Chapter 579

Buffett himself is very optimistic about the video tape rental industry, for which he has also studied Blockbuster's information in detail, since the mid-80s, the profits generated by the video tape industry have been no less than the box office, and Blockbuster, which has 3,000 branches, is undoubtedly the 'Wal-Mart' of the video tape rental industry, and Blockbuster's annual profit last year was not much less than that of the seven major Hollywood studios. And the videotape rental giant also has a huge cash flow that Buffett values the most. It is true that the video tape industry has been thriving all these years, but Buffett does not feel that there is a bubble in this industry, so Buffett's contempt for Blockbuster in Eric's words makes Buffett very puzzled: "Eric, aren't you optimistic about the prospects of the video industry?"

The videotape and upcoming DVD rental industry will be thriving for at least a decade, and Eric certainly can't afford not to be optimistic about this industry, at least because the Blockbuster chain is about to be rapidly phased out in a few years.

"Mr. Buffett......"

As soon as Eric spoke, Buffett interrupted him softly, smiled and said warmly: "Eric, you can call me Warren, I don't want the communication between us to be like a formal business negotiation, what do you think?"

"Okay, Warren," Eric smiled and nodded, "If you've been to some of the Blockbuster rental chains, you'll find that it's always a hassle to find some videotapes, and Blockbuster's fees are very unreasonable. I believe that if a better video rental business model emerges, it is almost inevitable that Blockbuster will be eliminated. ”

Buffett didn't have the slightest posture of a rich man, and continued to ask: "I think you must have considered some kind of better business model that you said, right?"

"Of course. Take the Internet, for example. We can set up a dedicated videotape rental website. Customers who want a movie can easily find detailed rental information about the movie by simply entering the name of the movie on the website, and we can even set up a special mailing system to make it easier for customers to rent videotapes. ”

Warren Buffett doesn't pay much attention to the high-tech industry, which can be seen from his portfolio, Berkshire Hathaway's portfolio is basically involved in traditional industries, but. Because of the information superhighway plan that the Clinton administration is vigorously promoting, Buffett has also been exposed to a lot of relevant information: "Eric, don't you think there are too few Internet users now?"

Eric hasn't been paying attention to the growth of Internet users in North America lately, but he can easily find a similar example: "It's not too many, but users who can access the Internet tend to have a lot of spending power." And, when the personal computer was first created more than a decade ago, perhaps no one realized that millions of units of this expensive seemingly useless household appliance were now sold in millions of units a year, and that tens of millions of users owned personal computers in North America and around the world had accumulated over the course of that decade. The economic strength of these people is usually not too bad, in the context of the increasing abundance of Internet content. I believe most people choose to get involved in the network. ”

In the process of researching Eric's profile, Buffett also deliberately logged on to the Yahoo portal and set up his own online email account, although many people think that his personal style is very conservative, but Buffett is a person who never forgets to learn and accept new things. He feels that the contact method of online mailbox is indeed much faster than letters, but because of the current restrictions of various software and hardware conditions, Buffett can't think of where the profit prospects of these network services are, Buffett has always been an investor who pursues profits, and strictly adheres to the principle that investment must be returned, if tens of millions of dollars are invested but can not be returned, he can't think of any need to continue to do something.

"Eric, before I came, I looked at the Yahoo portal that you invested in, and I want to know if you built this website for investment or pure public welfare?"

"Of course it's investment," Eric feels that Buffett has obviously taken the topic crookedly, and today he is obviously going to discuss the acquisition of the TV network by Firefly, however, Eric is also very clear that Buffett is a person who has a very strong desire to ask questions, and he can see from many of Buffett's materials that Buffett is interested in a company, and often bombards the person in charge of the company with tireless questions. However, Eric showed no signs of impatience. In fact, many business transactions are determined in this kind of small talk, as for the kind of business negotiations, it is often after the transaction intention is reached, the details are negotiated.

"So, for example, the Yahoo portal, when and how are you going to make it profitable?"

"I've never thought about Yahoo being profitable in the last few years, and it's still in the nurturing stage," Eric replied slowly, "Warren, imagine how much money would those advertisers be willing to pay to advertise on Yahoo if Yahoo had more than 100 million users?"

100 million users!

Warren Buffett narrowed his eyes slightly, not taking Eric's words as a fantasy, as Eric just said, ten years ago, no one knew that personal computers could now sell millions of units a year. If the number of Internet users really grows at the scale of millions or even tens of millions of users per year in the future, then 100 million users is not a distant thing.

Berkshire owns a number of newspapers, but the Washington Post, the largest of them, currently has an average daily circulation of only a few million, but even those millions of copies sold can bring hundreds of millions of dollars in profits to the Post every year. Therefore, the Internet media with 100 million users will definitely generate more profits than any traditional paper media after finding a suitable means of making profits.

Although Warren Buffett is not an impulsive person, he has clearly been moved at this time, but this intention does not make him immediately throw himself into the Internet wave.

After a quick moment, Buffett took a few sips of the Coke in front of him and gently lowered the glass. He looked at Eric and said, "Eric." The prospect is indeed very enticing. I'm looking forward to seeing Yahoo emerge in the future as you say. So, let's talk about the network, I heard you talked to Barry Diller the other day?"

"Yes," Eric said with a regretful expression, "but unfortunately, he didn't plan to join the Firefly." ”

Warren Buffett's expression remained unchanged: "So, if I promise to sell you ABC, how are you going to place Tom." You know, we're good friends, and I need to think about my friends' interests. ”

"If ABC can be successfully acquired, Firefly will not make too many personnel adjustments to ABC, and ABC's performance in the past few years is enough to prove Mr. Tom Murphy's management ability, so Firefly will mainly increase ABC's investment in content in the next few years. As we all know, a television network is also like a sales platform, and TV shows are the 'goods' it sells. Any customer at the same price point will be more likely to patronize a store with a higher quality product. ”

Buffett was clearly pleased with Eric's answer. He began to ask other questions about his concerns, including Eric's thoughts on the future acquisition of the network, and the two men had been gossiping about a trivial matter, and had not talked about the all-important purchase price.

After more than an hour, the two of them drank a large bottle of Coke, and Buffett finally spoke: "Eric, overall, I am quite satisfied with your various plans after the acquisition of the TV network, so we can now talk about the purchase price." ”

Warren Buffett and Tom Murphy now own a majority stake in the ABC network, which means that as long as these two men nod their heads, Firefly Pictures' acquisition of ABC will hardly be much more helpful.

However, Eric was not too relaxed at this time, because he had realized something else, if Buffett was just going to sell ABC to Firefly for cash, he wouldn't have talked to him for so long, maybe he would just quote a sale price very directly.

Sure enough, Buffett immediately said: "Eric, although I am more optimistic about this transaction, I do not plan to cash out all the shares of ABC." Tom and I have already talked about it, and at most we will sell 30% of our shares in ABC in a cash transaction, and the other 70% I hope to be able to invest in Firefly Pictures as capital. ”

Eric had already anticipated Buffett's intentions, and from the bottom of his heart, he didn't want to exchange it in the form of cash and shares, but now it is different from when it bought Disney, when Firefly bought Disney, Disney's performance was in a downturn, and Firefly, which was not too big at that time, completely swallowed Disney in a snake swallowing elephant posture. Most investors are not too optimistic about the Firefly acquisition, and Disney does not have a major shareholder like ABC, which is almost a controlling shareholder, and the shareholding is quite dispersed, so Firefly Pictures was able to realize the cash acquisition attempt.

But in the past two years, Firefly Pictures' performance is too dazzling, although this year's financial report has not been released, but there is almost no suspense about a net profit of more than $1 billion.

At present, except for the Time Warner Group, which is larger than Firefly, no film company can achieve such annual profits, so the world's bright-eyed investment institutions have been focusing on Firefly Pictures, always looking forward to Firefly Pictures will release news such as listing, in this case, Firefly wants to expand to the TV network, whether it is ABC, or the less powerful NBC and CBS, will definitely not give up this great opportunity to invest in Firefly.

As for Buffett's proposal to buy 70% of ABC's shares in Firefly, Eric did not rush to bargain, but asked: "So, Warren, I want to know, how much of Firefly Pictures shares are you going to exchange for 70% of ABC's shares?"

"49%," Buffett replied quickly, apparently having been thinking about it for a long time: "Eric, we can calculate it using ABC's current stock price, which is valued at about $10 billion. And for Firefly Pictures, I give a valuation of $15 billion, and I know that you will never give up your absolute controlling stake in Firefly Pictures, so we don't ask for a controlling stake, you are still the largest shareholder, and I will not interfere in the management of Firefly in the future, what do you think?"

Well, of course not so much.

Although Firefly's business is not as extensive as Time Warner's, Firefly's annual profit is definitely on par with Time Warner, although many people will definitely feel that this profit margin is only temporary according to the normal development trajectory of Hollywood studios, but Eric is very confident that Firefly will definitely be able to maintain high growth for a long time, even if there is no TV network, Firefly's profits will only rise in the future. After all, a movie or TV series produced by a film company is also a commodity, and Eric has the ability to produce and select 'quality goods' that no one else can match.

"Warren, this price is too high, I definitely won't agree," Eric didn't beat around the bush, and said directly: "Firefly's net profit last year was close to one billion dollars, and this year it may even exceed Time Warner, and we all know that now Time Warner Group's market value is close to $30 billion, but Firefly is only valued at $15 billion, don't you think this is too low?"

"Eric, I admit that Firefly's performance in recent years has been very dazzling, but we are also very aware that the return on investment in the film industry is very unstable, although everyone recognizes your talent in film, but it does not mean that you will not fail in the future, just like Spielberg, Hollywood throughout the eighties, almost Spielberg's world, but just into the nineties, Spielberg ushered in the failure of "Captain Hawke". Moreover, we are also well aware that the market value of a company can never be calculated according to the profit of a few years alone, and Time Warner owns all the industries such as film, television, publishing and music, which means that its ability to resist risks is very high, and even if there is a significant loss in a business in a given year, it will not affect Time Warner's overall revenue. But Firefly has a relatively large business scope, and businesses such as peripheral income are basically very dependent on movie results. (To be continued.) )