In the morning, Simon worked with Joseph Shrap to revise the lobbying strategy regarding the federal media consolidation ban.
The French Vivendi Group suddenly launched a bid to acquire Disney. To prevent more major Hollywood film companies from falling into foreign hands, pushing Congress to lift the media consolidation ban before Vivendi and Disney could reach an agreement wouldn't be a problem.
However, Simon didn't intend to do this.
From the perspective of the Westeros system, Simon preferred Vivendi's acquisition of Disney to succeed. If another major film company fell into foreign hands, the political barriers to lifting the media consolidation ban in the future would be significantly reduced when Daenerys Entertainment aimed to acquire TV networks.
Moreover, if the media consolidation ban were lifted prematurely, the old three major TV networks could compete with Vivendi. Even more problematic would be if the contender was the Metropolitan ABC Group, Simon's preferred acquisition target.
Even if it wasn't ABC, a merger between Disney and NBC or CBS to form another comprehensive entertainment media giant would undoubtedly become a powerful competitor to Daenerys Entertainment in Hollywood.
Simon wasn't afraid of competition. He even hoped for a strong enough opponent to challenge Daenerys Entertainment at the right time.
But not now.
Compared to that, allowing Disney to be acquired by Vivendi, a Hollywood film studio whose momentum had already been negatively impacted by Simon's presence in recent years, would only weaken further.
Whether it's Hollywood natives or the U.S. government, they wouldn't let foreign entities trying to enter the American entertainment industry have an easy time.
Many past and future examples have proven this.
If Disney merged with a local TV network, Daenerys Entertainment's suppression would undoubtedly attract widespread media attention, and the federal government wouldn't stand idly by. Conversely, if Disney became a subsidiary of a French company, even if this century-old Hollywood film studio was driven to bankruptcy, most people would turn a blind eye.
Want fair competition? It doesn't exist.
Ultimately, it's all about protectionism.
Understanding this, Simon ensured the Westeros system's overseas expansions always established close interest ties with local forces.
For instance, when Melisandre Company had the chance to fully acquire Gucci and other companies, Simon voluntarily gave up. When Nokia was just starting to develop, Simon had them go public in Europe to share the benefits. In Russia, the Westeros system provided almost all operational funds but only required half of the profit, a significant concession.
And in Australia.
If it weren't for the deep-rooted Johnston family, Simon wouldn't have ventured into Australia's mining resources, crucial to its economy, nor invested heavily in Australia's mobile communications and internet industries. He knew that without local connections, rashly seizing territory would lead to failure.
As a result, many overseas partners of the Westeros system felt they had gained advantages and spared no effort in using their resources and connections to assist the system's expansion, which in turn benefited Simon even more.
Contrast this with Hollywood's foreign entrants.
Whether it was Japan's Sony or Canada's Seagram, they chose to fully acquire their targets in Hollywood, now Vivendi plans to do the same.
Since these companies became wholly-owned foreign subsidiaries, the federal government's stance naturally changed.
Peter Guber and Jon Peters severely weakened Columbia Pictures, causing Sony over $2 billion in write-down losses. If Sony were an American company, Guber and Peters would have faced serious economic crime investigations and charges.
Instead, they left Sony with a mess, unscathed, enjoying millions in accumulated salary and benefits for retirement.
At noon, Simon had lunch at Sophia's home. After Sophia's parents took the kids away for the afternoon, they left Greenwich together, taking a helicopter to Martha's Vineyard, a famous tourist destination about 250 kilometers northeast of New York.
Sophia had arranged for Simon's property on Martha's Vineyard to be cleaned up in advance.
Martha's Vineyard is one of the East Coast's historic tourist destinations, attracting many wealthy individuals, politicians, and celebrities. Many U.S. presidents have used it as a vacation spot, and it has been the backdrop for numerous famous news events.
For example, Spielberg's breakthrough film "Jaws" was shot on Martha's Vineyard.
Additionally, John F. Kennedy Jr., tasked with reviving the Kennedy family legacy, tragically died in a plane crash returning from a wedding on Martha's Vineyard. Of course, this event occurred in 1999 in Simon's memory. Currently, John F. Kennedy Jr. is still alive.
Two Black Hawk helicopters landed one after another on the lawn of a mansion in Oak Bluffs on Martha's Vineyard, with its private beach. Unlike the 30-acre estate in Greenwich, this beachfront mansion spans only about six acres.
Still, even this was not something ordinary wealthy people could own; it was beyond reach for most.
Simon and Sophia got off the helicopter, followed by two teams of bodyguards from the other helicopter, led by Neil Bennett. They carried various equipment into the villa for routine bug sweeps and then activated the security surveillance system around the estate.
After over half an hour of busywork, the bodyguards retreated to the annex, leaving Simon and Sophia alone in the three-story vacation-style main villa.
Just the two of them.
Sophia, no longer reserved, found Simon still full of energy despite the previous night's activities.
They indulged themselves all afternoon, and when they woke up again in the master bedroom, the outdoor night sky was filled with stars. Unfortunately, this villa didn't have a balcony, and neither of them intended to go outside. Although Martha's Vineyard had pleasant scenery and climate, summer brought its share of pests.
With a limited view from the bed, Sophia pulled Simon to the window, moved aside the sofa set, laid down a blanket, and lay down again.
Lying against Simon's chest, under the starry sky, she listened to him tell various strange stories about the stars from the East and West. Then they made love again and slept until the next morning.
Upon waking, Simon decided to abstain for a week.
However, considering they were returning to Los Angeles later that morning, he decided to start abstaining from the following Monday.
Sophia, radiant in the early morning, her fair skin glowing with a rosy hue, was irresistible.
After breakfast, they remembered they had some business to discuss.
Over the past few years, Melisandre Company had expanded almost annually by acquiring a new company. After initially acquiring Gucci, it bought Château Latour in 1990, Van Cleef & Arpels in 1991, Calvin Klein in 1992, and Christie's auction house in 1993.
If not for Simon's intervention, Melisandre would have launched a fashion TV channel last year.
This year's expansion pace wouldn't stop.
In fact, since the beginning of the year, Sophia had been eyeing various targets, but several deals hadn't materialized for various reasons.
Despite investing heavily in expansion in recent years, the luxury goods industry is highly profitable. Even after distributing dividends to other shareholders, Melisandre had quietly accumulated over $300 million in cash reserves.
In this era, even many Fortune 500 companies couldn't easily come up with $300 million.
There's a reason why Bernard Arnault of LVMH became the world's second centibillionaire after Jeff Bezos.
Lacking suitable acquisition targets for now, Sophia had invested this money in the U.S. stock market since last fall, following Simon's suggestion, buying numerous highly sought-after tech stocks.
The $300 million principal had already appreciated by over 50%, and it could be liquidated anytime for acquisition purposes.
This time, Sophia brought information on three companies.
All very famous.
Bvlgari, Versace, Vacheron Constantin.
On the private beach of the Martha's Vineyard mansion, Simon lounged under an umbrella, reviewing the materials for the three companies. Sophia, seemingly wearing only a men's shirt, brought cold drinks, placing the tray on a side table before sitting directly in Simon's lap, asking, "How are they?"
Simon put down the materials, indicated for her to hand him a juice, and said, "They're all good, but they all have issues."
These three companies, unlike the once-distressed Gucci or Calvin Klein, were all seemingly in excellent shape.
However, there were many underlying problems.
Bvlgari is an Italian jewelry and watch company, still controlled by the Bvlgari family.
Compared to Melisandre's Van Cleef & Arpels, this company's scale is much larger, with 1993 revenue equivalent to $530 million and net profit of $110 million. Recently, it had been seeking to go public on the Milan Stock Exchange, with an estimated IPO valuation of $1-1.5 billion.
Melisandre had already contacted the Bvlgari family.
The family had mixed feelings about going public. While there were many benefits, there would also be various constraints, pros and cons.
This presented an opportunity for Melisandre.
However, although some in the Bvlgari family favored cooperation with Melisandre, previous negotiations indicated Melisandre could only acquire up to 30% of Bvlgari.
This didn't meet Sophia's expectations.
Since Melisandre already owned Van Cleef & Arpels, a similarly positioned company, which had been doing very well with $350 million in revenue in 1993, a 105% increase since its 1990 acquisition, its scale was not far behind Bvlgari.
The crucial point is Melisandre holds a 60% stake in Van Cleef & Arpels.
Therefore, if Melisandre could only acquire 30% of Bvlgari, it would face a resource allocation issue.
Between a 60% owned subsidiary and a 30% owned subsidiary, it's clear which would receive more resources.
This was not what Sophia wanted to see.
Large luxury conglomerates often eliminate potential threats by acquiring competitors preemptively.
LVMH in Simon's memory had done this more than once
.
However, Melisandre, still in its rapid growth phase, hadn't reached that stage yet.
If Melisandre were to acquire Bvlgari, Sophia hoped the slightly superior Bvlgari could advance further, rather than face unequal internal competition due to uneven resource allocation, potentially leading to one company's decline.
Thus, to maintain balance, even if 60% wasn't feasible, the acquisition team estimated the stake should be at least 40%.
The difference between 30% and 40% may seem small, but for the Bvlgari family, whose shares were already dispersed among family members, it meant whether Melisandre would become the largest shareholder.
The Bvlgari family was open to external investors but didn't want to lose control.
If that were the case, they'd rather proceed with the IPO.
Versace, on the other hand, presented more interesting issues.
As one of the hottest luxury brands in recent years, Versace's 1993 revenue reached $650 million, surpassing Bvlgari.
For a luxury company, this was impressive.
Bvlgari, founded in 1884, had over 110 years of history, while Versace, established in 1978, had only been around for 15 years. Despite Gianni Versace's exceptional talent, luxury brands typically required considerable time to mature.
So, what's the issue?
Sophia didn't leave the answer hanging in the materials.
The Italian Mafia.
Sophia's investigation confirmed rumors from Simon's memory that Versace was used as a money-laundering tool by the powerful Italian Mafia.
People often find money laundering mysterious and sophisticated, but the process is quite simple.
Take luxury goods laundering, for example.
The Mafia signs loan agreements with luxury companies, pretending to lend them large sums of money.
This money doesn't actually exist.
Then, the Mafia uses its influence to buy large quantities of goods from the luxury brand's stores, contributing to the brand's revenue. The brand repays this revenue as debt, turning the original dirty money into legitimate income.
To save costs, the purchased luxury goods can even be reused.
However, overall, the cost of laundering money is usually very high.
If someone could create a laundering method with costs below 30%, they'd be revered by gangs worldwide. In reality, laundering costs, including taxes, are often over 30%, with total costs usually exceeding 50%.
Many Western governments tolerate gangs to some extent because they contribute substantial tax revenue.
When Gianni Versace was murdered, there were rumors of the Mafia trying to steal his ashes to pressure the Versace family for debts, highlighting the issue.
If Versace's business was so successful, with substantial annual profits, why would it need to borrow from the Mafia?
Moreover, in its peak year of 1996, Versace's revenue reached $1.1 billion.
This was unusual.
Luxury companies have high-profit margins, but their revenue scales are limited by market capacity.
A 1990s luxury brand with $1 billion in revenue was a giant. Could a small-town Italian tailor-turned-designer really create all this?
Even after Versace's death, 20 years later, the brand never surpassed $1 billion in revenue. In 2017, when Versace was acquired by another luxury conglomerate, its annual revenue was only €660 million, about $750 million.
Furthermore, after Versace's death, the company's rapid decline, with both revenue and profits plummeting, leaving it on the brink of bankruptcy, raises questions.
What's the issue?
A luxury brand achieving $1 billion in revenue within 20 years should have enough resilience even if its founder dies or its successor is incompetent.
Therefore, Versace's rapid decline and sharp drop in revenue and profits were clear indicators.
The disappearance of certain additional revenues was the reason.
Moreover, the ash-stealing debt threat wasn't baseless.
But the Mafia wouldn't be stupid enough to kidnap ashes for debts. It was just a warning.
What was the warning?
Simply put, coercing the living is more effective than coercing the dead.
With the Mafia's terrifying influence in Italy, Simon believed the Versace family couldn't escape certain 'debts' even after Gianni Versace's death.
To repay these 'debts,' Versace undoubtedly had to withdraw large sums from the company, likely leading to a cash flow crisis or even a break. Combined with the disappearance of the black money-supported revenue after Versace's death, the company's decline was inevitable.
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