Exploiting Hollywood 1980.

Chapter 1457 Gambler on the Cliff
"Mr. Li, my first job after graduating from Harvard was to work as an assistant to the Assistant Secretary of Defense at the Ministry of National Defense. Top Gun was the first movie I had seen in so many years that positively praised our soldiers. I wanted to meet this director at the time..."

"You can call me Ronald or Ronnie. I have known Mr. Paulson for a long time..."

"Call me Hank, Ronald, Hank..." Hank Paulson, who is in charge of investment banking at Goldman Sachs, is a typical traditional elite. His parents are small businessmen and religious. He received a good public education when he grew up. He is a national outstanding Boy Scout award winner, good at football and wrestling. After graduating from Harvard MBA, he joined the Department of Defense...

He is energetic, sincere and friendly to clients and friends, which is different from the typical Goldman Sachs banker. This time, Goldman Sachs suggested to buy some Blockbuster shares to improve DDH's valuation, but it was affected by Redstone and failed. So Paulson flew to Los Angeles to meet with Ronald to maintain the relationship.

After visiting Ronald's collection room and looking at his several Oscar trophies and movie posters of the films he directed and produced, Paulson got straight to the point.

"The institutions that provided financial support for Redstone's acquisition were JPMorgan Chase, Citibank, and Credit Suisse, as well as the Rothschild family and Boston's local banking group, who have always had close relations with him. Only the Financial Advisory Department of Goldman Sachs did some work in this deal. I can guarantee 100% that the news of the acquisition of Blockbuster could not have been leaked through the investment banking department of Goldman Sachs. Public channels and the SEC are more likely to be the channels for the leak..."

"Hank, I have no intention of blaming anyone. The guys at Goldman Sachs cooperated fully with my staff. I just felt that we were ambushed this time, and Redstone was very confident when he met me. Obviously, he had much more information than I did."

Ronald had figured it out before Paulson's visit. Rather than blaming Goldman for the possible leak, he should have suggested that the key to the problem was that Goldman had not given him advance warnings like the financial institutions that served Redstone had.

As a leading investment bank on Wall Street, there is no reason why Goldman Sachs cannot compete with private consortiums like JPMorgan Chase and Rothschild.

Paulson is also a very smart person. He graduated from Dartmouth College, which is a relatively low-end school in the Ivy League. He studied at Harvard for his MBA, which is not the same path as those elite children who are destined to go to Harvard and Yale from birth.

However, relying on such a background, he was able to climb to the position of business manager in Goldman Sachs' core investment banking business. His ability is very outstanding even in Goldman Sachs, where elites gather.

He understood the implication of Ronald's words very clearly, smiled, stared into Ronald's eyes, and replied, "Our clients' interests come first, which is the motto of Goldman Sachs. As our cooperation deepens, we can provide you with richer and more in-depth information."

"Very good, would you like a drink?"

Ronald nodded with a smile, indicating that he understood what the other party meant. People who graduated from Ivy League schools are all shrewd people. In sensitive situations such as speaking and writing, it is impossible for them to make even the slightest hint that would leak key information of competitors.

He stood up, took a bottle of Japanese whiskey, handed it to Michael Goldman, a manager at Goldman Sachs, and motioned him to pour some wine for everyone and chat slowly.

People in Paulson's position may be able to remain calm, but Paulson's subordinate, people at this level like Michael Goldman, have a fierce look in their eyes that clearly shows that he will be extremely loyal to clients like Ronald, and he will do all the dirty work for you in the future.

Lei Shidong had really crossed the line. This sudden attack put Ronald, who was not well-informed, in a dilemma.

On the one hand, if he agreed to sell his shares to Redstone, then Goldman Sachs' valuation plan would fail. If he disagreed, it would be even worse. Not only would DDH's valuation be dragged down by the crazy acquisitions of the merged Blockbuster-Viacom, but Ronald's shares would also plummet because of the stubborn acquisitions of the old man Redstone.

The negotiations between Redstone and Blockbuster lasted only four days. There was no time for news to get out during the closed-door meeting. As soon as Ronald came down from the negotiation table, Redstone suddenly visited him.

Looking back now, it was probably a sudden idea of ​​Redstone to buy some shares from Ronald to suppress Blockbuster's asking price. Blockbuster is a company with very dispersed equity, and Huizenga, the largest shareholder, only holds 8% of the shares.

If Ronald was willing to sell him 1% of the shares, the effect of this example would allow more shareholders to stand on his side, and it would be cheaper to buy out the shares of those small shareholders in a dispersed manner to reach a similar level to Huizenga's shareholding ratio than to buy Blockbuster all at once. Subsequent mergers and acquisitions would also cost less.

But after this failed, Lei Shidong returned to Blockbuster and immediately raised his bid, reaching an acquisition agreement with them that was unfavorable to him.

Blockbuster spent more than 1.2 billion to acquire Viacom's non-voting B shares, and gave the cash to Redstone for free, asking him to use it to acquire Paramount. But Blockbuster's efforts paid off, as the company's owner Huizenga could get three seats on Viacom's 12-member board after the merger.

Last year, Blockbuster invested 600 million in Viacom shares, which is a display of Huizenga's ambition. After the merger, it is still unclear who will dominate the future of Viacom-Blockbuster.

After all, among the listed companies in the entertainment industry today, who can provide tens of billions of idle cash to be left lying around in the account?

"Although I work in Hollywood, I still don't quite understand why Blockbuster has so much cash. I've also seen their financial statements. Last year's operating income was just over 1.2 billion..."

Ronald and Paulson drank some wine and began to test how much respect the other party had for their client. The interests of the client come first, but when there is a conflict between clients, who do you put first? This depends on which client is more important in Goldman Sachs' eyes.

Paulson smiled. "That's Blockbuster's accounting magic... How much did they buy the videotapes for?"

"The current season's movie tapes are between thirty-five and seventy-five dollars, but those from two years ago can be as low as less than ten dollars..." Michael Goldman immediately joined in. Before he came to apologize today, he had yelled in the office at those Harvard elites to find out all the secrets of Blockbuster, and he recited them attentively for a long time on the way here.

Blockbuster's profit of "only" 140 million last year was completely fabricated. It consumed most of its cash by buying shares in Viacom and another company, but it is still the entertainment company with the most cash.

Huizenga, the owner of Blockbuster, started out by renting trash cans to tourists on Miami Beach, and his business secrets have never changed. The rental business is actually selling cheap assets to customers again and again.

A hit movie at Blockbuster would typically be rented up to 75 times in its first year, at about $3 per rental, generating $225 in revenue, three to seven times the cost of purchasing the video. These multiples accounted for a large portion of Blockbuster's huge cash flow.

Huizenga must be very proud now. With the bargaining power of more than 1.2 billion in cash, he feels that he will be the most powerful faction in Viacom's board of directors in the future.

The combined Viacom-Blockbuster was worth $84 billion, and Huizenga and Redstone were both very satisfied, as they both got what they wanted. Only shareholders like Ronald became victims of the merger... The share price of the combined company was almost certain to fall.

"How many voting rights does Lei Shidong have left?" Ronald asked Michael Goldman after listening to the introduction.

"Our estimate is 80%. Lei Shidong would rather pay a high premium and keep the A shares with voting rights firmly in his hands."

"It seems that this garbage collector Huizenga never had an MBA..." Ronald smiled. It seemed that this man's success was also caused by current events. For a little paper profit, he gave up the control of the company to a crocodile like Redstone...

"Hahaha..." Michael Goldman and Paulson both laughed, and then some other members of the Goldman Sachs team also began to laugh.

"So, when can I get my money back from those stocks?" After everyone finished laughing, Ronald looked at Michael Goldman again.

"It seems that the possibility of Redstone's acquisition of Paramount is decreasing rapidly. His previous acquisition offer has increased from 7.5 billion to 10.7 billion. According to our calculations, even if Viacom Blockbuster uses this price to acquire Paramount Media, the company is not worth that much. In addition to the debts and interests paid for the two acquisitions, they will lose money anyway..."

Michael Goldman was very excited. He said that as long as the Paramount acquisition was stopped, Viacom's stock price would recover. The DDH listing he led would also restore the valuation at that time.

Ronald did not comment and turned to look at Paulson.

"If Mr. Redstone does this, he will be very close to the red line of bankruptcy..." Paulson understood Ronald's meaning, and he still thought that Redstone would acquire Paramount. But in this case, spending more than 10 billion to buy an asset worth less than 8 billion, isn't it too risky, even scary?

Paulson looked at Ronald with a colder look in his eyes, and was also shocked. Goldman Sachs can measure its clients, and clients can also measure Goldman Sachs in turn. Does Ronald have any definite information? If Goldman Sachs doesn't know...

He waved his hand to dismiss his subordinates, saying that he wanted to talk to Ronald in private. Michael Goldman had been sitting still, thinking that he had entered the inner circle, but he was also signaled by Ronald's eyes to leave the room reluctantly.

"Before I came here today, I heard some rumors that QVC was considering renegotiating with Paramount Media. Their offer of more than 10 billion dollars is not profitable. Barry Diller regretted it and is ready to lower the price if his competitors withdraw!"

This is the kind of news that only the core circle of Wall Street can know. At this moment when Redstone just announced the acquisition of Blockbuster, he was able to get such news early. It turns out that Goldman Sachs's connections and information network are indeed extraordinary.

"Really? I've met both Redstone and Barry Diller, and I have different impressions of them. Redstone is rude and vulgar, but I think he is like a cheetah. Once he decides on a prey, he will go all out. If he can't catch up, he will consume too much energy and may starve to death.

Mr. Diller is like a lion, and every move he makes is the result of precise calculations..."

"Well, Ronald, where did you get such an interesting metaphor?" Paulson was a little confused. Did Ronald really have some information, or was he just being an artist, using some Hollywood screenwriter's character analysis to predict the two's decisions?
Although "Other People's Money" directed by Ronald is more reflective of the takeover wars on Wall Street than other Hollywood movies, it is a movie after all, and is far from the real situation.

"Disney's latest animated film is called The Lion King. It has similar metaphors in it. I happen to have a good relationship with them."

“You have to be kidding…hahahaha”, Paulson laughed, feeling a little weird…no…

"Are you shorting Viacom through some channel?" Paulson suddenly had an idea. Most people stick to their views after they place a bet. A person who buys a stock and then sees the stock price fall, especially an amateur, will always come up with various reasons, such as technical decline, or the dealer deliberately selling to absorb the stock, to find excuses for his mistakes.

"Do you have a suitable channel at Goldman Sachs? I mean the kind with high standards and good confidentiality." Ronald suddenly became interested. Paulson was a very intelligent man, so it was no surprise that he saw through his thoughts. The short-selling trader on Bannon's side was not the best on Wall Street.

"Asset Management Department, they can do this to investment clients. But I suggest Global Markets Department, the people there are better, and they are much stricter with fast in and out."

Paulson had some thoughts. As a mercenary, Goldman Sachs could make money no matter whether Ronald made a profit or a loss on his short selling. Besides, Ronald still had shares in Blockbuster, which were enough to close his position.

The worst that can happen to Ronald is that he loses money on both stocks and short selling, but that won't hurt him at all. He might even rely more on Goldman Sachs' investment strategy advice.

In addition, Goldman Sachs CEO Jon Kolzin has hinted that he will promote a new COO by the end of the year. If Paulson can not only continue to lead the investment banking department to great success, but also unite the global market department, then the competition with the head of another core business department, the asset management department, will have another solid ally.

"I'll have my people contact your people..."

"Very good." Paulson heard Ronald's confidence and began to pack up and prepare to leave. After the two said goodbye, Paulson opened the door and then stopped...

"But, Ronald, can you tell me what made you so confident? Seriously..."

This question before leaving is also Paulson's unique experience. Usually, their vigilance is the lowest at this time.

"Mr. Lei Shidong is not a person who likes to go to other people's homes to chat, but he still came to my house that day..."

Ronald looked solemn. Lei Shidong was such an egomaniac that he seemed to be doing favors to others. He even harassed a strange woman, as if all women should throw themselves at his feet and all men should be used by him.

For such a person to give up his self-esteem and come to Ronald's house to discuss something shows that this matter is very important to him. Is it just because of the acquisition of Blockbuster?
No, he encountered obstacles in acquiring Blockbuster, so he condescended to make an offer to Ronald. He wanted to take over this company, and then use the money from Blockbuster to acquire Paramount.

"No Shxt!" Paulson blurted out.

"No Shxt..." Ronald said that what I said was true.

"It seems that you have convinced me that Cheetah is going to go all out."

Ronald nodded, stood up and shook hands with Paulson, "I need the best trader..."

"You'll get it..."

……

"It's actually like this..." Paulson pondered in the car. Ronald was a good hunter. He had a dangerous instinct for his prey. It was not easy for people who were targeted by him. People with such business instincts deserved more investment from him. He said to Michael Goldman, "All DDH's listing matters must be reported to me in the future..."

"Continue to add 100 million in funds? Since you are so sure, I won't persuade you." Ronald's personal accountant Lawrence heard that he was going to add short-selling funds to Goldman Sachs, so he prepared to go as usual. Ronald's previous investment vision was not to be questioned.

"Of course I am sure," Ronald thought with a smile after putting down the phone. "In just a short meeting, Lei Shidong proposed to me three times to acquire the company. When will such an arrogant person be so patient with a small business? He is a gambler who has been pushed to the edge of the cliff and must go all in.

Besides, after DDH went public, he and he were both technically equal as media group owners. How could he not return the favor after Lei Shidong humiliated him so much? Otherwise, Lei Shidong would definitely make fun of his mistake in person if he had the chance.