Exploiting Hollywood 1980.

Chapter 1546: Attacking Ovitz from both sides

"In general, Panasonic wants to sell Universal Pictures, but it can't let go of the fact that it lost to Sony in the competition. This is a particularly embarrassing thing for them."

After the secret meeting with Ron Mayer, Ronald got some information about Ovitz and came back to have a meeting with his confidants. Panasonic hired Ovitz as a sales consultant, just like they hired him as an acquisition consultant. However, this time, Panasonic did not ask Ronald to be a consultant. Ronald also vaguely knew why...

"I don't understand how they can be so financially underperforming when Spielberg just made Jurassic Park and Schindler's List for them?" Lawyer Lindsay Doll has been living in Los Angeles during this time, providing Ronald with any legal counsel he needs.

She also brought her son Matthew to live in the guest room of Ronald's house. Unexpectedly, little Matthew had a lot of fun playing with Ronald's son Roger. There were many toys that his mother didn't buy for him. Roger also liked his brother very much. Every day, the two of them made up many stories with toy dinosaurs from Jurassic Park and Jedi dolls from Star Wars. They had a lot of fun and hoped that Lindsay's work would not end in the short term.

Therefore, Lindsay Doyle saw the strong money-making ability of Jurassic Park. Even if Universal had a money-losing movie like "The Last Action Hero", Jurassic Park should be enough to smooth out the poor box office performance of various projects. Why is it so eager to sell it?
“Their fixed costs are too high…”

Ed Bastien looked at the financial report of Universal Pictures and sighed. Although Jurassic Park made a lot of money, Universal Pictures had a bigger bill.

Universal Studios theme park has brought a lot of income to Universal Pictures for many years. It is the second largest theme park in Hollywood after Disneyland. The two theme parks in Hollywood and Orlando also followed in Disney's footsteps and launched many movie-related adventure projects.

For example, the Hollywood theme park has a project to renovate the sets of Jaws and King Kong, which allows the audience to understand how the monsters in these two blockbusters were filmed. You can also take a boat and be attacked by a great white shark just like in the movie.

Orlando's theme parks are newer and include ET the Extraterrestrial and Back to the Future attractions.

The names of these movies are old. The youngest one, Back to the Future, was a blockbuster ten years ago. Most of the kids nowadays have watched new movies from Disney, and many have never seen these Universal movies.

After decades, these facilities have reached the stage of renovation. For example, the latest Jurassic Park, to add this project, the cost is sky-high. In addition to this part of the renovation and construction costs, the daily operating costs are also astronomical.

Universal Studios’ original gimmick was to recreate famous scenes from movies. Unlike Disney, which builds castles and hires singers and dancers to sing and dance inside, its daily operating costs are very high, but its ability to sell toys is not as good as Disney’s.

An even more expensive fixed cost is that Universal has fallen behind Paramount and Warner Bros. in its global distribution network. For Jurassic Park, many of the cooperations must be negotiated separately with local distributors, which simply adds more costs.

In order to catch up with its competitors, the money spent on rebuilding the distribution network cannot be saved. Wall Street also looks at the main data of these competitors to make demands on Universal.

Just adding all these together means that Global is faced with huge fixed asset investments, and it can be said that it is financially stretched.

But none of these are as big as another problem.

Universal's two leaders, Lew Wasserman and Sidney Sheinberg, have reached the age of retirement. After earning stock options and pensions (mostly given to them by Panasonic after the acquisition of Universal), the two long-time contributors to Universal have long lost their motivation to move forward. But they have not officially retired yet.

Finding suitable people to replace them is not only difficult, but will also inevitably require some expense, allowing the two to enjoy their retirement life in peace.

"I heard that their situation in Japan is not good either..." Richard heard a lot of news. Japan's economy is now in trouble. Those Japanese multinational companies that were doing a lot of shopping in America in the early years have revealed their true colors today.

Is it really strong enough to survive in Hollywood, or was it just a pretense when it bought the studio? Today is the day to find out.

But it is precisely because of this that Panasonic was still hesitant when it came to seeking to sell Universal Pictures. The Japanese executives did not want this action to be interpreted as a wrong investment for Panasonic, nor did they want to be said to be inferior to Sony. After all, Columbia Pictures under Sony was only losing money, and it did not become such a heavy burden.

Therefore, when a company called Seagram, whose founder's son Bronfman Jr., approached Panasonic last year and wanted to buy Universal, Panasonic flatly rejected it.

In fact, it is not difficult for Panasonic to turn losses into profits. They only need to imitate Redstone's Viacom and acquire some TV stations, so that they can form a super large media group. The resources of the film studio and TV stations can be used to increase the valuation of both.

For example, a star who is loved by many viewers in a TV series can try to make a movie, and vice versa. Good movies can be broadcast on their own TV stations, and good TV series can be made into movie specials.

In short, if a business group has two major media outlets, they can hype each other up and form a virtuous circle.

But this is where Panasonic is embarrassed. They are not an American company. According to FCC regulations, they cannot own or control a local American TV station.

Panasonic has no choice but to sell the company since it failed to take advantage of such a good opportunity. It is not easy to sell the movie and record companies that it bought for $60 billion at the original price.

When Seagram's Bronfman approached Panasonic last year, the terms he offered were quite favorable. They were willing to use cash to acquire the company, and the price they offered was 10% higher than Panasonic's acquisition price that year.

Such a buyer is actually hard to find in China. But Panasonic still refused, which puzzled Bronfman, so he had to ask Ovitz, who was very familiar with Japanese culture in Hollywood, for advice and try to find a way to make another invitation.

In fact, Bronfman Jr. found the wrong person for this matter. If he had found Ronald, he would have been able to explain the matter in one sentence. The Japanese cannot afford to lose face. So it is impossible for them to admit that the acquisition failed and sell everything to you...

However, outsiders don’t know much about Ronald’s relationship with Mr. Ohga of Matsushita, so from outsiders’ perspective, Ronald is more like a fan of Chinese culture. His home is filled with Chinese gardens and Chinese artworks. Of course, he doesn’t understand Japanese people as well as Ovitz, whose home is decorated in the Japanese style of dry landscape…

Panasonic has not stopped looking for a suitable buyer.

One potential buyer they thought of was Redstone, who had already acquired Paramount. Of course, Redstone's Viacom was still in financial danger and had made various moves to sell assets. In the eyes of those who knew the business, Redstone was already walking on a tightrope, and it was simply a pipe dream to expect him to take on another burden and leverage to acquire Universal.

But Americans don't understand Panasonic, and Panasonic doesn't understand Americans. In the eyes of those people at Panasonic, Redstone is a very strong person. Since he bought Paramount, why not buy Universal as well?
Lei Shidong was probably also surprised when he was contacted, but as a consistently strong entrepreneur, he could not show weakness at any time. Otherwise, it would be no joke if someone sniffed out his weakness in the capital market.

After a while, the two sides actually started talking. Panasonic really wanted to sell, but Redstone didn't want to buy at all. The two sides spent a month in a state of confusion, with no progress.

At this time, Ovitz showed the appearance of a qualified broker again. He helped Panasonic contact several possible buyers.

For example, Time Warner Group wanted to expand its film production scale. They were formed by the merger of Warner Bros. Pictures and Time Publishing Group in the early 1990s. The capital market was not satisfied with their performance, especially several influential films were snatched away by other companies (such as Forrest Gump), which made investors put forward more requirements for the company, such as making more successful films at the box office and critics awards.

Looking at Hollywood, Universal's Jurassic Park and Schindler's List, if you say they are not successful in terms of box office and awards, then no one else can say they are successful. Doesn't this sale just meet Time Warner's requirements?

Disney is also said to be interested in Universal's assets, especially its early film libraries. Remakes have always been a magic weapon for Disney...

In addition, PolyGram Films from Europe was also included in Ovitz's recommendation list. They are now owned by the Dutch electronics giant Philips, and like Panasonic, they may also provide better film and television products for their electronic entertainment products by investing in film studios.

In addition to them, Ovitz also recommended Turner Television to Panasonic. After all, Philips is a Dutch company and a competitor of Panasonic in consumer electronics. Besides, they cannot own American TV stations.

Following this line of thought, since Panasonic cannot own a TV station, it might as well sell Universal to a TV station.

Turner Television's CNN is now enjoying booming ratings, and with the tens of millions of subscribers created by the Gulf War, there must be a lot of interest in expanding it into a comprehensive media oligopoly, right?

In fact, this was all Ovitz's trick. He knew that the only company with enough cash to acquire Universal was Seagram. The Bronfman family actually owned 24.3% of DuPont's shares, which was worth nearly $88 billion, enough to buy the entire Universal at a premium.

However, Seagram had just made an offer, and Panasonic rejected it. If the misunderstanding between the two parties could be solved so easily, then Ovitz would not be of much value.

The ideal situation would be to introduce a bunch of companies to Panasonic that seem to have good acquisition ideas but are actually impossible to actually buy Universal. After Panasonic has experienced many setbacks, it would introduce the Seagram Group again. This would put both parties in a psychological position where they hope the deal will be successful.

This is the important information that Ron Meyer specifically revealed to Ronald during their secret conversation.

Mayer and Ovitz are both one of the five founding partners of CAA. However, over the years, Ovitz has used various means to force the other three partners to leave. Now Mayer has less than 20% of CAA shares, and she dares not speak out against Ovitz's tyranny.

According to Mayer's understanding, Ovitz was so enthusiastic about promoting and arranging the deal for Panasonic to sell Universal because he actually wanted to switch from the brokerage industry and become the future CEO of Seagram Global Group.

Ovitz particularly wanted to prove that he could be successful not only in the agent industry, but also as head of a film studio and a record company.

Thus, since the law prohibits agents from engaging in any production business, he can no longer concurrently serve as the boss of CAA.

Ron Mayer finally waited for the day when he became the largest shareholder of CAA. As the only remaining founding partner, it was legitimate for him to become the president of CAA.

By the way, after Ovitz leaves, his 80% of shares can also be sold through a share sale plan, allowing the younger generation of agents within CAA, known as the "Young Turks," to also get some equity, thereby dispersing the original major shareholders and making Mayer the person with the largest shareholding.

To achieve this goal, we must find a way to help Ovitz successfully complete the deal and make the buyer very satisfied with him so that he will be hired to manage the company's business after the acquisition.

However, Ronald was still surprised when he talked to Ron Mayer. It turned out that Mayer did not have much desire to run CAA.

In this day and age, agents are no longer able to make a lot of excess profits by packaging projects, taking advantage of the weakness of many major studios and the lack of stars and box office guaranteed projects, as they did in the past decade.

Ever since Redstone acquired Paramount, the industry quickly felt that a studio owned by such a media tycoon was no longer as weak as it had been in the past in negotiating with stars on pay and in packaging with talent agencies.

Moreover, Viacom's financial pressure will force them to continue to cut all possible costs and reduce the risks of filming movies.

So, in fact, what Ron Mayer really wanted was the position of Universal President after the acquisition. He also wanted to jump out of the agent business and become the head of a studio.

Ronald was very shocked by this, and later asked Richard, Niceta and others what they thought.

Nicita is happy to stay at CAA as a senior partner, because his wife Paula Wagner has become a production partner with Tom Cruise. This way, one foot in the agent industry and the other in the production business is the most beneficial to the couple.

And Richard...Richard showed his nostalgia for the brokerage business. He really wanted to make a big splash in the brokerage industry. He also disagreed with Ovitz's high-pressure model in the past.

In this way, Ronald felt that he could strengthen cooperation with Ron Mayer. If he could successfully recommend him to Bronfman Jr. of Seagram, this would become a strange situation. Mayer took away Ovitz's way out, and the Young Turks group represented by Richard cut off his retreat.

Ovitz got a lot of money, but he no longer had a foothold in Hollywood and no influence.

If this plan succeeds, it will be very much to Ronald's liking. However, whether it succeeds or not also depends on Ronald's luck. In short, with the idea of ​​not letting Ovitz become the CEO of Universal, Ronald began his own layout.