Exploiting Hollywood 1980.

Chapter 1593 Your New Boss is Mickey Mouse
"Hello, Mr. Eisner, Mr. Murphy, it's a pleasure to be here on Good Morning America..."

In the studio in Manhattan, New York, hosts Charlie Gibson and Joan Landon greeted TV viewers as usual. The difference is that they had a new boss yesterday.

Moreover, the current and future new and old bosses appeared on ABC's morning ace program at the same time to talk about some topics related to this merger and acquisition case.

"I would like to ask a question on behalf of our show's viewers that they are concerned about..." After chatting about some polite questions, veteran host and reporter Charlie Gibson deviated a little from the purpose of today's show to have two bigwigs appear, and began to ask some more controversial questions.

"Will Disney's acquisition of ABC affect the quality of its news programs?"

As soon as this question was asked, not only did the two bosses look sideways, but all the technicians on the scene and the director in the background also widened their eyes. Was Charlie Gibson so disrespectful to his new boss Eisner? Was he just accusing the other party of interfering with the freedom of the news on his show?

In American tradition, media journalists always regard themselves as the uncrowned kings, the most powerful channel for the public to supervise the government outside the system of separation of powers, and the power of media freedom to report and supervise, which is called the fourth power.

In order to ensure that this power was effectively implemented, Congress passed the Communications Act of 1934 to supervise television media during the Roosevelt administration in 1934.

The communications law has three main components, the first of which is the financial and syndication rules, which limit the financial benefits that the three wireless television networks, CBS, ABC, and NBC, can gain from owning programs that air during their prime time.

Moreover, in the subsequent national syndicated network, wireless stations were unable to obtain further advertising revenue through reruns.

The purpose of this regulation is to prevent the three major TV stations from making money and monopolizing the production and broadcasting of programs. Otherwise, the three major TV stations will monopolize the TV programs that the people of the country can watch, and it is hard to say how much media supervision power will be left.

The second regulation is the national radio and television ownership limit. No single television media can control more than 35% of the national audience. Again, this is a preemptive anti-monopoly measure.

Members of Congress on Capitol Hill believe that the key to media supervision lies in competition. If a media outlet becomes the main national television network, then these capitalists are likely to use this monopoly position to spread remarks that are beneficial to them, and they may even lie to achieve this goal.

The third provision is to limit cross-media ownership of companies, broadcasters, telecommunications companies and content production companies, and prevent cross-holdings beyond a certain scale. Similarly, this is also a measure to prevent monopoly from bringing excessive profits, allowing TV companies to become giants and thus weakening media supervision.

Disney's acquisition of ABC happened to avoid the regulation of this law because Disney was originally a pure content production company, and its acquisition of a broadcasting and television network like ABC was a form of vertical integration.

Although the merger amount of Disney's content plus ABC's distribution set a record in the media industry, the proportion of audiences occupied has not changed much from ABC before the merger, so it just meets the requirements of the bill.

But legislation always lags behind reality. Although this merger does not violate the provisions of the law, after big capital controls ABC, some reports on Good Morning America will definitely be affected more than before.

For example, this morning, Charlie Gibson wanted to talk about international news. Last month, President William announced the establishment of diplomatic relations with Vietnam, and Congress is discussing ratification these days. For this generation of people who experienced the Vietnam War, this symbolizes the end of an era.

I didn't expect to be asked by the TV station to change the topic suddenly. To be honest, Murphy is about to retire, and Eisner is notorious for greed in Hollywood. Is such a change of boss really more important than the topic of US-Vietnam relations?
This question was very abrupt, and the future boss Eisner's face visibly darkened. Moreover, this was broadcast live nationwide, and even Ronald in Los Angeles would see the replay a few hours later.

Eisner thought for a moment and decided not to back down. Just as he was about to respond with a tit-for-tat counterattack, Murphy got there first and answered Gibson's question.

"Why, Charlie, aren't you proud to be a part of Disney?"

Murphy cursed Charlie Gibson several times in his heart. There was an illusion that ABC couldn't do without this ace host of the TV station. Anyway, this would soon not be a headache for him...

"Ah, no, it just suddenly occurred to me that my boss in the future will be..." Gibson was about to point the finger at Eisner.

At the critical moment, it was his old partner, host Joan Landon, who kicked him hard under the table.

Charlie Gibson also felt his partner's resentment and immediately tried to make amends, "From now on, my boss will be a mouse named Mickey..."

"Hahaha, what? You don't want to work for a boss named Mickey?" Eisner responded quickly and continued with this joke.

"I'm sure I'll like it because my children will be very happy." The hostess Joan Landon interrupted before Gibson could reply.

"Ha, you're right, I should be happy. Now children all over the country will be happy. They will have more opportunities to see Mickey Mouse."

"Let's talk about how you decided to merge?" Host Gibson finally guided the topic in the right direction.

"It's a long story, but the origin of Disney and ABC actually dates back about 40 years ago, when Walt Disney dreamed of building a great theme park and needed to raise funds, so he mortgaged his house and took out life insurance.

He tried NBC and CBS, but they both turned him down. However, ABC offered loan guarantees of $50 and $450 million. Since then, the two companies have maintained a good relationship.

ABC took a chance and aired the first three series produced by Disney. I had also been working at the ABC network for 10 years, starting with children's programming and eventually becoming senior vice president of prime time.

The merger was discussed 10 years before I joined Disney. “It was discussed three years ago, two years ago, and six months ago,” he said. “In the end, we felt that now was the right time for both companies.”

……

After the live broadcast, Eisner was very proud. Now he was the most powerful person in Hollywood and the television industry.

"Drip drip..."

"Your phone number, Mr. Eisner." The driver reported to him that during the live broadcast just now, people kept calling him, and now there is another one..."

"Hello?" Eisner picked up the phone and put down the partition.

"It's me, Katzenberg."

Eisner was very happy, and Katzenberg, with whom he had a deep conflict, also called to express his greetings. This was the first time the two had communicated over the phone since he fired him.

"The cooperation agreement we signed with ABC remains unchanged, right?"

"Of course, Bob (Iger) is still in charge of this part..."

After saying that, Eisner hung up the phone. Now even Katzenberg had to come over to beg him with a smug look on his face. It felt really good. DreamWorks, which Katzenberg was in charge of, was preparing to enter the TV series production industry. He had just established a $2 million joint venture with Robert Iger, who was in charge of ABC operations, to produce TV series for ABC.

"Hey?"

Another call came, this was from Ovitz. After he sent Eisner to the studio, he was not qualified to accompany him, so he could only kill time in the ABC studio building. Who knew that after he came out, Eisner drove away before he got into his car, so he had to get in his own car and follow.

"Michael, I couldn't get through to you just now... The landscape of the American media industry has been completely redrawn today..."

"Hahaha, of course, from now on this will belong to both of us..."

Eisner thought Ovitz came to say nice and auspicious words, and he was very pleased.

"Michael, I just got the news that Westinghouse Electric is about to announce the acquisition of CBS... the price is close to 60 billion US dollars..."

"What, how did they get around the Telecommunications Act?"

"That's exactly what I wanted to discuss with you..."

"Stop the car ahead..."

Eisner's good mood was also ruined.

Westinghouse Electric's acquisition of CBS, like Disney's acquisition of ABC, took a long time to negotiate. Their main obstacle was actually the Telecommunications Act of 1934.

Westinghouse Electric is the owner of many local wireless TV stations, and media assets account for a large proportion of its business. If they acquire CBS, it will be a horizontal merger, which violates antitrust principles.

The reaching of this agreement shows that they have made a breakthrough in legislation.

After getting off the bus, the two found a place to watch the TV news. Sure enough, not long after, the news about Westinghouse Electric's acquisition of CBS was broadcast.

The transaction price was US$54 billion, which is much smaller than Disney's acquisition of ABC, and also smaller than the original US$60 billion expected by Wall Street.

Just as the two continued to discuss how to deal with this new competitor, another piece of news came out.

Congress announced that it had passed legislation to repeal the Telecommunications Act of 1934, removing six decades of regulation of the television industry.

As for the reason for the abolition, the main reason given by Congress was the competition from cable TV. The emergence of cable TV news networks such as CNN has made the original market even bigger. It has become meaningless to limit a company to no more than 34% of the audience, because cable TV is rapidly snatching the audience of traditional wireless stations.

If we continue to stick to the old ways and do not allow wireless stations to fully exploit their programs for profit, it will not be long before these unregulated cable stations surpass or even acquire the wireless stations.

Another deeper reason is that the current President William, although a member of the Donald Trump Party, has continued the neoliberal direction of the previous two Elephant Party presidents in terms of economic policy.

In general, it is to reduce regulation and strengthen free competition, which has enabled a large number of companies to grow rapidly. This has led to a rapid increase in fiscal revenue. In addition, William passed the "All-round Budget Reconciliation Act" in his first year in office to limit the exaggerated fiscal spending of the previous government. The fiscal deficit for the whole year has dropped to $2900 billion compared to $2000 billion when he took over.

To achieve the government's goal of financial control, the most important thing is to collect more taxes. In the first two years of this administration, America's economy was very good, and the economic growth rate returned to around 4% from the recession during George Sr.'s era.

Moreover, the average profit of the S&P 10 companies has been growing by about 15%-% every year. The stock prices of new IT companies, such as Microsoft and IBM, have been booming. In addition, the S&P index has also hit a new high this year.

In such a thriving social context, the original Donkey Party's anti-monopoly and support for unions gradually became out of date. William took this opportunity to begin cutting off some of the roots of the Donkey Party establishment that started with Roosevelt, thereby cultivating a new Donkey Party force that is only loyal to himself...especially voters who work in Silicon Valley companies and like Hollywood stars.

Ovitz and Eisner discussed for a long time, but they did not expect that the competitive situation in the media industry would change so drastically so quickly.

Eisner realized that ABC's business in the future would not be as smooth as he had imagined. Instead, it had new concerns amid intensified competition.

"Michael..." he said to Ovitz, "It seems that your job content needs to be revised. I now feel that the ABC business is our greater challenge. Why don't we make ABC and Disney independent entities? In this way, we can each take care of our own business, and you can be responsible for the ABC business..."

"Is that so? This is a very reasonable choice." Ovitz felt a little regretful that he could not use the power of Disney to make those people in Hollywood who had offended him in the past bow down to him.

It doesn't matter, this is inevitable. I just have to wait a few more years. After Eisner retires, the entire group will be handed over to me.

"We'll be complete partners, like Goizueta and Keough at Coca-Cola, or Daly and Semel at Warner Bros. . . " Eisner continued to Ovitz, citing the example of two executives of large public companies who worked closely together.

"So what will my position be?" Ovitz couldn't help but wonder, was Eisner really adjusting his job for business reasons, or was he afraid of him? Could it be that he had lost Eisner's trust so quickly?

"I will continue to serve as co-CEO for a period of time. As long as you make some achievements in ABC, I can just remain as chairman and you will be the full-time CEO." Eisner seemed not to notice Ovitz's emotions and continued.

"Don't worry, it's not important to look up. The key is what you do. You are the undisputed number two person in Disney, and you will report directly to the board of directors." Eisner patted Ovitz on the shoulder.

"I feel very honored." Ovitz was satisfied and reported directly to the board of directors, which meant that he didn't have to be so careful about Eisner's expression.

"Hurry up and learn some new industry knowledge. You will officially take office next month. I hope that by then, people will praise me for finding the most suitable CEO for them, hahahaha."

Eisner laughed, but he was even more unhappy in his heart. Ovitz had failed his test today. If the candidate was Barry Diller or Ronald Lee, he would definitely be much happier today.