Simon and Jack Welch reached a basic transaction framework regarding New World Entertainment, and the detailed contract terms still need further negotiation between the two parties.
With the tacit approval of New World Entertainment's major shareholders and General Electric, Daenerys Entertainment quickly began to intervene in the company's operations in the following days, requesting New World Entertainment CEO Robert Rehme to temporarily halt the production and distribution of all film and television projects, and any expenditure exceeding $50,000 had to be approved by Daenerys Entertainment.
Due to the continuous paparazzi following Simon, news of his meeting with Jack Welch and others appeared in newspapers the next day, and the media immediately clarified the whole story.
However, this time, there was no repeat of the situation at the beginning of the year when capital rushed in, in half a year, too many things had changed.
At the beginning of the year, news of Simon's sudden wealth through stock index futures operations had just broken, making him a 'fat sheep' in the eyes of many. Moreover, the Hollywood writers' strike had not yet occurred, and New World Entertainment's crisis was not as severe as it was now.
Now, due to the Hollywood writers' strike, New World Entertainment's heavily reliant television production business was almost at a standstill, further worsening the company's already precarious financial situation. Simon's actions at the beginning of the year also demonstrated his stance.
Therefore, the transaction progressed quite smoothly.
The day after Simon's meeting with Jack Welch was July 4th, American Independence Day.
After a four-day holiday, Daenerys Entertainment, New World Entertainment, and General Electric jointly issued an announcement, officially disclosing the relevant news to the public.
Daenerys Entertainment plans to acquire all shares of New World Entertainment, after General Electric's debt-to-equity swap, for $250 million. Through this transaction, General Electric will recover $225 million, and New World Entertainment's original shareholders will receive a total compensation of $25 million, equivalent to one-sixth of the stock price before the transaction.
Although some shareholders expressed dissatisfaction with the transaction, all parties understood that this was actually the best outcome.
Without this transaction, New World Entertainment would either go bankrupt and liquidate, or sell its assets to repay debts, both of which would leave shareholders empty-handed.
After finalizing these matters, Simon instructed James Raybould to organize a team to conduct an asset and financial audit of New World Entertainment.
In addition to overt financing and loans, many companies accumulate hidden debts by inflating operating income or delaying payments. Companies with worse operating conditions are more prone to this. If an acquirer ignores this, they often have to bear these expenses themselves after the transaction.
Hidden debts are even more common in Hollywood's complex accounting system.
Simon did not choose to first buy the debt from General Electric and then conduct the debt-to-equity swap himself, precisely because he was worried that New World Entertainment would suddenly reveal a large amount of hidden debt, catching Daenerys Entertainment off guard. By having General Electric conduct the debt-to-equity swap beforehand, as long as the contract is not officially signed, the risks in this regard still lie with General Electric and New World Entertainment.
The preliminary audit work would take about a month, and coupled with the financing issues for the acquisition of New World Entertainment, Daenerys Entertainment might not officially take over the company until August.
Amidst such busyness, a new week passed.
Due to the four-day Independence Day holiday, the total North American box office for the week of July 1st to July 7th exceeded $100 million, reaching $117 million.
Paramount Pictures' 'Coming to America', starring Eddie Murphy and with a somewhat patriotic theme, debuted with a strong $36.15 million from 2,065 screens in its opening week, becoming the highest-grossing film in its opening week during this summer season. Previously, 'Crocodile Dundee II', also from Paramount, had an opening of 2,837 screens but only grossed $30.17 million in its first week.
Disney's 'Who Framed Roger Rabbit', after a first-week box office of $21.65 million, with strong word-of-mouth and the support of the four-day holiday, saw almost zero decline in its second week, taking in another $21.34 million, bringing its cumulative box office to $42.99 million after two weeks.
Sandra's black comedy 'A Fish Called Wanda' ranked third in its opening week, with a box office of $13.96 million. Although the start was not stunning, compared to the film's production budget of only $8 million, this movie would be enough to recover all its production and distribution costs next week, and the word-of-mouth and buzz it generated were enough to support a very impressive long run.
'Pulp Fiction' slipped to fourth place this week, with a box office drop of 17%, taking in another $12.53 million. After 5 weeks of release, the film's cumulative box office reached $95.79 million, and it was destined to break $100 million next week.
'Big', starring Tom Hanks, also entered its fifth week of release, taking in another $9.24 million. This film, which never once claimed the weekly box office championship, had quietly accumulated $55.46 million at the box office, demonstrating a remarkably strong performance.
On July 8th, North American cinemas simultaneously released four new films from major studios.
However, judging from the box office data for the three-day weekend, the four new films basically all ended in failure. Fox Pictures' comedy 'License to Drive', which was expected to have the best opening performance, only grossed about $7.5 million in its first week, and none of them managed to break into the top five on the charts.
At the same time, 'Basic Instinct' also began its final week of promotional blitz before its release.
On the other hand, after only a week of stalemate, ABC Television Network resumed contact with Daenerys Entertainment.
As Simon had previously judged, ABC indeed did not have enough confidence to give up a TV show that could earn the network $1 million per episode. Moreover, the number of episodes per season for this TV show was three times that of a traditional hour-long drama.
Resuming negotiations, Daenerys Entertainment still insisted on its quoted price of $2 million per episode, but also made some minor concessions in other areas, agreeing to provide ABC with an additional 15 episodes before the fall season, to make up for the network's program shortage caused by the strike.
Including the previous week's pilot episode, ABC would pay Daenerys Entertainment $30 million upfront for these additional 22 episodes.
ABC wanted these additional episodes primarily to attract more TV viewers before the fall season, which was also why ABC was willing to compromise so quickly. In comparison, although NBC also quickly signed a contract with Daenerys Entertainment, the 'Survivor' they acquired could not serve this purpose.
For 'Survivor', Daenerys Entertainment and NBC also signed a binding clause similar to ABC's.
However, because the viewership could not be confirmed through a pre-broadcast pilot, Daenerys Entertainment only received a one-time buyout price of $1.2 million per episode for the first season. After the show aired, both parties could renegotiate the subsequent pricing based on actual viewership.
Simon actually wanted a revenue-sharing agreement, but NBC firmly refused.
He later learned that this was more because the network did not want to expose its financial data to the public. TV networks also have an accounting system similar to Hollywood's books, and it is even less transparent.
Compared to the standard 69 episodes per season of 'Who Wants to Be a Millionaire?', Daenerys Entertainment's proposed first season of 'Survivor' only had 13 episodes. While it might be adjusted based on the broadcast schedule in the future, it would generally be kept within 20 episodes per season.
The estimated production cost for the first season was about $5 million, which was much more expensive, per episode, than 'Who Wants to Be a Millionaire?'.
Therefore, the profits from 'Survivor' cannot be compared to 'Who Wants to Be a Millionaire?'.
Even if the price is renegotiated for the second season, Simon estimated that this show would only fetch a similar price to 'Who Wants to Be a Millionaire?'. However, the projected longevity of 'Who Wants to Be a Millionaire?' would be much shorter than 'Survivor'. Even if Daenerys Entertainment actively controls it to prevent the show from becoming too ubiquitous, it will end in at most three to five years once audiences experience aesthetic fatigue.
In comparison, with a production pace of two seasons per year, 'Survivor' could last on television screens for more than ten years.
Moreover, although it cannot compare to 'Who Wants to Be a Millionaire?', the return on investment for 'Survivor' is still unmatched by traditional TV shows.
If this show achieves the same success as it did in the original timeline, with two seasons per year and appropriate expansion of episodes, calculated at 30 episodes for two seasons, plus the in-program advertising revenue that Daenerys Entertainment also retains, 'Survivor' could bring Daenerys Entertainment no less than $60 million in annual revenue.
In short, both of these reality shows are like low-cost, high-grossing box office dark horses, rare and hard to come by. For Daenerys Entertainment to develop its television business long-term, it still needs to produce various types of mainstream television programs.
Santa Monica City.
Daenerys Entertainment Headquarters, the date is July 12th.
In Simon's office, a middle-aged man in his fifties sat opposite him. Even sitting down, it was evident that the man was over 1.9 meters tall.
This was Robert Rehme, the current CEO of New World Entertainment.
With the transaction plan finalized, Robert Rehme had been actively maintaining contact with Simon in recent days, and Simon had also meticulously inquired about the middle-aged man's professional background through his connections in the industry.
Robert Rehme was 53 years old this year. As early as 16, he had worked as an usher in a local cinema. After graduating from university, Robert Rehme held a series of jobs in film and television entertainment, possessing thirty years of experience in film and television production and distribution.
Before becoming CEO of New World Entertainment, Robert Rehme served as Vice President of Marketing and Distribution at Universal Pictures, and his previous work was also more inclined towards film distribution.
This was exactly what Daenerys Entertainment urgently needed.
The man clearly saw this point, which is why he was so proactive.
After all, according to his resume, he was still a long way from securing the top position at a major studio. If he were to leave Daenerys Entertainment after the acquisition of New World Entertainment, he would more likely become an independent producer, or perhaps receive job offers as an executive at other second or third-tier film companies, but those jobs clearly could not compare to the rapidly developing Daenerys Entertainment.
It's worth noting that in the first half of the year alone, the anticipated earnings from 'When Harry Met Sally', 'Pulp Fiction', and the recently successful 'Who Wants to Be a Millionaire?' had already surpassed all second-tier film companies in Hollywood, which generally had poor operating conditions, and even rivalled the profit levels of some of the lower-ranked companies among the Big Seven.
Simon also intended to keep him on, but he needed to ascertain Robert Rehme's attitude.
After all, compared to Robert Rehme, Amy Pascal had much less experience in Hollywood, and she was also a woman. However, Simon had no intention of letting Amy give up the top position; he had always been very satisfied with Amy. If Robert Rehme was unwilling to be second-in-command and wanted to replace Amy, Simon would only regretfully decline.
Robert Rehme's main purpose for coming today was to deliver Simon the project materials held by New World Entertainment.
When Larry Kuppin and others acquired New World Entertainment from Roger Corman, Roger Corman retained the copyrights to all films before 1983. However, in recent years, due to continuous large-scale expansion, New World Entertainment quickly accumulated the copyrights to nearly a hundred films and TV series through self-production and agency distribution within just five years.
Simon was most interested in the company's television programs.
According to the materials in hand, the major television networks had announced reservations for five TV series from New World Entertainment last year, including 'The Ultimate Police Network' and 'Santa Barbara', all of which had very good viewership. In the spring season of this year, just before the Hollywood writers' strike, New World Entertainment also launched another well-received new drama, 'The Wonder Years'.
However, due to the Hollywood writers' strike, these programs that the TV networks had announced renewals for were temporarily on hold. Without this acquisition by Daenerys Entertainment, even if the TV networks still had demand, New World Entertainment would have had to cut most of these projects due to funding and other reasons.
As for films.
Inheriting the production style of the Roger Corman era, New World Entertainment's films produced and distributed in recent years were generally low-budget B-movies, and most of them went directly to the video market.
Compared to last year's eight-film production slate, New World Entertainment's production plan for this year was down to only three films, with several other clearly uncertain projects in the pipeline.
As for distribution, in the first half of the year, New World Entertainment released a total of seven films, four of which were released in theatres and all ended in failure. 'Zombie Cop', released at the edge of the summer season in early May, had a production cost of $5 million and opened on 1,012 screens, but only recovered $3.59 million at the box office. This was still the best performance among the four theatrical films, with the other three films only receiving video distribution, which shows how dismal New World Entertainment's film business was.
Simon did not keep Robert Rehme waiting too long. After quickly glancing through the materials in his hand, he looked up and said, "Bob, after this acquisition is complete, I will integrate all of New World Entertainment into Daenerys Entertainment. Daenerys Entertainment will be reorganized, with subsidiaries set up according to New World Entertainment's model. In the short term, I do not plan to lay off staff from this company, but according to custom, you personally are an exception. However, I also understand your thoughts. So, let's be frank, are you willing to serve as Amy's deputy?"
Robert Rehme was naturally unwilling. Before coming to Daenerys Entertainment, he had considered persuading Simon to let him be the top executive. However, Simon immediately made this a prerequisite, and he realized Simon's stance.
After a moment of thought, Robert Rehme nodded and said, "No problem, Simon. However, I can serve as Ms. Pascal's deputy in terms of position, but I hope to report directly to you personally, without being subject to Pascal's jurisdiction".