A Reckless Challenge and Overwhelming Retribution
The world’s movie theaters were still firmly in the grip of The Lord of the Rings when a rather strange sentence left Yoo Jae-won’s mouth.
“We’re short on cash.”
It was a weekday during business hours, so he sat before the dedicated computer in his study. Yet what ran on the screen wasn’t one of the programming tools he usually favored. Instead, the client program for ID Group’s integrated enterprise network displayed the entire conglomerate’s cash position in real time.
Starting with World of Warcraft last year, followed by Harry Potter and now The Lord of the Rings, every new service and film launch from ID Group had shattered records. The money poured in as if raked with a giant comb. Even the existing portfolio boasted rock-solid returns. Nevertheless, Jae-won still claimed they were short on funds—because the expenditures he planned next were simply monstrous.
It wasn’t the production budget for Fantasy Universe, the game that had turned the ID Entertainment development studio upside down a few days earlier. A few hundred million dollars for development and character licensing fees barely registered as a problem. No, the real issues each demanded truly staggering capital. One was securing a controlling stake in Chevron. The second was the acquisition—or merger—of NBC.
It was true that since the founding of the Organization of the Petroleum Exporting Countries, the Seven Sisters had lost much of their former dominance. In the 1950s they could manipulate global posted crude prices at will, but OPEC’s arrival had changed that. Still, their influence over oil development and distribution remained intact.
Chevron currently ranked fourth among the Seven Sisters. ExxonMobil and Royal Dutch Shell vied for first, while British Petroleum and Chevron formed the second tier—with Chevron perpetually trailing BP by about two percent. The company’s present market capitalization stood at roughly 120 billion dollars, about 24 billion higher than in the original timeline. The surge in oil prices after 9/11, combined with heightened geopolitical anxiety in the Middle East, had driven the stock sharply upward. On top of that, the revaluation of old-economy industries after the dot-com bubble collapse had kept the share price climbing steadily since the third quarter of last year.
A truly colossal company.
After careful analysis of Chevron’s succession structure, Jae-won had concluded that for Tiffany to inherit control after Frederick, she would need to secure at least seventeen percent of the shares. They had steadily accumulated seven percent since last year; another ten percent remained to be gathered. At current prices, ten percent equaled twelve billion dollars. And if rumors spread that Yoo Jae-won was buying Chevron stock, the price would skyrocket even further—so twelve billion was the absolute minimum.
The situation with NBC, his next target, was similar. Initially, NBC had been in talks with Universal. Then Time Warner Nextcom declared its entry into the bidding war. When multiple parties covet the same single asset, the price naturally rises. Especially when the buyers are bitter rivals who refuse to back down for the sake of pride. That was exactly NBC’s predicament.
A latecomer would normally approach with extreme caution, but such tactics simply didn’t apply to a prize like NBC. Any acquisition of a major broadcast network required federal approval, and media exposure during that process was inevitable. Some corporations tried to keep things quiet by seeking approval only at the final stage, but if the government suddenly refused, it would be nothing short of a lightning strike. In his previous life, Jae-won had witnessed countless megamergers among American giants collapse at the hands of federal regulators.
Because government approval represented the greatest hurdle for the NBC deal, Time Warner Nextcom had formally announced its participation and immediately filed for regulatory clearance. Three months had passed since the filing, yet no official response had arrived. Even so, the outlook wasn’t bleak.
“Mr. Turner is confident it will be approved,” Jae-won murmured.
When he had first floated the idea of buying NBC, he had wondered if he was overreaching. Time Warner Nextcom was already enormous. Yet Ted Turner’s confidence stemmed from one simple fact: Time Warner possessed no over-the-air broadcast network. It owned powerhouses like HBO, TBS, and TNT, but those were cable channels that required a paid subscription. Acquiring a free-to-air network had long been a cherished goal for Time Warner, but market conditions had never allowed it.
Broadcasting was a massive industry in scale, yet notoriously poor in profitability. Even now, isolating Time Warner’s numbers showed revenue of sixteen billion dollars and net income that barely exceeded six billion. The biggest slice of media revenue came from advertising sales, but the advertising market was shifting violently from television to the internet. The weakness of cable was bad enough; the newspapers, including Time, were in truly dire straits. The legendary Life magazine had posted its worst results ever, and rumors of its closure were circulating. Without the internet business launched in partnership with Nextcom and ID Group, profitability would have been even worse.
Under those circumstances, had it not been for Yoo Jae-won, the NBC acquisition would have simply fallen into Universal’s lap. Raising the enormous capital required to compete would have been impossible.
“Hmm… probably a little over forty billion dollars?”
Jae-won, who hated outside interference, was contemplating buying one hundred percent of NBC’s equity. The price tag came to forty billion. Traditional over-the-air media had been in decline, so NBC’s stock price had fallen sharply; on a pure market-cap basis it was only a little over twenty billion. But an acquisition wasn’t settled by paying market capitalization alone. There was a rival—Universal—that had approached first, and a control premium had to be added on top. When everything was tallied, the number exceeded forty billion.
Of course there were ways to lower the cost. He could buy only a controlling stake instead of the entire company, or form a consortium to share the burden. But that would invite just as many meddlesome major shareholders. For Jae-won, who possessed an endless pipeline of content to distribute through NBC, those options held little appeal.
“Which means I’ll need more than fifty billion dollars combined for both.”
Ever since he had placed ID Group on solid ground, Jae-won had grown used to handling dollars in the hundreds of millions. Yet mobilizing more than fifty billion in a short period was still a stretch.
“The cash I can deploy immediately is only 23.5634 billion dollars.”
Even that was an impressive sum. Among corporations worldwide, only a tiny handful held more than twenty billion in cash. ID Group’s reserves had swelled thanks to perfect timing; the company had never been one to hoard cash internally.
The largest portion of that 23.5 billion came from liquidating a significant part of the investments ID Investment had prepared ahead of 9/11. The put options had been closed at peak prices the day after the attacks, and this time the cash had come from commodity positions in gold and oil. ID Investment actually controlled far more capital than that—money had flooded in from around the world, centered on Korea. But Jae-won could not freely use those funds.
There was also the money repaid early under the banner of Korea’s swift exit from the IMF crisis. Some had been spent establishing Deokjin University, but a substantial amount remained. Finally, there were the pure profits ID Group had earned through diligent work in 2001. Adding all those figures together produced the 23.5 billion dollars currently displayed on Jae-won’s monitor.
“Twenty-six billion short.”
It wasn’t twenty-six billion won—it was twenty-six billion dollars he needed to raise. Yet Yoo Jae-won felt no burden whatsoever. Even without resorting to extreme instruments like stocks or futures, he was confident he could generate that money.
“Well, only something on this scale deserves to be called real business.”
There had once been a time, right after he created the ID name and started the company, when he had been thrilled to sell handmade packages with help from his friends. That felt like only yesterday. Now he had grown large enough to set his sights on America’s flagship broadcast network and one of the Seven Sisters. A quiet sense of pride filled Yoo Jae-won.
At the same moment, high in the iconic Rockefeller Center in New York—the financial capital of the United States—someone occupied the luxurious top-floor office that commanded a spectacular skyline. The office belonged to Steve Burke, head of Universal Media. The vast space should have made any man feel the sweet taste of success, yet since the end of last year, a shadow had never left Burke’s face.
Today was no different.
“What? Forty billion?”
Steve Burke’s voice shot upward as he spoke into his iPhone S. The unimaginable number had just burst from the receiver.
It was the same estimated purchase price for NBC that Jae-won had seen moments earlier. Jae-won had accepted the figure calmly, but Burke could not.
“How can it double in just three months?”
The executive on the other end politely corrected him. When calculated precisely, the increase was far more than double.
The man was Steve Burke’s most trusted lieutenant, currently negotiating directly with NBC’s leadership on his behalf.
“Isn’t it the same thing!” Burke snapped.
As he had complained, only last winter NBC’s valuation had not even reached twenty billion. Even the breakout drama Friends had failed to improve the network’s dismal finances or cloudy future. Consequently its value had hit rock bottom. The proposed deal had been favorable to Universal—part cash, the remainder paid in shares of the merged entity.
Then the negotiations, which had been proceeding smoothly, suddenly flipped upside down.
The headline had appeared in the papers quite some time ago, yet the raw fury of that moment still burned vividly in Burke’s chest. From then on, negotiations with NBC had grown strained, the asking price had gone insane, and now it had more than doubled.
“Damn bastard!”
Although the newspaper named Time Warner Nextcom, the person Steve Burke was cursing was someone else. With 99.9 percent certainty, that someone was Yoo Jae-won. After all, everyone knew who stood at the top of Time Warner Nextcom. Moreover, as the man leading one of Hollywood’s five major studios, Burke had accumulated plenty of grievances against Jae-won.
Last year Universal’s report card had been abysmal. Its best performer, Jurassic Park III, had earned only 180 million domestically and 360 million worldwide. In contrast, Warner Bros. had crossed nine hundred million with Harry Potter and the Sorcerer’s Stone alone. And the Lord of the Rings that opened a few weeks ago was shattering box-office records yet again.
The year before had been the same. Going further back changed nothing. The joke around Hollywood was that any film receiving investment from Yoo Jae-won would at least avoid total failure. The better Jae-won and Time Warner performed, the greater the pressure on every other studio—including Universal.
One reason the studios had turned to the unusual path of acquiring a broadcast network was precisely because of Yoo Jae-won. And now he was throwing a wrench into the NBC deal as well.
“This time, I cannot lose.”
If internal funds fell short, he simply needed to find partners. And the more resentment those partners already harbored toward Yoo Jae-won, the better. President Steve Burke knew plenty of such people. ID Group’s vast business footprint had created fierce competition with countless incumbents, leaving a long trail of bruised egos in its wake.
Besides, acquiring an over-the-air network like NBC was not a business that ended with money alone. It was a national infrastructure asset, after all! This was the perfect chance to teach that arrogant upstart a bitter lesson. At the same time, once the competition disappeared, the bloated asking price for NBC would return to reality.
Having made up his mind, Steve Burke scrolled through the contacts on his iPhone S, selected a name, and placed the call.