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Chapter 92 The Development of Television Stations and Television Networks

Inside the MGM headquarters building in Century City, Los Angeles, Hugh Hefner sat by the window, his fingers unconsciously stroking the smooth mahogany tabletop, while his gaze involuntarily swept over the MGM lion emblem hanging on the wall.

This was his first time attending a high-level MGM meeting in his dual capacity as a director and editor-in-chief of Playboy Group. The coolness of the leather chair contrasted strangely with the surging excitement in his heart.

Three days ago, on January 24, three days before the Super Bowl, MGM officially completed its acquisition of Playboy Group.

This was followed by changes to the board of directors, with Hugh Hefner being nominated to replace Cole and becoming an important member of the MGM family.

Hugh Hefner attended the management meeting primarily because of his role as editor-in-chief of Playboy, as one of the topics discussed was the future development of Playboy.

"Ernst, I've always said you're the chosen successor to Playboy." Hugh Hefner's voice broke the silence of the conference room, filled with heartfelt admiration.

He threw the newspaper he was holding onto the large conference table. The front of the newspaper featured sexy photos of models in lingerie, which were visually striking.

The headline is as eye-catching as a giant GG: "The real winner of the Super Bowl: Playboy Group".

This $6 million GG campaign now appears to have been remarkably effective and was entirely worthwhile.

It not only brought the Playboy brand back into the public eye in America, but also enhanced the Playboy Group's brand awareness, and transformed the Playboy Group's management from initial skepticism to deep admiration.

This is not just a simple promotional event for GG, but a meticulously planned event encompassing planning, program production, and post-production promotion.

It's fair to say that Ernst elevated Playboy to a whole new level. If Playboy were a publicly traded company, its stock price would have skyrocketed beyond anyone's imagination.

"You can have this honor. I'm a man who aspires to be a big capitalist," Ernst replied with a smile.

Although he was very pleased with Hugh Hefner's praise, he still had to be mindful of his image in front of so many management personnel.

"Alright, let's start the meeting now."

Ernst sat at the head of the table. Although his position was chairman of MGM rather than a member of the management team, everyone present felt that his involvement in MGM's management was perfectly reasonable.

On the one hand, Ernst's series of successful initiatives led these management personnel to develop an almost blind trust in him. On the other hand, with the change in shareholding, MGM has now become Ernst's absolute domain.

The acquisition of Playboy Group diluted Ernst's stake in MGM, but Google's financing event reversed the situation.

On the very first day after news broke that Google had successfully secured funding, Ernst began acquiring large amounts of MGM shares from Wall Street.

He now holds more than 50% of MGM's shares, reaching 51.65%.

Of course, the price was not small; he was once again burdened with a massive loan of nine hundred million US dollars.

Of the $400 million, $400 million was used to repay installments to the Italian consortium, and of the remaining $500 million, $4.78 million was used to acquire less than 11% of MGM's shares from Wall Street.

When Cochrane acquired MGM, he offered $13 billion for a 40% stake from the Italian consortium, which meant that MGM's market value was estimated at $32.5 billion at the time.

Even if Ernst acquires the company at a premium, raising the price to $14.5 billion, the total market value would only be $36.25 billion.

However, in less than six months, when he acquired these shares from Wall Street, MGM's market value had soared to $43.45 billion.

Ernst knew perfectly well that Wall Street was trying to take advantage of him.

Even though they know he's not short of money, it's also because he publicly expressed his dissatisfaction with Google's funding round and wanted to take this opportunity to get back at them.

But Ernst didn't care about that and didn't haggle much. Looking back, it was clear who was the fool.

"How's the acquisition of Orion going?"

Robert Iger, who was in charge of the matter, replied with a hint of helplessness, "It's not ideal; the other party is very firm on their price."

The acquisition of Orion has been a key focus for him recently, but the current progress has been quite a blow to him.

He paused, then continued, "I've decided to temporarily suspend the overall acquisition negotiations for Orion and let them cool off for a while."

"However, there was some good news as well. Orion was very interested in our idea of ​​acquiring the television stations separately. The price of $3800 million brought Orion's television business into MGM's television business system."

"Adding to Playboy's existing television business, the newly integrated MGM Television now has six channels and more than 1.2 million subscribers," Robert Iger added, with a hint of satisfaction in his voice.

In an era before mobile internet and even before the internet was fully developed, six channels and 20 users may not seem like a large number, but they were actually quite considerable.

This is in America, where the average number of users per channel is just over 100,000, so 1.2 million users is a pretty good achievement.

"What's the status of the television network setup?" Ernst asked immediately, as this was what he was most concerned about, because it directly affected the reach of the programs.

"Progress in this area has been relatively smooth. We have reached preliminary agreements with more than 30 television stations, including those in Washington, Idaho, California, and Nevada, covering 11 states and reaching approximately 1175 million subscribers," Robert Iger replied.

"However, these television stations haven't signed formal contracts with us; they only plan to run a six-month trial to see how it goes. If the results are satisfactory, they will officially join the MGM television network."

Ernst snorted softly, "Looks like they still don't quite trust us."

Ernst was already very satisfied that he was able to secure deals with so many television stations in such a short time.

"It doesn't matter. When our program can significantly increase the number of viewers for these TV stations, they will come to us on their own initiative. At that time, the terms of cooperation will not be so favorable."

In order to develop the MGM television network, Ernst and Robert Iger set content prices far below market levels.

Take a TV series for example, MGM offered these TV stations $1.5 per person per episode.

In other words, for every episode of a TV series broadcast by MGM that a viewer watches through this television station, MGM receives a profit share of $1.5.

This price is very low in the industry. Across all television networks in the US, the price for a TV series is generally between $2 and $2.5. National networks like NBC can even reach $2.7 to $3.

The US dollar has been used in one episode.

Moreover, not only TV dramas, but also movies, variety shows and other programs have lower fees than the industry average.

"By the way, how's the program outline and TV drama script I gave you coming along?" Ernst changed the subject and inquired about the program's production.

Ernst wasn't just a stud at Playboy Manor all the time; he also came up with the outlines for many of the later hit TV series and variety shows and handed them over to Robert Iger.

First, there's Breaking Bad, and supposedly its prequel Better Call Saul, as well as Gossip Girl, which Ernst quite enjoyed.

Ernst wrote many outlines for these three series, and even provided a rough script for the first episode.

Then there's The Big Bang Theory and Shameless, but these two comedies will require MGM's writers to fully utilize their talents and brainstorm.

After all, Ernst was not familiar with many slang terms and cultural references in the field of comedy, and he did not fully understand many of the jokes when he watched it in his previous life, so his memory of them was also rather vague.

Finally, for variety shows, Ernst chose three: American Idol, The Amazing Race, and Survivor.

Whether it's TV dramas or variety shows, the ones selected are all perfectly capable of being produced with the current level of technology.

"After internal discussions within the television department, it was decided that the drama series would be produced first, namely 'Better Call Saul' and 'GG Madman'. One episode of 'Better Call Saul' has already been filmed, and casting for 'GG Madman' has been completed, and filming will begin soon."

That's one of the good things about America; TV series are broadcast weekly, one episode per week, so they can basically air as soon as one or two episodes are filmed.

"Like 'The Big Bang Theory' and 'Shameless,' these two shows are still in the process of perfecting their scripts. Both shows are family comedies, so we plan to film one of them first and put the other on hold until the market reacts."

"As for the crime dramas and workplace dramas you mentioned, screenwriters are racking their brains to create them."

"Another thing is variety shows. Although Playboy Spy has not yet aired, it is already a successful example. We think we should add a talk show," Robert Iger added.

Ernst supports the idea that talk shows have been popular and enduring in the United States for a long time.

"In addition, of the three variety show outlines you provided, we chose to produce 'The Amazing Race' first. Considering the current coverage of MGM's television network, 'American Idol' cannot yet achieve its maximum promotional effect, and 'Survivor' has a higher production budget, so we felt it was better to hold off for now," Robert Iger explained.

That makes sense. Ernst considered whether the filming conditions allowed for these programs.

Ernst didn't consider issues like publicity or costs.

Leave the professional work to the professionals. Robert Iger and MGM's behind-the-scenes team are clearly more experienced than him, and their decisions are more comprehensive.

Regardless, with these programs as a foundation, MGM's television network will surely gain a significant number of subscribers. At that point, it won't be MGM begging for help; instead, numerous local television stations will proactively seek cooperation with MGM.

The prototype of a national television station was gradually becoming clear to Ernst.