Simon glanced at the notes he had jotted down while listening to Nancy Brill's report, then looked up at the woman standing at the front of the room. "Nancy, your presentation was thorough: toys, apparel, accessories, books, video games, licensing, and, for the time being, soundtrack releases handled by the consumer products division. But those are all broad, long-range plans. Tell me about your immediate priorities say, the next month."
Nancy Brill answered without the slightest pause, her words flowing easily. "In the coming month I intend to recruit staff and assemble product-design and sales teams. I'll draw on contacts I've made over the years and bring in talent from other companies so that, from day one, they can begin work on merchandise tied to our current film and television projects." She continued, "I also believe merchandise planning must be forward-looking. We can't wait for a film to become a hit before we start developing derivatives. With your approval, I'd like to conduct a merchandise-potential assessment of every project currently in development at Daenerys Entertainment."
Simon gave a small nod. "Projects like Survivor, Beverly Hills Housewives, Scream, and the rest will generate an enormous variety of merchandise categories. How do you plan to manage that?"
Again Nancy answered instantly. "In the short term I'll be selective, focusing development and promotion on the categories with the clearest commercial promise. That way our limited resources and manpower won't be spread too thin. Once the company has accumulated enough intellectual property to achieve economies of scale, we can expand the range of categories and extract maximum derivative value from our film and television projects."
"And distribution channels?"
"We'll pursue a partnership with a national chain retailer, ideally securing dedicated counter space for easier marketing and promotion. With the hot properties we already own, retailers will be eager to work with us. This approach can apply across all types of movie and television merchandise. We'll also stock traditional cinema shops, Toys "R" Us, and similar outlets. That side of the business is about learning the market and cultivating relationships. Real profits will come only after we have built a sufficiently deep library of intellectual property." She paused, then added, "One more thing. The company is going to generate substantial profits over the next few years. I recommend we invest in the fast-growing video-rental chain sector. Compared to the fiercely competitive theatrical exhibition system, the home-video market is still far from saturated. If we owned hundreds—perhaps thousands—of rental outlets across the country and eventually the world, we would not only share in the profits of this emerging market but also gain a ready-made, nationwide merchandise retail network."
Even if Daenerys Entertainment stopped pushing forward today and simply coasted on its existing reality-show franchises, it would still earn enormous profits for years to come.
Simon had been deliberately stockpiling cash for initiatives planned two years out, yet he had never abandoned the idea of continued aggressive expansion. If necessary, he could simply borrow more; the company's debt ratio was still well within his tolerance.
Nancy Brill's unexpected proposal was genuinely tempting. A video-rental chain would give Daenerys a perfect terminal sales network, and businesses of that kind generated strong, steady cash flow, much like supermarkets. He remembered that Viacom had used the cash from Blockbuster to finance its acquisition of Paramount.
Still, entering the rental business would carry risks.
Daenerys's greatest weakness at the moment was its relatively thin content library. The major studios could only watch helplessly as Daenerys grew rapidly in production, but if it moved into video retail, the Big Seven might well use their vast content libraries to erect barriers.
"A very good suggestion," Simon said. "I'll give it serious thought."
After a brief pause for consideration, he steered the meeting back to its main topic.
Nancy fielded additional questions from Simon and the other executives before leaving the conference room. The group discussed a few more company matters, and the meeting wrapped up a little after six.
Amy gathered her files, lingering as usual until everyone else had gone. She turned to Simon, who was still seated at the table. "So, what did you think of Nancy?"
"An impressive woman," Simon said. "I'm eager to see her turn those written plans into reality."
"Nancy was highly regarded in Hasbro's marketing department. When I poached her, Hasbro nearly threatened legal action," Amy said with a smile. "She handled the whole thing herself."
With more and more male executives joining the company, Simon understood that Amy had brought in a female senior leader partly to strengthen her own position, and he was happy to offer praise.
He simply smiled, turned another page in the documents in front of him, and said nothing more.
Realizing Simon had seen through her motive, Amy shifted the subject with a touch of embarrassment. "Simon, about Nancy's idea of entering the video-rental business do you think it's feasible?"
He nodded. "Work with her on a detailed proposal for me. Start scouting potential acquisition targets as well. There's no need to build from scratch."
They talked a while longer. When Simon finished reviewing his files, he stood to leave. Amy, however, remembered something else and walked out with him. "One more thing, Simon. We're running out of office space again. Nancy's new consumer products division will have to lease separate offices nearby. I really think it's time we addressed this properly."
Daenerys Entertainment was indeed becoming scattered. New York was fine, they now owned the building in Greenwich Village, but in Los Angeles the company occupied four separate locations: headquarters on Fourth Street in Santa Monica, Daenerys Visual Effects and Pixar Animation on Second Street, the Daenerys division in Burbank, and Marvel's studio nearby. That kind of fragmentation was not sustainable.
On the drive back to Malibu, Simon, unusually, did not pull out scripts or files. He gazed out the window, turning the problem over in his mind.
Over the past few months he had toyed with the idea of building a dedicated Daenerys studio lot, but every site he had looked at had drawbacks: too small, too expensive, or too remote.
The Range Rover turned off the Santa Monica freeway onto the coastal highway and entered Malibu. As Simon pondered, his eye caught a side road. A sudden spark of recognition hit him. "Neil, pull over. Quick."
Neil Bennett, puzzled, eased the car onto the shoulder and glanced in the rear-view mirror. "Boss?"
"Back up. Go back to that turnoff."
It was rush hour; traffic was heavy. Neil carefully reversed until they reached the junction a few dozen yards behind them, then turned in at Simon's signal.
The road climbed a newly cleared slope, the surface graded but not yet paved. After a couple of hundred yards it curved sharply in a U-shape.
When the car stopped, Simon stepped out onto a broad, relatively level clearing. Aside from a temporary wooden shack and some construction materials stacked in the open, the area was still overgrown with brush.
A grizzled old man emerged from the shack at the sound of the engine. Seeing they were not the usual teenage trespassers, he gave them a gap-toothed grin and addressed the younger man who looked vaguely familiar. "Something I can do for you fellas?"
Simon returned the smile. "Mind if I take a look around?"
"Be my guest."
The old man nodded, started to say something, glanced at the expensive Range Rover, and thought better of it. He went back inside.
Simon pushed through the brush until he reached the edge of a cliff more than thirty feet high, directly above the coastal highway.
It was nearly seven o'clock. The winter sun had already slipped below the horizon, leaving only a faint red glow on the darkening sea. To the west he could see lights coming on along the Malibu coast; to the east, the growing glow of Santa Monica.
Simon stood there a moment, then, instead of returning to the car, followed a half-remembered path northward up the gentler slope.
The parcel was roughly triangular, hemmed in by ridges on both sides and bounded on the south by the cliff above the highway. In the failing light Simon climbed more than a kilometer along the rugged incline until he reached the highest point.
From there the view was even wider, though the ridges blocked much of the city light.
He knew from memory that in twenty-plus years this area would become a residential community—luxury homes on the prime upper ground where he now stood, mid-range housing below. For now it remained untouched wilderness awaiting development.
Drawing on those future memories, Simon quickly formed a rough plan in his mind.
From the summit down to the cliff, the entire triangle enclosed by the ridges totaled more than fifty hectares. It could be terraced into three broad levels descending toward the sea, each level more than ten hectares.
Of the existing Hollywood studios, only Universal covered two hundred hectares. Warner, Fox, Paramount, and MGM each occupied twenty to thirty. Conservatively, this site could yield more than thirty buildable hectares enough for an entirely new studio lot.
And the location was ideal.
To the west lay Malibu proper; Point Dume was less than twenty kilometers away an easy commute.
To the east, five kilometers beyond the cliff lay Pacific Palisades and Santa Monica. Highway 1 connected Palisades to the western end of Sunset Boulevard, which in turn ran through Palisades, Brentwood, Bel Air, Beverly Hills, and finally straight into the heart of Hollywood.
Compared with flat urban land, the biggest challenge here would be construction cost. For Simon, however, cost was the least of his concerns if the site itself was right.
He returned home after dark, ate dinner, and immediately began sketching a preliminary layout for Daenerys Studios.
Three descending tiers: the uppermost for administration, the middle for subsidiary companies—Daenerys Visual Effects, Pixar Animation, Marvel Comics, and so on—and the lowest and largest tier for soundstages and post-production facilities.
In the future Daenerys would inevitably acquire other major studios and inherit their lots, yet that prospect did nothing to dampen Simon's desire to build a studio that was unmistakably his own.
A company strong enough could easily support multiple studio complexes.
The next day Simon showed his overnight sketches to Amy and the other core executives. After a brief discussion they moved quickly to acquire the land.
Malibu was still in a development phase; many even more desirable parcels remained vacant. The real-estate crash following last year's stock-market collapse had stalled the early-eighties building boom. Buying the hillside property Simon wanted proved straightforward.
Meanwhile, as limited engagements began, North American critics published their first reviews of Steel Magnolias.
Because CAA had turned it down, the film was no longer directed by Herbert Ross; Sally Field's role had gone to another Oscar-winning actress, Jessica Lange. The rest of the cast—Julia Roberts, Daryl Hannah, Dolly Parton—remained unchanged.
Under Simon's personal supervision, the new version was every bit the equal of the original.
The director recommended by WMA was Mark Rydell, who had helmed the deeply moving On Golden Pond. Rydell proved even better than Ross at capturing the quiet emotional power that made... made Steel Magnolias work.
Unlike Scream, aimed squarely at teenage audiences, Steel Magnolias was positioned as warm family holiday fare built on word-of-mouth.
North American media and critics were less susceptible to studio influence than many believed, but influence still existed. When Daenerys poured substantial advertising dollars into those outlets and the film itself was undeniably excellent, the result was near-unanimous praise across virtually every platform.