Capítulo 401: Chapter 401: The Upcoming Birthday
After the US Department of Justice officially approved Daenerys Entertainment's acquisition of MCA, the merger process that had already been underway between the two companies began to accelerate.
In the week following the approval, Daenerys Entertainment continuously announced various news related to corporate finances and personnel, making it hard for many to grasp the implications behind these announcements.
At the press conference held on the day the acquisition was approved, Amy Pascal, CEO of Daenerys Entertainment, announced that the transfer of MCA's shares to its shareholders would be completed by the end of February.
Furthermore, the funds for the acquisition of MCA were to be obtained entirely through loans.
The next day, Daenerys Entertainment announced it would be collaborating with legendary Hollywood director Steven Spielberg on two projects: the dinosaur sci-fi movie "Jurassic Park" and "Schindler's List," which recounts the Holocaust during World War II.
Although Daenerys Entertainment was not a publicly traded company, the announcement of these collaborations made the industry more optimistic about the new Daenerys Entertainment group, now burdened with an additional $7 billion in debt. This optimism was not only due to the collaboration with Steven Spielberg but also because of the implications behind the "Schindler's List" project.
Subsequently, Amy Pascal, whose contract as CEO of Daenerys Entertainment was due to expire in March of this year, announced her renewal.
This influential Hollywood woman, who had assisted Simon Westeros in building the Daenerys Entertainment Group within just a few years, had her contract renewal become a focal point of media attention, sparking various speculations.
After much discussion, the Igneel portal's entertainment news section finally revealed the details of Pascal's new contract. It was a three-year deal with a base salary increased to $750,000 annually, with profit-sharing terms consistent with her 1987 agreement.
Being part of the Westeros system, information from the Igneel portal was essentially an official announcement.
However, interpretations of this contract continued unabated.
Most media had predicted that Pascal's contract term would likely be the typical five-year term common among Hollywood executives, like those of Michael Eisner, Peter Guber, and Sherry Lansing at other major studios.
Thus, the three-year term seemed particularly intriguing.
Industry media did not interpret this as a sign that Pascal might leave Daenerys Entertainment. Otherwise, Westeros wouldn't offer the same 5% net profit share and equity rewards as four years ago, especially since the scale of Daenerys Entertainment had expanded many times over.
Typically, profit-sharing ratios for studio heads in the industry are only around 2%.
Even with significant debt pressures potentially reducing profits in the coming years, a contract amounting to 10% of company net profits was still considered very generous.
Looking back at Pascal's contract term:
Three years.
This likely signaled another milestone.
It is well known that before a company's IPO, executives' contracts need to be renegotiated.
Daenerys Entertainment had just merged with MCA, and starting an IPO immediately would not be prudent. A three-year digestion period seemed just right.
At the same time, several in-depth collaboration agreements between Daenerys Entertainment and Panasonic were reported in the media, which finally revealed why Panasonic had cleanly exited the bidding for MCA.
Among a flurry of news, negative news was inevitable.
Before the acquisition was approved by the Department of Justice, Daenerys Entertainment had just reached a workforce of 3,000 employees. Both companies had similar revenue scales over the past fiscal year, but MCA had over 12,000 employees worldwide.
Westeros Corporation chose not to lay off employees after acquiring Bell Atlantic because the rapid expansion of the telecommunications and internet sectors naturally absorbed the surplus manpower of Bell Atlantic.
Moreover, since Simon was not overly familiar with the telecommunications sector, and because Bell Atlantic did not need to cut staff to resolve debt issues, Simon chose to maintain the status quo.
MCA was different.
Since Daenerys Entertainment and MCA had many overlapping functions, and under the management of the no longer sharp Lou Wasserman, MCA inevitably had the severe staffing redundancy common in large companies.
Thus, layoffs were inevitable.
"The Hollywood Reporter" was the first to expose that Daenerys Entertainment might carry out a massive layoff of up to 3,000 people after the merger.
Employment issues are always a focal point in American society.
For politicians, employment rates are a reflection of their performance. For companies, ensuring employment is also a reflection of corporate image and social responsibility.
Suddenly, the potential loss of 3,000 jobs stirred unrest throughout Hollywood.
The three major unions, which had initially given up on stopping Daenerys Entertainment's acquisition of MCA, were the first to speak out against the potential layoffs, condemning Daenerys Entertainment. North American media and various labor protection organizations in California also began to scrutinize this matter closely.
As the issue escalated, the newly inaugurated governor of California and several state congress members
expressed their concerns.
Faced with public pressure, Daenerys Entertainment quickly clarified after a few days of silence that there was no plan for layoffs as extensive as 3,000 people.
However, due to many redundant positions resulting from the merger, Daenerys Entertainment had to make choices but assured that the layoffs would be strictly limited to fewer than 1,000 people.
Additionally, Daenerys Entertainment promised to create at least 1,000 new jobs within the next three years through business expansion.
Reducing the number of layoffs from the rumored 3,000 to 1,000, while still inevitably criticized, was much more acceptable to the public.
As the merger continued to advance, the Valentine's Day movie season in North America quietly kicked off.
Last year's Valentine's Day brought the box office dark horse "Pretty Woman," and this year, Daenerys Entertainment's releases were similarly under extra media scrutiny.
However, compared to "Pretty Woman," Daenerys Entertainment's Valentine's release this year was much more niche, titled "Wayne's World."
Moreover, the most anticipated movie in North American theaters remained last Christmas's "Home Alone."
As of February 7th, a week before the Valentine's Day season, "Home Alone" in its seventh week of release once again earned $12.93 million at the box office. Over seven weeks, this phenomenal children's comedy had accumulated a total of $191.59 million.
On February 8th, with the start of the Valentine's Day movie season, Daenerys Entertainment's New World Pictures released and distributed "Wayne's World" across 1,739 screens. Also released at the same time were Warner Brothers' high-budget fantasy adventure "The NeverEnding Story II" directed by George Miller, and Columbia Pictures' subsidiary TriStar's romantic movie "LA Story."
"The NeverEnding Story," based on the famous German children's book and first released in 1984, had a substantial budget of $26 million. Although its North American box office was not very successful, only just over $20 million, it recouped around $100 million globally thanks to its impressive special effects.
For "The NeverEnding Story II," Warner Brothers had George Miller direct and invested an even heftier $36 million, making it a strong contender for the box office champion this Valentine's season.
However, the box office performance of several films during this Valentine's season surprised many.
From February 8th to 14th, the first week of the Valentine's season, the top of the weekly box office was not George Miller's "The NeverEnding Story II" nor the very Valentine's-appropriate "LA Story," but rather the niche and nonsensical comedy "Wayne's World."
In its opening week, "Wayne's World," starring "Saturday Night Live" TV star Mike Myers and lacking a coherent main plot, surprisingly pulled in $21.7 million.
Despite Daenerys Entertainment's strong promotional efforts, which led many critics to give the film positive reviews for being fresh and fun, no one expected this unconventional comedy, which seemed to lack selling points, to exceed $20 million in its first week.
Inside Daenerys Entertainment, although many knew that Simon personally selected this project, even Danny Morris, the president of New World Pictures who managed the production of "Wayne's World," believed before the release that if the movie could reach $50 million in North American box office, it would be miraculous. The project managers even made a small wager on this.
Consequently, Danny Morris ended up the loser but was pleased to be so.
The surprising $21.7 million in its first week, coupled with the film's media reputation and decent buzz, meant that "Wayne's World" had the potential to achieve a remarkable long-term box office run.
$50 million in domestic box office might just be a baseline.
However, because the movie involved many jokes that only Americans could understand, the distribution team had modest expectations for its overseas box office.
Following "Wayne's World," the second place in the weekly box office was not one of the new releases but still "Home Alone."
In its eighth week, "Home Alone" lost the top spot for the first time, but its box office decline was still very respectable at 21%, bringing in an additional $10.22 million.
Simultaneously, the film's North American domestic total also officially surpassed the $200 million mark, reaching $201.81 million.
Given "Home Alone's" phenomenal box office momentum, the film's total screen life could typically reach about 25 weeks.
Predictably, after eight weeks in theaters, "Home Alone" could remain in North American cinemas for another four months.
Although starting next week, "Home Alone's" weekly box office would drop below $10 million, the subsequent four months of screening, including the equally family-friendly Easter season, would not make accumulating an additional $80 million difficult, ultimately reaching the $280 million mark seen in the original timeline.
A production
budget of $18 million, yet pulling in $280 million just in North America, highlighted a return on investment that left all of Hollywood envious.
Due to these recent events, and with a certain date approaching, Simon, who had been trying to reduce his personal exposure, once again unavoidably became the focus of media attention.
February 22nd.
Simon Westeros' 23rd birthday.
Although there was media speculation that the Westeros system's tens of billions of dollars in debt might undermine Westeros' personal fortune, in reality, a month into the Gulf War, with the multi-national forces achieving victory after victory, the US stock market, as a leader in the war, quickly rebounded from the war's shadows.
In just one month, the Dow Jones index rose 23% from its pre-war level, with the S&P 500 index rebounding by 25%.
Looking back.
Simon Westeros' decisive and swift completion of the acquisitions of Bell Atlantic and MCA just before the outbreak of the war could be described as a masterstroke.
If the acquisitions had been delayed until after the war had begun, simply following the general market uptrend, Westeros would not have been able to secure these companies at the original prices.
After all, Westeros Corporation's initial offer for Bell Atlantic was a premium of only about 30% over the pre-offer stock price. The premium for the MCA acquisition was higher, but that was also due to the significant drag on MCA's stock price caused by the prolonged economic downturn in the US over the previous year.
Two years prior, when CAA President Michael Ovitz made a tentative offer on behalf of Sony to MCA, Lou Wasserman's asking price was as high as $8 billion.
As for Bell Atlantic, Daenerys Entertainment got a significant bargain. If delayed until after the war, Simon might have had to pay an additional $2 billion for Bell Atlantic.
Now, just the natural rebound in the US economic situation alone brought substantial potential profits to Simon from these two companies.
If necessary, Simon could easily alleviate the Westeros system's debt pressures by selling shares of these two companies.
Moreover, Simon didn't actually need to do this.
After more than a month of financial auditing, Daenerys Entertainment's financial report for 1990 was finally released.
Throughout 1990, with substantial earnings from movies, TV, games, consumer products, and soundtracks, Daenerys Entertainment's net profit for the year reached $1.12 billion, about $100 million higher than the initially projected $1 billion.
Although last year's earnings were quickly drawn off for other investments within the Westeros system, with the subsequent revenue from several blockbuster films over the previous years, just counting Daenerys Entertainment prior to the merger with MCA, the company's 1991 earnings were still expected to match the 1990 level.
Thus, the income contributed by Daenerys Entertainment alone was sufficient to pay off the entire Westeros system's maturing debts.
With the ongoing rebound of the US stock market and the expiration of the three-year no-sell promise on the batch of tech stocks, if necessary, Westeros Corporation could also cash out substantial funds from the tech stock market at any time.
Moreover, the two corporate giants acquired, Bell Atlantic and MCA, could also continuously generate substantial cash flows and profit earnings.
Since the tens of billions of dollars in debt were not a threat to the Westeros system, it was not difficult to foresee that Simon Westeros' personal fortune, with the recovery of the overall US economic situation, would not only not shrink but was more likely to continue growing.
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