While the merger negotiations between General Electric and Time Warner continued to drag on, another major media acquisition was finalized.
On September 11, Westinghouse Electric and CBS Group held a joint press conference at CBS headquarters in Rockefeller Center, New York, announcing that Westinghouse Electric would acquire CBS Group for $9 billion in cash and take on CBS's $1.9 billion in debt, bringing the total transaction value to $10.9 billion.
When rumors spread that Daenerys Entertainment was considering acquiring CBS, CBS's market value briefly soared to $8.7 billion. If Daenerys had seriously pursued the deal, it would have been difficult to acquire CBS for less than $11 billion.
However, Daenerys Entertainment had feinted and shifted its focus toward acquiring Metro-Goldwyn-Mayer ABC, causing CBS's stock to plummet. As a result, Westinghouse was able to make a bid with a 23% premium over CBS's pre-announcement share price. Excluding the debt, the $9 billion acquisition price was $2 billion less than what Daenerys would have likely paid.
To many in the media, this outcome was expected.
With a market capitalization of only about $40 billion, Westinghouse Electric couldn't possibly compete with Daenerys Entertainment. Given that CBS was unable to secure Daenerys's offer, selling for $9 billion was considered a high price, especially when earlier in the year CBS's market value had hovered around $5 billion.
With CBS changing hands, it marked the end of an era, as all three of America's major TV networks were now controlled by large conglomerates. For those closely observing the media landscape, this consolidation pointed to a deeper trend: the monopolistic division of public television networks by corporate giants.
While cable television had been steadily eroding the market share of public broadcasters, no one could deny that the three legacy networks still played a crucial role in shaping American public opinion.
These networks were like nationwide loudspeakers, stronger in reach than any traditional print media outlet.
With the rise of the internet and the decline of print media, and now the consolidation of public broadcasters, the once diverse and competitive American media landscape of the pre-1990s was returning to an era of oligopoly.
Monopoly inherently meant the loss of freedom.
The loss of press freedom.
Yet, this cyclical trend of consolidation in the industry was not something just anyone could stop.
On another front, Viacom, the other major suitor for CBS, saw its stock drop by 6.1% on the day the Westinghouse-CBS merger was announced. Having lost out on the opportunity to transform into a media giant by acquiring CBS, Viacom was now likely to become a target for acquisition itself, with limited chances for further expansion.
A furious Sumner Redstone publicly stated that Viacom would sue Westinghouse and CBS, accusing them of fraud during the negotiations. Redstone vowed to stop the merger at all costs.
This left many onlookers puzzled.
However, Simon had insider knowledge. During the negotiation process, Redstone had been played by CBS's major shareholder, Larry Tisch. Tisch had promised Redstone that if Viacom raised its bid to $9.2 billion, CBS would agree to the stock-swap merger. With this understanding in place, Tisch then leaked the information to Westinghouse, prompting them to raise their bid from $8.7 billion to $9 billion at the last minute.
Although Viacom's bid appeared higher at $9.2 billion, Westinghouse's offer was all cash.
In corporate mergers, unless shareholders are very optimistic about the future of the merged entity, they typically prefer to receive cash upfront.
Viacom's $9.2 billion stock-swap deal might seem more lucrative by giving CBS shareholders more shares in the new company, but no one could guarantee how Viacom's stock would perform after the merger. If the stock price plummeted, what good would those extra shares be?
CBS's stock had been artificially inflated by the bidding war, and there was a real possibility of a market correction once the deal was completed.
Thus, between the two offers—Viacom's $9.2 billion stock-swap and Westinghouse's $9 billion all-cash bid—it didn't take a genius to see which was the better choice.
As for Redstone's rage, it was ultimately futile.
Being played was being played.
Even if Viacom went through with the lawsuit, it would likely amount to nothing. After all, no contract had been signed.
The crux of the matter was that Viacom didn't have the financial strength to raise enough cash for the acquisition, a situation quietly influenced by the Westeros system's own behind-the-scenes efforts. From the beginning, Simon had no desire to see Viacom acquire CBS.
While Westinghouse and CBS were finalizing their merger, another smaller deal was also closed.
After more than two months of quiet negotiations, Cersei Capital's Apollo Management acquired IBM's battery research and manufacturing division for $1.25 billion. This asset included five research teams across North America and overseas, three battery factories located in New York, Mexico, and China, and, most importantly, a substantial portfolio of battery-related patents.
The reason Simon conducted the acquisition through Apollo Management was to facilitate a later division of the assets.
At present, IBM's battery division primarily produced traditional nickel-cadmium rechargeable batteries for IBM's laptops and other electronics. The factories in Mexico City and Guangdong, China, were focused on this. Only the newly built factory in Albany, New York, produced the latest lithium-ion batteries, but on a much smaller scale than the other two.
Simon's interest in acquiring IBM's battery division lay entirely in the lithium-ion battery technology.
As one of the oldest electronic giants, IBM had resources comparable to Europe's and Asia's most innovative tech companies. Although Sony had launched the first commercial lithium-ion battery in 1992, IBM had completed its own development last year and established a factory in Albany.
Since 1992, when Louis Gerstner took over as CEO of IBM, he had been streamlining the company's operations. While IBM's battery division was not a burden, it wasn't core to the company's future either. The revenue and profit it generated were insignificant compared to IBM's other divisions, making it an asset that could be sold off.
When the Westeros system extended an offer, Gerstner quickly agreed.
Initially, Gerstner had hoped to emulate Jack Welch's strategy with NBC by keeping a stake in the battery division and turning it into a joint venture with the Westeros system, where IBM would retain equity but leave operations to the Westeros team.
Under different circumstances, Simon might have agreed.
It's hard for an independent battery supplier to survive without customers, and retaining IBM as a shareholder would ensure that the battery division could secure large orders from IBM in the future.
However, since Simon was only interested in IBM's lithium-ion research teams, patents, and manufacturing facilities—and had no interest in their outdated, polluting nickel-cadmium batteries—keeping IBM as a shareholder wasn't viable.
After several phone calls with Gerstner, Simon convinced him to fully transfer the battery division to Apollo Management. In return, Simon agreed to give IBM a 25% stake in a new battery company, Recttery, which Westeros would form.
Recttery was a coined term derived from "Recyclable Battery," following the common naming conventions in Silicon Valley.
This also reflected Simon's vision for the new company.
New technology.
Recttery's headquarters would be based in Silicon Valley.
This was meant to ride the wave of the burgeoning tech industry.
After Apollo Management acquired IBM's battery division, all lithium-ion-related assets, including research teams, patents, and factories, would be transferred to Recttery, while Apollo would continue to operate the remaining traditional nickel-cadmium battery business.
Even though lithium-ion batteries were the future, traditional nickel-cadmium batteries still had a good 10-year lifespan ahead of them, and for the time being, they were the mainstream choice for most portable electronic devices. This business could still thrive.
As a former division of IBM, it had long been hindered by IBM's rigid corporate structure, which Gerstner had only begun to reform three years earlier. Once spun off, the nickel-cadmium battery business would be turned into an independent company. Apollo Management planned to improve efficiency, expand production, and capture more market share over a few years. The goal would then be to either sell the company or take it public for a profitable exit.
A standard private equity buyout and restructuring deal.
Meanwhile, Recttery, having inherited IBM's entire lithium-ion battery infrastructure, would no longer be constrained by IBM's bloated corporate structure. With a vast potential customer base that included IBM, Tinkobell, and even Nokia, there was no need to worry about market demand. Recttery could focus entirely on the research and production of cutting-edge lithium-ion batteries.
The world is constantly in motion.
In recent years, the American public had become increasingly aware that many of the major events happening around them seemed to involve the Westeros system in some way.
Because the details of the subsequent restructuring were not widely known, and Simon's long-term plans remained confidential, IBM's sale of its battery division didn't attract much attention. Instead, the public's focus was captured by the launch of a new Flash game integrated into Eaglet's Facebook social network.
This was Happy Ranch, a long-awaited follow-up to Happy Farm, which had been shelved for some time to maintain Happy Farm's dominant position.
It was also a strategic move to generate excitement ahead of Eaglet's IPO roadshow.
Although companies entering the IPO process are required to observe a "quiet period" for several months after filing their prospectus, this doesn't mean they can't boost market sentiment through business activities.
Thus, Happy Ranch, which was fully integrated with
Happy Farm, was launched on September 22.
This date happened to mark exactly 18 months since Happy Farm's launch.
The game's development team had originally planned to release Happy Ranch at the 12- to 18-month mark, hoping to revive interest in Happy Farm as it began to decline.
However, Happy Farm's life cycle had far exceeded expectations, thanks to the team's meticulous care.
Initially, the team had estimated that Happy Farm would peak at around 100 million users. By the time Happy Ranch was released, Happy Farm had amassed 149 million users worldwide. Although revenue from the game had already passed its peak, the sheer size of the user base ensured it remained highly profitable. In the week leading up to Happy Ranch's release, Happy Farm still generated $21.79 million in revenue from in-game purchases.
This marked the 11th consecutive month since Happy Farm had surpassed $20 million in weekly revenue, with a peak of $33.12 million recorded during the Easter event earlier this year.
In total, Happy Farm had generated $1.376 billion in revenue in just 18 months.
It was nothing short of miraculous.
Although this figure paled in comparison to games like Pokémon or Super Mario, which had generated tens of billions or even hundreds of billions of dollars in lifetime revenue, it's important to note that those franchises accumulated their wealth over decades, including merchandise and other spin-offs.
In contrast, Happy Farm, a standalone game with no sequels, had crossed the $1 billion revenue mark in under two years.
This phenomenal success surpassed any farming simulation game Simon could remember, but it was not entirely unexpected.
After all, Happy Farm had been supported by Eaglet, a platform that dominated the global internet market.
As of September 1995, the global internet user base had approached 400 million. Unlike the more fragmented internet landscape of the past, nearly all these users were now part of the Eaglet ecosystem, meaning none of them could avoid Happy Farm.
Furthermore, after the game's initial success, despite its modest $1.5 million development cost, Daenerys and Eaglet had spared no expense in supporting its continued growth.
To ensure the game's internal "ecosystem" remained balanced, avoiding issues like excessive virtual item production or rapid leveling, the development team had recruited top mathematicians and sociologists to monitor and optimize every aspect of the game. This dedication to maintaining user satisfaction was unparalleled.
To further enhance the realism of the game's farming activities, Happy Farm even had a team of botanists on staff as consultants.
It was this meticulous attention to detail that allowed Happy Farm, 18 months after launch, to maintain steady user growth and avoid any signs of decline. It had become a ubiquitous, national-level pastime for internet users.
The launch of Happy Ranch was primarily intended to drum up excitement for Tinkobell's IPO.
There was also the added consideration of Daenerys Entertainment's upcoming full-year financial report, set for release next month. After its IPO last year, Daenerys Entertainment had adjusted its fiscal year to run from October to September, aligning better with the entertainment industry's calendar.
Since Happy Ranch was directly linked to Happy Farm, with some items and virtual currency transferable between the two games, what seemed like a simple Flash game became a global sensation upon its release.
September 22 fell on a Friday.
After weeks of aggressive promotion, Happy Ranch launched at 8 p.m. that evening. By 8 a.m. the next morning, just 12 hours later, the game had already surpassed 40 million activated users.
By the end of the weekend, on Sunday, September 24, Happy Ranch had broken through the 100 million user mark, reaching 107 million total activations—meaning more than two-thirds of Happy Farm's 149 million users had joined Happy Ranch. The development team announced via the game's official Facebook page that they would be applying for a Guinness World Record for the fastest game to reach 100 million users.
During its opening weekend, Happy Ranch not only achieved impressive user growth but also broke Happy Farm's previous revenue record of $33.12 million, set during the Easter event earlier in the year. In just three days, Happy Ranch generated $36.75 million in revenue, cementing its place as yet another cash cow for Daenerys and Eaglet, even more profitable than the drug trade.
As the new week began, Happy Ranch dominated the media, becoming the hottest topic of discussion. This momentum even spilled over into the stock market, driving Daenerys Entertainment's stock price higher on Monday.
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