Exploiting Hollywood 1980.

Chapter 1592 The Second Largest Merger in History
"Michael, you and I will serve as co-CEOs, and after a period of adjustment, I will be able to step down and let you serve as the sole CEO."

"The title doesn't matter, Michael. What matters is the content of the work I do."

Eisner and Ovitz attended the press conference announcing Disney's acquisition of ABC. Ovitz's appearance also announced his plans after resigning as CEO of CAA, ending rumors that he would go to Warner Bros. after failing to get a job at Universal MCA.

This is the second largest corporate merger in American history, second only to the KKR fund's leveraged buyout of RJR Nabisco in 1989. The total acquisition amount reached 190 billion US dollars. Once the news came out, it shocked the entire Hollywood and Wall Street.

Except for some of the top people in the industry, most executives and Wall Street bankers were actually uncertain about the merger. Most people had only heard rumors and did not believe that Disney would swallow up the giant ABC.

For a time, Hollywood's entertainment media and Wall Street's financial media were all going crazy and asking questions to Eisner, the man who was in charge of this matter.

"Mr. Eisner, how do you feel about the acquisition?"

“Haha, that feels like buying a house from your cousin…”

Eisner once worked at ABC TV, so he answered the questions in such a casual tone, which caused laughter from the people present.

However, the reporters at the scene soon discovered that Eisner had no intention of answering the questions in detail. He just used some simple metaphors to express the strategy he adopted after the merger of the two companies.

To put it simply, Disney is responsible for content production and ABC is responsible for content distribution, and the two together are truly greater than one plus one.

The reporters at the scene could tell that the adjective "real" was used by Eisner to target Redstone, the chairman of Viacom, which acquired Paramount. Viacom also said something similar when it acquired Paramount, but more than a year later, Viacom's market value has actually dropped compared to when it acquired the previous two companies.

Another big move announced by Eisner was to enter India and China. Eisner wanted Disney's cartoons, toys, and amusement parks to enter the two most populous countries in the world. He also hoped that ABC could land in these two countries so that their people could see news from Disney/ABC.

There were so many big news that reporters ignored the "small matter" of Ovitz's appearance at the scene. They hurried back to write articles and then found people to interview the heads of other companies in the industry, as well as Eisner's little object of ridicule, Redstone.

Sure enough, on the next day, all the media tycoons were interviewed in their respective newspapers and said something.

The first was Redstone of Viacom, who was interviewed by the Boston Globe in his hometown. When asked about his opinion on the merger, Redstone said something rare:

"No one knew about it beforehand. It was a really well-kept secret."

For someone like Lei Shidong, such a statement is tantamount to admitting defeat in disguise. This actually makes sense. Lei Shidong is a typical old-school rich man. He measures a person's value by how much assets he can manipulate and how many people's lives he can influence.

Disney's $190 billion acquisition of ABC far exceeds Viacom's acquisition of Paramount. To say more would be to humiliate oneself.

Another media tycoon, Rupert of News Corporation, also accepted the interview. He did not let his newspapers report the story, but chose the Wall Street Journal to speak out. This may be because most of the newspapers under his control are gossip tabloids, and a serious financial media like the Wall Street Journal is more worthy of his status.

When asked about his opinion on the merger, Rupert simply admitted defeat, "Now they are twice as big as me."

Of course, if we look at the value of the entire group, Disney/ABC is almost twice as much as Fox Television Network and 20th Century Fox Film. Although Rupert's personal wealth is higher than Eisner's, it is foreseeable that people like Eisner will desperately give themselves dividends and options in the future, and the gap between the two will only narrow by then.

Paul Fahey, chief financial reporter for The Washington Post, said in the report, "This move has catapulted Disney into the top of the global entertainment giants."

This represents the views of other serious media. What surprised everyone the most was not their confidentiality, but the huge size of this media group after the merger.

Of course, the excellent confidentiality is also a point that the media likes to mention, and this point was made the center of the report by the Los Angeles Times.

This is also because the person they interviewed was Katzenberg of DreamWorks, who was formerly Eisner’s closest friend and subordinate, and now his mortal enemy.

Because of the relationship between Katzenberg and Eisner, Katzenberg did not get any valuable information in advance. He thought Disney would buy CBS. "All my guesses were wrong. This acquisition was totally beyond my expectations."

"Hollywood, Wall Street and the entire entertainment media industry were caught off guard by this acquisition." Claudia Eller, an entertainment reporter for the Los Angeles Times, ended her full-page special report with this conclusion.

In the financial section of the same newspaper, reporter Tom Petruno focused on the market reaction after the merger and acquisition. He commented: "Synergy, one is better than two, this argument has been abused on Wall Street, but many large investors believe that this merger has more real synergy potential than most previous transactions."

Of course, not all media reports are full of heartfelt or insincere congratulations and praise. Some industry insiders are not particularly satisfied with this merger.

Howard Stringer, chairman and CEO of TELE-TV, was also interviewed by the Wall Street Journal. He compared it to Godzilla marrying King Kong. For other competitors, the jungle will become more empty and lonely.

This metaphor is obvious to people working on Wall Street. It means that after the merger of the two largest players in the field of television and film production, they have established a monopoly advantage over other players. In the future competition, this advantage will become larger and larger.

Some use metaphors to reason, while others speak bluntly, especially the New York Times, which has always stood on the side of self-proclaimed progress and equality and has no favorable feelings towards this kind of merger and acquisition by big capital.

Benjamin Barber, a professor at Rutgers University, where many liberal professors are, wrote in a column: "This vertical and horizontal integration of enterprises is fashionablely called 'synergy', but in fact, it is just another name for monopoly."

What is more unexpected is that Warren Buffett also expressed his opinion. He was interviewed by Reuters and his evaluation was concise and to the point, "This is the combination of the world's number one content company and the number one distribution system."

One of the important reasons why he broke his usual silence and expressed his views on this is that he is a major shareholder of ABC's parent company, City Group. Just like the Bass family owns a relatively large number of shares in Disney but never interferes with Eisner's operations, Warren actually took a financial investment attitude towards ABC, allowing the ABC management team, which he believes is very competitive, to play a role, and only enjoying the excess returns brought by their business operations.

But the prospect of the merger is not particularly good in Buffett's view. The biggest problem is that this merger has exhausted the cash resources of both companies, and the current valuation of $190 billion is too high in Buffett's view.

In addition, after Ronald told him about Eisner's management style, he had no confidence in the management after the merger. It would be better to find a high point after the merger to sell the original shares and exit with a profit.

……

"Mr. Li, we are reporters from the Wall Street Journal. May I ask what you think about the merger between Disney and ABC?"

Of course, the media did not let Ronald go. The Wall Street Journal, the New York Times, and the Washington Post all asked him to do interviews. Ronald chose those with less political background and more financial expertise. The Wall Street Journal.

"Well, my view is simply that this is a behemoth among behemoths... This company will have enough power to achieve almost any goal."

Ronald was more afraid that the media would misinterpret his words. After the out-of-context report came out, it affected his relationship with Eisner. Like everyone else, Ronald was wary of the chairman and CEO of such a newly accomplished Hollywood giant.

Among the three major newspapers, only the Wall Street Journal likes to talk about professional analysis of company operations, so there is no risk in accepting their interview. Moreover, the Wall Street Journal also agreed to reprint the interview content and other related reports through the New York Daily News under Ronald Media Group.

"What do you think about content distribution, a business strategy that Eisner has talked about many times?" The Wall Street Journal continued to ask. They were very happy that there was such an industry insider willing to talk about Disney/ABC's strategy.

"This is a very good strategy, two simple words that tell the fundamental story of the media industry." Ronald also maintained an objective evaluation approach and did not make any subjective evaluation of Eisner and the merger.

"What do you think of Mr. Eisner's announcement at the press conference about the strategy of entering China and India?"

"Oh, really? He wants to enter India and China?" Ronald paused, thought for more than ten seconds, and then answered carefully, "My guess is that Mr. Eisner has taken a fancy to the population potential of the two countries. If I were to make an unfounded guess, perhaps Disney/ABC would focus more on sports programs and family TV series content rather than news."

……

"Honey, why don't you go out today? It would be nice if you can just stay at home with me, drink some coffee, and read the newspaper."

The next day, Eisner's wife made him a cup of black tea, and then tactfully suggested that Eisner stop going out to play golf. After the operation, it would be best to stay at home for a while to rest.

"I'm not going out to play. The most important thing after acquiring ABC is to make everyone stable. So I will go to their flagship morning news program: Good Morning, America with ABC CEO Murphy."

Eisner didn't want to face his wife at home. He took a sip of tea, ate some breakfast, and then slowly appreciated the series of reports on his mergers and acquisitions in today's newspaper. He would laugh when he saw something happy.

Among these reports, Warren Buffett's evaluation of him made him most satisfied. Not only was it because Warren was a leading American investor, but his positive evaluation also represented his optimism about this merger.

Also, because Buffett's company Berkshire Hathaway is an important shareholder of ABC, such a statement will help stabilize the stock price in the future.

What made him happiest were those reports accusing it of forming a monopoly or comparing the merger to the marriage of Godzilla and King Kong.

It is no exaggeration to say that the fundamental purpose of this merger is to form a monopoly of a larger scale and higher dimension. Although Eisner was determined not to admit this to the outside world, otherwise it would trigger an antitrust investigation by Congress.

The comparison of the giant monsters of Godzilla and King Kong made it even more smiling. There were only a few monsters left in the jungle, and it became a combination of the two most terrifying monsters in Hollywood movie history. This was the highest compliment that a competitor in the same industry could give him.

Eisner frowned again after reading the rest of the interview. In Ronald's interview, he specifically mentioned that it would be best to start expanding in China and India with sports and TV dramas, which made him feel a little uneasy.

When communicating with Chinese high-level officials, there will definitely be different situations in different countries, and there are various regulations for American TV stations. So starting with sports games and TV dramas that everyone likes to watch may be a good idea!
Eisner then called to find out about the broadcasting of American sports games and TV series in China. He was surprised to find that both the popular NBA basketball games and the most popular family TV series Growing Pains were related to Ronald.

"It seems that Ronald didn't say this casually, but specifically for me." Eisner was happy, but also felt regretful. It was a pity that such a talent could not come to Disney to help me.

"Michael, we should go..."

At this moment, Ovitz walked in. After greeting Eisner's wife Jane, he urged Eisner to go to the ABC studio with him.

"By the way, what do you think about our entry into India and China? Which TV show do you think we should promote first?" Eisner looked at the CEO candidate and wanted to weigh his weight from this strategic perspective.

"I think it should be a 24-hour news network like CNN. In every country, the people with the greatest purchasing power and willing to pay to watch programs are business people, and what they care most about is what is happening in the world at any time and anywhere," Ovitz blurted out.

"Hmm..." Eisner sighed in his heart. After all, he was just an agent and lacked understanding of the media industry and the sensitivity of developing countries.

"I say, Michael," he said, looking at Ovitz, "I have a new idea now. There are many things to deal with in the company after the merger. Maybe it would be a better choice for me to retain the position of chairman and let you serve as a full-time CEO. What do you think?"

"Ah..." Ovitz didn't expect Eisner to change his mind so quickly. "Well, that's great, of course. I think the title is not important. What's important is that we form a team..."

"Okay, let's go..."

Eisner interrupted Ovitz and tried to continue talking about his future plans.

Although he still smiled on the surface, Eisner felt very uncomfortable. You haven't even come to work yet, and you want to overturn my established plan. Do you think you are Ronald? Can you see the weakness of my plan at a glance?

(End of this chapter)