章 442: Chapter 443: The Largest Collective Heist
[Chapter 443: The Largest Collective Heist]
In the following two weeks, Firefly Films successfully completed Disney's stock buyback with the assistance of the Morgan Stanley acquisition team. On February 5, 1992, Disney officially announced its privatization, making Firefly Films its wholly-owned subsidiary.
During this time, Universal Pictures, controlled by the Panasonic conglomerate, signed an agreement with Michael Eisner, who had just left Disney, appointing him as CEO of Universal Pictures. The former head of Universal, Sid Sheinberg, was dismissed and left his position in disgrace.
Sheinberg had led Universal Pictures for nearly twenty years, with deep roots in the company, and he was instrumental in discovering numerous renowned filmmakers, including Spielberg. The Panasonic conglomerate, much like Sony, showed great caution regarding potential backlash from the American public. For two years after their acquisition in 1990, they delegated considerable authority, remaining largely uninvolved in Universal's decision-making.
Although Sheinberg was not like Columbia's Peter Guber, who recklessly squandered resources without focusing on managing the film company, as a businessman, his performance at Universal had significantly declined over the past two years. Meanwhile, Sheinberg profited greatly off of Universal's resources.
Panasonic executives realized that if this continued, their acquisition of Universal Pictures would become their greatest blunder. To prevent matters from worsening, they seized upon the opportunity of Eisner's departure from Disney and began a significant restructuring of Universal's management.
Due to Sheinberg's entrenched influence, Eisner's takeover was anything but smooth. Facing both internal and external pressures, Eisner rapidly made extensive personnel changes at Universal.
"Within a week of Eisner's appointment, fourteen senior executives at Universal were dismissed," Eric slid a newspaper across the table to Jeffrey Katzenberg, who had just entered the office.
Anyone familiar with Katzenberg knew he was an extremely arrogant individual; however, at that moment, he wore a smile while sitting across from Eric, appearing, at least on the surface, respectful.
After quickly scanning through the headlines of the newspaper Eric handed him, Katzenberg remarked, "This was necessary. Many of the senior executives at Universal have been loyal to Sheinberg for over a decade. If Michael didn't act decisively, it wouldn't be long before he left the same way he came in, and Panasonic would have to reinstate Sheinberg."
Eric tapped a pen on the paper in front of him, casually asking, "Disney also has quite a few of Michael's loyalists. What do you think I should do?"
Although Eric's tone seemed nonchalant, Katzenberg perked up. For over half a month, the CEO position at Disney had remained vacant, and speculation ran rampant about who would be appointed next. Rumors circulated that Eric might take on the role of Disney's CEO, while others pointed to the current president, Frank Wells, as the successor. There were even whispers that Firefly Films might appoint Roy Disney, Walt Disney's nephew, to the position.
However, Katzenberg had already received subtle hints from Barry Diller and had been quietly preparing, unlike some who were frantically trying to position themselves.
The biggest hurdle facing Disney was the "golden parachute" plan, which granted a total compensation package of $500 million to the management upon acquisition. This meant that for at least two years, Firefly Films could not make significant changes to Disney's upper management.
"Eric, the situation at Disney is quite different from that at Universal. Universal was under Sheinberg's control for twenty years and is a tightly-knit organization. Additionally, Sheinberg was once a major shareholder. By moving against him, Panasonic was essentially threatening the interests of many at Universal. But Disney is not that way. Michael may have promoted many people, but Disney is not solely his domain. Besides, Michael is currently focused on Universal and won't dedicate too much energy to Disney. If we continue along Disney's established development track, everything should be fine. Even if someone is tempted to stir the pot, Firefly can still cover the compensation for one or two departures, right?"
Eric watched Katzenberg discuss the situation confidently and smiled, asking, "So you're already in the know?"
Katzenberg slightly paused, feeling a bit awkward but nodded, saying, "Barry gave me some hints."
"In that case, we can lay everything on the table," Eric put down the pen he had been holding and leaned back in his chair, laughing. "The reason we're discussing this is that I've been somewhat indecisive. I didn't know if handing Disney over to you would turn into a disaster."
Katzenberg shook his head confidently, "I guarantee it absolutely won't."
"Jeffrey, you know promises like that carry no weight. Your personal capability isn't in question. Over the years, among the eleven films you produced, nine turned a profit, which is a miracle in Hollywood. Barry also personally recommended you to me. But, well, do you know where your issues lie?"
Katzenberg's lips moved, but Eric didn't press him to articulate further. He continued, "I've heard you've forced studio employees to attend meetings at 7 a.m. on Sunday mornings, resulting in many showing up in their pajamas to protest. Furthermore, your relationship with Roy Disney of the Disney family is also quite poor. If you were simply overseeing the production department, this might not be a major issue. But as CEO of Disney, it's hard to imagine what horrifying consequences might arise from having a workforce that dislikes your style."
"I can change, Eric. Just give me three months," Katzenberg stated without hesitation.
Eric raised an eyebrow, "Three months?"
Katzenberg nodded again, "Just three months. If I can't improve within that time, then I will step aside myself."
Eric looked at Katzenberg's expression, feeling reassured. For someone with such strong self-control, if he made such a statement, he might not need the full three months to bring about change.
Eric extended three fingers and said, "Alright then, three months. But I must also remind you, aside from Michael's $30 million severance package, Firefly won't spend another dime on the golden parachute agreement. This serves as a kind of test for you. You'll need to coexist peacefully with the old guard Michael left behind and absolutely cannot disrupt Disney's operations, or you'll be held accountable for failure."
Katzenberg hesitated for a moment but quickly nodded in agreement.
Eric smiled in satisfaction and said, "As for your compensation, we'll discuss that later. For now, what are your thoughts? Since Barry has already hinted at the news, I imagine you've made some preparations?"
Katzenberg straightforwardly replied, "I want Pixar."
Following the massive success of Toy Story, all the film companies in Hollywood recognized the potential of 3D animated films. Since its release, Pixar had faced several waves of poaching attempts, even John Lasseter had been approached. Fortunately, thanks to Eric's appropriate measures, Pixar had avoided any serious losses.
Before Toy Story, animated films had been completely dominated by Disney. With Disney acquired by Firefly, it was perfectly normal for Katzenberg to propose this condition in order to maintain that monopoly.
Eric responded, "No need for you to request it. Starting with the next animated film, all of Pixar's works will be distributed by Disney. Additionally, Disney will manage the brand and merchandise development for Pixar animations."
"Eric, I've seen some data on Pixar. Don't you think their efficiency is too low?"
"A film every two years is indeed slow, but Pixar is taking a quality-first approach. And as president of Disney Studios, you should know that even if you want to speed things up in animation, it can't be rushed."
"But at least one animated film a year should be manageable, right? Computer production is much faster than manual!"
Eric recalled that in the original timeline, Katzenberg's DreamWorks Animation was known for its high output, but apart from a few series such as Shrek, Kung Fu Panda, and How to Train Your Dragon, it had produced few quality films, which could be the result of over-emphasis on quantity.
"Jeffrey, isn't Disney's animation studio also working on animations? Combined, one film per year isn't far-fetched. By the way, speaking of Disney's animation studio, you must have recognized the potential of computer animation; thus, I hope to transition Disney's animation studio from traditional hand-drawn methods to fully digital production over three years."
"You mean a complete shift to 3D animation? But right now, Disney has 600 hand-drawn animators. If we proceed with reforms, those employees might..."
Eric shrugged, "Jeffrey, in any industry, failing to adapt to trends leads to obsolescence. I'm giving three years to make this transition, which is generous. They have ample time to receive training. If they still can't adapt at the end, I can only say it's unfortunate."
In the original timeline, Toy Story's triumph marked the decline of Disney's hand-drawn animation. After The Lion King, Disney never released another 2D hand-drawn animated film that reached the box office charts.
"Alright, I will take care of it," Katzenberg nodded.
...
Following this conversation, Eric quickly announced Katzenberg's appointment. Although there was discontent among many about the choice, the overall atmosphere at Disney remained calm, especially compared to the turmoil surrounding Michael Eisner's move to Universal.
Many worried that Katzenberg would adopt the same management style he had previously, preparing for a high-pressure resignation threat. But within a week, Disney employees discovered that Katzenberg's management style had changed significantly. He no longer acted so recklessly or on his own whim and even started saying "thank you," which was shocking. Previously, Katzenberg never expressed such courtesy, dismissing it as a waste of time.
...
After appointing a new CEO, Eric finally felt some relief. He no longer needed to pour excessive energy into Disney. Though the acquisition was preliminary completed, the remaining tasks for handover and integration required at least six more months. Those duties still fell to the Morgan Stanley team, and Eric had full confidence in this professional acquisition team, feeling a bit envious as well. Unfortunately, Firefly couldn't afford to sustain such a team yet.
"Not only can we not afford, but we also don't need them," Chris remarked while dining at Liberty City Manor.
After completing the acquisition, Chris was returning to New York, and Eric hosted a farewell dinner for him at the manor. Besides Chris, his girlfriend, Emily Brighton, also attended the event, having come to Los Angeles for work.
"I'm just saying, although we can't afford it right now, we'll definitely need them sooner or later," Eric countered.
Chris chuckled, "Maybe so, Eric. What's your next move? We only have about $1.5 billion left, barely enough to cover Disney's lingering debt. Besides, I wouldn't recommend settling the debt. A certain degree of leverage is necessary in running a business. Compared to Firefly's current market value, $2 billion represents only about 25% debt ratio, which is the lowest among the major Hollywood studios."
Eric contemplated, "Actually, I've considered it. Since we can't pay off the debt, we should look toward investments. Too bad, the Soviet Union collapsed last year, and we didn't capitalize on that opportunity."
"Don't even think about it, Eric. The Soviet Union was a prize beyond our reach. It's a global heist on a massive scale. To hinder any potential resurgence, countries in Western Europe collectively manipulated the situation," Chris recounted, swallowing at the thought of the enormous profits brought by the ruble depreciation. He raised his glass of red wine and took a sip before continuing, "In just half a year, the ruble lost 11,000 times its value. Nearly $28 trillion of wealth accumulated over 80 years in the Soviet Union was seized for mere hundreds of millions. Just thinking about it is exhilarating."
Sitting next to Eric, a demure-looking Jennifer Connelly couldn't help but ask, "Hey, what are you guys talking about? I'm having a hard time understanding."
Chris glanced at the stunning beauty opposite him. Despite his girlfriend being nearby, he couldn't resist the instinct to show off. "We're discussing the largest collective heist in human history."
*****
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