Chapter 169: Circling Around
Chapter 169: Circling Around
Aniston, who had been quietly sitting beside Eric the entire time, was getting a little confused.
On the way here, Eric had not hidden the purpose of inviting Robert Shaye from her. However, now that dinner was already more than halfway over, the two men still had not mentioned anything related to acquiring a film company.
Instead, they kept chatting endlessly about all kinds of industry gossip and insider stories.
The disastrous losses of MGM’s Heaven’s Gate, the box office miracle of Gone with the Wind back when Robert Shaye was born in 1939, why Disney had risen so quickly, the real reason behind RKO’s bankruptcy…
Basically, they talked about everything except film company acquisitions.
At least, that was what the not-so-clever little woman thought.
At first, Aniston listened with great interest. But later on, she gradually lost interest. Still, she did not want to appear rude and embarrass her boyfriend, so she could only sit upright pretending to listen attentively while her thoughts drifted far away.
Even after the waiters removed the dishes and replaced them with coffee, Eric and Robert Shaye’s “casual chat” still had not ended.
“…The latest issue of Variety published a statistical article showing that starting next year, revenue from videotapes and television broadcast rights will fully surpass theatrical box office revenue. At the same time, film-related peripheral rights are becoming increasingly diversified. Therefore, the role of distribution channels within the film industry chain will become more and more important. In the future, pure film content providers will find it difficult to survive.”
“That statement is somewhat one-sided,” Eric replied. “Without excellent films, the expansion of distribution channels would have nothing to distribute in the first place. Hollywood conquered overseas markets and dominated them precisely because of one high-quality film after another. If our films became as stagnant as European films, producing very few good works, then we would inevitably end up like European cinema as well, entertaining ourselves only within a small circle.”
“Highways are certainly important, but without cars, highways have no value whatsoever.”
“And besides, the salaries of Hollywood movie stars have already increased more than tenfold compared to ten years ago. Some have even started sharing in film profit participation. That alone is the clearest proof of the importance of content in the film market.”
After finishing, Eric slowly took a sip of coffee and glanced at Robert Shaye.
Not long after dinner had begun, the two men had exchanged several polite compliments before unconsciously entering into a hidden confrontation. Although neither side had mentioned acquisitions or company mergers directly, they had been continuously debating the importance of film content versus distribution channels.
Robert Shaye had been the one to initiate the topic.
In fact, from the moment he brought it up, he had already fallen into a disadvantageous position.
Because once Shaye chose to start that discussion, Eric immediately understood that Robert Shaye was very tempted by Firefly’s proposal to acquire New Line. If he had no intention of selling New Line, he never would have raised the subject at all.
Sitting across from him, Robert Shaye also felt somewhat bitter inside.
He realized he had still vastly underestimated the vision and insight of the young man sitting opposite him.
As a veteran who had spent over twenty years surviving in Hollywood, how could he not understand that bringing up that topic might reveal his intentions?
But Robert Shaye originally believed that Eric was only nineteen years old. Even if the young man possessed extraordinary talent in filmmaking, he surely could not know much about other aspects of the industry.
Meanwhile, Robert himself was more than thirty years older. That meant thirty additional years of accumulated experience. Combined with his confidence in his own eloquence, he had initially believed he could easily overwhelm Eric.
As long as he planted the idea that “distribution channels are the true key” into Eric’s mind, then in future negotiations, Robert could seize the initiative.
Eric’s consecutive blockbuster films had already proven his ability.
So when Firefly sent him an invitation while subtly revealing some information, Robert Shaye’s thoughts immediately became active.
There was no doubt that Firefly wanted to acquire New Line. Robert had never even considered the reverse possibility.
But although Robert Shaye was already fifty years old, he remained extremely ambitious.
What he valued was not the huge amount of money Firefly could pay for New Line. Instead, he hoped to merge the two companies and obtain as much equity as possible in the merged company.
New Line had already developed to the point of a bottleneck.
Among second-tier film companies, New Line was already considered outstanding. It possessed stable, profitable film franchises and had established solid domestic distribution channels across the United States. It also had fixed overseas distribution partners.
More importantly, despite developing this far, New Line had never attached itself to any major studio and had remained completely independent.
But compared to the Big Six studios, the gap was still enormous.
The biggest difference was that New Line lacked true blockbuster films.
Or rather, it had none at all.
Up to now, even the best-performing A Nightmare on Elm Street film had only earned slightly over forty million dollars at the box office. Meanwhile, for a movie to truly qualify as a blockbuster, its North American box office generally needed to reach around one hundred million dollars.
Without blockbuster films, New Line was destined to remain unable to join the ranks of the major studios.
The 80/20 rule within Hollywood’s box office market was especially obvious.
Every year, twenty percent of films took more than eighty percent of total box office revenue.
And the top ten films on yearly box office rankings had always been monopolized by the Big Six studios. That also meant more than eighty percent of total box office revenue remained in the hands of the Big Six.
Actually, the proportion controlled by the Big Six had already declined somewhat in recent years.
The rapid development of various new channels had created enormous room for independent film companies to grow.
As a result, the Big Six now controlled around eighty-five percent of annual box office revenue, leaving fifteen percent for the rest of Hollywood’s film companies.
That proportion might sound small, but compared to over a decade ago, it was already enormous.
More than ten years earlier, the Big Six had practically swallowed nearly the entire yearly box office market, leaving pitiful scraps of barely one percent for smaller film companies.
If New Line wanted to enter the ranks of the major studios and share in that eighty-percent-plus profit pool, then before meeting Eric, it only had two possible paths.
The first was gathering all its strength and making a desperate gamble on producing a major big-budget film. Only that carried the possibility of achieving blockbuster box office success.
But the risk was enormous.
Once it failed, New Line would face only one outcome: bankruptcy.
The second option was simply waiting patiently.
Perhaps one day, a small low-budget film the company invested in would suddenly achieve miraculous box office success, rapidly accumulating huge financial strength for the company. Then, provided the company leadership also possessed good judgment and continued investing in successful films afterward, a positive cycle could form, allowing the company to rapidly accumulate strength and eventually join the ranks of the major studios.
In the parallel timeline, Lionsgate had risen exactly through such luck.
Founded only in 1997, Lionsgate had originally been far inferior to older second-tier companies like New Line and Miramax in both qualifications and strength.
But because it boldly distributed the low-budget documentary Fahrenheit 9/11 in 2004 despite enormous political pressure, and because that film fortunately earned 224 million dollars worldwide, Lionsgate rapidly accumulated sufficient capital.
Relying on those funds, it later consecutively developed hugely successful franchises like Twilight and The Hunger Games, once surpassing both Universal and MGM in box office performance and ranking fifth behind Warner Bros., Disney, Columbia, and Fox.
After Eric proposed the acquisition idea, Robert Shaye suddenly saw another broad and promising road.
This road allowed New Line to enter the ranks of the major studios steadily and safely, without gambling recklessly or waiting endlessly for luck to arrive.
Eric’s previous blockbuster films had already proven he possessed the ability to accomplish such a thing.
Since Hollywood already had combined giants like MGM-UA, why couldn’t another combined powerhouse appear?
A Firefly–New Line.
Well… Firefly-New Line, not New Line-Firefly.
As one or two cups of coffee disappeared, Robert Shaye finally lost patience for continuing this endless circling with Eric.
The young man before him possessed astonishing patience.
Although unwilling to admit it, Robert Shaye had no choice but to accept that he had already lost this exchange.
And if he still did not bring up the real topic, Eric might genuinely treat this dinner as nothing more than casual conversation before standing up and saying goodbye.
At that point, perhaps their next meeting would only happen at the negotiation table.
“Eric, I heard Firefly is preparing to expand its own distribution channels?”
Casually stirring the fresh coffee the waiter had just refilled, Robert Shaye asked the question as if it were an afterthought.
A faint smile appeared at the corner of Eric’s mouth.
So he finally could not hold back anymore.
This dinner had already lasted nearly two hours. Eric himself had almost lost patience with the prolonged circling.
The little woman beside him had already sent him several flirtatious looks hinting that she wanted to leave.
Eric had already decided that if Robert still refused to bring it up after he finished this cup of coffee, then he would simply head home and roll around in bed with Aniston.
After that, Firefly would formally and publicly send New Line an acquisition proposal.
The reason for arranging this dinner in the first place was because Eric wanted to test Robert Shaye’s attitude and see whether the man actually intended to sell New Line.
Because in Eric’s memory, Robert Shaye possessed an extremely strong desire for control.
Even in his previous life, although New Line had eventually been absorbed into Warner Bros., Robert Shaye still firmly maintained control over New Line.
It seemed that nearly twenty years later, only after The Golden Compass suffered catastrophic losses was Robert Shaye finally forced to step down under immense pressure.
The topic Robert Shaye initially brought up, combined with the long argument afterward, had already revealed his attitude clearly.
So whether they continued discussing things or not no longer mattered much.
Even if they reached a preliminary agreement tonight, the specific terms would still require lengthy negotiations afterward.
Sony’s acquisition of Columbia had already taken more than half a year, and including the earlier planning stages, at least a full year altogether.
Firefly’s acquisition of New Line would not be that troublesome, but it certainly would not be completed within merely one or two months either.