While the 10-movie plan set all of Hollywood abuzz, Daenerys Entertainment's 1989 mid-year financial audit also quietly concluded.
In between balancing his other work, Simon spent three days studying the dozens of pages of financial reports compiled by the company's finance department.
Overall, the focus of Daenerys Entertainment's revenue in the first half of the year remained the four films released at the end of last year: 'Scream', 'Steel Magnolias', 'Dead Poets Society', and 'Rain Man'.
From January 1st to June 30th, a six-month period, the domestic box office for these four films continued to bring in $263 million, with Daenerys Entertainment's share of that box office coming to $121 million. The reason this was lower than the average 55% box office split was mainly due to the tiered distribution schemes used by theatres, where the box office split percentage gradually decreases after a film is released.
Overseas, the total revenue brought in by the four films was $356 million, of which 'Scream' accounted for $95.15 million, 'Steel Magnolias' for $12.37 million, 'Dead Poets Society' for $86.32 million, and 'Rain Man' for $163.65 million.
These box office figures would still increase somewhat in the second half of the year, but the potential left was already very small.
Compared to the data in the original timeline, the overseas box office for all four films showed a significant shrinkage. Except for 'Steel Magnolias', where the huge gap between overseas and domestic box office was due to the subject matter having too small an overseas audience, the shrinkage for the other films was mainly due to Daenerys Entertainment's lack of overseas distribution capabilities and the fact that many overseas box office markets had not yet opened their film markets.
Furthermore, in this era, even if most overseas box office countries had opened their film markets, they still implemented various restrictive measures to protect their own film industries, such as low revenue splits, high taxes, and delayed release dates. Daenerys Entertainment's average revenue split from the overseas box office was only 33%.
In addition, for some overseas markets that were too small or had stricter policy restrictions, Daenerys Entertainment could only do one-time buyout deals. Although the box office would still be counted in the total overseas box office data, it would not participate in the revenue split.
In Simon's memory, this situation would improve rapidly after the nineties.
Calculated out, these four films contributed a total of $116 million in overseas box office revenue to Daenerys Entertainment.
As for the new films released this year, as of June 30th, the six films from the first half of the year, including 'Blue Steel' and 'Metropolitan', had accumulated $123 million. 'The Sixth Sense', which was released on June 30th, was excluded from this tally. The cumulative revenue split from the six new films was $73 million.
In the home entertainment business, 'When Harry Met Sally', released at the end of last year, sold 2.93 million videotapes in the first half of the year. At a unit price of $29.90 per tape, sales reached $87.60 million.
Although film companies, in their basic agreements with various unions, count 80% of videotape revenue as costs and only leave 20% for distribution, in reality, studios generally achieve a gross profit of 40% to 50% of the unit sales price from each videotape sold. For a hot-selling new release like 'When Harry Met Sally', the gross profit margin would be even higher.
Therefore, the videotape release of 'When Harry Met Sally' alone brought in over $46 million in gross profit for Daenerys Entertainment.
Including some other miscellaneous project income, a comprehensive tally showed that out of the nearly $900 million in total industry value generated by Daenerys Entertainment's film business in box office, videotapes, and other areas in the first half of the year, the operating revenue belonging to Daenerys Entertainment itself was $395 million.
Behind the abundant revenue, however, also lay massive expenditures.
In the first half of the year, Daenerys Entertainment had more than ten films in various stages of formal production. Among them, the budget cost for 'Batman' alone reached $50 million. Other projects like 'The Bodyguard', 'The Sixth Sense', 'Uncle Buck', and 'Scream 2' also required large expenditures.
At the same time, Daenerys Entertainment also invested large sums in marketing and distribution expenses for domestic and overseas theatrical releases.
Finally, considering a series of large expenditures that the company as a whole had to bear, such as the construction of Malibu Daenerys Studios, the establishment of numerous overseas branches, the repayment of some maturing loans, as well as the equally important tax factors, the net profit scale of Daenerys Entertainment's film business in the first half of the year was only $51.19 million, with a net profit margin of less than 13%.
Regarding the television business.
Compared to film, the television business in the first half of the year was somewhat lacklustre. The focus of Daenerys Television's revenue remained the four reality shows. Since the beginning of this year, the television department had signed production contracts with networks for three more new series, but the two series from last year were also cancelled after the spring season ended due to low ratings.
With this tally, Daenerys Television currently has exactly 10 television projects in operation, six of which are TV series and four are reality shows.
Because the profit figures for the reality shows, which make up the bulk of the income, were basically fixed, the total revenue of Daenerys Entertainment's television business in the first half of the year was $232 million. Similarly, after allocating large expenditures, the net profit of the television department was $36.82 million, and the net profit margin was also not very high at 16%.
Regarding the comic book business.
Although the launch of the 'Batman' project had brought Marvel Entertainment to the industry's attention, the comic book company continued to operate in a low-profile state in the first half of the year. Its revenue of $39.71 million and profit of $2.26 million did not have a large impact on Daenerys Entertainment's overall performance.
However, in the financial report for the first half of the year, there were also highlights, namely the Consumer Products Department led by Nancy Brill.
After several adjustments, Daenerys Entertainment's Consumer Products Department is currently mainly responsible for the development of peripheral products for the company's series of film and television projects, the release of soundtrack albums, and a portion of the advertising business.
Of course, the sponsorship advertising operations for reality shows like 'Who Wants To Be A Millionaire?' are still handled separately by Daenerys Television, belonging to Daenerys Television's advertising department. The Consumer Products Department only handles the peripheral product development for several reality shows. The so-called advertising business mainly involves product placement collaborations for films and TV series produced by Daenerys Entertainment.
The energetic little woman had spearheaded the investment in Blockbuster, established Daenerys Analytics, and launched Blizzard Studio in the first half of the year. While she seemed to be straying from her main duties, the operations of the Consumer Products Department hadn't fallen behind at all.
Through the peripheral product operations of two key projects, 'Scream' and 'The Real Housewives Of Beverly Hills', the Consumer Products Department's peripheral business made a breakthrough. The two projects, targeting different consumer groups, successfully established two targeted retail channels for the department: one for teenagers and one for housewives. These two groups happen to be the two with the greatest consumption potential.
After the success of the peripheral operations for 'Scream' and 'The Real Housewives Of Beverly Hills', the development of peripheral products for the company's other films was also carried out more smoothly.
Regarding soundtrack albums, although the soundtracks for 'Dead Poets Society' and 'Rain Man' released by the record department did not reach the heights of 'The Bodyguard' soundtrack album, they still achieved quite good sales. As of June 30th, sales of the 'Rain Man' soundtrack had exceeded 5 million copies, which is already very rare for a pure music album.
Finally, in the advertising business, to avoid audience backlash from blind product placement in the company's films and TV shows, Simon had been very cautious in this regard.
Nancy Brill also did not blindly pursue inappropriate product placements. However, because Daenerys Entertainment's series of films last year were so successful, there were countless companies hoping to establish brand collaborations with the company, and their offers were very generous. Under Simon's prerequisite requirement to avoid a flood of advertising, Nancy Brill still brought in substantial revenue for the company through brand collaborations for projects like 'Batman', 'Brenda Starr', 'Pretty Woman', and 'Ghost'.
As a result, the Consumer Products Department, which had almost no income last year, saw its revenue figures break through the $200 million mark in the first six months of this year, reaching $207 million.
However, because Nancy Brill pursued a business strategy focused more on long-term development than short-term profits, large sums of money were invested in product production, channel construction, and marketing. The company had even unknowingly acquired a toy factory in Rhode Island on the East Coast. Coupled with the fact that the Consumer Products Department also had to share the company's other expenses, the profit margin was even lower at only 9.5%, with a net profit of $19.71 million.
Ultimately, overall, Daenerys Entertainment's total revenue for the first two quarters of this year was $873 million, and its net profit income was $110.78 million.
Compared to the massive gains Cersei Capital had just obtained from the Japanese financial market, Daenerys Entertainment's $110 million net profit seemed somewhat insignificant. However, Simon was always very clear that this company was his foundation. Opportunities in the financial market would not exist every year, and as he became more prominent, the difficulty of profiting in the financial market also increased. Investments in the technology sector, moreover, generally take ten to twenty years to see final results.
Daenerys Entertainment's lower profit scale was also mainly due to the needs of its rapid expansion.
Moreover, $110 million in net profit for half a year is actually by no means low. This level of profitability in this era could easily squeeze into the top 100 of the Forbes North American 500 list.
More than fifty kilometres off the Los Angeles city coastline, a luxury yacht over 60 meters long was quietly anchored on the sea's surface.
The time was Sunday, August 6th, 1989.
This weekend, Simon did not continue working consecutively, but once again chose to rest.
However, this time it was not purely for rest.
James Raybould had come from New York in the last few days to discuss company matters and also to help introduce some people to Simon, more accurately, some politicians.
The location was arranged on this yacht.
Simon did not intend to use illegal means in the process of expanding his political network; everything was conducted according to public rules such as the Federal Election Campaign Act. However, he also hoped that this matter could be conducted as low-key as possible; at the very least, he had no intention of appearing publicly on newspaper media pages with any politician.
Over the two days, Simon met with a total of six politicians, including David Dinkins, who was making final preparations for the year-end New York City mayoral election. These were all people Westeros Company had already confirmed it would support with funding. Besides David Dinkins, the other five were: a California State Senator, two California State Assembly members, a U.S. Senator from New York, and a U.S. Representative from California.
These people were all Democrats. Since he had decided to take a side, Simon did not intend to bet on both sides in the short term.
Moreover, Simon did not pick those high-profile star politicians. The few people he chose were basically potential candidates with good abilities and no established backing, identified after careful investigation. Congressional elections in the U.S. occur every two years, which seems very frequent, but in reality, the re-election rate for members of Congress is very high; some 'evergreen' politicians can even serve more than ten consecutive terms.
Simon also didn't seek immediate returns from these people.
The initial first batch of 'investments' was mainly to establish a network of contacts, to avoid Daenerys Entertainment being completely in the dark at the federal high level should anything happen.
In the long-term vision, it would be good enough if these people could provide support for Westeros Company's expansion in three to five years. If someone could enter the core of federal power in eight to ten years and still be on Westeros Company's side, that would be a huge win.
At dusk, Simon finally finished the last meeting of the weekend.
After personally seeing the U.S. Senator from New York off on a helicopter, Simon and James walked to the table and chairs on the yacht's top deck terrace near the helipad and sat down.
As the sun set, the fiery clouds in the sky filled the horizon, painting a magnificent scene of sea and sky.
Jennifer personally brought a pot of coffee to the two of them but then walked over to another set of table and chairs nearby and sat down, quietly lowering her head to read a magazine.
James glanced at his daughter, sighed slightly in his heart, and continued to Simon: "I'll send you the information on the other candidate lists when I have a chance. Also, there's a consulting firm that provides polling and campaign plans for the party; it was founded not long ago and is called Sharp Consulting, headquartered in Greenwich, Connecticut, near New York. Although it was just established, the firm's founder, Joseph Sharp, and his family have very deep seniority and connections in politics. I think this is a good opportunity, Simon; we can set up a specialized fund to provide long-term support to this company".
Political investment cannot seek direct monetary returns. Setting up a non-profit fund can also maximize the conversion of capital investment into tax-avoidance capital.
"I'll take a look at the materials when I have time", Simon didn't nod immediately, then added: "Also, this time I can probably transfer another $50 million from Daenerys Entertainment to your side. We definitely won't be needing the overseas funds within a year".
"$50 million is already very good. I also recently did a review of the company's finances. The group of tech companies we invested in during the first half of the year contributed about $37 million in dividends, which is a bit low compared to last year, mainly because the several companies like Microsoft where we have heavy positions did not issue dividends. However, counting the original accumulation, this money is already enough to maintain the company's operations". James said, then remembered something else: "Also, among the remaining three companies that we can reduce holdings in at any time, AMD's stock price has been falling recently, and its market value is now 50% lower than when we bought it two years ago. I feel there's no need to keep it anymore".
AMD was, naturally, Intel's 'little rival'.
It still can't be propped up after all.
He remembered that when they bought into AMD two years ago, the company's market value was about $900 million, with a total investment of around $45 million. Simon hadn't been following this recently, but hearing James say this, AMD's market value might have fallen to $600 million. Compared to Intel's market value heading straight for $6 billion... well, they simply couldn't be compared.
However, thinking that AMD could continue to linger on for more than twenty years, there was no need to cut losses and leave now. Maybe it would have a sudden resurgence sometime, and the losses would be recouped.
Simon smiled and shook his head, saying: "Our current funds aren't that tight; let's continue to hold it".
James nodded in agreement.
With the business finished, they casually chatted about Daenerys Entertainment's recent big moves.
The two sat on the terrace for half an hour until the helicopter flew back. Simon, James, and Jennifer boarded the helicopter to return to Malibu.
Back on shore, the Raybould father and daughter declined Simon's invitation to attend a Warner Bros. party that evening and hurried off to have dinner with Jennifer's uncle, George Norman, and his family.
Simon rested for a while at his home on the west side of Point Dume before setting out for downtown Los Angeles.