By the end of the year, something big shook up Hollywood—big enough to climb all the way up to federal power structures, legal debates, and congressional hearings: the issue of pirated DVDs!
It was a mess that basically united the entire Hollywood machine. Every studio and organization pulled all their connections and resources to lodge a protest with the government.
Disney's animated flick Monsters, Inc. had barely been out a week when pirated discs started popping up on street corners. By the time The Chronicles of Narnia and The Lord of the Rings hit theaters, it only got worse.
Those two movies were so huge that people were literally stopping cars to hawk bootleg DVDs—like, out-in-the-open, breaking-the-law stuff. It was basically street robbery with extra steps!
The Motion Picture Association of America filed a lawsuit with Congress, demanding an investigation and a crackdown.
The feds responded fast, notifying Disney, Warner Bros., Universal Pictures, Paramount, Columbia Pictures, MGM, and 20th Century Fox to gear up and cooperate. They'd already sent a task force to dig into it.
But guess who didn't make the list? Dunn Pictures—the hottest studio of the past two years!
Officially speaking, the MPAA is Hollywood's big representative. No matter how much cash Dunn Pictures rakes in or how many classics they churn out, they're still not "fancy" enough for the old guard.
Dunn took it in stride. Less drama, more free time.
Juno was about to hit theaters—the first film out of Rose Pictures and Dunn's first stab at a feminist story. It might be niche, but he wasn't about to slack on it.
He'd already sent invites to the five biggest feminist organizations in the U.S. For Juno's premiere, they'd hold a special screening to kick off some buzz for women's rights.
Plus, it was year-end—time for the annual wrap-up.
The STA Network peaked at 15.8 million subscribers! After Band of Brothers wrapped, the numbers dipped a bit, falling just under 15 million.
Still, that didn't stop STA from cashing a massive check from Comcast. After skimming off 8-10% for operating costs, they pocketed a cool 580 million USD!
For context, STA's subscription revenue for the first half of the year wasn't even 60 million.
Now, the movie biz…
This year, Dunn Pictures had three films in theaters: The Unsinkable, Mr. & Mrs. Smith, and A Beautiful Mind—all still showing.
Add in Saw, Traffic, and Girl, Interrupted from earlier in the year, and Dunn Pictures pulled in 850 million USD in box office splits for 2001!
Everyone knows the real money's in the peripherals. The Unsinkable and Mr. & Mrs. Smith's licensing deals are still in the works, with Universal Pictures playing middleman. The full financial picture won't be clear until next year.
But Dunn Pictures already got last year's peripheral revenue reports for Spider-Man, Girl, Interrupted, Saw, and Traffic.
Those four films hauled in 1.28 billion USD through merchandise, DVDs, pay-per-view, and TV licensing!
And Spider-Man alone? It accounted for 90% of that!
DVD sales: 210 million in North America, 90 million overseas. DVD rentals: 45 million in North America, 17 million overseas. Pay-per-view: 56 million. TV revenue: 110 million in North America, 80 million overseas…
Oh, and the Spider-Man toys? Absolute fire!
That life-sized Spider-Man figure, priced at 150 bucks a pop, sold 22,000 units in the first 12 hours. Over the past year, it moved 560,000 units total!
In the last 12 months, Spider-Man's merchandise sales hit 1.67 billion USD!
Compared to the monster sales driven by Star Wars: Episode I – The Phantom Menace, it was only 280 million short!
Just from peripherals, Dunn Pictures pocketed 540 million USD.
That's the true power of Spider-Man!
In its past life, Sony Group was teetering on bankruptcy, and it was Sony Entertainment that pulled them out of the fire. Sony Entertainment leaned on Sony Pictures, Sony Pictures leaned on Columbia Pictures, and Columbia Pictures leaned on the Spider-Man trilogy!
That's how a once-mighty electronics giant like Sony ended up debating a pivot—cutting the electronics and gaming divisions to go all-in on entertainment.
For 2001, between Marvel Entertainment, Marvel Studios, STA Network, and all its subsidiaries, Dunn Pictures' total revenue hit 3.02 billion USD!
Of course, spending was hefty too. Dunn's got big hands when it comes to cash.
Investments in TV shows, movies, and animation hit 1 billion USD.
To grow STA Network, he splurged on TV rights for a ton of films. He also dropped 130 million USD to order three planes under Dunn Pictures' name—one for the Dunn Pictures president, one for the Marvel Studios president, and one for general business use. Add in employee salaries and guild payouts…
By year's end, Dunn Pictures' expenses clocked in at 1.73 billion USD!
And that's not all.
After over two months of negotiations, the IMAX acquisition was basically locked in.
Back when IMAX's stock was at 1.1 USD, rumors of the buyout pushed it to 2.3 USD. Under CFO Brandi Norris, Dunn Pictures upped the offer to 3.5 USD per share, finally satisfying IMAX's shareholders.
On top of the 180-million-USD deal, Dunn Pictures took on IMAX's 40-something million in debt, bringing the total to 220 million USD!
Since it's a public company, approvals and small shareholder exits are a hassle. The whole deal's expected to wrap in six months.
IMAX's original market cap was just 60 million USD, so shelling out 220 million sparked some grumbling inside Dunn Pictures.
Natalie's mom, Shirley Hershler—the former financial head—had plenty to say about it.
She clearly wasn't thrilled about some new CFO parachuting in above her.
But Dunn and Brandi Norris couldn't stop raving about the deal.
"IMAX has developed this new DMR tech and is applying for a patent—should be approved by February next year. Once it launches, IMAX's revenue and market potential are gonna skyrocket," Brandi said, pretty pleased with herself for nailing this acquisition right after joining.
Dunn was even more stoked!
DMR tech basically converts regular movies into IMAX format.
It's practically a revolution!
It opens the door for IMAX screens to pop up in regular theaters.
Bigger screens mean better viewing—who doesn't know that?
IMAX screens used to be rare because there weren't enough IMAX movies—shooting with IMAX cameras was a nightmare!
But DMR changes everything. It'll pull IMAX out of the sidelines and into the mainstream, making it the hot new trend in moviegoing!
Spending 220 million USD on IMAX wasn't overpaying—it was a steal!
If they'd waited for DMR to drop, the price could've doubled.
"What about Dolby Labs? That tough, huh?" Dunn asked, frowning.
Brandi shook her head. "It's a family business thing. Dr. Dolby's getting old, and he wants his son to take over. Dolby Labs is his life's work—he doesn't wanna sell to outsiders."
Dunn's voice dropped. "Isn't he worried about ending up like Wang Laboratories?"
Brandi shrugged. "It's not the same. Dolby's operations are smaller, and little Dolby's a scientist too. He's been running things lately, doing a solid job—not some spoiled rich kid like Wang's son."
Dunn mulled it over, then said firmly, "No matter what, we've gotta snag Dolby Labs! Price-wise… we can bend a little."
Dunn Pictures is swimming in cash right now—7 billion USD from Dunn Capital, plus 1 billion in profit this year. They're basically debt-free, and if they borrowed, they could pull another 5 billion easy.
2002's gotta be the year for some big moves!
Brandi chimed in, "Buying Dolby Labs isn't actually that hard. Like I said, the key's not just money—Dr. Dolby cares about control."
Dunn narrowed his eyes, thinking back to Dolby Labs' success under little Dolby in its past life.
Pretty impressive!
When Dolby went public in 2005, it was worth 2 billion USD. Under little Dolby, it grew like crazy, hitting a peak of over 7.5 billion.
More than that, Dolby's brand value is huge. Their constant tech innovations keep making movie theaters better.
In that sense, they might even outshine IMAX.
Dunn nodded. "You know the Warner-New Line setup?"
"Huh?"
Brandi's a finance whiz, not a Hollywood insider.
Dunn explained, "Warner bought New Line but let it run independently—financially and operationally. They signed a deal: Warner only steps in if New Line screws up big time."
Brandi got it instantly. "Like if New Line tanks hard on a major strategy or loses a ton of money!"
In its past life, New Line's big-budget flop The Golden Compass bombed so bad that Warner yanked their autonomy.
Dunn grinned. "Exactly. Dunn Pictures is a film company—we can give Dolby Labs a steady stream of movies to boost their business, like with DMR tech. As long as Dolby stays on a smart, fast, innovative track."
Brandi nodded seriously. "If that's the play… the Dolby father-son duo won't be a problem!"