Chapter 387: Chapter 388: Trouble
[Chapter 388: Trouble]
In order to invite Eric to the premiere of Hot Shots!, Fox had moved the premiere up to a day before the release of Ghost Detective. However, Eric had no intention of attending the premiere for Ghost Detective. No matter how sincere Fox was, he wouldn't attend the premiere for Hot Shots! either. It was already generous enough for him to let them make publicity on his name indirectly.
As MGM-UA invested heavily in Rocky V, with a production cost of $60 million, it had the most screens of any movie released that year. However, when the weekend box office numbers came in, it surprised many by underperforming.
Despite being the most anticipated film, Rocky V turned out to be the worst performer in the series. The previous sequel had grossed $300 million worldwide, and Rocky V opened in a stunning 2,000 theaters. But over its opening weekend, Rocky V only raked in $14.35 million, averaging less than $7,000 per theater. To compare, the previous sequel, Rocky IV, had achieved an average of $15,000 per theater during the same timeframe.
Not only did the film have a low attendance rate, but it also received extremely poor reviews. Box office tracking agencies had to drastically lower their projections to just $50 million. There was no chance of breaking even, and media outlets predicted that this film could very likely mark the end of the Rocky series.
Ghost Detective, released in over 1,900 theaters, fared just slightly better, earning over $15 million. However, this horror comedy, which imitated Ghostbusters, also failed to garner good reviews.
What really shocked everyone was Hot Shots!, released by Fox. This almost absurd film received a barrage of criticism from critics, with many passionate conservative reviewers claiming it was a desecration of classic cinema. Unexpectedly, this quirky parody attracted a large audience. Over its opening weekend, it grossed $25 million across more than 1,900 theaters, matching its production cost. If the film didn't experience a significant drop in box office numbers afterward, it could become another box-office hit for Fox this year.
As of now, Fox had only seen success with Die Hard 2, which grossed $110 million. However, with a $70 million production budget and nearly $100 million in total marketing costs, Die Hard 2 hadn't made much of a profit despite its international success.
Although Eric had a 30% stake in Hot Shots!, Fox still took the lion's share of the profits. With overseas distribution and subsequent video sales, this parody film was set to easily generate over $100 million in profits. Consequently, after the strong opening weekend, Fox quickly announced plans for a sequel.
...
While Fox celebrated, the mood among Hollywood colleagues was quite mixed. Originally, they believed Ghost Detective's poor performance would be Eric's first major failure. But the unexpected success of Hot Shots! took everyone by surprise.
After further investigation, someone quickly discovered that a significant portion of Ghost Detective's funding came from a company called Good Line Productions. Upon hearing this, many seemed to connect the dots, especially when Eric had suddenly established Black Ant Productions earlier that year. They realized there might be problems within Firefly Films.
...
However, Eric had not taken time to focus on movie matters lately. On the eve of Thanksgiving, after over 600,000 multinational troops were deployed in the Middle East, they issued an ultimatum to Saddam, demanding he withdraw from Iraq by January 15, 1991. Saddam responded dismissively, proclaiming that he would "fight to the end."
This news sent the crude oil futures market into yet another round of volatility. Eric remembered that the Gulf War had erupted just two days after the ultimatum was issued, on January 17. He believed that, even if he was the metaphorical butterfly flapping its wings, the timing would be quite close to that.
To avoid drawing too much attention, Eric chose not to fly to New York this time. Instead, Chris came to Los Angeles. Much like how most thought Iraq would not act against Kuwait, this time the speculators believed the war, when it arrived, would drag on like America's previous two conflicts. If this occurred, crude oil prices would soar again. Following the ultimatum, speculators had begun to build up long positions.
Faced with Eric's unusual bearish outlook, Chris had little doubt this time. However, he noted that the situation was quite different from before August. Prior to then, oil prices had been steadily increasing until Iraq invaded Kuwait, when prices suddenly skyrocketed to $40.
Now, faced with an imminent war, the crude oil futures market would likely become more unpredictable. With two months until the conflict erupted, any announcement from the Western countries or Saddam could lead to a significant rise or fall in oil prices. Using a ten-fold leverage in such a volatile market would be akin to signing one's own death warrant.
After discussions, the two agreed to use $2 billion in funds with a more secure five-times leverage, reserving the rest as margin for guarantees. This approach would minimize risk, although Eric wanted to invest all his funds with higher leverage. Yet, the futures market couldn't accommodate more than $10 billion at five times leverage. If they attempted to invest several billion at such high leverage, they would struggle to find banks willing to issue collateral for hundreds of billions.
...
After two days in Los Angeles, Chris quickly departed, leaving Eric to focus entirely on his most important task. Even during Thanksgiving with Drew, he didn't cease his related preparations.
Although the federal Thanksgiving holiday was only one day, businesses typically closed from Thursday through the following Monday. Firefly Films was certainly no exception, given that Thanksgiving in 1990 fell on November 22.
On November 26, Monday, with the opening of several new films on November 22 and 23, the second weekend saw Rocky V's box office drop a staggering 55%, earning less than 7 million. Ghost Detective also had decline approaching 50%, indicating potential losses for the $40 million investment. In contrast, Hot Shots! managed to maintain its momentum amid the new releases, collecting $16 million in its second weekend. Its total gross had surpassed $47 million.
Coincidentally, this day marked Firefly's year-end meeting. Arriving early at the office, Robert Shea quickly sensed that the atmosphere was a bit off. Initially, he attributed it to the ridicule regarding Ghost Detective's box office flop and even took it out on a staff member.
By 9 AM, the meeting officially began.
*****
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