Capítulo 353: Chapter 353: The Cunning Mastermind
No movie is completely devoid of merit.
Moreover, since the original "Sleeping with the Enemy" managed to earn over $100 million at the North American box office, there certainly were elements in the film that sparked audience interest.
Following the joint public relations efforts by Daenerys and Fox, when the movie was released on June 15, the mainstream media's reviews were generally positive. They either favored the performance of the new lead, Michelle Pfeiffer, praised the film's cinematography and soundtrack, or delved into its deeper exploration and critique of domestic violence.
Overall, the coverage was predominantly positive.
When the aggregated media scores were released, "Sleeping with the Enemy" scored 6.7, surpassing the concurrent "Ultimate Detective" at 6.4, and was significantly higher than the pre-release team's estimated score of below 5 based on preview feedback.
Moreover, "Sleeping with the Enemy" being the first of ten films in Daenerys Entertainment's external collaboration, had a solid fanbase even before filming began. Ultimately, on its opening weekend over three days on 1,719 screens, it garnered $18.86 million, making an impressive entry into the box office hits list.
In comparison, Disney's "Ultimate Detective," although earning $22.54 million over three days, was shown on 2,332 screens, making its per theater average lower than "Sleeping with the Enemy."
The $18.86 million over three days was comparable to the $19.76 million in the first seven days of "Ghost."
Assuming that weekend sales typically account for 60% to 70% of the week's total, the first week's revenue for "Sleeping with the Enemy" was expected to reach between $27 million to $30 million. Even if it couldn't replicate the long-term success of "Ghost" due to reviews, themes, and audience reasons, as long as the drop in the following week did not exceed 30%, the North American box office reaching $100 million seemed quite feasible.
Moreover, even if it didn't reach $100 million, compared to the total production cost of $15 million and the marketing budget of $7 million for "Sleeping with the Enemy," and considering Fox only held a half stake, factoring in a 10% distribution commission, the return on investment for this movie was likely to easily surpass the scheduled June 29 release of "Die Hard 2."
Unlike "Sleeping with the Enemy," which had a combined production and marketing expenditure of $22 million, "Die Hard 2," starring Bruce Willis, had a production cost alone of $70 million. Coupled with substantial domestic and international marketing budgets, the film needed to triple its production costs globally, or about $210 million, just to break even.
Simon remembered that the global box office for "Die Hard 2" was roughly around $200 million.
A new week began, and for a cameo in Madonna's concert on Saturday, Simon flew to the East Coast on Monday, June 18.
Originally planning to take a year off for relaxation last year, Simon, always swamped with work, decided to treat this cameo as a break. After this, he would fly to Melbourne to personally follow up on the filming of "Batman: The Dark Knight."
During this period, Simon maintained close communication with Madonna's team.
Madonna had sold the live broadcast rights for $6 million, equivalent to five times the revenue from ticket sales at each concert at the Brenda Barry Stadium, and accounting for 10% of the total ticket sales from this tour round. To achieve the best stage effect and ensure all partners felt their investment was worthwhile, after persistent negotiations, Daenerys Entertainment was granted two free movie cameo opportunities. Additionally, Simon provided two new songs for Madonna.
Of course, they were still her own songs.
Had Simon not agreed, acquiring these songs from him would have been impossible.
However, as Madonna's career was not very long, and suitable live guitar performance songs were scarce, Simon, although treating this cameo as a rest, did not want to perform in a mediocre manner, hence he agreed.
Simon didn't mention a fee for this cameo, but with two new songs involved, including the one Madonna planned to hold until her next album's lead single "Bad Romance," the necessary royalties were still accounted for. Of course, Simon didn't need to handle these personally.
After finishing her tour in Toronto on June 17, Madonna would have normally moved on to New York, requiring only routine rehearsals for familiar sets. However, due to Simon's participation, besides the concert on the 20th, daytime that week was fully scheduled for rehearsal to integrate the three songs Simon was involved in.
Considering that a single concert's direct broadcast revenue was equivalent to one-tenth of her entire tour's box office, Madonna was exceptionally motivated.
In the midst of busyness, time quickly moved to Friday again.
The full week's box
office data from June 15 to June 21 was officially released.
Disney's "Ultimate Detective" ultimately claimed the top spot with $34.74 million.
Following closely, "Sleeping with the Enemy," which also opened that week, reported a seven-day box office of $27.62 million, ranking second—clearly exceeding the initial expectations of the distribution team. With this performance, the film was expected to recoup its total production and distribution costs from the North American domestic box office the following week, and then it would be pure profit.
While none of Daenerys Entertainment's related summer films had yet won a weekly box office championship, the third-placed "Ghost," even more attention-grabbing than the second-placed "Sleeping with the Enemy," had its third week of screenings significantly increased. With a mere 12% drop from the previous week, it garnered an additional $18.01 million in a single week. In three weeks, this fantasy romance, which had an unexpectedly slow start, had already amassed $58.33 million in ticket sales.
Daenerys Entertainment was now beginning to generate profits.
Moreover, the nearly flat box office trajectory over three weeks suggested that "Ghost" might not just stop around $100 million. The industry widely predicted that its North American box office would at least reach the levels of "Pretty Woman."
Initially, Hollywood thought Daenerys Entertainment's strength lay solely in thriller and horror films, with recent years' "Final Destination," "The Butterfly Effect," and the "Scream" series being particularly famous. However, looking back, it became apparent that Daenerys Entertainment had inadvertently created three classic love stories worthy of Hollywood history: "When Harry Met Sally," "Pretty Woman," and "Ghost."
The success of "Batman: Battle Time" at the end of last year further proved Simon Westeros's immense potential in superhero action movies.
Including high-grossing art films produced by Highgate Pictures, it was clear that Daenerys Entertainment had no real weaknesses.
Starting off by suppressing "Ghost," "Total Recall," in its third week of release, had a noticeably narrowed box office drop of 26% from the previous week's 41%, slipping to fourth place with only $15.74 million that week and a cumulative box office of $72.14 million.
Based on this trend, "Total Recall's" North American total was estimated at only around $120 million.
The fifth-ranked, Warner Brothers-produced crime thriller starring Harrison Ford, "Presumed Innocent," also presented an unexpected box office trajectory. Starting off modestly, its second week saw a slight 13% drop, earning an additional $10.17 million, with total earnings potentially reaching over $50 million.
Moreover, the coming week would see two new films in North American theaters: Eddie Murphy's "Another 48 Hrs" and Steven Spielberg's fantasy horror comedy "Gremlins 2," produced under his banner.
Inside an apartment at the corner of East 68th Street on Manhattan's Fifth Avenue.
Simon and Janet were having breakfast in the dining room, casually browsing the past week's box office data.
With the summer releases of "Ghost" and "Sleeping with the Enemy" essentially settled, and relying on the box office performance of these two films to close out the season, Simon wasn't too concerned about the upcoming July 6 release of "Teenage Mutant Ninja Turtles," the July 27 release of "The Hand that Rocks the Cradle," and the August 10 release of "Poltergeist III."
After setting aside the box office report, Janet mentioned, "That mattress company called Simmons, we've pretty much finalized the deal. Do you want to check it out this morning?"
Simon was interested in Simmons because the mattress company was so well-known across the ocean—it was practically synonymous with mattresses.
However, from the information he had previously reviewed, this long-standing brand had been struggling in recent years. Before Simon took notice, Simmons had already been sold twice, in 1986 and 1988.
The first time was to a private equity firm in 1986 for $124 million. After two years of operation, Simmons managed to escape its previous troubles, maintaining a thriving state even after the stock market crash of 1987.
Thinking they had played a crucial role in this turnaround, the Simmons management team proposed a management buyout to the private equity firm in 1988. The firm didn't insist on keeping its stake, opting to cash out and ultimately walked away with $240 million.
Simmons then became an employee-owned company.
However, clearly overestimating their capabilities, coupled with the high debts incurred during the management buyout process and untimely internal benefit distribution reforms, Simmons's condition rapidly declined in the past two years, mirroring the troubles faced by the tobacco industry giant Reynolds Nabisco at the time.
Hearing Janet bring up this matter, Simon asked, "What's the price tag?"
"$96 million for 100% equity," Janet said.
"However, after the acquisition, we'll also assume $136 million in debt."
The debt, over $100 million, was obviously a remnant from the previous management buyout.
Simon thought for a moment, then asked, "It's not just Apollo Management putting up the funds, right?"
Janet shook her head. "Of course not. We've pulled in two other private equity funds to collaborate. We're contributing $36 million for a 37.5% stake, and we'll have control over Simmons's future operations."
Simon nodded in approval.
A $96 million investment, even considering the $136 million in debt, was manageable for Apollo Management, which had $500 million in cash on hand. However, this did not align with the investment style of private equity funds. Allocating all funds to a single project not only increased the risk but also hindered the fund's ability to exit and cash out at the right moment.
Taking on only a part of the investment while still gaining control over the acquired company was, in Simon's view, the best investment approach.
Thinking further, Simon said, "After the junk bond market collapse, the method used by Drexel Burnham, KKR, Carl Icahn, and Ronald Perelman—using high leverage to swallow companies and quickly cash out through asset sales—is no longer applicable. Moving forward, private equity should focus on improving the operational conditions of the companies they acquire. Maybe, while merging businesses, Cersei Capital could also develop a team of specialized professional managers."
Janet nodded seriously, replying, "I'll discuss it with them this morning."
Simon, seeing how promptly Janet agreed, added, "Of course, I might not be right, you're the experts."
Janet leaned closer to Simon, saying, "Even if you're wrong, I'll listen to you."
Simon playfully dodged, laughing, "Don't do that, it's too easy to make a man conceited."
Janet's eyes twinkled as she glanced down towards Simon: "Are you getting conceited? Do you need help with that?"
Simon tapped her forehead lightly with his hand.
After some light teasing, Janet continued in a soft voice, "I've already had them start establishing long positions in crude oil futures. If your prediction goes wrong this time, we're going to take a big hit."
Although Saddam had threatened to go to war to protect Iraq's oil interests, there were no immediate signs of conflict in the Middle East, and most people doubted Saddam would actually start another war.
Recently, the price of crude oil fluctuated between $14 and $15 per barrel. Simon knew that the crisis's lowest point was roughly $13.
However, many analytical institutions predicted that due to continued increased production by oil-producing countries like Saudi Arabia and Kuwait, the international price of crude oil might fall to around $10 per barrel.
If the war didn't happen as expected on August 2, and oil prices dropped to $10 a barrel, Cersei Capital's profits from short-selling over the past few months would not only be completely lost, but they might even lose their principal.
This was indeed a significant risk.
Of course, high risk also meant high rewards.
If they didn't bet in advance now, once the situation became clear and everyone rushed to establish long positions seeing the signs of war, by then, there wouldn't be much left for Cersei Capital to profit from.
Thinking over these factors, Simon smiled at Janet and said, "If we lose, we lose. We've been too conspicuous these past few years, I actually wouldn't mind taking a loss somewhere."
Janet smiled back, not saying much more.
After breakfast, Janet hurried to Cersei Capital's headquarters in Midtown, while Simon didn't head to Jersey City. Madonna had just performed a concert last night and was likely still resting in the morning.
Simon's destination was the East Coast branch of Daenerys Entertainment in Greenwich Village.
This morning, there was a new movie project to discuss called "The Cunning Mastermind," adapted from a sketch on "Saturday Night Live," created by the later star of the "Austin Powers" series, Mike Myers.
After guiding New World Cinema's Danny Morris to set the next expansion target in the lowbrow comedy market, Simon quickly discovered this atypical comedy among the projects Morris had scouted, which had broken the $100 million mark in North American box office in the original timeline.
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