Chapter 172 Debt-to-Equity Swap

Simon returned from Cannes, and the media discussion and controversy about "Vulgar" winning the Palme d'Or intensified as the film approached its release, even overshadowing Ronald Reagan's upcoming state visit to the Soviet Union at the end of the month.

The two weeks away had accumulated so much work that Simon didn't have time to fully adjust to the jet lag and quickly threw himself into the busy business of the company.

In addition to "Vulgar", "Instinct", which is scheduled for July 15, has entered the final cutting stage since the start of filming in February, and Simon, as the investor, screenwriter and the person who is most familiar with the selling point of this project, naturally wants to participate in it.

Fox Films, which is responsible for the distribution of "Instinct", has already released the film's first TV trailer during Simon's participation in the Cannes Film Festival, and the film will be submitted to the MPAA for rating in early June.

During this time, Dustin Hoffman made some changes to the script of "Rain Man" on an impromptu basis, and the filming cycle of the film was inevitably extended again, and it is expected to be completed by the end of June.

When Simon heard the news at Cannes, he could only hope that the project would not exceed the $25 million production budget, and he also realized where Tom Cruise's bad problem of making all the films he starred in 'Tom Cruise movies' no matter how good or bad the ending was.

In addition to "Rain Man", projects such as "Scream", "Steel Magnolia" and "Dead Poets Society" seem to be progressing much more smoothly, and the selection of the actor in "Batman" has entered the third round, and Simon has also begun to participate in it himself.

After attending a host of sample screenings, production meetings and casting auditions for a host of projects, Simon flew to New York again on May 30 to participate in the recording of NBC's "The Johnny Carson Tonight Show" for "Vulgar", and Amy Pascal also rushed to the East Coast with Simon because of several reality shows.

At the same time, the competition for summer files has also begun to become fierce.

Due to the weak word-of-mouth and box office of Lucasfilm and MGM's special effects blockbuster "The Storm", Paramount and Samsung unanimously chose to advance the release date of "Crocodile Dundee 2" and "First Blood 3" to Wednesday, May 25.

As the 1986 second-only box office runner-up sequel to "Top Gun", "Crocodile Dundee 2" reached 2,837 screens. Sylvester Stallone's "First Blood 3" also has 2,562 screens.

During the week from May 20th to May 26th, the cumulative box office of "Gathering the Storm" in seven days was $11.05 million, ranking first in the weekly box office list.

The second-ranked "Crocodile Dundee 2" grossed $4.75 million in two days.

"First Blood 3", which ranked third on the list, grossed $4.46 million in two days.

It is worth mentioning that the production budget of "First Blood 3" has completely reached the runaway level of $63 million. In comparison, the production cost of "Crocodile Dundee 2", which achieved a box office of $174 million in North America only two years ago, is still well controlled at $14 million.

Moreover, there is another movie with a seriously out of control budget next in this summer file, "Who Framed Roger Rabbit".

Disney had a budget of $45 million for "Who Framed Roger Rabbit," which was already one of the few big-scale productions in the '80s, but Robert Zemeckis eventually pushed the project's production cost up to $70 million.

Now Disney can't afford the failure of a project with a budget of $70 million, although Simon knows that the final box office data of "Who Framed Roger Rabbit" is very good, but during this time, Disney is already panicking because of this project, and several responsible persons are openly and secretly letting go in advance to help themselves shirk their responsibilities.

The release date of "Who Framed Roger Rabbit" is June 24, so let's not mention it for the time being.

Squeezed by three new films, "When Harry Met Sally", which has always had a very bright box office curve, fell by 33% at the box office this week, far exceeding the weekly decline of only 120% since its release.

In the 11th week of its release, "When Harry Met Sally" collected another $4.11 million, with a cumulative box office of $94.23 million, one step closer to breaking 100 million.

While arriving in New York to record The Johnny Carson Tonight Show, Simon also had to juggle Westeros' business.

Jennifer's father, James Raybould, has already secured the loan during this time, Westeros' investment in several companies such as Cisco, and some important affairs of many technology companies in which the company has a stake, and many related contract documents and memoranda need to be reviewed and signed by Simon in person.

The other side.

Amy's negotiations with the network continue.

The four major television networks have expressed interest in Daenerys Films' plans for four reality shows, but things have not gone well because Daenerys Films wants to gain the initiative as much as possible in order to share more profits later.

Television networks generally classify these reality shows as traditional variety shows, which are usually proposed by production companies or producers in the industry, and TV networks buy the ideas and invest in them and own the copyrights. Even if it is outsourced, the production company in charge of the program often only earns a simple labor fee, and if the program has higher ratings, it may receive an additional bonus, and that's it.

Simon would not have accepted such a condition under any circumstances.

Phenomenal reality shows like "Who Will Become a Millionaire" and "Survivor", which are enough to support a TV network's ratings in the original time and space, remember that just the annual advertising revenue can bring hundreds of millions of dollars in net profits to the TV network, and the program's role in boosting the ratings of the entire TV network is immeasurable.

Moreover, once this kind of reality show is successful, the overseas production licensing fee in the future will also be a very considerable income. Like "Who Will Be a Millionaire", this reality show at its peak had reproductions in dozens of countries around the world, and these were subject to royalties.

If the copyright is handed over to the TV network, the profits that Daenerys Pictures can share in the future will definitely shrink significantly, and the overseas licensing fees that can continue to bring in revenue will have nothing to do with the company.

Upper East Side, the Raybould family's apartment.

It's June 1st, and last night "Johnny Carson Tonight Show" aired a special interview with the creator of "Vulgar", and the film is one step closer to its release. All the pre-marketing work has been completed, and the next step is to see the market performance of the film.

Tonight was an invitation to dinner at the Raybould family, and in addition to Simon and Amy, the Leybould family's friends Robert Egger and his wife also arrived.

After this period of see-saw, Daenerys Films finally reached the first contract with ABC yesterday for "Who Will Be a Millionaire".

ABC will acquire the North American rights to "Who Will Be a Millionaire," and Daenerys Pictures will retain the rights to the project outside of North America and will be solely responsible for the production of the show. Under the terms of the contract, ABC could not get rid of Daenerys Pictures to produce the show on its own, and it was impossible for Daenerys Pictures to sell the show to other television networks in the United States.

It can be said that this is a contract in which neither of the two sides can kick out the other.

In addition, the production budget and competition prize money are covered by Daenerys Pictures, and ABC pays for each season's subscription based on viewership. Daenerys Films will then pre-produce a week-long pilot to test the show, which will be scheduled to air the following week, starting June 20.

If the show meets the ratings, the two parties will negotiate the subscription price for the first season.

This year's fall schedule has been severely affected by the writers' strike, and once the pilot of "Who Will Be a Millionaire" is approved, ABC plans to order 69 episodes at once, with three episodes per week, just to fill the network's traditional 23-week schedule from autumn to spring.

As an indoor answering reality show, the production budget of each issue of "Who Will Become a Millionaire" is actually not high, the basic venue recording and other expenses are only about 200,000 US dollars, and the bonus of 1 million US dollars is not so easy to get, and the average total bonus expenditure of 100,000 US dollars per issue is more than enough.

However, even at $300,000 per episode, the cumulative production cost of the entire season of 69 episodes would exceed $20 million, which is obviously a lot of money.

The break-even line given by ABC is 10 million viewers for the fall slot.

With an audience size of less than 10 million, ABC will be able to offer a program subscription price of less than $20 million. Within the network's tolerable viewing range, Daenerys Pictures would have to rely on self-financed in-program sponsorship to cover its production budget if it wanted to keep the show.

In this era when cable TV has not yet become popular, the threshold of 10 million viewers is not low, but it is definitely not high. This also shows that ABC does not have much expectation for "Who Will Become a Millionaire".

In addition, because the trial broadcast time is the most unpopular summer file for TV networks, the standard viewership of the pilot episode given by ABC is 6.5 million.

In the restaurant, everyone enjoyed the food, and it was natural to discuss these reality shows.

Robert Iger happened to be placed across from Simon to talk about "Who's going to Be a Millionaire," and the ABC executive turned the conversation to "Survivor": "Simon, I actually think 'Survivor' is more interesting than 'Who Becomes a Millionaire'. However, the show was too risky because of the coherence of the plot, it had to be produced one season at a time, and it could not be scheduled for a pilot episode, and it could not be cut immediately if the ratings were poor. So, I think it's best to schedule it to be played in the summer. If you succeed in this way, you can move to the autumn file, and if you fail, it won't have much impact on the TV network. ”

Simon nodded in agreement, then shook his head and said, "Unfortunately, Bob, although we have done a lot of preliminary preparations, it must be too late in time. ”

Many popular reality shows in my memory are actually put on the summer file for trial broadcast first, and then readjusted to the popular schedule after success. Robert Iger can easily see this before reality TV shows are on the rise, which certainly shows the TV network executive's keen professional sense.

"Actually, now happens to be an opportunity, this year everyone has no programs to broadcast, so they can only take some risks. Robert Iger continued with a smile, "So, Simon, if you can make a slight concession on the terms of cooperation, I can call Daniel right now to finalize the matter." ”

Now that "Who Will Be a Millionaire" has been signed, Simon is no longer so eager for the other three reality shows. As long as next month's pilot episode is successful, there will be no shortage of buyers for these projects, and Daenerys Pictures will be able to gain more initiative.

Of course, if it fails, there is nothing to be done.

"Bob, the terms of the 'Survivor' partnership that I can accept are similar to 'Who Will Be a Millionaire', it's a win-win partnership, and I don't think I have any room to back down," Simon shook his head and refused, and then said, "Speaking of which, Bob, if Daenerys Pictures' TV business develops well in the future, would you be willing to jump ship and help me?"

Simon had only made some tentative attempts through James Raybould before, and at this time he brought it up in front of everyone, and everyone in the restaurant looked at Robert Iger.

Robert Iger was also a little surprised, but he said quickly: "Simon, if there is a better career development platform, I would be happy to change jobs." But I don't see that potential at Daenerys Films right now. ”

Simon laughed, "Can I take this as a promise?"

"You're an amazing young man, and I'm curious about what happens when I work for you. So, why not," Robert Iger shrugged, and in the midst of everyone's surprised gazes, asked Simon again, "I remember when you tried to buy New World Entertainment at the beginning of the year?"

Unexpectedly received a reply from Robert Iger, Simon did not hide this matter, and said: "Yes, I still haven't given up this effort. ”

"New World Entertainment is still very strong in the field of TV production," commented Robert Iger, "It's a pity that the pace of expansion is too big, and they are destined to be unable to escape the catastrophe due to the stock market crash and strikes." ”

Simon nodded, looked at James Raybould, and asked, "Jim, what's New World Entertainment's recent stock price?"

James Raybould thought for a moment and said, "It's not clear in the last few days, it was $8.5 at the close last Friday, with a total market capitalization of about $210 million. ”

At the beginning of the year, when the company tried to buy New World Entertainment, the company's stock price soared to nearly $17, and then Simon made a gesture of complete abandonment, coupled with financial deterioration and strike blows, New World Entertainment's stock price fell back to low levels in recent months.

After James Raybould finished speaking, he glanced at Simon meaningfully.

During this time, according to Simon's orders, Westeros secretly bought 1.23 million shares of New World Entertainment again, which was still stuck below the public reporting line of 5% shareholding. Westeros can continue to absorb from the open market at any time for as long as it needs to.

There is no need to be as frank as Robert Iger about this.

Robert Iger didn't seem to think much about it, but said, "Simon, if you want to get New World Entertainment, maybe you can contact General Electric." ”

Simon hadn't reacted yet, but James Raybould subconsciously said, "Good idea, I should have thought of it a long time ago." ”

Everyone looked at James Raybould for some reason.

Realizing his gaffe, James Raybould smiled awkwardly and said to Simon: "General Electric is the main creditor of New World Entertainment, Simon, and this company is now insolvent. If we were to make a public takeover, we would definitely have to take on a huge amount of debt in the future that is almost equal to the market value of New World Entertainment. However, if we can buy the debt in the hands of General Electric, we can then put pressure on New World Entertainment to carry out the debt-to-equity swap operation. Based on the size of GE's debt, we will be able to get at least 90% of the shares of New World Entertainment, and we will be able to save half of the fees. ”

After listening to James Raybould's explanation, Simon quickly understood.

Of course, if this is done, retail investors in the circulating market, and even Westeros itself, which secretly holds shares, will undoubtedly become the biggest victims. The 90% debt-to-equity swap ratio is equivalent to the direct depreciation of the shares in the hands of the original shareholders to one-tenth of the original stock price.

But.

If NWG eventually goes bankrupt and liquidates, the shares in the hands of shareholders will also become worthless. Investments are risky, and Simon didn't sacrifice my dedication to making a family of tens of millions, and he quickly made up his mind.

After dinner, it was already ten o'clock in the evening when he left Raybould's house, Simon and Raybould agreed to come to the company tomorrow morning to discuss the matter of New World Entertainment in detail, and took the initiative to open the car door and let Amy Pascal into the car.

Simon is returning to his apartment on Lexington Avenue in Midtown and dropping Amy back to her hotel.

Neil Bennett in the front row started the car, Simon and Amy chatted casually, and suddenly remembered another thing, and said, "Amy, from tomorrow, stop negotiating with NBC about our reality shows." ”

Amy Pascal was a little confused: "Huh?"

Simon thought for a moment and said, "Stop it all, not only NBC, but also the others, you can go back to Los Angeles tomorrow." ”

Amy Pascal felt like she understood something, but she couldn't fully sort out the joints. However, she also gradually got used to no longer being exhaustive about Simon's decision, and just said, "What about the preparations?"

Simon said: "Of course, this still has to be continued. ”

According to the current crumbling state of New World Entertainment, Westeros' purchase of GE's debt can definitely help the other party avoid a large loss. However, compared to a behemoth like General Electric, Simon's strength is still too weak, and who knows if General Electric will have other ideas.

"Who Will Be a Millionaire" will be piloted next month, and if the reality show can be as successful as it was in the original plane, three other reality projects in the hands of Daenerys Pictures will also become Simon's bargaining chips.

GE is the parent company of NBC Television Network, and the aircraft carrier-level corporate giant invested in New World Entertainment with the intention of providing NBC with more content resources. At that time, Simon can rely on the reality show project with great potential in his hand in exchange for GE's debt-to-equity swap plan with Westeros.

Dropping Amy off at the hotel, Simon rushed back to the penthouse on Lysington Avenue.

When I opened the door, it was quiet in the living room, but the lights were on.

Simon took off his shoes and walked through the hallway, where Catherine sat on the couch facing the doorway, wearing a slim light blue wide-checked shirt and crisp white slacks, looking down and intently flipping through a magazine.

Quietly turned behind the woman, and it wasn't until Simon leaned down that Catherine noticed him coming back, and tilted her head slightly in shame to let the man kiss her on the cheek, and rubbed her neck again, before she whispered, "Drinking?"

Simon sniffed the woman's nice scent and said, "Just some red wine." ”

Catherine felt Simon's two hands touch from behind her, threw away the magazine in her hand and reached out to hold him, with a slight tremor in her tone: "I, I just made coffee." ”

Simon just responded, "Yes." ”

The two hands were still doing nonsense, and seemed to be interested in the buttons of her shirt, and even ripped off one of them. It's disgusting, what about the newly bought clothes. I already knew that I couldn't stop this little bastard with a lot of strength, but I really couldn't stop it, but I still continued to express my attitude.

I was reluctant.

Feebly let him play with it for a moment, feeling his body being hugged ...... Well, she carried it, and it turned out to be like a robber, so she hammered him a few times very dissatisfied.

Little bastard.

How can this be!