From the end of June, when Gilbert's birthday passed, to July, the hype surrounding The Lord of the Rings: The Two Towers gradually faded. This allowed the backlog of blockbuster films from earlier in the year to start crowding into theaters.
On the second weekend of The Matrix Reloaded, Jurassic Park III, produced by Steven Spielberg and distributed by Universal Pictures, was released.
However, compared to the first two Jurassic Park films, Jurassic Park III did not perform well at the box office upon release, and its reception was fairly mediocre.
This was reflected in its box office numbers, as Jurassic Park III only brought in $50.77 million in its opening weekend, failing to secure the number one spot at the box office.
Meanwhile, The Matrix Reloaded earned $51.3 million in its second weekend, and with its weekday earnings, it brought in a total of $89.25 million for the week, easily securing its second consecutive box office crown.
As of its tenth day in theaters, The Matrix Reloaded had grossed a cumulative total of $182.879 million. This film catapulted James Gunn to fame, making him look much better than Joe Johnston, who had taken over Jurassic Park III.
This marked the third major summer blockbuster for Melon Studios this year. Compared to Rush Hour 2, The Matrix Reloaded performed even better in terms of merchandise sales.
Due to its R rating, The Matrix Reloaded was expected to top out at around $300 million in North America and approximately $700 million worldwide. Multiple media outlets predicted similar figures.
However, its merchandise sales were performing exceptionally well. From the film's premiere to its second weekend, it had already generated $135 million in merchandise revenue.
That said, in terms of total sales, The Lord of the Rings: The Two Towers was still on top. As of now, The Two Towers had reached a global merchandise sales figure of $450 million.
As of July 9th, the weekend when Jurassic Park III premiered, The Lord of the Rings: The Two Towers had reached $511 million at the North American box office.
With a long theatrical run still ahead, The Two Towers was undoubtedly going to surpass its predecessor, The Lord of the Rings: The Fellowship of the Ring, in domestic box office earnings.
Globally, The Two Towers had already earned $1.123 billion, and surpassing the first film's worldwide total was just a matter of time.
Two consecutive years with billion-dollar-grossing films was an extraordinary achievement, solidifying Gilbert's reputation in the world of commercial filmmaking.
However, even more remarkable than the box office figures was the Lord of the Rings merchandise sales, which had reached a staggering total of $1.7435 billion.
The best-selling item was undoubtedly The Fellowship of the Ring's DVD box set, which had raked in $552.55 million worldwide.
This was despite piracy impacting sales in some regions—otherwise, the DVD revenue could have even surpassed $700 million.
With The Two Towers now in the latter half of its theatrical run, market research teams from Disney and Warner Bros. reported that the soundtrack and DVD sales for The Two Towers were expected to exceed those of The Fellowship of the Ring.
It was well known that merchandise profits were often higher than box office earnings. So while merchandise revenue might appear smaller in comparison, the profits distributed to investors were actually greater than what they earned from box office sales.
Merchandising relied heavily on distribution channels. Without the support of Disney and Warner Bros.' parent company, Time Warner, the merchandising process would have been far less structured and efficient.
This was precisely why Steve Jobs ultimately agreed to engage with Pixar Animation Studios. He understood that without Disney's platform, Pixar's merchandising sales wouldn't have been as impressive.
Similarly, Gilbert had earned just over $200 million personally from The Fellowship of the Ring, but he never felt dissatisfied with that sum.
Compared to the box office and merchandising revenue, his earnings were relatively modest.
But without Disney and Warner Bros. providing strong backing, he wouldn't have even been able to secure that much income. Access to capital and risk mitigation were important, but a major company's ability to integrate resources was exactly what Gilbert needed.
Many novels depict protagonists single-handedly challenging powerful figures, giant corporations, and massive conglomerates. It sounds exhilarating, but in reality, it's not practical.
As the saying goes, "Two fists are no match for four hands." Ip Man may have been able to take on ten opponents, but if the number was increased to a thousand, could he still win?
That's why gathering allies and forming a strong network of interests was Gilbert's true objective.
In Hollywood, working alone was never a viable strategy. The industry had entered the era of massive media conglomerates, and learning to align with powerful allies—just like "Ajarn" did—was the key to survival.
Sure, Ajarn's skills were terrible, relying entirely on physical endurance and biased referees, but he had long understood the essence of survival: forming alliances.
This concept of forming alliances was precisely why Gilbert never turned Melon Studios into an independent entity like DreamWorks. Instead, he agreed to its acquisition by Disney and Warner Bros.
As a new week began, an internal meeting was held at Disney, chaired by Robert Iger.
Over the past two years, as Robert Iger gradually took charge at Disney, the company's performance had soared. This, in turn, solidified his position as Disney's president.
With CEO Michael Eisner in a semi-retired state, Robert Iger had effectively become the man in charge of Disney.
However, he was well aware that his rise to the top wouldn't have been possible without Gilbert's support.
Inside Disney, there were even rumors that Robert Iger had secured his position by holding tightly onto Gilbert's backing. That wasn't difficult to believe—after all, Iger had good instincts and a solid personal rapport with Gilbert.
After listening to reports from department heads about The Lord of the Rings' market performance, Robert Iger was very pleased.
Looking at the gathered executives, he said, "Gentlemen, we are now entering the most critical phase. The acquisition of Melon Studios is nearing completion.
We've already reached an agreement with Warner Bros. Now comes the most crucial part.
We must ensure that no new players enter the game."
Disney, Warner, and Gilbert had already reached a basic agreement—each company would acquire 50% of Melon Studios' shares.
Gilbert's requirements were straightforward: Disney and Warner had to exchange shares of equal value.
For Gilbert, cash was not an issue after all, he was ranked 12th on the Forbes rich list. However, becoming a shareholder in Disney and Warner Bros. was something he was eager to see happen.
If this acquisition were successfully completed, it would undoubtedly shock all of North America and even the entire world of Hollywood enthusiasts.
However, within Hollywood itself, Disney and Warner's acquisition of Melon Studios was no secret—it was something that everyone had seen coming.
Universal Pictures, Paramount Pictures, and 20th Century Fox had all attempted to intervene, while Gilbert had continued to weigh his options.
But due to the outstanding commercial performance of The Lord of the Rings and Harry Potter franchises, Disney and Warner could no longer sit still and were forced to make concessions.
Delaying any further would introduce too many uncertainties. Robert Iger and Doug Walter had met privately several times before finally reaching a consensus.
According to the acquisition plan and future projections, this deal would be finalized by the end of the year at the latest. By then, Gilbert would become a significant shareholder in both Disney and Warner Bros.
This also meant that Gilbert would be firmly tied to these two companies. If he ever wanted to switch allegiances in the future, it would be much more challenging.
In this regard, Gilbert's approach differed from Spielberg's. Spielberg had founded DreamWorks with the goal of creating a new Hollywood giant.
But it was clear that the existing giants had no intention of allowing a new competitor to join the battlefield.
Aside from the acquisition and merchandising discussions, the head of the Disney theme park project also gave a report:
"At present, we have expanded several Disney parks worldwide.
Hogwarts Academy of Magic and Middle-earth theme parks are under steady construction, and the two related areas in Orlando's Disney World are expected to open in September."
Although Warner also had theme park projects, when it came to theme park operations, Disney was the expert—Warner was nowhere near as skilled.
With The Lord of the Rings and Harry Potter being such massive IPs, it would be a shame not to develop theme parks based on them.
However, Warner had its own advantages over Disney. Warner Music Group was one of the world's top three record distributors, and the soundtracks it released had achieved massive sales worldwide.
Moreover, Warner's television production division was far superior to Disney's, which mainly focused on children's programming.
Warner's TV division was already planning spin-off series for The Lord of the Rings and had even acquired the rights to George R.R. Martin's A Song of Ice and Fire, intending to develop it into either a television series or a film franchise like The Lord of the Rings.
Additionally, Warner's game development division was also very strong.
A series of video game adaptations for The Lord of the Rings was already in the works.
Undoubtedly, in these auxiliary markets, Warner, which held a dominant position, stood to earn far more revenue. This advantage helped balance out Warner's weaker performance in theme parks compared to Disney.
Beyond these business dealings, the most important task for Disney and Warner at the moment was negotiating with J.K. Rowling.
Rowling herself was inclined to continue working with Gilbert, Disney, and Warner Bros. She admired Gilbert greatly and maintained an excellent personal relationship with him.
However, given the enormous financial stakes amounting to billions or even tens of billions Rowling's agents, family, and business interests would not allow her to make decisions based purely on personal sentiment.
Thus, negotiations over the rights to future Harry Potter films had been ongoing since last year. The occasional interference from rival companies had further complicated matters, making the talks anything but smooth.
Nevertheless, Rowling's personal stance remained unchanged—she still wanted to collaborate with Gilbert, meaning that finalizing the deal was just a matter of time.
At the beginning of September, Harry Potter and the Chamber of Secrets was officially set for production.
Given the success of the first film and the return of the original cast, the sequel was guaranteed to perform well at the box office. After multiple rounds of compromise, an agreement was finally reached.
According to the latest contract, starting from Harry Potter and the Order of the Phoenix, Rowling would receive an 8.5% share of all box office and merchandise revenues.
In exchange, Melon Studios, Disney, and Warner would collectively pay $120 million for the rights to the remaining Harry Potter books.
This set a new record for novel adaptation rights and instantly elevated Rowling to the ranks of the wealthiest authors.
And that wasn't all—under the new revenue-sharing model, Rowling would have earned $241 million from Harry Potter and the Sorcerer's Stone alone.
Fortunately, this agreement would only take effect starting from Order of the Phoenix, or else the studios would have suffered a significant loss.
However, according to internal plans, the Harry Potter franchise would be managed as a separate studio with independently audited financial statements.
This meant that Rowling's revenue share would come from Harry Potter Studios rather than directly from Disney or Warner.
Hollywood's accounting methods were so sophisticated that even Wall Street's top financial experts would struggle to uncover discrepancies.
By shifting revenue between entities, studios could generate artificial losses on paper, effectively nullifying profit-based revenue shares without legal repercussions.
Gilbert strongly opposed this plan when discussing it with Robert Iger. He believed that such tactics might be justifiable when dealing with lead actors, but they should not be used against Rowling.
This approach could trigger unforeseen negative consequences and have a damaging impact.
Compared to Rowling, the real challenge lay with the Harry Potter lead actors.
Haley Joel Osment, who played Harry Potter, had already raised his salary to $10 million—making him the highest-paid child actor in history.
Meanwhile, Emma Watson and the other lead actors had each seen their salaries rise into the millions. Given the long-term nature of the franchise, their salaries would only continue to increase.
It was common for actors in sequels to demand higher pay, sometimes even negotiating for a share of box office and merchandise profits.
For film studios, however, such demands were difficult to accept, as they directly impacted profitability. Future negotiations were bound to be intense.
As with Rowling, these salary negotiations were not solely dictated by the actors themselves.
Although Haley had a good relationship with Gilbert, his family would never forgo massive financial benefits just for personal friendship.
To address this issue, after Harry Potter and the Sorcerer's Stone, the studio renegotiated contracts with the three main actors to satisfy their increasingly demanding agents and families.
However, it was only a matter of time before their representatives sought even greater financial gains.
At that point, Robert Iger's strategy would come into play—having Harry Potter Studios take loans from Disney and Warner to finance production.
By shifting funds internally, paper losses could be created, making revenue-sharing claims invalid.
Of course, there was also the option of replacing the lead actors with newcomers, but this was a last resort.
That said, the actors still had to fulfill their obligations.
Haley's acting skills were solid, but the other two leads were significantly weaker. As the series progressed, higher performance standards would be required.
Therefore, Gilbert insisted that all actors in the franchise undergo formal acting training.
If they failed to meet the required standards, it would be reflected in their salaries.
...
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