Corporate mergers at the giant level are extremely tedious. Early financial and legal feasibility assessments, negotiations for detailed acquisition plans after the formal launch, auditing of corporate assets and liabilities after an agreement is reached, and so on—it usually takes at least several months or even a year or two to complete thoroughly.
Matsushita began contacting Michael Ovitz late last year after Sony acquired Columbia Pictures, also hoping to acquire a major Hollywood film studio.
The Japanese stock market has plummeted by more than 30% over the past six months; however, Matsushita, which has accumulated a large amount of US dollars cash over the years, has not abandoned the idea of an acquisition.
For half a year, to maintain maximum secrecy, Michael Ovitz often led his team back and forth between Tokyo and Los Angeles, even forbidding staff from disclosing specific business trip itineraries to their families. One of his deputies, returning from Tokyo with a kimono for his wife, had to falsely claim it was bought in London.
Unexpectedly, despite all precautions, a single slip-up caused the matter to be leaked ahead of time.
CAA headquarters in Century City.
Michael Ovitz had a busy day yesterday, coordinating with Matsushita, finding reasonable excuses, contacting the media, unifying the narrative with team members, and finalizing the plan to deny the report in the Los Angeles Times. It was late at night by the time he personally finished reviewing the media press release.
Today, he still arrived at the company before eight o'clock.
After finishing the routine high-level meeting for the new week and discussing today's media feedback and the next steps with the acquisition team members, it was already 9:30.
Returning to his office, Michael Ovitz browsed today's work schedule while asking his assistant if the lunch with Dustin Hoffman at noon had been arranged.
Last year, under pressure from Westeros, he had ostensibly terminated contracts with Hoffman and several others, but Ovitz had been doing his best to help them maintain their careers, and for free. This largely mitigated the negative impact the termination event had on CAA.
Dustin Hoffman's ability to join 'Hook' this time, as well as Terry Semel and Peter Guber personally coming forward to advocate for him, were all results of Ovitz's behind the scenes operations.
Of course, of the four people whose contracts were terminated last year, only three were actually salvaged.
Westeros had suppressed Meg Ryan without reservation to make an example of her regarding long-term contracts, and Ovitz was powerless to do anything about it.
After discussing the lunch arrangements, Ovitz was about to start his other work for the day when his assistant handed him a box office report from the past weekend and said, "Mr. Ovitz, perhaps you should take a look at this".
Michael Ovitz took the box office report, dismissed the assistant, looked down, and a look of surprise soon appeared on his face.
This past weekend, because the box office performances of the two new films, 'Presumed Innocent' and 'The Jungle Book', were not particularly outstanding, 'Total Recall', in its second week of opening, easily took the top spot on the weekend box office chart with $15.06 million, despite a year-on-year drop of 41%.
After ten days of release, the cumulative box office for total recall also broke the $50 million mark in one fell swoop, reaching $51.14 million.
Of course, such data didn't actually surprise Ovitz.
What Michael Ovitz didn't expect was the name in second place on the chart: 'Ghost'.
Entering its second week, 'Ghost', Daenerys Entertainment's summer season opening film, whose critical response and box office in its first week had failed to meet many people's expectations, not only didn't see a significant drop like 'Total Recall' in its second weekend, but instead rose against the trend.
Compared to the $12.19 million box office for the three-day opening weekend, ghost's box office for the second weekend rose by 2.7%, bringing in another $12.52 million.
2.7%, this number seems insignificant. However, Michael Ovitz knew very well that when media reviews are only average, it is very difficult for a movie to achieve a counter-trend rise.
Yet 'Ghost' did it.
Once again.
Last year during the same period, 'The Sixth Sense', because of its explosive word-of-mouth and extremely high buzz, naturally achieved a counter-trend rise in its second week.
Now, what was going on with 'Ghost'?!
Michael Ovitz's confusion was likely a question the entire Hollywood was paying attention to early this morning.
One must understand that with just such a seemingly unremarkable counter-trend rise, the box office curve for 'Ghost' was directly propped up. This film, which many media outlets had originally predicted might only have a domestic box office of $60 million, was now almost certain to challenge the $100 million box office club.
It might even eventually surpass 'Total Recall'.
This was truly shocking.
Consequently, the media and other Hollywood studios finally began to pay attention to why this was happening.
The plot of 'Ghost' made countless audience members weep, 'Unchained Melody' triggered resonance in countless people. It was yet another result of the word of mouth effect.
In short…..
The audience liked this movie!
This was the most important and direct reason, a reason that countless filmmakers sought but could not obtain.
As the media swarmed to report on the grand screening of 'Ghost' and Hollywood began searching frantically for ideas similar to this movie, many people recalled their initial mindset when 'Ghost' was first released and couldn't help but laugh at themselves. Regarding Daenerys Entertainment, they couldn't help but feel a sense of powerlessness in their hearts: 'your uncle is still your uncle'.
On Sunday, with Daenerys Entertainment's top executives, Simon discussed the response strategy in case Matsushita launched an early acquisition of MCA. As CAA denied the matter in the media, Simon's mind turned back to other matters at hand.
However, although CAA publicly denied it, from Monday onwards and for the next few days, MCA's stock price still saw a surge, reaching a high of $52 at one point. Clearly, many capital players had already begun to enter the market.
If Daenerys Entertainment had no intention of acquiring MCA, Cersei Capital could now completely begin to aggressively absorb the company's stock. Once Matsushita's acquisition of MCA was completed, they would certainly make a huge profit.
Now, such an opportunity had to be given up.
Strictly speaking, as long as no one took it seriously, this wouldn't actually count as insider trading. However, Cersei Capital was already too conspicuous in many people's eyes. Simon believed that if he really did this, someone would definitely 'take it seriously' against Cersei Capital when the time came.
Over in Silicon Valley.
Because the growth in the number of America Online access users in May exceeded expectations, America Online management predicted that in the second half of this year alone, the number of users accessing the world wide web through the company could reach 500,000.
Furthermore, other ISPs outside of America Online's service areas had already begun contacting Ygritte Company, which held the core patents for the world wide web. Having accumulated over many years, the base of network users across the US was actually very large. If they all turned to the world wide web, the number of world wide web users nationwide would certainly far exceed 500,000 by the end of this year.
Therefore, both America Online and Ygritte began planning to expand their own data centres and line networks.
Ygritte's current two data centres on the East and West Coasts could only carry a user traffic of 400,000. This time, Ygritte planned to build two more 300,000-user-level data centres on the East and West Coasts respectively, expanding the user traffic the company's servers could carry to the million level.
America Online was mainly expanding its own basic line network.
Although building a nationwide network transmission channel would be impossible without an investment in the billion-dollar range, America Online's own funds were sufficient to support just investing in the backbone fibre-optic networks on the East and West Coasts. Simon did not intend to inject further capital to dilute other shareholders' equity in the short term; if necessary, America Online's next stage of financing would be in the form of loans.
Regarding internet cafes, after confirming the internet cafe prototype and business model, 100 internet cafes are expected to open one after another around the end of July.
America Online's stake in the 'Intercom Bar' subsidiary is 60%, and the basic cost of each internet cafe also exceeds $100,000. However, the investment America Online itself needs to bear is actually only $3.5 million, with the rest being covered by sponsors and an investment fund under IBM.
Daenerys Studios in Malibu.
The time is June 13th, Wednesday, 1990.
'Ghost' unexpectedly became a box office hit. Although its box office for the previous three-day weekend was nearly $3 million behind the first-place 'Total Recall', after entering the workdays, 'Ghost's daily box office had already surpassed 'Total Recall' due to further increases in media buzz and audience word-of-mouth.
Simon, however, did not relax.
The first of Daenerys Entertainment's 10-movie plan from last year, 'Sleeping With The Enemy', is about to be released on June 15th. However, in several consecutive internal screenings of this film, the evaluations given by participating media figures were all very low, and the test screenings for ordinary audiences did not yield particularly outstanding feedback either.
Both Hollywood and ordinary audiences are quite looking forward to Daenerys Entertainment's 10-movie plan.
Now, 'Ghost', which Daenerys Entertainment is operating independently, has shown signs of becoming a big hit. If 'Sleeping With The Enemy', a collaborative effort, fails at the box office, not only will audiences lose anticipation for the subsequent films in the 10-movie plan, but other Hollywood studios will inevitably have other ideas.
Simon, of course, had no way to control the audience's feedback to the film.
However, having accumulated influence up to now, many Hollywood studios were tied to the same boat by the 10-movie plan. This time, manipulating the media's evaluation of 'Sleeping With The Enemy' to ensure an evaluation above the passing line wouldn't be much of a problem.
Therefore, as soon as the new week arrived, Simon began to contact the media connections Daenerys Entertainment had built up over the years, while also requiring Fox and even other participants in the 10-movie plan to exert effort together. Everyone knew that if 'Sleeping With The Enemy' got off to a bad start, the other 10-movie plan films, which had already created a brand effect in the minds of the audience, would all be affected.
In the conference room on the top floor of Office Building No. 1 on the fifth floor of the administrative area.
The distribution teams from Daenerys Entertainment and Fox Pictures were discussing this very matter. Simon, Amy Pascal, and Fox's Joe Roth all participated in this meeting.
After the busy days prior, Fox's distribution team, with the help of Daenerys Entertainment and other Hollywood connections, had already secured the film review direction of four major East and West Coast newspapers: the Los Angeles Times, The New York Times, the Chicago Tribune, and the San Francisco Chronicle.
The two professional media outlets, The Hollywood Reporter and Variety, also promised to give a relatively lenient evaluation.
Outside of these influential print media platforms, the team also contacted a group of well-known film critics such as Roger Ebert, who had also agreed.
Overall, there wouldn't be very high evaluations, but a passing score of over 6 points on average was definitely not a problem.
Simon wasn't worried that this manipulation of film critic reviews would be leaked. To put it bluntly, this was actually a form of public relations, and it wasn't the first time it had happened in Hollywood. Moreover, although he could still only be considered a new player in Hollywood, Simon knew the principle that such things must absolutely not be overused.
Therefore, before 'Sleeping With The Enemy', other films produced by Daenerys Entertainment had not undergone similar public relations.
Once in a while, as long as it wasn't too frequent, various newspapers and film critics were actually very willing to do a Hollywood giant a favour. Even if it were exposed, because it didn't involve substantive monetary transactions and there were no particularly shady inside deals, just a tacit understanding formed during coffee or phone calls amidst casual conversation, it wouldn't cause too much of a stir.
There are numerous print media platforms in the US, but those with significant influence are only a few. Small and medium-sized print media platforms are actually very easily influenced by the direction of large print media.
With major media like the Los Angeles Times and The New York Times secured, the critical response to 'Sleeping With The Enemy' was somewhat guaranteed.
In the midst of the trivial busyness, another week flew by.
June 8th to June 14th.
Arnold Schwarzenegger's 'Total Recall', with a 41% drop in weekly box office, brought in another $21.32 million, still holding the top spot on the weekly box office chart. Its cumulative box office quickly reached $57.40 million in two weeks.
However, compared to 'Ghost', whose word-of-mouth and popularity were rising against the market trend, 'Total Recall's advantage was already very slight.
In its second week of release, 'Ghost's weekly counter-trend rise reached 4%, bringing in another $20.55 million, with the gap from the weekly chart champion 'Total Recall' being less than $1 million. In two weeks, 'Ghost's cumulative box office had already reached $40.31 million.
Because of 'Ghost's unexpected box office performance, Daenerys Entertainment reacted quickly to increase the number of screens for the film's third week of opening to 1,866. Compared to the 1,521 screens at opening, adding more than 300 screens at once, it's expected that the film's third-week box office still won't see much of a decline.
The two other new films, 'Presumed Innocent', starring Harrison Ford, ranked third with a first-week box office of $11.71 million, unfortunately failing to break ten thousand in per-theatre average.
'Back To The Future Part III', in its third week of release, brought in another $10.84 million, with a cumulative box office reaching $52.72 million.
Disney's re-release of 'The Jungle Book' ranked fifth, taking in $7.70 million in its first week, which was also decent.
Outside the top five, 'Fire Birds', which was released at the same time as 'Back To The Future Part III', saw its weekly box office plummet to $1.78 million in its third week. In three weeks, 'Fire Birds'' cumulative box office was only $12.01 million. It's expected that after next week's release, most screens will be pulled, and the final box office will only stop at around $15 million. Paramount won't even be able to recover its marketing costs based on the North American box office.
June 15th, a new week. North American theatres still have two new films premiering simultaneously: 'Sleeping With The Enemy', a collaboration between Fox Pictures and Daenerys Entertainment, and 'Dick Tracy', a comic book adaptation starring Warren Beatty and Madonna from Disney Pictures.