Bab 443: Chapter 443: Acquisition of CBS
The fierce Hollywood summer blockbuster season didn't fully occupy Arthur's mind. After spending a few days in London, Arthur flew to Sun Valley, Idaho, with Kate Beckinsale.
At the Sun Valley Resort's landing pad, various private jets lined up. It was certainly the busiest time of year. Since it was summer vacation, the organizers put together a schedule of tennis matches, golf tournaments, Sawtooth Mountain hikes, salmon river rafting trips, and several cocktail parties for the elite to enjoy their summer and unwind.
"More and more people are showing up," Kate Beckinsale remarked during a cocktail party that evening as she spotted Warren Buffett and his family.
Arthur chuckled, "Yeah, the crowd is getting bigger!"
His gaze shifted to the incoming Disney Chairman Michael Eisner, who was being warmly greeted by Tom Murphy, the chairman of the Capital Cities/ABC broadcasting group.
Something was fishy. Arthur knew Disney had been considering acquiring CBS, but the price hadn't been right.
He didn't believe Westinghouse could compete with Disney. Although Westinghouse owned Westinghouse Broadcasting, everyone knew that radio's future was dim compared to that of television. Many stations were cutting back on their radio operations, either selling or restructuring.
"Kate, I'm heading over," Arthur said as he figured out what was going on. He wanted to have a chat with Buffett. He had already met CBS Chairman Laurence Tisch and his brother Preston.
Given the circumstances with Eisner and Murphy, Arthur couldn't help but suspect that there was a connection between Capital Cities/ABC and Disney. After all, Buffett's Berkshire Hathaway was a major shareholder in Capital Cities/ABC.
"Mr. Buffett, Mr. Tisch, good evening," Arthur approached them. The other man was Herbert Allen, chairman of Allen & Company, the organizer of the Sun Valley conference.
"Arthur, good evening!"
"Arthur, have you been enjoying the environment and lifestyle here in Sun Valley?" Herbert asked with a warm smile.
"It's quite relaxing, feeling great..."
As they chatted, after Herbert Allen departed, Arthur asked Warren Buffett, "Is Disney really planning to acquire Capital Cities/ABC?"
Buffett smiled, "That depends on what Eisner and Murphy decide, but I support the merger. Charlie Munger thinks so too!"
Charlie Munger, vice chairman of Berkshire Hathaway and Buffett's right-hand man, had a good relationship with Eisner; they were both Jewish.
"It seems CBS's asking price is a bit high for Disney," Arthur said with a grin. The scale of CBS couldn't compare to Capital Cities/ABC.
Currently, ABC owned the most local television stations among the four major broadcast networks, plus additional cable channels like ESPN.
Buffett looked at Arthur, "Disney's board is optimistic about acquiring Capital Cities/ABC. Capital Cities/ABC shareholders are also open to the merger!"
Arthur smiled in silence. Disney would definitely want to acquire Capital Cities/ABC, mainly depending on Capital Cities/ABC's willingness. Now that heavyweight shareholders like Berkshire Hathaway and Allen & Company were on board, the feasibility of the deal had undoubtedly increased!
"I believe this merger will create the largest media empire," the combined market capitalization would reach over forty billion dollars!
Buffett took a sip of his drink, "Arthur, Galaxy's Toy Story is really impressive! You guys are getting into animation too. Does Galaxy not have any interest in CBS? Actually, Berkshire Hathaway has a lot of faith in Galaxy!"
Arthur felt a rush of excitement. If Galaxy acquired CBS, it would become a true media giant, owning a national broadcast network -- the benefits were clear.
However, acquiring CBS would not come cheap; Galaxy's valuation had skyrocketed in recent years, especially with the success of Toy Story this year which could easily add a billion dollars to its valuation!
...
On the lawn outside the mansion, Arthur took a thoughtful sip of his drink when Laurence Tisch approached him.
"Arthur, did you need to see me?"
Arthur smiled, "Galaxy wants to acquire CBS!"
Simple and straightforward.
Laurence Tisch was taken aback for a moment but quickly grasped that all the major Hollywood studios were eyeing the television networks.
Time Warner was interested in the TBS group, 20th Century Fox was aggressively developing FOX, Paramount was recovering from back-to-back major mergers, and MCA Universal had just changed ownership...
"Disney is focusing on Capital Cities/ABC, so it's not surprising Galaxy has those thoughts," Tisch replied with a smirk. Given Galaxy's rapid rise in Hollywood, it would be strange if they didn't have such ambitions.
"Westinghouse is also interested in CBS, Arthur."
"I know," Arthur nodded, "but I don't think CBS's shareholders would see Westinghouse as a worthy competitor against Galaxy. Galaxy will implement a stock swap, and CBS's shareholders should know how to choose. Right now, I don't know who else can match Galaxy's production capabilities!"
Arthur was very confident. Disney had always had subpar movie production skills, being primarily an animation studio; Westinghouse had some competition, but currently, there was no one like Galaxy. If CBS had Galaxy's content support in the future, it was hard to imagine what it could become.
Laurence Tisch looked at Arthur; he was a prodigy, with not much time in the industry but had already achieved great heights. Galaxy Television wasn't underestimated either, boasting Galaxy Television Productions, USA Network, Starz Pay Channel, BET, and ESPN stakes!
"5.2 billion dollars, plus debt, Galaxy would pay part in cash, with the rest in stock swaps."
Arthur made his offer. Disney wasn't even willing to go up to five billion dollars earlier; in comparison, Galaxy was quite sincere!
Laurence Tisch squinted slightly, "I need to discuss this with the other board members."
CBS was a Jewish media group, and he had to consider if Arthur Smith would turn out to be another arrogant Ted Turner.
"Better think it through," Arthur had made his decision and wouldn't look back. Galaxy was gearing up to officially start the acquisition of CBS!
*****
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