCC and allocated accordingly. However, in recent years, the mobile communication industry had rapidly ascended with the support of digital technology, which left most operators lacking the frequency resources they initially acquired from the FCC. As the number of license applications skyrocketed, the Clinton administration recognized a golden opportunity for generating revenue and divided the spectrum resources needed by telecom operators into three segments: A, B, and C licenses for auction. What you saw yesterday was the auction for A and B licenses, primarily aimed at traditional telecom operators. The auction for these two segments generated $3.75 billion for the Treasury."

Eric raised his head and asked, "What about the C segment?"

Kelly replied, "According to the Clinton administration's plans, the C segment licenses are mainly intended for emerging telecom operators, to support small to medium-sized enterprises at the start-up phase. However, this auction is scheduled for three months from now."

Eric mused for a moment, grasping the situation with a wry smile; currently, the American mobile communication industry was at a critical juncture, transitioning from analog to digital signals. Traditional telecom operators already held substantial advantages, and gaining the licenses alongside a three-month head start widened the gap further. Eric imagined that even if the new telecom operators received the C segment licenses, their fate would likely involve being swallowed up by the established giants.

Noticing the expression on Eric's face, Kelly guessed his thoughts and smiled, adding, "You've probably figured out that the FCC is influenced by the likes of AT&T and Sprint. But there's something even more outrageous coming!"

Perplexed, Eric asked, "What?"

Kelly rummaged through the thick folder on the desk and found a document, handing it to Eric. "Here, take a look. This is the FCC's detailed bid invitation for the spectrum license auction. Flip to page 12; I marked it with a red line."

Eric turned to the mentioned page and noticed a highlighted passage: "The C segment licenses will be auctioned separately to give minority groups, women, rural operators, and small businesses more opportunities for a fair competitive environment."

He read it several times, finding nothing amiss. Curious, he looked up and asked, "What's wrong with this statement?"

With a chuckle, Kelly said, "You wouldn't believe it. Right after the auction concluded yesterday, several small businesses that submitted bids for the C segment licenses simultaneously filed a lawsuit in federal court, claiming that the FCC's description related to race and gender in the bid document violated the equal protection clause of the U.S. Constitution and suspected discrimination, demanding that the FCC revise it and apologize for the offending language."

Eric was genuinely taken aback. "Is it really possible to play this game?"

Since someone had initiated a lawsuit on this matter, it certainly wouldn't be as simple as FCC merely revising the bid document. They would definitely need to gather lawyers and study the Constitution to determine if the statement was genuinely unconstitutional. The Constitution was quite extensive; combing through it could easily take a month or two -- that was the so-called evidence-gathering stage. Once evidence was collected, both sides would have to engage in a verbal battle in court. Even if a local court finally issued a ruling, if one party refused to accept it, the appeals would drag on indefinitely.

With all this fuss, by the time the lawsuit concluded, it would surely be half a year later.

The C segment auction was already scheduled three months after A and B, and with this lawsuit popping up, it seemed that any emerging telecom operators hoping to obtain C licenses wouldn't expect to do so until next year.

[A/N: The C segment license in the U.S. ended up being auctioned off a year and a half later, and nothing came of it.]

"Alright, let's not dwell on this," Eric set the bid document aside, gesturing around the not particularly lavish but still elegant office and smiled, "I think we're a bit out of our depth discussing these issues when I'm a capitalist now -- the unscrupulous kind."

Kelly laughed at Eric's words, acknowledging the truth in them. This issue merely stirred some discomfort due to happening in an industry that held little relevance for them. But if similar events occurred in Hollywood, the Big Seven would certainly band together without hesitation to nip any threats to their dominance in the bud.

"So, Eric, are you considering venturing into mobile communication?"

Having seen the news about the mobile operation license auction yesterday, Eric was indeed intrigued. It was the dawn of a mobile communication boom, and investing in telecom could undoubtedly yield significant returns. However, the complications behind the C segment auction made him hesitant to jump in without clear insights.

Shaking his head in disappointment, Eric stroked the folder in front of him, "Not for now. By the way, Kelly, have you had any contact with Qualcomm?"

"Oh, I was just going to mention that," Kelly pulled out her notepad, flipping through a few pages before handing Eric a note. "Qualcomm's CEO, Irwin Jacobs, is very interested in our discussions, but he's been in South Korea. He won't be back until next week. He called me saying he would fly directly to Los Angeles to talk with you in person. Here's his contact number at his residence in Korea -- he said you could call him anytime."

Eric glanced at the note, smiling, "Qualcomm is so keen. That can't be a good habit. Aren't they worried about walking into a lion's den?"

"Qualcomm is in a tough spot right now. So far, they've only secured the opportunity to build a CDMA network in Korea, but the Korean telecom market is too small to have any significant impact on the global standards. Plus, just a week before the license auction, AT&T announced plans to build a nationwide GSM network. As the leading telecom operator, AT&T's technology standard would surely influence a host of followers. GSM is far more mature than CDMA, and if most operators shift to GSM, Qualcomm might face bankruptcy," Kelly paused to gather her thoughts, "Firefly is about to exceed 1 million shares of Qualcomm stock. If we continue, Eric, once Qualcomm goes under, those shares would be worthless."

Having first gone public in 1992 with 6 million shares at about 30% of total stock, Qualcomm lagged in recent years due to the rise of GSM and hadn't attempted any further financing.

Currently, Qualcomm's stock was hovering around $17, with a market cap of just $340 million.

Truth be told, if Eric could buy up Qualcomm entirely, he wouldn't hesitate for a moment. After all, the revenue from just the Victoria's Secret Fashion Show tapes had already netted him over $300 million. And since Firefly Group had no large-scale expansion plans in sight, they boasted unparalleled profitability in Hollywood. However, they were faced with the fortunate dilemma of having too much money.

"1 million shares are just $17 million," Eric told Kelly. "I plan to acquire at least 3 million shares. That would only cost $50 million, which is like the investment in a mid-budget film. Even if I lost it all, it wouldn't matter."

"Yeah, for you, it really seems like it wouldn't matter," Kelly realized she might have been overreacting. For Eric's current net worth, $50 million was indeed not substantial.

As they discussed, Eric's mobile phone on the desk rang.

After answering, Elisabeth's voice came through from the other end.

After a brief exchange, he hung up.

Kelly picked up on some cues from their chat and asked, "Ms. Murdoch?"

"Yeah, regarding the Golden Globe and Oscars, Saving Private Ryan and Braveheart are clashing, Liz is asking to discuss the PR strategies for both films' awards."

As Eric stood up, Kelly helpfully fetched his coat. He slipped it on and, watching Kelly tie up the buttons on his jacket with her gentle expression, he felt an odd sensation, like a wife sending her husband off to meet another woman. He instinctively wrapped his arm around her waist, laughing, "Strange, suddenly I feel a bit guilty."

Kelly smiled sweetly, not pausing her movement, and added with a hint of flirty emotion, "That's the idea -- I want you to feel guilty."

"Uh, that trick is for you to use. Please, don't let it out."

"Will it be troublesome if it does get out?"

Eric nodded vigorously, "Very troublesome."

...

After the hectic New Year period, the most significant concern for Hollywood was undoubtedly dealing with the upcoming awards season.

Unlike last year's subdued Oscar roll, this year the awards season presented a remarkable showdown between Saving Private Ryan and Braveheart.

Although the Oscar nominations hadn't been announced yet, both films coincidentally received nominations for Best Picture, Best Director, Best Actor, Best Screenplay, and Best Original Score at the Golden Globe Awards. Mel Gibson's performance could only be considered mediocre; Eric recalled he hadn't received any Best Actor nominations in the original timeline, so adding one at the Golden Globes this time should be credited to Weinstein's PR efforts.

Over a year ago, Eric and Elisabeth had discussed the award strategies for these two films. However, plans often couldn't keep pace with changes, and many matters needed adjustment according to the current situation.

Thanks to Miramax's adept handling, Braveheart had performed far better at the box office compared to its original version, which won awards but flopped.

Braveheart began a limited release in early December of last year, slowly building its reputation and box office. During the Christmas season, Miramax expanded its release to 2,000 theaters, leveraging the promotional boost from the Golden Globe nominations and its accumulated word-of-mouth to earn over $26 million that week. Now, just into the first week of the New Year, Braveheart's total box office was nearing $60 million. With the fervent discussions in the awards season keeping it in the spotlight, while many other films saw significant dips in box office returns, Braveheart's weekly earnings held steady with a marginal decline of around 20%. If this trend continued until the Oscars, Braveheart's final gross was conservatively estimated at around $120 million, and with an Oscar win, it could recover its costs through overseas sales alone.

After leaving Firefly headquarters, Eric arrived at an outdoor restaurant in Beverly Hills, a popular hangout for Hollywood celebrities, following Elisabeth's directions. Even though it was a weekday afternoon, the restaurant was bustling with guests casually sipping coffee and chatting, many of whom were familiar faces. As the waiter led Eric inside, several patrons stood up to greet him.

After some casual exchanges, Eric joined Elisabeth and Harvey Weinstein at a table on the restaurant terrace.

He sat down, casually ordered a coffee, and gazed at the lush sloped landscape outside the railing, the sprawling Beverly Hills mansions scattered throughout his view, and the distant expanse of downtown Los Angeles, nodding, "The scenery here is quite nice; no wonder so many people come."

Harvey Weinstein grinned broadly, saying, "Eric, if you like it, you should come here more often. The owner of this restaurant is my friend, and I'll have him comp your meals."

Eric gestured toward the guests who kept glancing their way and joked, "Comping my meals won't be enough. If I come here often, your friend might want to pay me an advertising fee or something."

Elisabeth and Harvey laughed. If Eric did frequent the place, the number of patrons attempting to ingratiate themselves with him would undoubtedly multiply, making it far more effective than any advertisement.

After a casual chat, the conversation gradually shifted towards the awards season.

*****

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