章 789: Chapter 790: Below Expectations
[Chapter 790: Below Expectations]
The filming locations for Casino Royale included the UK, Italy, the Czech Republic, and the Bahamas, with over sixty detailed shooting spots. This was consistent with the lavishness typical of the 007 series.
Eric had set off in early April to scout all the locations and returned to Los Angeles on May 6, a Monday, which coincidentally was the fifth week since the release of Se7en.
In its fourth weekend, Se7en accumulated a box office of $60.43 million, and during its fifth weekend, it generated another $7.12 million. This was only a minor 17% drop compared to the previous week. With summer blockbuster season approaching, while Se7en's shoot might face some competition, its heightened popularity was sure to bring a resurgence in attendance. It was clear that its total box office would surpass the $100 million mark without question.
As for Primal Fear, it earned $1.63 million over its fifth weekend, and it was expected to completely disappear from North American theaters soon after next week.
Primal Fear wasn't a significant project for Paramount, and both films weren't of the hot genre variety, which was why Firefly enjoyed such an easy win this time around.
However, with the clash of summer blockbusters on the horizon, manipulating public perception became not-so-simple. The best a company could do was conduct solid promotional work and then wait to see how the market responded. In times like this, even the reviews didn't hold as much weight; some films with terrible critical reception still enjoyed enthusiastic audiences flocking to purchase tickets.
Titanic was still in the post-production phase, expected to be completed by the end of July. Firefly's main movies for the summer season included just two: The Matrix, set to be released on May 31, and The Rock, debuting on June 14. Due to Titanic's absence, New Line filled its originally scheduled slot with the already completed Final Destination, officially launching on June 28.
Filming for Casino Royale was scheduled to start on June 2; however, Eric couldn't possibly arrive at the set that day. To accommodate his schedule, The Matrix's premiere was moved up to May 27. Unfortunately, Eric would have to miss the premiere of The Rock.
...
Upon returning to Los Angeles, Eric barely had time to adjust to the time difference before he dove back into the preparations for the joint venture of three companies with FFM cable network.
After months of preliminary work, aside from the initial cable network acquired through Tele-Communications, the three companies secured a few smaller cable channels from operators like Cablevision, totaling around 4 million users.
Eric had originally hoped to acquire Showtime from Viacom, which was second in size and prestige only to HBO. However, its current user base was only around 500,000. Due to its smaller size, it was considered a marginal business within Viacom. However, when Katzenberg called expressing interest in a purchase, Summer Redstone promptly declined. Eric suspected Redstone would research why Firefly showed interest in Showtime, but such efforts would be fruitless. Eric was only interested in the subscriber base at this point.
With Redstone's refusal to sell Showtime, Eric redirected his focus to the cable channels they had already secured.
Following the original trajectory of history, aside from HBO, other major media companies missed out on the lucrative cable network market. Later, when Showtime and Starz made their climb, the age of streaming media arrived. To compete against Time Warner's traditional cable operations and the emerging streaming services, Fox, Disney, and Comcast collaborated to launch the streaming platform Hulu. However, the three companies faced disagreements over development strategies, with no party holding absolute control over the platform. Eventually, this led to discord, with management pulling out to seek other opportunities, making competition against platforms like HBO and Netflix almost impossible.
Hulu's collaboration model was very similar to what FFM was preparing.
The preliminary plan distributed FFM's equity as follows: Firefly held 30%, News Corp held 30%, MGM retained 20%, while the remaining 20% was distributed among Tele-Communications, Cablevision, and other cable operators. Although Firefly and MGM held a combined 50%, giving Eric complete control of the company, it was crucial for all parties to agree on a consistent development track and revenue model from the outset to ensure a long-term partnership.
In terms of development, both Eric and Murdoch, as primary decision-makers, had not significant disagreements. MGM naturally sided with Eric, and the other operators promised not to interfere with the company's operations. Hence, as long as Eric and Murdoch reached an agreement, everything would proceed smoothly.
To avoid the management of the three companies affecting FFM's growth, Eric and Murdoch mutually decided to establish a new cable company dedicated to FFM's operations. This company's management team would report directly to Eric, Murdoch, and a few others, without being constrained by the individual management structures of the three major groups.
With Firefly, News Corp, and MGM's content support, FFM faced no significant restrictions on content development. The primary issue was the lack of pedigree; it lacked the brand equity that HBO had built over more than twenty years. Therefore, to facilitate FFM's rapid development, a manager adept at leveraging small investments for substantial brand recognition was indispensable. Eric immediately thought of a certain heavyset individual.
...
Beverly Hills was where Eric had visited a few times, specifically to an al fresco restaurant.
It was afternoon, and he and Murdoch occupied a section of the terrace, discussing FFM. Murdoch mostly resided in New York with occasional trips to London. He had specifically come to Los Angeles this time to discuss FFM matters.
"HBO has developed for 23 years since 1973 and has established a solid reputation among viewers. For FFM to grow in this brand-new market, the key issue is brand building -- meaning we need to get viewers to recognize the FFM brand in the shortest possible time. Although we boast even richer movie resources than Time Warner, the audience isn't aware of this. The power of familiarity is incredibly strong, so we have to think outside the box."
As Eric said this, Murdoch interjected, "Are you suggesting we do reality shows like America's Next Top Model or Project Runway?"
Lifetime Television rose to fame thanks to these two reality shows, which became industry classics.
Eric shook his head, saying, "Not exactly. While everyone knows that reality shows aren't wholly real, they still carry the 'real' aspect. For cable network reality shows to draw viewers' attention, they must push boundaries far beyond basic cable and public television standards, to the point where they risk touching on social ethics or even legal limits. It's a minefield we should definitely avoid."
"That leads us to self-produced dramas like Sex and the City," Murdoch seemed to catch on but then gently shook his head. "However, TV shows can never match the production quality of films. It's one thing for basic cable, but persuading viewers to spend more on premium cable TV shows isn't so easy."
"Then, we should aim to produce TV shows to the same standards as films. In fact, Firefly originally had a project in mind stemming from my thoughts after Saving Private Ryan. We planned to invest about $100 million to produce a large miniseries on World War II. Unfortunately, this project wasn't suitable for ABC, so it was shelved."
Murdoch rubbed his coffee cup gently, leaning back in his chair, asking, "$100 million, do you think we could recover our costs?"
"If the project were at ABC, it definitely wouldn't recoup costs; advertisers wouldn't pay far beyond the rates set for other TV programs. After airing on public television, revenue from off-network syndication and video sales would also take a hit. But on a premium cable network, that's a different story. First off, we'd gain subscription revenue, and secondly, as long as these miniseries generate sufficient buzz, we could definitely recover costs and even turn a profit through future video and syndication sales."
Murdoch nodded in understanding, "I get it. So that's why you want Weinstein to run this network, right?"
Eric smiled and nodded.
For a premium cable network's original drama to become successful, besides having necessary word-of-mouth promotion, it must employ marketing strategies akin to those of independent film companies aiming for big box office returns.
Historically, HBO's biggest selling point for its well-produced content was the hundreds of Emmy nominations frequently cited by the media. As long as there were outstanding works, no one had been able to outshine the Weinstein brothers at awards in recent years. Even with Forrest Gump sweeping the Oscars, Miramax still took both Best Actress and Best Supporting Actor awards.
While Eric was still in Europe, he had had several discussions with Harvey Weinstein over the phone. Weinstein had shown significant interest in taking over FFM, leading to this meeting.
Eric glanced at his watch, noticing their scheduled time was approaching, and he waved to the server to bring out a fresh pot of coffee.
Murdoch remained calm, but then suddenly adopted a serious tone, "Eric, you're about to turn 26, right?"
Eric's heart skipped a beat; that line felt eerily familiar.
What was coming next?
Just as Eric contemplated how to divert the conversation, a chubby figure appeared just in time to avoid any potential awkwardness. Eric had always embraced a single lifestyle. He had only chosen to settle down at thirty due to being pushed by his parents during the holidays. This time, Eric had no intention of being tied down, especially given the complex situation surrounding him, which clearly wasn't conducive to marriage.
...
"Good afternoon, Rupert, Eric. Hope I'm not late," Weinstein approached, warmly exchanging embraces with both men as they stood up.
"Of course not; we just arrived a little early," Eric happily released Weinstein, silently glad he'd shown up at such a timely moment.
Murdoch wore a somewhat helpless expression -- while he could be as cunning as a fox in business, he wasn't able to act coldly with his children like Redstone. Instead, like many traditional parents who spoiled their kids, he hoped for them to grow up, achieve something, and start families. Unfortunately, his children brought him worry. The issues with his youngest daughter and oldest son were one thing; his youngest son James recently got caught street racing, fortunately without any accidents this time around.
Noticing Murdoch's unusual expression, Weinstein stood up to take the coffee pot from the server to fill their cups, casting a curious glance at Eric.
Eric felt he couldn't explain the situation, so he simply ignored Weinstein's look.
Fortunately, Murdoch didn't linger on his concerns for too long and soon initiated conversation, "Harvey, have you thought about that deal we discussed?"
Weinstein quickly replied, "Of course, I'm very eager to take over FFM, but I do have some questions."
"Go ahead."
Weinstein gathered his thoughts and said, "If I were to manage FFM, would I only need to answer to you and Eric, um, and those at MGM?"
Murdoch looked at Eric.
Eric responded, "Absolutely. FFM operates independently, and the management teams of the three companies have no jurisdiction over you. However, I would appreciate it if you could work cooperatively with them."
Reassured by Eric's words, Weinstein felt relieved. Miramax had done well in recent years but was still just a subsidiary of Twentieth Century Fox, lacking proximity to the parent company, News Corp. Weinstein was keen on seizing a larger platform and power in the media landscape, and with the weight placed on FFM by all three companies, he certainly understood it was a splendid opportunity.
"Also, regarding the salary..."
As he mentioned this, Weinstein rubbed his hands together in a seemingly bashful manner.
However, Eric wasn't fooled by Weinstein's demeanor. He laid out the plan he had crafted with Murdoch, saying, "Rupert and I hope you can sign a five-year contract with an annual salary of $250,000 plus 5 million options for stock."
Leaning on Miramax's performance, Weinstein had been receiving bonuses and dividends exceeding $10 million in the past couple of years. However, he didn't think a $250,000 salary was too low. Even Katzenberg only earned $750,000. In Hollywood, what everyone truly cared about were bonuses and dividends -- the real money. As long as the company performed well, the annual incomes of executives ranged from millions to tens of millions.
Weinstein also recognized the significance of the 5 million stock options in that package, asking, "Eric, what's FFM's total stock?"
Eric thought for a moment, saying, "Once the company integration is complete, it'll be around 400 million shares."
Stock options allowed shareholders to set a lower selling price for the management team, granting them the option to purchase a specified number of shares within a certain time frame. If the company's performance and market value hadn't grown, or had even declined, management wouldn't be inclined to cash out at a high price. However, if the stock price doubled or more, then purchasing at that price effectively amounted to a bonus.
Weinstein had reviewed some materials before and noted that FFM's current estimated market value was around $1 billion. 5 million options were equivalent to 1.25% of the total stock, and cashing them all would require just over $10 million, a figure he could manage.
However, even if FFM's market value doubled in five years, the profits he could glean from the options would only total just over $10 million, which fell far below his expectations.
*****
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