Simon and Jack Welch reached a basic transaction framework regarding New World Entertainment, though the detailed contractual terms still required further negotiation between both sides.
With the tacit approval of New World Entertainment's major shareholders and General Electric, Daenerys Pictures began intervening in the company's operations over the following days. They required New World Entertainment CEO Robert Rehme to temporarily halt all film and television production and distribution, and mandated that any expenditure exceeding fifty thousand dollars must receive approval from Daenerys Pictures.
Because Simon was constantly followed by paparazzi, news of his meeting with Jack Welch and the others appeared in newspapers the very next day, and the media quickly pieced together the full story behind the developments.
This time, however, there was no repeat of the capital frenzy seen earlier in the year.
In just half a year, too many things had changed.
At the beginning of the year, news of Simon's sudden rise to immense wealth through index futures trading had only just broken, and in many people's eyes he was an easy target. Moreover, the Hollywood writers' strike had not yet occurred, and New World Entertainment's crisis was nowhere near as severe as it was now.
At present, due to the writers' strike, New World Entertainment's heavily relied-upon television production business had nearly ground to a halt, further worsening the company's already dire financial situation. Simon's earlier actions had also clearly demonstrated his stance.
As a result, the transaction progressed quite smoothly.
The day after Simon met with Jack Welch was July 4, Independence Day in the United States.
After four consecutive days of holiday, Daenerys Pictures, New World Entertainment, and General Electric jointly released an announcement officially disclosing the transaction to the public.
Daenerys Pictures planned to acquire all shares of New World Entertainment, following General Electric's debt-to-equity conversion, at a price of 250 million dollars. Through this transaction, General Electric would recover 225 million dollars, while New World Entertainment's original shareholders would receive a total of 25 million dollars in compensation, equivalent to one-sixth of the share price prior to the deal.
Although some shareholders expressed dissatisfaction with the transaction, everyone understood that this was actually the best possible outcome.
Without this deal, New World Entertainment would either face bankruptcy liquidation or be forced to sell off assets to repay debts, both of which would leave shareholders with nothing.
Once these matters were settled, Simon had James Rebould organize a team to conduct asset and financial audits of New World Entertainment.
Beyond obvious loans, many companies accumulate hidden liabilities through inflated operating income or unpaid accounts payable. The worse a company's operating condition, the more common such practices become. If an acquirer overlooks this, they often end up bearing those costs after the transaction.
Hidden liabilities were even more prevalent in Hollywood, with its notoriously complex accounting systems.
Simon chose not to first purchase General Electric's debt and then carry out the debt-to-equity conversion himself precisely because he feared that New World Entertainment might suddenly reveal a large amount of hidden debt, catching Daenerys Pictures off guard. By having General Electric complete the debt conversion in advance, as long as the final contracts were not signed, those risks remained with General Electric and New World Entertainment.
The preliminary audit was expected to take about a month. Combined with financing arrangements for the acquisition, Daenerys Pictures would likely not formally take over New World Entertainment until August.
Amid this busy period, another week passed.
Due to the four-day Independence Day holiday, total North American box office revenue for the week from July 1 to July 7 surpassed 100 million dollars, reaching 117 million.
Paramount Pictures' Eddie Murphy vehicle, the rather patriotic comedy Coming to America, opened on 2,065 screens and grossed 36.15 million dollars in its first week, becoming the highest-opening film of the summer season so far. Previously, another Paramount release, Crocodile Dundee II, had opened on 2,837 screens and earned only 30.17 million dollars in its first week.
Disney's Who Framed Roger Rabbit?, after earning 21.65 million dollars in its opening week, benefited from strong word of mouth and the four-day holiday to post an almost flat drop in its second week, earning another 21.34 million dollars. Its two-week cumulative total reached 42.99 million.
Sandra's black comedy A Fish Called Wanda ranked third in its opening week with 13.96 million dollars. While not a spectacular start, given the film's modest 8 million dollar production budget, it would recoup all production and distribution costs by the following week. Its positive word of mouth and buzz were also more than enough to support an excellent long-term run.
Pulp Fiction slipped to fourth place this week, with a 17 percent drop, earning another 12.53 million dollars. After five weeks in release, its cumulative box office reached 95.79 million dollars, and it was all but guaranteed to cross the 100 million mark the following week.
Tom Hanks' Big entered its fifth week in release as well, earning another 9.24 million dollars. Despite never once claiming the weekly box office crown, the film had quietly accumulated 55.46 million dollars, demonstrating remarkably strong legs.
On July 8, North American theaters released four new films from major studios simultaneously.
However, judging from the weekend box office numbers, all four essentially failed. The best-performing among them, Fox's comedy License to Drive, was expected to open with only around 7.5 million dollars, and none managed to break into the top five.
Meanwhile, Basic Instinct entered its final week of intensive pre-release promotion.
On another front, after only a week-long standoff, ABC resumed contact with Daenerys Pictures.
Just as Simon had anticipated, ABC did not have the confidence to abandon a television program capable of earning the network one million dollars per episode. Moreover, the number of episodes per season was three times that of a traditional one-hour drama.
When negotiations resumed, Daenerys Pictures maintained its demand of two million dollars per episode, but made slight concessions in other areas, agreeing to provide ABC with an additional fifteen episodes before the fall season to help offset programming shortages caused by the strike.
Including the earlier test episodes, ABC would receive a total of twenty-two additional episodes, for which it would make a one-time payment of 30 million dollars to Daenerys Pictures.
ABC's eagerness to secure these extra episodes was primarily driven by the desire to capture more viewers ahead of the fall season, which was also the real reason behind its swift concession. In comparison, although NBC also quickly signed a contract with Daenerys Pictures, the Survivor project it obtained could not serve the same immediate purpose.
For Survivor, Daenerys Pictures signed a similar binding agreement with NBC.
However, since there was no opportunity for advance test broadcasts to confirm ratings performance, Daenerys Pictures only secured a first-season buyout price of 1.2 million dollars per episode. After the show aired, both parties could renegotiate future pricing based on actual ratings.
Simon would have preferred a profit-sharing arrangement, but NBC firmly rejected the idea.
He later learned that this was largely because the networks did not want to disclose their financial data. Television networks also operated with accounting systems similar to Hollywood bookkeeping, and were even less transparent.
Unlike the standard sixty-nine-episode seasons of Who Wants to Be a Millionaire, Daenerys Pictures' planned first season of Survivor consisted of only thirteen episodes. Future seasons might be adjusted based on scheduling, but would generally be kept under twenty episodes per season.
The estimated production cost for the first season was around five million dollars, significantly higher than Who Wants to Be a Millionaire.
As a result, Survivor's returns could not match those of Who Wants to Be a Millionaire.
Even if pricing was renegotiated for the second season, Simon estimated that the show would only achieve a similar per-episode price. However, the expected on-screen lifespan of Who Wants to Be a Millionaire was far shorter. Even with Daenerys Pictures deliberately preventing overexposure, within three to five years audience fatigue would likely set in and the show would end.
By contrast, with a production pace of two seasons per year, Survivor could remain on television for more than a decade.
Although it could not compare directly with Who Wants to Be a Millionaire, Survivor's return on investment still far exceeded that of traditional television programming.
If the show achieved success comparable to that of the original timeline, producing two seasons per year and moderately expanding episode counts, a total of thirty episodes annually, combined with in-show advertising placement revenue retained by Daenerys Pictures, Survivor could generate no less than 60 million dollars in net income per year.
In short, both reality shows were akin to low-cost, high-grossing box office dark horses, rare opportunities not easily replicated. For Daenerys Pictures to develop its television business over the long term, it would still need to produce mainstream television programming across various genres.
Santa Monica.
Daenerys Pictures headquarters, July 12.
Inside Simon's office, a middle-aged man in his early fifties sat across from him. Even seated, it was clear the man stood well over six feet three inches tall.
This was Robert Rehme, the current CEO of New World Entertainment.
With the transaction framework settled, Rehme had been actively maintaining contact with Simon over the past several days. Simon, in turn, had used his industry connections to thoroughly investigate Rehme's professional background.
Robert Rehme was fifty-three years old. At sixteen, he had worked as an usher at a local cinema. After graduating from college, he spent decades in film and television-related roles, accumulating over thirty years of experience in production and distribution.
Before becoming CEO of New World Entertainment, Rehme had served as a senior vice president in charge of marketing and distribution at Universal Pictures. His career had largely focused on film distribution.
This happened to be exactly what Daenerys Pictures needed most.
Rehme had clearly recognized this as well, which was why he had been so proactive.
Given his résumé, Rehme was still a long way from securing the top position at a major studio. If he were to leave after Daenerys Pictures completed the acquisition, he would most likely become an independent producer, or perhaps receive qoffers for executive roles at second- or third-tier film companies. Those positions, however, could not compare with the rapidly rising Daenerys Pictures.
Just the projected profits from When Harry Met Sally, Pulp Fiction, and the recent success of Who Wants to Be a Millionaire in the first half of the year already exceeded those of most struggling second-tier Hollywood studios, and were even enough to rival the lower-ranked major studios.
Simon was inclined to keep Rehme, but he needed to confirm his attitude.
Compared to Rehme, Amy Pascal had far less seniority in Hollywood and was also a woman. However, Simon had no intention of removing Amy from the top position. He had always been very satisfied with her. If Rehme was unwilling to accept a secondary role and wanted to replace Amy, Simon would have no choice but to part ways.
Rehme's main purpose for visiting today was to deliver detailed information on New World Entertainment's various projects.
In 1983, when Larry Kupin and others acquired New World Entertainment from Roger Corman, Corman retained the rights to all films produced prior to that year. However, over the past several years, through aggressive expansion, New World Entertainment had rapidly accumulated the rights to nearly a hundred films and television series via in-house production and distribution deals.
Simon was most interested in the company's television programming.
According to the materials, last year alone the major networks had ordered five well-performing series from New World Entertainment, including Hill Street Blues and Santa Barbara. During the spring season this year, just before the writers' strike, New World Entertainment also launched a well-reviewed new series, The Age of Innocence.
However, due to the strike, all of these renewed projects were currently on hold. Without Daenerys Pictures' acquisition, even if the networks still wanted them, New World Entertainment would have been forced to cancel most of these projects due to funding constraints.
As for films.
Inheriting the production style of the Roger Corman era, most of New World Entertainment's recent films were low-budget B-movies, with the majority going straight to the home video market.
Compared to eight productions last year, this year's slate had shrunk to just three, with several other projects in development clearly facing uncertain futures.
On the distribution side, New World Entertainment released seven films in the first half of the year. Of the four that received theatrical releases, all were failures. A zombie action film titled Dead Heat, released in early May on the edge of the summer season, had a production budget of five million dollars and opened on 1,012 screens, yet earned only 3.59 million dollars in total box office. Even so, it was the best-performing of the four theatrical releases. The other three went straight to video, underscoring how dismal New World Entertainment's film business had become.
Simon did not keep Rehme waiting long. After quickly reviewing the materials, he looked up and said, "Bob, after this acquisition is completed, I will fully integrate New World Entertainment into Daenerys Pictures. Daenerys Pictures will be reorganized into Daenerys Entertainment, with subsidiaries structured according to New World Entertainment's model. In the short term, I do not plan to carry out layoffs at New World Entertainment, but as per convention, you personally are an exception. That said, I understand your intentions, so let's be candid. Are you willing to serve as Amy's deputy?"
Rehme was naturally unwilling at heart. Before coming to Daenerys Pictures, he had even considered persuading Simon to let him take the top position. However, Simon raised this as a prerequisite from the outset, making his stance clear.
After a moment of consideration, Rehme nodded. "No problem, Simon. However, I'm willing to serve as Ms. Pascal's deputy in title, but I hope to report directly to you, without being under Ms. Pascal's direct supervision."