I'm in Hollywood Chapter 171: Not Much Time Left

“30% is out of the question,” Eric shook his head slightly, with eyes gazing at Robert Shea. Before any rebuttal, Eric leaned forward and continued: “30 percent of stake to merge a mere distribution company is a losing proposition anyway, so I would rather give it up. As Firefly is going gangbuster now, all the seven Hollywood giants are willing to cooperate with me. I can even exchange Firefly’s 30 percent of stake for 10 percent of stake of MGM, the underdog among the Hollywood giants.”
When Eric finished, Robert Shea rebutted instantly: “Actually, Eric, you will not do that. If Firefly becomes a subsidiary of seven giants, it meanwhile loses the chance to run neck to neck with them. I have been hustling in Hollywood for some 20 years, and I have been tired of seeing cases in which a film giant prevents the development of second-and third-tier companies by acquisitions, so they will never threat its status. It’s their same old trick, Eric.”
“Of course, I will not do that. I just account for a possibility. If I have to pay out 30 percent of stake to acquire New Line, I would rather exchange my stake for that of the giants. So, Robert, I have my bottom line, 10 percent at most, and if not enough, some cashes can be offered as compensation.” Eric also bid his offer, 10 percent, a result of his long-time deliberation. He believed that it was enough to acquire New Line, and would attract other collaborators.
“That’s far from enough,” Robert said: “I have run New Line for over 20 years, a child of mine it is to me. If your Firefly desires to merge it, 30 percent is not enough, and any offer less than that is unacceptable.”
Eric almost burst out laughing: “Radio Keith Orpheum has longer history, where it is now? United Artists is an old brand but also became the subsidiary of MGM. So time, Robert, doesn’t hold water. In 1981, United Artists was merged by MGM because of the huge losses of Heaven’s Gate, then only six giants, Warner, Universal, Paramount, MGM and Fox survived in Hollywood. But how about now? In just five years since Michael Eisner took the chair of Disney in 1984, the six giants had expanded into seven.
Robert Shea was going red in the face---it seemed that Eric was comparing Robert with Michael Eisner. True indeed, he could hardly equal Michael Eisner, but it was ashamed to be pointed out by a young man 30 years his junior. In embarrassment, Robert blurted it out, “Whatever, Eric, it must be 30 percent.”
Eric placated him as soon as he noticed Robert’s anger: “Well, Robert, we both have the intention to cooperate, so why don’t we go deeper into the details.”
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“Oh no, it’s useless,” Robert Shea rejected: “If 30 percent cannot be guaranteed, there will be no need for details.”
Eric's was slightly agitated, with fingers tapping habitually on the table for a few times, because it did not make the usual light noise due to the tablecloth.
“Robert, you have to understand that there is not much time left for us.”
Robert Shea was slightly curious about Eric’s baffling words, but he didn’t ask any questions after all to keep his momentum.
Eric also went straight to the point: “Over a decade ago, films could only make profits in cinemas, yet with the vigorous development of video tapes, cable television and other film-distributed channels, this small profiting circle had been largely expanded, which had also made films more and more important in the media industry. I believe that in the next decade, most of the Hollywood giants will be merged by media groups and become a part of the huge media industrial chain. Once this trend prevails, the Hollywood giants will gain the media and financial resources supported by media groups. That means film giants can spare the risks of bankruptcy caused by bad investment and will ultimately enhance their position with numerous media resources. By then, without God’s grace, second-and third-tier companies can never weaken the impregnable position film giants backed by media groups. They will either be merged by film giants, and as you said, lose the chance to join them or carve up the scrapes of profits left over by the giants.”
Robert Shea restrained his surprise and kept it from his expression, resorting: “There is something in your words, but this trend still has a long way to go. I have faith in New Line. It has chance as long as…”
“No, it doesn’t,” Eric interrupted Robert Shea firmly: “Actually, this trend had begun a few years ago when News Corporation bought Fox. This year, with Columbia purchased by Sony, seven giants lessened to five. Moreover, I read in the newspaper that Warner intends to cooperate with Turner Network Television, establishing media group, then another giant gone. So, four film giants remain, and how long can they survive?”
Robert Shea went silent.
Eric didn’t stop his persuasion: “Robert, as the second-and third-tier companies, this is our last opportunity to rise up. The time left for us is no more than 10 years, or even only 5 years. Yes, you can afford to miss the chance and be resigned to seeing the whole industry carved up. Then, as you imagined, you turn New Line into a first-class film company through the accumulation of luck and time, making more profits than any former giants. But the point is, by then except New Line, there will be no more pure film company anymore. All the former giants have already integrated into media group and you can never compete with them, which means you are doomed to be a second-tier company.
When coming to this topic, Eric recalled the previous Lions Gate Films. With the popularity of The Hunger Games series and Twilight series, Lions Gate made more profits than two renowned film companies. However, at that time, except Lions Gate, all the other 6 giants had integrated into media groups. Although making more profits, Lions Gate had little chance to outdo them in comprehensive strength.
"What you said... is all hypothetical, isn't it? Robert Shea could not help giving a short rebuttal.
Eric could see that Robert Shea almost gave in and slowed down his tone: “Robert, although it is hypothetical, with your experience in Hollywood for more than 20 years, you can certainly tell the possibility of this hypothesis, right?”
Robert Shea looked down at the cup with few coffees in it: “But 10 percent is too puny…”
“Michael Eisner holds less than 10 percent of Disney’s share, owning no more property than you. However, he ranks in the top three on the Hollywood power list, admired by 90 percent of people in Hollywood. Robert, you have mentioned that money is not attractive for us anymore. Think about it, after the acquisition, you will become the CEO of Firefly and you also trust the profitability of my films. It will only take few years for us to join the film giants party and we can win a seat in the industry after the integration with media groups. By then, your 10 percent of stake may be worth over $ 1 billion. But if you continue to run New Line independently, when will its value reach that number?”
“OK, then 20 percent, Eric, 20 percent, this is the bottom line,” Robert Shea was totally drawn by the prospect described by Eric, and offered a huge concession.
Eric wore a slight and almost invisible triumph smile since Robert Shea had given up his original bottom line, then the negotiation could go on. Eric snapped his fingers to the waiter and handed the credit card to pay the bill. Then he said: “Robert, currently it is hard for us to reach any results, and it's a little bit late, so we should choose a more formal occasion for further talks on details.”
No sooner had Robert Shea offered 20 percent than he regretted. He found that he should have been muddleheaded by a young man’s tricky words. He would like to slap on his own face---it was fine to decide to make a concession, but it was foolish to say it out. It seemed that Robert had made several mistakes tonight, which taught him not to underestimate Eric. Meanwhile, before the formal negotiation, any direct confrontation with Eric should also be avoided. Maybe it was good choice to entrusted this task with a professional negotiator. Noticing that Eric didn’t continue to beat him down, Robert took the opportunity and said: “All right, it’s quite late now, I should go back.”
After the three of them parted at the restaurant entrance, Aniston, who was quiet before, suddenly flung her arms around Eric’s neck, tiptoed and laughed, “Wow, Eric, you were so impressive just now. Robert was baffled by your momentum, huh.”
Eric fussed with a wisp of hair that had fallen from her forehead, laughing: “So, do you admire me so much that you have the impulse to kneel down and kiss me shoes?”