In Burbank's business clubhouse, after several rounds of contact between the negotiating teams on both sides, Ronan and Reed Hastings sat down at the negotiating table again.

Although Reed Hastings decided to sell Netflix, he also wanted to sell for a good price.

"I've never denied that Netflix is in a bad position at the moment, which is why I'm looking for outside opportunities. Reed Hastings is not stupid enough to deny some basic things, but he also strives for it: "But Netflix also has advantages that cannot be ignored, and Netflix is a well-deserved leader in the film and television online rental industry." ”

Ronan didn't answer, and Garcia interjected at the right time: "That's because the online rental market share is extremely small." ”

Reid Hastings looked at Garcia unaffected, saying, "The market share of movie online rentals will grow, and Netflix has a talented and self-disciplined team and has the largest market share in the growing online rental market. ”

His voice is loud and confident: "After several years of hard work, Netflix has begun to change the way consumers rent audio-visual products. Admittedly, Netflix has not done a good enough job, but it's not just for money, it's about launching a challenge to dismantle an inherent and outdated industry and create a new sunrise industry!"

Although Ronan did not speak, he knew that Reed Hastings was essentially boasting about what he said, and wanted to get as much attention as possible from his side, so that the price of the trade could meet psychological expectations.

Reed Hastings had no idea that all these words he had sold and boasted about would become true in the future.

Netflix changed the movie rental industry, breaking the old order of the industry.

The serious asymmetry of information between the two sides has brought about the current situation.

Reed Hastings' voice is loud, and his words are very contagious: "The industrial model created by Netflix has created a fashion leader, a technological innovator, and a Starbucks-level brand power!"

Ronan is well aware that, according to the development of his previous life, Reed Hastings is not exaggerating at all.

But as a buyer, of course Ronan will not admit it, and then said lightly: "I don't have so many ideas about Netflix, Relativity doesn't need Netflix to create a new industry, and there is no need to take this unnecessary risk, what Relativity Entertainment needs is just a supplement to the peripheral sales channels." ”

Reid Hastings is a little unhappy about this obviously not paying enough attention to Netflix, but he is a businessman and will not affect tens of millions of dollars of business just because he is not happy at all.

Reed Hastings said directly: "Mr. Anderson, I must have heard that I pitched Netflix to Besta for $50 million. Now my mind has not changed, if Relativity Entertainment acquires Netflix as a wholly owned company, I will ask you to pay a lump sum of $50 million. ”

Ronan replied unceremoniously: "For the theory of relativity, a channel that is losing money, the cost of $50 million is too high. ”

Reed Hastings smiled slightly mockingly and said, "Your company can try your original plan, I tell you with practical experience, 50 million US dollars, you will definitely not reach the current scale of Netflix!"

He said conclusively: "I have invested more than $70 million in Netflix over the years!"

Ronan was unmoved: "But that doesn't change the fact that Netflix is a company that is seriously losing money. According to what I have learned, Netflix lost $9.9 million in 1999, nearly $19 million in 2000, and could lose $30 million this year!

Reid Hastings' face remained unchanged: "Netflix keeps losing money because it is creating a new industry model. ”

"And what is the result?" Ronan said calmly: "Netflix's order fulfillment costs are too high, the cost of damaged and lost DVDs in the mail is unpredictable, and there are less than 200,000 registered users so far! Mr. Hastings, my evaluation team has a comprehensive understanding of your company, and with Netflix's current business situation, it must send 100,000 films a day to protect its capital, and Netflix's current production volume is only 2,000 films!"

He asked, "Are you sure you want to sell for $50 million for such a company?"

Reed Hastings is powerless to refute in this regard, because what Ronan said is not very different from the real situation of Netflix.

"Mr. Anderson!" Reed Hastings said, "I want to remind you that Netflix has a very low debt burden! Most of Netflix's losses come from my investments and the investments I have raised, and in today's market, you can't buy any Internet company with a lower debt burden than Netflix." ”

Ronan said, "If Netflix was heavily in debt, I wouldn't be sitting here talking to you." He offered the price of Relativity Entertainment: "$35 million, and at the same time Netflix strips all debt." ”

Reed Hastings' face finally changed: "This is not in line with the actual value of Netflix!"

This time, the negotiations ended unhappily, but the two sides did not stalemate, and when they ended, they agreed on the time of the next meeting.

Ronan dares to lower the price, and the biggest reliance is still the current situation of Netflix.

Just like Pepsi's treatment of Reed Hastings, Netflix's model is not recognized, and since the stock market bubble burst in 2000, the Internet industry has been sluggish, even if some Internet star companies lack investment, let alone a small company like Netflix.

During the negotiations, Reed Hastings made many efforts to continue to promote Netflix to other companies or investment institutions, and as long as one or two of them expressed investment intentions to Netflix, he could gain a certain initiative and advantage at the negotiating table.

Moreover, the emergence of Relativity Entertainment also made him feel that Netflix might be an effective channel supplement for Hollywood film distributors.

In just about ten days, Reed Hastings has visited the six major Hollywood companies and other medium-sized film companies, but Pepsi's ability to firmly occupy the leading position in the film rental industry also shows Hollywood's recognition of the Peskind model.

As for the Netflix model, these companies are not interested right now.

Maybe a year later, Reed Hastings will sell the Netflix model to Hollywood, and the result will be completely different.

But reality forced Reed Hastings to sit back at the table again and continue to negotiate a wholly-owned acquisition with Relativity Entertainment.

The negotiations dragged on until late November, with both sides making concessions to varying degrees.

Relativity Entertainment's valuation team valued Netflix at between $35 million and $45 million.

From its establishment in 1997 to the end of 2001, in the four years since its establishment, Netflix's losses have doubled year by year.

At the height of the negotiations, Ronan also produced this assessment report, and any data on it was well-founded and supported by sufficient market research, and even Reed Hastings could not refute it forcefully.

By the end of November, the two sides finally reached an agreement in negotiations that Relativity Entertainment would buy Netflix wholly for $42 million, but that didn't include Netflix's debt.

This small amount of debt is the responsibility of Netflix's original shareholders.

However, Relativity Entertainment needs to pay a lump sum of $42 million in equity transfer within a week of the signing of the agreement between the two parties.

This is also one reason why Reed Hastings has made concessions, and it is not uncommon for some transaction fees to drag on for a year or even years.

Reed Hastings was very happy with the lump sum payment.

Relativity Entertainment currently has sufficient cash flow, and a one-time payment of $42 million is not a problem at all, even if it continues to invest in Netflix in the future, there will be no pressure for the time being.

After a few years of accumulation, Ronan also has a certain amount of capital.

Before the arrival of December, Ronan signed a formal equity transfer agreement with Reed Hastings on behalf of Netflix on behalf of Relativity Entertainment, and as long as the funds are in place, Relativity Entertainment will become the new owner of Netflix.

"Congratulations, Mr. Anderson. ”

After signing the contract, Reid Hastings shook hands with Ronan: "You've got a company with an unlimited future. ”

Ronan smiled and said, "If Netflix really has an infinite future, will you sell it to me?" He put away his smile and said seriously, "Anyway, it's a win-win deal." ”

Reid Hastings couldn't help but say, "Hopefully, Netflix will still exist and grow as an independent company, rather than becoming a division of the film company." ”

Ronan glanced at Mark Randolph next to De Hastings and said solemnly: "Netflix was, is, and will always be an independent Internet company. ”

Hearing this, Reed Hastings was noncommittal, but Mark Randolph next to him breathed a sigh of relief.

What Mark Randolph is most worried about is that after Relativity Entertainment completes the acquisition, Netflix will become a division of the film company, completely cutting off Netflix's future.

An independent company has a completely different space for development than a division of a certain company.

"Mark. Reed Hastings beckoned, "It's time for us to go." ”

Ronan shook hands with Mark Randolph and Reed Hastings, respectively: "Goodbye, both. I hope we will have the opportunity to work together in the future. ”

Reed Hastings coped: "I hope so. ”

Mark Randolph shook hands with Ronan and had something to say, but he didn't know how to say it, so he had to accompany Reed Hastings away.

After the Netflix side left, Ronan said to assistant Connie, "Inform Mary and settle the matter with Reed Hastings as soon as possible." Also, when the deal is done, you can ask Mark Randolph for me and say I'm going to talk to him about the future of Netflix. ”