San Francisco.
Inside a villa tucked into the wooded hills of Woodside, west of Palo Alto.
Dawn had only just broken. Sensing movement beside him, Simon instinctively reached out, hooked an arm around a slender waist, and pulled her into his chest.
Jennifer had just picked up a small camisole to put on. Now dragged back against the man's chest, she knew he loved the feeling, so she didn't resist. She nestled there for a moment before coaxing him like a child, softly saying, "Let go, okay? I'll make you breakfast, and then I still have to go back to work."
After last night's cocktail party hosted by MCA chairman Lew Wasserman, the assistant had said she wouldn't go, but in the end Simon still coaxed her into coming to San Francisco.
Simon's big hand wandered over her as he murmured, "Stay and sleep a little longer. Allison and the others will make breakfast."
"But I want to make it for you myself."
"All right."
Feeling Jennifer's stubborn insistence, Simon could only let go. He watched her slip into her camisole and underwear and pad toward the bathroom, then sat up as well.
In the early 1990s, the Woodside hills weren't yet as crowded and glittering as they would become after the internet era arrived. At the end of August, with the region sharing a Mediterranean climate, everything around them was still lush and vibrant.
While Jennifer prepared breakfast in the kitchen, Simon changed into a set of workout clothes and left the house, jogging along an asphalt mountain road lined with green trees and almost no people.
For Simon now, chances to move freely like this were rare. Malibu, where he usually stayed, was much more densely populated, and every move he made drew attention. Most days he could only exercise inside the villa's private gym. If he went to New York, it was even worse.
He was mid run when a black Mercedes sedan slowed and pulled alongside. The window rolled down, and a middle aged man leaned out and said, "Hey, buddy, there are two people behind you..." Halfway through, he recognized Simon. His expression shifted to surprise and disbelief, and he asked uncertainly, "You're... um, Simon Westeros?"
Realizing the man had been kindly warning him that two people were tailing him, Simon stopped, smiled, nodded, and greeted him. "Good morning."
The two bodyguards jogging with Simon immediately quickened their pace and came up, alert.
The middle aged man realized he'd made a fool of himself. He got out to greet Simon properly. He turned out to be an Oracle executive, and before leaving, he even handed over a business card.
Simon casually passed the card to Neil Bennett behind him and continued jogging. Ten minutes later, he returned home to find Jennifer had already prepared breakfast.
They didn't have the two A and B girls who'd come along this time help out. Jennifer and Simon carried breakfast into the dining room themselves.
While they ate, Jennifer brought up last night's cocktail party. "Wasserman already noticed what we're setting up. What are you planning to do next?"
At the cocktail party, Lew Wasserman had cut straight to it. He said he already knew Simon was preparing to acquire MCA, and he even proactively shared some of Matsushita's negotiation progress with MCA's management. He openly welcomed Daenerys Entertainment to bid alongside Matsushita for his company.
Simon, of course, had no intention of jumping into the negotiations on Wasserman's terms. He'd only played along politely and brushed it off.
Now, hearing Jennifer ask, Simon said, "Do you remember the plan America Online submitted a month ago? The one about buying exclusive access to Bell Atlantic, Bell Pacific, and NYNEX so they could develop the internet?"
In the famous 1983 AT and T breakup, the Bell System that had monopolized America's telecom market was split into the nationwide long distance carrier AT and T, plus seven regional phone companies. The three Simon named were three of those Baby Bells, and also the ones America Online wanted most, covering more than a dozen states on the East and West Coasts.
At the moment, aside from a small amount of its own built lines, America Online could only lease most of its network access from the traditional Bell system infrastructure.
As confidence in the internet's future grew, Steve Case had submitted a proposal to Simon at the end of last month. He wanted to buy exclusive internet access rights from Bell Atlantic and the other two companies by signing an exclusive agreement, paying annual fees to each operator. That would block other internet service providers from entering AOL's territory, while also gaining stronger support from the three carriers for internet access services.
If the leadership of those three regional phone companies could see the future the way Simon did, there was no way they would agree.
After all, signing a twenty year exclusive contract like Case proposed would not only shut out other internet service providers. Even the three telecom companies themselves would be barred from running ISP businesses on their own.
Yet the reality was that the internet industry in America had only just begun. AOL had barely over a hundred thousand users. To old line telecom giants, that was nothing, not worth entering personally. If they could sell exclusive access and earn extra income, why not?
So all three companies showed interest in Steve Case's proposal.
But the specific terms became a month long tug of war, and they still hadn't reached agreement.
The three companies believed that if AOL wanted to buy exclusive access to their line networks, it should pay based on the total number of subscribers, not based only on the number of internet access users as AOL proposed.
AOL's proposal offered to pay the three companies $20 per user per year. With AOL's August user base of 150,000, that meant only $3 million per year to the three companies.
Three million wasn't much, but given AOL's rapid growth in recent months, in one or two years, once AOL reached a million users, that number would become very impressive.
On the other hand, under the three companies' proposal, they were willing to cut the per user fee down to one tenth of AOL's quote, to $2 per user. But multiplied by the nearly 20 million total subscribers across their territories in more than a dozen East and West Coast states, AOL would face an enormous annual fee of $40 million right from the start.
And the three companies also wanted to retain the right to renegotiate the price every two years during the contract term.
AOL's valuation, even during Westeros Company's investment takeover, had still been under $100 million. The three companies were daring to open their mouths this wide because they could see Simon, the deep pocketed backer behind AOL.
If there was a fat sheep, why not carve it up?
Not only that, because Simon was known to be bullish on the internet, the three companies also demanded an equity stake in AOL.
In Simon's eyes, if he could sign this exclusive deal, he would gladly pay forty million right away. Once the internet boom truly exploded, the three telecom companies would realize just how enormous a mistake they'd made.
But he couldn't show that. And he absolutely wouldn't allow the three companies to buy into AOL.
So the negotiation had dragged on for a month, with no result.
Jennifer clearly remembered it. She nodded. "I think if those three can drop the per user number to one dollar, paying based on total subscribers would actually be more cost effective. But what does this have to do with us buying MCA?"
Simon said, "My earlier plan was that once AOL grew to a certain scale, and once federal telecom regulation loosened more, we'd have AOL acquire those traditional operators. Convergence, remember? Did I mention that idea?"
"The telecom laws that came out of the 1984 AT and T breakup limit long distance carriers, regional phone companies, and cable TV companies from entering each other's fields. Getting the federal government to loosen telecom regulation should be very difficult," Jennifer said smoothly. Then she suddenly realized. "You want to launch an acquisition against traditional carriers right now?"
"Bingo," Simon said, lightly tapping his fork against the porcelain plate. "When you go back today, start collecting information on those three companies. Their assets and market cap, operating conditions, management profiles, and industry related legal documents. And keep it quiet."
"I'll do it personally," Jennifer nodded. "But if we do that, we'll need to raise a huge amount of money. And it's impossible to buy all three at once anyway. Which one are you choosing?"
Simon answered without hesitation. "Bell Atlantic."
For the current Westeros system, swallowing all three companies in one bite was impossible, both financially and legally.
So among the three, Simon's true target was Bell Atlantic.
Bell Atlantic was the predecessor of Verizon, which many years later would become America's second largest telecom operator after AT and T. Its service territory covered densely populated states in the eastern U.S. like Pennsylvania, New Jersey, Washington, D.C., and Virginia, representing more than one fifth of the U.S. population.
And of course, Bell Atlantic also had the highest market cap of the three.
Even against the backdrop of the Gulf War and a sliding U.S. market, by last week's close its market cap still exceeded $5.6 billion.
With an acquisition premium around thirty percent, Simon would need at least $8 billion to take Bell Atlantic. Combined with the $7 billion he was preparing for MCA, the total funding he'd need to mobilize would reach $15 billion, more than half of it coming from loans and financing.
The Reynolds Nabisco buyout completed early last year had turned into a disaster by now. After the U.S. debt crisis erupted late last year, there had been very few corporate mergers above one billion dollars over the past year.
If word of Simon's planned dual track mega acquisition ever got out, it would set the entire federal media on fire.
If he had enough time, Simon would have preferred to advance step by step.
But right now was the low point of America's early 1990s economy. Once the coalition forces wrapped up the Gulf War cleanly next year, the federal economy would rebound fast. At that point, if Simon still wanted Bell Atlantic, the price he'd pay could exceed ten billion, and he might even face competing bidders.
Looking further ahead, if Simon waited until the peak of the new technology wave in the 1990s and then pushed AOL's expansion according to his original plan, then by the time he was dealing with hundred billion level mega mergers, government regulatory resistance alone would be far more than ten times what it was now.
Since so many things had already changed, and since he had abundant capital available right now, beginning Westeros's expansion in telecom ahead of schedule was without a doubt the best choice.