June in Los Angeles, the air shimmered above the asphalt on the Paramount lot, and the soundstage walls radiated stored heat until well past sunset.
Duke Hauser was in the accounting office on the second floor of the administration building at seven-fifteen on a Wednesday morning, which was early even for him.
Stanley Jaffe was already there, of course. Jaffe was always already there.
Duke had long suspected that his Vice-Chairman simply lived in the building, sustained by black coffee.
"Good morning, Stanley."
"It's a complicated morning," Jaffe said, which was his way of saying that the news was mixed and he wanted Duke to sit down before hearing it.
Duke sat.
Jaffe opened the first of three folders arranged on the table. Each one was color-coded green, blue, and red.
"Green folder," Jaffe said. "Willy Wonka and the Chocolate Factory. Opened yesterday. Coastal release, eighty screens."
"And?"
"Respectable. Not explosive. First-day gross is tracking toward a solid opening week, but we're not looking at a big movie. The family audience is showing up, matinees are strong, weekend presales are healthy."
"But the adult crossover isn't materializing the way the marketing team hoped. The reviews are mixed. Some critics love it. Others think it's too dark for children and too childish for adults."
Duke nodded. He'd expected this.
"Remind me of our exposure," he said.
"Effectively zero." Jaffe allowed himself the smallest of smiles. "The Quaker Oats Company absorbed the entire three-million-dollar production budget in exchange for the Wonka Bar licensing rights. Our distribution costs are covered by the theatrical guarantee. For Paramount, Wonka is a zero-risk prestige play."
Duke leaned back in his chair and looked at the ceiling, where the fan blades turned their slow, hypnotic circles.
"The box office isn't the story, in the long term it will probably hav a long life." Duke said.
"I agree with the long-term idea," Jaffe said. "But the bankers won't evaluate us on fifty-year projections. They evaluate us on this quarter's earnings."
"Which is why we have the blue folder."
Jaffe's smile widened fractionally. He opened the blue folder.
"Shaft," he said. "Released last Friday on Urban Markets, a hundred screens."
"And?"
"Exploded."
The word hung in the air conditioning hum, glittering with significance.
"Opening weekend gross of 2.1$ million. Per-screen average is the highest of any film released this year. The urban theaters are sold out, every showing, every screen, standing room only. But here's what's interesting, the suburban numbers are also strong. Not as strong as urban, but strong. The film is crossing over. White audiences are showing up."
"Because it's a great movie," Duke said.
"Because it's a great movie with a great star and a great soundtrack. Isaac Hayes is getting more radio play than the Beatles right now. 'Theme from Shaft' is going to be a number-one single by August which Clive is focused on pushing."
"Projections?" he asked.
"If the current trajectory holds, Shaft will gross between twelve and fifteen million domestic. On a production budget of five hundred thousand dollars."
"Say that number again."
"Five hundred thousand dollars."
"And the gross?"
"Twelve to fifteen millions."
Duke closed his eyes for a moment. The math was almost obscene. A thirty-to-one return on investment.
"Red folder," he said.
Jaffe opened the third folder. "Sweet Sweetback's Baadasssss Song. Current status, pure profit phase."
"How pure?"
"As of this week, Sweetback has grossed $3.5 million against a production cost of $150,000. The prints have paid for themselves many times over. Every dollar that comes in from this point forward is net profit, less distribution costs, which are minimal because most of the theatrical venues are independent operators who handle their own marketing."
Duke opened his eyes.
The film that Melvin Van Peebles had made with borrowed money, a non-union crew, and the kind of creative desperation that only comes from having nothing to lose.
Duke had helped it get finished.
"Next time we meet Lehman Brothers, we need to tell them to bring a bigger calculator." Duke laughed.
___
Duke had slept approximately ninety minutes on the plane, which was about average on his way to Connecticut.
The PULSE Comics headquarters building had the particular energy of a creative workspace running at full capacity, phones ringing, pages being passed between desks, the arguments of writers and artists debating story points in their rooms.
Archie Goodwin met him at the entrance with a fresh cup of coffee and a stack of papers tucked under his arm.
"You look terrible," Goodwin said.
"Well I feel fantastic so show me what you've got."
They walked through the bullpen, Duke nodding at the artists and writers who looked up from their work with the slightly starstruck expression and went into the large corner office where Goodwin had laid out the latest drawings on a drafting table.
The drawswere for the new issue of Blue Beetle, and they were gorgeous.
The cover showed Ted Kord in mid-leap, the scarab's alien technology flowing across his body like living armor, the Chicago skyline stretching out below him in meticulously detail.
The colors were rich, deep blues and vibrant golds.
"Beautiful," Duke said, picking up the drawing and holding it at arm's length.
"The art team is firing on all cylinders," Goodwin agreed. "But I want to talk to you about pricing before we get into the creative."
"Go ahead."
"I've decided to keep the price of Blue Beetle at twenty cents."
Duke set down the proof. "Industry standard is twenty-five."
"Industry standard is twenty-five. Marvel's charging twenty-five for Amazing Spider-Man, which is our direct competition. By undercutting them by five cents, we're sending a signal that PULSE gives you more for less."
"For a kid standing at the spinner rack at 7-Eleven with a quarter in his pocket, five cents is the difference between buying one comic and having a nickel left over for a snack."
Duke nodded slowly. He understood the logic. He also understood its limitations.
"It's a good move for trial," Duke said. "Gets the book into hands that wouldn't have picked it up otherwise. But, Archie, I want you to understand something about the long game."
"Blue Beetle is not going to beat Spider-Man on a spinner rack. Not in 1971. Not in 1975. Spider-Man has a decade of continuity, a massive fan base, and Stan Lee's genius for self-promotion."
"Then how do we beat them?"
"We don't beat them in 'comics'. We beat them in everything else. Movies. Animation. Television. The mediums where the character moves."
Duke picked up the proof again and studied Ted Kord's figure, the lean, acrobatic build, the scarab technology flowing across his body like something alive. "Look at this character, Archie. Look at what the scarab gives us visually. This isn't just a guy in a suit."
"This is a man bonded to an alien artifact that transforms him, augments him, gives him powers that are unpredictable and visually spectacular. On a comic page, that's cool. On a movie screen? On an animation cel? That's the kind of visual spectacle that sells tickets and toys and lunchboxes."
"So the comic is the incubator."
"The comic is always the incubator. We're rebuilding Ted Kord's story right now, issue by issue, reader by reader. We're establishing who he is, what he cares about, why the audience should love him."
"And when the time comes to put him on screen and that time will come, we'll have a decade of stories to draw from and a fan base that's already invested. Spider-Man's biggest advantage is that he's been around since 1962. Blue Beetle's biggest advantage is that we're building him from the ground up, with the screen in mind."
"The scarab as a visual engine," Goodwin said, making a note. "I like that. It gives us something Spider-Man doesn't have, a power source that's genuinely alien, genuinely unpredictable. Spidey's powers are fixed. Ted's are evolving."
"Exactly. And that evolution, the mystery of the scarab, the question of what it really is and what it really wants, that's our narrative engine. It's not just a power. It's a relationship. Ted and the scarab, man and alien."
They moved from pricing to the larger strategic picture. Goodwin pulled out a second set of documents, editorial plans, organizational charts, a timeline marked with color-coded milestones.
"The Assimilation," Goodwin said. "Here's where we stand. The Charlton Characters, Peacemaker, Captain Atom, Blue Beetle, the Question are being officially folded into the DC Comics editorial hierarchy."
"As of next month, they'll share continuity with Batman, Superman, Wonder Woman, and the rest of the DC universe. One world. One timeline. One interconnected mythology."
"And PULSE Weekly?"
"Stays separate. Completely separate brand identity. PULSE is still the indie-flavored entity. It maintains its own editorial voice, its own design aesthetic, its own distribution strategy."
"The indie cool factor," Duke said.
"The indie cool factor. It's the most valuable thing PULSE has, and we're not going to sacrifice it for organizational tidiness."
Duke was about to respond when Goodwin's expression shifted, a slight change, almost imperceptible, the kind of shift that meant he was about to introduce a topic he wasn't sure how Duke would receive.
"There's one more thing," Goodwin said. "I got a call last week from a representative of a company called Blue Ribbon Sports."
Duke's hand, which had been reaching for his coffee, stopped in mid-air.
"They're a small athletic shoe company out of Oregon," Goodwin continued. "Founded by a track coach and one of his former athletes. They make running shoes. Good ones, apparently, they're gaining traction with serious runners, college track teams, that sort of thing."
"They saw the basketball sequences in Slam Dunk and they want to put their shoes on the characters. Product placement in the comic. Their representative was very enthusiastic."
Duke set his coffee down without drinking it.
Blue Ribbon Sports. Founded by Phil Knight and Bill Bowerman. The company that would become Nike.
The company that would, within fifteen years, become one of the most valuable brands on the planet. The company whose swoosh logo would become one fo the most recognizable in the world.
"What did you tell them?" Duke asked, keeping his voice neutral.
"I told them I'd pass it along. They're offering a modest placement fee, nothing substantial. A few hundred dollars per issue."
Duke was quiet for a moment.
"Tell them we're interested," Duke said slowly, "but don't sign anything yet."
"Not yet?"
"The timing isn't right. Right now, Blue Ribbon Sports is a small company with a small brand. Putting their shoes in our comic doesn't do enough for us, and it doesn't do enough for them. But I want you to note the name. I would like to speak with them before anything."
"I'll keep the line open," Goodwin said.
Duke picked up his coffee, finally, and took a long sip.
___
It was four-seventeen in the afternoon, Pacific time, when the phone rang.
Duke was back in Los Angeles, back in his office on the Paramount lot, back in the leather chair.
He was reviewing the French Connection production report, Friedkin was on schedule, doing some reshoots, Duke was feeling good.
Duke was feeling, if he was honest with himself, Invincible like the Prime TV Series about that guy that gets beat up.
The phone rang. He picked it up.
"Duke, it's Paul."
Paul Goldstein. The man Duke retained as his intellectual property advisor, a professor from Stanford.
"Paul. What's going on?"
"I need you to sit down."
"I am sitting down."
"Good. Because the Federal Trade Commission has opened a preliminary investigation into Atari's business practices in the coin-operated amusement sector."
The office was suddenly very quiet. The ambient sounds of the lot, the distant hum of a generator, a grip shouting instructions on a nearby soundstage, the soft drone of traffic on Melrose, seemed to recede, as if someone had turned down the volume on the world.
"Say that again," Duke said.
"The FTC. Preliminary investigation. Monopolistic practices. Atari. I received a courtesy call from a contact at the Commission forty-five minutes ago. The formal notice will arrive at Paramount's legal department within this week."
Duke's hand tightened on the receiver from surprise. Genuine, unfiltered, chest-tightening surprise. He had been so careful. So deliberately careful.
The entire Kinney deal, licensing the arcade patents to Steve Ross, letting Warner into the market, creating the appearance of competition had been designed, in part, to prevent exactly this.
"How is this possible?" Duke said, and he was aware, even as the words left his mouth, that the question was naive.
He knew how it was possible. The question was reflex.
"I'll explain," Goldstein said. "And I want you to listen carefully, because the logic is counterintuitive."
Duke listened.
"The FTC's concern isn't that Atari is a monopoly in the traditional sense, a single company controlling all supply. Their concern is that Atari has created what they're calling a 'patent-locked ecosystem.'"
"Here's the argument, Atari holds the core patents on video game cabinet technology. Without a license from Atari, no one can legally build or operate a video game cabinet in the United States."
"You licensed those patents to Kinney, which on its face looks like pro-competitive behavior, you're sharing the technology, creating a competitor, opening the market."
"Which is exactly what we did."
"Which is exactly what you did. But the FTC is reading it differently. They're arguing that the license to Kinney was 'exclusive in effect' that the terms of the deal, combined with the scope of the patents, effectively shut out any third party."
"You licensed to one competitor, Duke. One. And the terms of that license, the territorial restrictions, the sublicensing prohibitions, the technical specifications, made it functionally impossible for anyone other than Kinney to enter the market."
"The FTC's position is that you didn't create competition. You created two players, both controlled by the same patent portfolio, with no room for a third."
Duke stared at the ceiling of his office.
"I licensed to Ross specifically to avoid this," Duke said. "I wanted there to be competition. I wanted the market to look open."
"I know. And from a business strategy perspective, it was smart. But from a regulatory perspective, it may have backfired. The FTC sees the Kinney license not as an act of market-opening but as an act of market-management. You chose who got to compete with you. You set the terms. In the Commission's view, that's not competition."
The word landed with a dull, heavy thud in Duke's mind. He'd decided who was in and who was out. And the government had noticed.
"What's the scope of the investigation?" Duke asked.
"Preliminary. That's the key word. They're gathering information, requesting documents, interviewing industry participants. It hasn't escalated to a formal complaint or a consent decree. We have time. But we need to move quickly and we need to move smartly."
"What do you recommend?"
"Two things. First, you need to hire the best patent litigation firm in the country. Not for litigation, we're not there yet."
"For positioning. You need lawyers who can walk into the FTC and speak the Commission's language, who can present Atari's patent strategy as pro-competitive rather than exclusionary, and who can do it with the kind of credibility that makes the regulators think twice before escalating."
"Who?"
"Fish & Neave. They're the preeminent patent firm in the country. They've represented everyone from Thomas Edison's estate to Xerox. The partner you want is Lloyd Rich, he's a close friend. He's also the best in the business at making the government understand that innovation and market dominance are not the same thing as monopoly."
Duke wrote the name down. Lloyd Rich. Fish & Neave.
"Second thing," Goldstein continued. "You need to open the licensing program. Wider. Not just Kinney, other manufacturers, other operators. Although If you use your market structure to stop other countries, the FTC will look the other way."
"You need to be able to walk into the FTC and say, 'We have offered licenses to any qualified applicant on reasonable, non-discriminatory terms.' That takes their argument off the table."
"Opening the licenses means more competition. More competitors building cabinets, and taking placing for machines." Duke protested, he was extremely frustrated with this. He had only made a move with Kinney cause he wanted to avoid this.
"Yes. But Duke, and I say this as your advisor and as someone who has watched you build your company with genuine admiration, you need to understand something fundamental about American antitrust law."
"The government does not punish success. If you're the dominant player because your product is better, your prices are fair, and your technology is superior, that's legal. That's capitalism."
"But if you're the dominant player because you've structured the market so that no one else can compete, that's a problem. And right now, the FTC thinks it might be looking at the second scenario."
"Even though we licensed to Ross in good faith."
"Even though you licensed to Ross in good faith. Intent doesn't matter to the FTC. Structure matters. And the structure of the current market, two players, one patent portfolio, no third option looks exclusionary, regardless of your intentions."
Duke was quiet for a long time.
"I'll call Lloyd Rich today."
"Good. And Duke? One more thing."
"Yeah?"
"Don't let this distract you from what you're building. The FTC is a speed bump, not a roadblock. The people who panic when the government comes knocking are the people who have something to hide. You don't have anything to hide."
"You have a great product, a great company, and a great vision. Just make sure the lawyers do the talking, they can translate that vision into language the FTC understands."
"I am familiar with the FTC commisioner, David S. Dennison Jr. I will try to speak with him this month."
"Thank you, Paul."
"That's what you pay me for. Good luck."
The line went dead. Duke set the receiver down and sat motionless in his chair for a full minute, staring at the notepad where he'd written Lloyd Rich's name.
Duke picked up the phone and dialed a number. It rang twice.
"Fish & Neave, how may I direct your call?"
"Hello, I need to speak with Lloyd Rich. My name is Duke Hauser. I'm the chairman of the Ajax Group, I was reccomended by Paul Goldstein."
"One moment, Mr. Hauser."
He waited. A click on the line.
"Mr. Hauser. This is Lloyd Rich. Paul Goldstein told me you might be calling. How can I help you?".
"Mr. Rich," Duke said, "I'm going to need the best patent lawyers in the country. And I'm going to need them immediately."
"You've called the right office. Tell me everything."
___
I have been doing a deep dive about the early 70's arcade scene and wow, things are crazy.