The richest person in Chinese entertainment

Chapter 377 Zhang Chen's bargaining chips, opportunities in crisis
“Leon, I wonder how sincere I am this time?”

Robert Iger was confident in the price he offered.

Zhang Chen didn't say anything, but looked carefully at the pile of documents Robert Iger gave him.

The content is simple, it is about the acquisition plan of Pixar Animation.

Zhang Chen had been waiting for this day ever since he acquired the stocks from Boss Qiao.

But last time in Cannes, Robert Iger's offer did not satisfy Zhang Chen, so the matter was delayed.

Moreover, Robert Iger had not officially taken over as CEO of Disney at the time and could not implement this plan.

When businessman CEO Isner stepped down, Robert Iger, who replaced him last month, has been working hard to revive Disney's animation capabilities.

You should know that many of Disney's current animated films are produced by Pixar Animation, including "Toy Story", "A Bug's Life", "Monsters, Inc.", "Finding Nemo" and "The Incredibles", all of which are high-quality animated films with both honors and box office success.

Pixar uses Disney's strong position in North America to get an opening rate that no other film company can get when the movie is released, and can also get a higher box office share than other Hollywood studios. It is hard to say who makes money and who loses.

However, due to the outrageous actions of the previous CEO, the business conflict between Pixar and Disney began to intensify.

Since 03, the two parties have begun discussing the renewal of the contract, with Disney continuing to have full rights to distribute the animations produced by the latter. However, in January 04, the negotiations broke down, mainly because of the disagreement between then Disney CEO Michael Eisner and Jobs.

Isner believes that the characters created by computer animation are "very pitiful", while Steve Jobs calls the sequel made by Disney "shameful". Last year, Steve Jobs also discussed with Zhang Chen and wanted to use Zhang Chen's relationship to negotiate with Disney about sharing the ownership of the film, but was rejected by Disney.

So the two parties agreed to go their separate ways in June next year after their collaboration on "Cars", which is about to be completed.

But when Robert Iger came to power, Disney's attitude towards Pixar took a 180-degree turn. He had previously gone to Cannes to discuss equity acquisition with Zhang Chen, and now he came to the Golden Horse Awards to give a big gift and mentioned his intention to acquire Pixar again.

And the current offer is much higher than before in Cannes.

According to the terms in the document, Disney is willing to acquire Pixar Animation by issuing additional shares at a price of $59 per share, with a total bid of $70 billion.

This means that Disney is willing to use its own company's stock to exchange for the shares held by Pixar shareholders.

If calculated based on Disney's offer and Disney's current stock price, Zhang Chen's 50% stake in Pixar will be worth US$35 billion, which can be exchanged for 6.05% of Disney's shares, or about 11040.03 million shares, making him Disney's largest individual shareholder.

This shareholding ratio is second only to the current largest shareholder of Disney, Vanguard, with 7.60% and BlackRock Group with 6.40%.
But is Disney really willing to let Zhang Chen, a Chinese, hold such great power in Hollywood's largest film and television company?

Zhang Chen didn’t know what kind of price Boss Qiao paid behind the scenes at that time, but he himself was already facing this hugely tempting choice.

According to Robert Iger, although there was no requirement to become a U.S. citizen in order to make the deal, Zhang Chen knew that this was Disney's requirement.

In fact, after the Cannes Film Festival ended, Zhang Chen had not received any contact request from Disney, which made him think that the deal would fall through.

After that, Zhang Chen took advantage of the Golden Rooster Awards to make a big splash in the domestic film industry.

The purpose is to try out the reasons why Disney is hesitating.

After he publicly fell out with the Golden Rooster Awards and their relationship became extremely strained, and after word spread on the internet that he had done so much for China but received such unfair treatment, Disney couldn't wait to approach him, just three days later.

This made Zhang Chen confirm the reason why Disney hesitated in the first place.

Become a citizen of the United States?
Although he had confirmed his guess and had lured Robert out by breaking up with the Golden Rooster Awards, since Zhang Chen had made a guess, he naturally made some preparations.

As for the request put forward by Robert, it was not absolute, otherwise he would not have used indirect methods to test Zhang Chen's attitude.

Zhang Chen also knows that Pixar is an indispensable part of Disney's animated film empire.

This leaves room for maneuver.

"Mr. Iger, I am very satisfied with the price you offered, but the additional conditions are hard for me to accept." Zhang Chen put the document on the table and pushed it back to Robert Iger with a little regret.

"Leon?" Robert Iger was extremely surprised. "You have such a bad relationship with the film industry management department of your country. Do you still want to be suppressed by them in the future? I promise that if you come to the United States, we at Disney and other Hollywood film and television companies will fully support your creation."

Zhang Chen shook his head when he heard this: "Mr. Yige, I don't think you understand what I want."

"Oh?" Yige raised his eyebrows and motioned Zhang Chen to continue.

"Making movies is just my hobby, not my career."

"Hobby." Robert Iger was stunned when he heard this, and then his eyes widened. "You said making a movie that won the Palme d'Or is just your hobby?"

"Perhaps, there are other purposes?" A smile appeared on Zhang Chen's lips.

"What is it?" This made Robert Eger curious.

"Mr. Iger, do you remember my first movie?"

"The Pursuit of Happyness?"

"Correct!"

"Mr. Iger, have you heard of this movie?"

"Uh," Robert Iger smiled awkwardly, "I've seen it."

"Mr. Iger brought a great gift. How about I give you one too?"

After Zhang Chen finished speaking, he took out a document from the briefcase he was carrying.

Robert Iger took the thick file bag. From its thickness, it could be seen that Zhang Chen came prepared. He looked at the young man in front of him thoughtfully.

It seems that things are far more complicated than he imagined.
He thought he had figured out Zhang Chen's mind, and he brought in a contract worth $70 billion, believing that the deal should be foolproof.

But when he saw that Zhang Chen came prepared, he knew that it was just an appearance.

Now, he was no longer sure whether he had come to today's meeting on his own initiative or Zhang Chen had asked him to come.

With some emotion in his heart, he opened the folder that Zhang Chen brought.

"This?!" Robert Iger just took a glance and stood up in shock, "Leon, are you sure?"

Zhang Chen didn't say anything, but gestured to Robert Iger to continue reading.

The more Robert Iger watched, the more shocked he became. He also knew why Zhang Chen suddenly mentioned the movie "The Pursuit of Happyness".

Because he remembered that at the end of the movie, the protagonist seemed to have made profits by short selling and became one of the top capitals on Wall Street. Although the plot was a bit self-evident, the little information revealed in it was very consistent with the investigative report he was currently reading in many places.

First of all, according to the report submitted by Zhang Chen, the current real estate situation in the United States is not as good as many banks have claimed.

There is a huge hidden danger lurking in this "good".

In the real estate loan market, loan companies seek out investment banks in order to share risks and profits. The investment banks then securitize their loans, thus creating CDO (collateralized debt obligations).

In order to earn huge profits, many investment banks use 20 to 30 times leverage. For example, if an investment bank A has $30 billion in assets and uses 30 times leverage, that is, it uses $30 billion in assets as collateral to borrow $900 billion for investment. If the investment earns 5%, then investment bank A will earn $45 billion, which is a 150% profit relative to its own assets.

However, leverage operations are high-risk, and according to normal regulations, A-Dai Investment Bank is unwilling to carry out such risky operations.

So someone came up with a solution, which was to use leveraged investments as insurance, and this insurance was CDS (credit default swap). However, leveraged operations were risky, and according to normal regulations, Ah Dai Investment Bank was unwilling to conduct such risky operations.

So someone came up with a solution, which was to use leveraged investments as insurance, and this type of insurance is CDS (credit default swap).

Investment bank A finds B, who may be another investment bank or insurance company. A insures leveraged operations and pays B $5000 million in insurance premiums every year, for a total of $5 million for ten consecutive years. If the CDO does not default, in addition to the $5 million insurance premium, A can still earn $40 billion; if the CDO defaults, B will pay for it anyway.

For A, this is an investment that can only make money and not lose money. But B is not a fool either. According to statistical analysis, the default rate in a prosperous market is less than 1%.

If 100 insurance policies are taken out, a total of US$500 billion in insurance money can be obtained. If one of the companies defaults, the maximum compensation will be US$50 billion.

What a good deal this is! Most of the "A"s and "B"s on Wall Street have been enjoying an unprecedented wealth carnival during the more than ten years of growth in US housing prices.

Due to the current boom in the real estate market in the United States, the price of CDS, which is the insurance that guarantees these CDOs, is very low, because as long as the price of houses continues to rise, there is no possibility of CDO default.

Because even if those home buyers default, the bank can recover the loan by auctioning their houses.

In fact, the real situation is that in order to sell more houses, the United States has provided loans to many people who have no ability to repay the loans, and has included these contracts in CDOs, and has used these contracts as collateral in banks to borrow more money.

However, based on the current real estate market in the United States, many banks have given CDOs very high ratings, and they are considered high-quality assets. This has led to the investment companies being able to easily borrow large amounts of funds from banks through leverage when packaging these contracts.

As long as those who have no job income start to default on their loans, the banks will have bad debts and will auction off their houses, which will lead to more commercial housing on the market and subsequently drive down housing prices.

When property prices drop, these people will not be able to pay off their bank debts even if their houses are auctioned off. In addition, the drop in property prices will cause speculators to start selling their houses, which will once again dampen the market.

Then comes the death spiral.

When this situation occurs, the price of CDS on the market will skyrocket, which is the insurance of CDO.

Investment banks will frantically purchase CDS for hedging purposes to ensure that the funds in their hands will not shrink due to the plummeting price of CDO.

Therefore, if you want to gain benefits from this crisis in the United States, there are two ways. One is to purchase a large amount of CDS when the current price is still very low, and the other is to short CDO.

"Leon, if I'm not mistaken, you should have quite a few CDS in your hands, right?" Robert Iger was obviously not a fool. After reading Zhang Chen's investigation report, he knew that Zhang Chen dared to show him this thing, so he was already prepared.

"Yes!" Zhang Chen nodded in acknowledgement.

Shortly after the release of "The Pursuit of Happyness", Zhang Chen asked William to buy a large number of CDS in the market to prepare for this "feast".

“So, all we can do is short CDOs?”

"Yes."

Robert Iger also fell silent when he heard Zhang Chen's affirmative answer.

To be honest, he didn't really believe that the real estate industry in the United States would fall into crisis.

There is no sign of this at all now, and the real estate industry in the entire United States is in an unprecedented stage of prosperity.

At this time, Zhang Chen told him that the real estate market in the United States would collapse soon, but he didn't believe it from the bottom of his heart.

But thinking of the investigation report just now, he had to believe this impossible fact.

Is the real estate in the United States really doomed?

As the CEO of Disney, he has a lot of assets and has invested in a lot of real estate over the years. Even if he doesn't go short as Zhang Chen said, this news is undoubtedly good news for him.

As long as he can sell the properties under his name as soon as possible at the current price, he can minimize the losses.

The question now is whether he should believe Zhang Chen’s report.

"Mr. Iger, you can tell your board members. I believe they will be more interested in this matter."

"This..." Robert Iger was a little embarrassed, but he nodded slowly, "Can I ask, in how many years do you think this incident will break out?"

Zhang Chen just smiled and didn't answer.

This is the core of the whole incident and also his bargaining chip. How could he reveal it so easily?

Even with a detailed investigation report, it is impossible to fully predict market trends.

Perhaps only Zhang Chen knows at which stage this crisis will occur.

When Robert Iger saw that Zhang Chen didn't answer, he knew that he had spoken too much.

This should be the bargaining chip that the person in front of him is using to negotiate with Disney.

He used naturalization to get Zhang Chen to agree to Disney's acquisition of Pixar Animation and make Zhang Chen a Disney shareholder.

Zhang Chen, on the other hand, produced an investigation report that could be worth over 10 billion U.S. dollars, hoping that Disney would give up on allowing Zhang Chen to become a naturalized citizen and instead directly become a Disney shareholder.

Which is more important, tens of billions of dollars or being Disney’s largest individual shareholder?

Robert Iger didn't know.

And this is indeed a big deal. It is difficult for him to make money in this crisis alone.

Thinking of this, he also glanced at the young man in front of him.

Perhaps, the person in front of me thinks so too?

Thinking about Zhang Chen's identity, he became more certain of his thoughts.

For a Chinese citizen to short the U.S. real estate is undoubtedly an act of seeking death.

Now he has brought out this news and wants the shareholders behind Disney to take the lead?
Robert Iger left Zhang Chen's hotel with a heavy heart and contacted his driver to rush to the airport.

He needs to get this news to his own people as soon as possible.

As for the acquisition of Pixar Animation, he needs to submit the news to the board of directors and let the board members make the decision.

After Robert Iger left, Zhang Chen returned to his hotel room with a heavy heart.

"what happened?"

When Liu Yifei saw Zhang Chen coming back with a gloomy face, her originally happy expression turned into one of doubt.

"It's okay." Zhang Chen forced a smile.

Although he had made sufficient preparations this time, he still did not hold out much hope for success.

His nationality is the biggest reason why those people don't believe him.

This is also why Robert Iger made naturalization a prerequisite for joining Disney.

Do Vanguard and BlackRock, the companies behind Disney, really need those tens of billions of dollars?
This amount of money may seem like a lot, but for these two giants, it is really nothing.

What they care about is only the mouthpiece that firmly controls some key positions.

Hollywood is one of their strongholds.

Let someone who is not one of them get involved?
too difficult.

Moreover, acquiring Pixar is not the only option. If the acquisition fails, Zhang Chen is not sure whether Disney will poach people directly.

It is not impossible to poach Pixar Animation's core creative team and turn it into an empty shell.

However, doing so will put Disney under a huge cash flow burden, and the Pixar Animation brand is also a bright signboard. I don’t know whether Disney is willing to give it up.

However, the most important thing for Pixar Animation is the copyright of the animated characters.

Although Disney currently owns the ultimate copyright to the animated films created by Pixar Animation, the copyright to the animated characters has always been in the hands of Pixar Animation.

If Disney wants to continue developing the IP of movies that have already been released, such as various "Tom Clancy's The Last Airbenders," it must obtain authorization from Pixar Animation.

Of course, Disney can also abandon the sequel plan and instead poach Pixar Animation's core creative team and let these teams develop new animated films.

But doing so will undoubtedly add a lot of risks to the project.

Mature IP and IP that has not been verified by the market are two completely different investment tracks.

The trade-offs involved are also the key to the success of this acquisition.

Zhang Chen could only be thankful that it wasn't that Brother Ni ZT yet, otherwise it would be hard to say.

Thinking of Brother Ni, Zhang Chen suddenly remembered something and a smile appeared on his face again.

There is an island that seems to be useful.

The timing is also suitable now, just before this person on the stage.

That means his risk of "suicide" will increase a lot.

"What did you think of? Why are you suddenly happy?"

"I figured out some things."

"What have you figured out?"

"Life is only 30,000 days long, so we should enjoy it while we can!"

Zhang Chen chuckled, picked up Liu Yifei and walked towards the bedroom.

"Ah! What are you doing?"

"Dry!"

Liu Yifei: "???"

"Have you forgotten our bet?"

"What bet?"

"Don't try to cheat!"

"What? I don't understand!"

"You'll understand in a moment."

Zhang Chen hugged the person whose legs were flapping and threw him onto the bed.

"No!" Liu Yifei put her hands on Zhang Chen's chest and said uncomfortably, "Why don't you check out the news online?"

"Online?" Zhang Chen put his hands on both sides of the little girl's body and straightened up. "What's wrong?"

"Here!" Liu Yifei raised her chin towards the bed and motioned Zhang Chen to look at the laptop computer there. "The internet is going crazy."

"Let me see."

Zhang Chen got up and took the laptop from the bedside table.

"Wow, that's quite a commotion." Zhang Chen smacked his lips.

"Of course!" Liu Yifei sat down next to Zhang Chen, leaning against him and pointing at the news on the screen, saying, "Do you want to explain?"

Zhang Chen looked over and saw a news headline on the screen:

[Because the Golden Rooster Awards did not give someone an award, someone made a scene at the awards ceremony, bringing shame to the entire mainland film industry. Now he is showing off in Taiwan. This is the behavior of a villain who has succeeded. Is he the pride of Chinese films, or a future "dictator" after winning the Palme d'Or? ]

This report lists in detail all of Zhang Chen’s domineering behavior in the country over the years.

Including what he did at some music award ceremonies.

For example, he beat people, made sarcastic remarks, and slapped people in the face in public. Now that he has entered the film industry, he is using the big stick of Morning Glory Cinemas to threaten everyone in the industry.

The article also speculates that the reason why movie fans rarely see Hong Kong stars in movies nowadays is because of Zhang Chen’s personal preference. Also, because he wants to raise the status of his company’s artists, he deliberately suppresses Hong Kong artists.

It can be said that this article portrays Zhang Chen as a tyrannical and unreasonable person, and those who have been "bullied" by Zhang Chen are portrayed as pure and pitiful "little white flowers".

"What a Spring and Autumn style of writing." Zhang Chen exclaimed.

"You're still praising me?" Liu Yifei was so angry that she hit Zhang Chen. "You're almost being portrayed as a bully who does all kinds of evil. Don't you want to think about what to do?"

"What should we do?" Zhang Chen was not interested. "What else can we do? Just let him say whatever he wants."

"No!" Liu Yifei's eyes narrowed, "I won't allow them to slander you like this!"

Zhang Chen looked at the little girl in surprise and asked curiously, "They scolded me, why are you so excited?"

"No! What's wrong?" Liu Yifei pouted, "I feel uncomfortable watching this!"

Zhang Chen stroked his chin, looked at the little girl thoughtfully, and then nodded: "Then... let's uncover the fig leaf of some people."

　I have had a cold and fever these two days, and I feel a little uncomfortable, but I will try my best to keep updating.

　　
　
(End of this chapter)