America's No. 1 financial conglomerate

Chapter 492 A Significant Step for the Television Network

The MGM headquarters building appeared serene under the cover of night.

The core conference room on the middle floor of the building was anything but quiet for the night; the air was filled with the mixed aroma of caffeine and cigars.

The heavy solid wood door to the conference room was gently pushed open, accompanied by a soft footstep.

Ernst had barely taken three steps into the conference room when a voice, clearly laced with sarcasm, shattered the brief silence: "We know you're the son of the internet, but that doesn't justify such blatant discrimination, does it? Do you really think MGM is some kind of stepmother, so stingy with even basic respect?"

Robert Iger leaned back in the large leather chair, legs crossed, a half-smile playing on his lips, but his eyes held a hint of barely perceptible resentment.

Ernst paused slightly involuntarily, a fleeting look of surprise in his eyes, as if he hadn't expected such an opening.

His gaze quickly swept over the other senior executives in the conference room, and he noticed that many of them had their heads down, with the corners of their mouths slightly upturned, clearly trying their best to suppress their laughter.

After settling into his seat and settling in, he turned to the crowd and asked, "Could someone kindly introduce our usually impeccably mannered President Robert? What's gotten into him today?"

Everyone looked at each other, and finally, the financial director, Orwell, coughed lightly, breaking the silence. "Today is a special day. Yolanda has prepared a candlelight dinner at home, waiting for someone to come back early to spend a romantic evening together."

Ernst chuckled, turned to look at Robert Iger again, raised an eyebrow, and said with a hint of mockery, "Pretty romantic, huh? At your age, still going for candlelight dinners? Can your body handle it?"

Then, as if he had suddenly thought of something, his smile widened, and he continued, "No wonder you kept sending Tannier to Oprah School before, so you wanted to use that as an excuse to have some time alone with your husband."

"Speaking of which, didn't Playboy recently design a few pieces of sexy lingerie that haven't officially launched yet? Want me to send you a few?"

Oprah Winfrey School may not be well-known to the general public, and many long-term residents of Los Angeles may never have heard of it, but it enjoys a very high reputation among California's wealthy and powerful circles, and is considered a top-tier private boarding school.

On the one hand, it has an extremely low enrollment number, admitting only a very small number of students each year to ensure that every student can receive the highest quality and most personalized educational resources.

Another thing is that the school's curriculum is very interesting. It's not just about learning, but more about teaching students how to become aristocrats.

The school teaches things like equestrianism, golf, and dining etiquette.

The students here all come from powerful and influential families. Not only can they apply if they meet certain requirements, but the school also has to conduct a review.

It can be said that Oprah School is no longer just an educational institution, but more like a social platform created for the children of the elite, allowing them to accumulate valuable connections from a young age.

Tannil's admission to this school was already an exceptional case.

According to the Oprah Winfrey School's accreditation standards, Robert Iger's current qualifications do not actually meet the requirements.

He may be able to meet the requirements in other aspects, but he still has some shortcomings in the asset audit section.

Oprah requires applicants to have families with at least $20 million in assets, and Robert Iger's current assets are still some distance from that standard.

However, Oprah also knew that Robert Iger would definitely become a multimillionaire, or even a billionaire, in the future.

Given his position at MGM, his outstanding management skills, and the fact that MGM was already showing signs of becoming a media empire, it would only be a matter of time before he became a multi-millionaire or even a billionaire through corresponding stock incentives, provided that MGM could successfully go public.

Just as Ernst and Robert Iger were joking around, Orwell spoke up again, adding, "Today is their wedding anniversary."

Okay, no wonder he's being so sarcastic.

Ernst immediately showed an apologetic expression, putting away his previous playful demeanor, sitting up slightly, and his tone became serious. "Then let's get back to the main topic."

He came to MGM late at night mainly because of MGM Television Network.

The meeting was actually scheduled for this afternoon, but he wasted too much time at AiTech, so it was delayed until now.

MGM is in talks with Liberty Television Network (LTV) to acquire the influential sports channel.

However, the plan to acquire Liberty Television Network was highly controversial within MGM. It wasn't that the company shouldn't be acquired, but rather that the offer was too high.

As the key figure responsible for the company's financial situation and risk assessment, Orwell first took out a thick financial statement from the file bag and said in a serious tone, "I've calculated that if we acquire this company that owns eighteen regional sports channels at the current price, then MGM's overall debt will reach six billion US dollars."

What does this number mean?

"We could very well repeat the same mistake and become the next Ted Turner."

As one of the founders of Warner Bros. Entertainment, Ted Turner's entrepreneurial journey is legendary, but it is also accompanied by huge risks of high-debt expansion.

From taking over the debt-ridden GG brand company to building CNN and expanding his media empire, he raised funds through large-scale mortgages and debt.

In particular, the 1986 acquisition of MGM added a massive $9 million to his debt.

The final result was that, due to the excessive interest, it was acquired by Times, and only 11% of the shares were obtained.

Aside from the opposition led by Orwell, the most resolute figure was Lynn Hall, CEO of MGM Television.

"But you should also understand that in the media industry, sports programming has an irreplaceable position. With the broadcast of sports events, we essentially have a program that never ends. NFL, MLB, NHL, NBA—these top-level sports events are the real moat of television networks, the core competitiveness for attracting viewers and increasing ratings."

In the American media market, the status of sports programming is indeed unshakeable and a perpetual guarantee.

Whether it's a captivating TV drama, a variety of entertainment programs, or a popular talk show, their viewership ratings fluctuate significantly, rising and falling with changes in factors such as season, subject matter, and guests.

But sports programs are different, especially top-level sporting events, which have a large and stable audience. No matter how times change, sports events are always the focus of attention and can be called an eternal theme.

Liberty Networks owns broadcasting rights to select games from the three major sports leagues, NFL, MLB, and NHL, in eighteen regions.

If MGM successfully acquires this company, its sports network business will experience a qualitative leap, rapidly expanding its coverage to a quarter of the United States. This is of vital strategic significance to MGM's strategy in the sports media field.

Orwell remained calm, gently shaking his head. "I'm not saying the sports field isn't important, nor am I denying the future prospects of the sports media industry. But MGM isn't going to be taken advantage of; we can't let them lead us by the nose."

"Based on our financial assessment and market research, Liberty Television Network is currently worth far less than $18 billion. This offer is too high and far exceeds its reasonable market valuation."

Ernst remained silent, listening to the two men's heated debate while his hands continued working, looking at the specific information about the Free Television Network.

According to this information, as Orwell said, based on the current market conditions and the actual operating status of Liberty Television Network, its reasonable valuation is at most around $15 billion. The $18 billion offer made by the other party is indeed much higher and has a clear premium.

"But don't forget that risk and opportunity go hand in hand. Some people see risk, while others see opportunity. I firmly believe that the acquisition of Liberty Networks is a key step in the future development of MGM Television Networks and an important piece in our strategic layout in the sports media field."

"This not only allowed us to successfully enter the sports field, but also resulted in a huge increase in GG fees, which is of strategic value. We need to factor in the hidden benefits."

Ernst supported Lynn on this point; the acquisition of Liberty Networks not only further expanded MGM's business scope but also increased its competitiveness in the sports media field.

The key is that through the broadcasting rights of various sporting events, MGM Television can attract a large audience that was previously unreached, especially male viewers.

MGM Television Network has built a strong reputation among viewers with its high-quality dramas and diverse variety shows, and its ratings have steadily increased over the past year.

Many media outlets have even predicted that MGM Television is poised to replace Fox Television Network and become the fourth major television network to pose a significant challenge to the three traditional networks of ABC, NBC, and CBS.

However, behind this rapid development, MGM Television Network also faces a serious development dilemma, namely, a lack of diversity in its audience.

Both TV dramas and variety shows are more popular with female viewers, resulting in the core audience of TV networks being predominantly female.

Male viewers, especially middle-aged men, are often not very interested in these kinds of programs; their attention is more focused on sports events.

Ernst saw the detailed data from MGM Television Network and found that the number of viewers in the 18-35 age group was not large, and the number of viewers in the 35-70 age group was even more pitiful.

Viewers in this age group, aside from old-school erotic shows like "Playboy Spy," primarily watch sports programs. This is a fatal weakness for MGM, which is why they can't effectively target this demographic.

MGM currently has some cash on hand, plus bank loans, so even if the debt exceeds $60 billion, it's not a big deal.

Given Wall Street's current valuation of MGM, acquiring Liberty Television Network should easily put it at $150 billion.

If Ernst's power is added to the mix, he would dare to ask for a staggering $200 billion.

He turned to look at Robert Iger, somewhat puzzled.

Given their perspective, it's impossible that they couldn't see this, nor would they care about MGM's $60 billion debt. Why would they need to call me to a meeting?

Robert Iger noticed his gaze, took a document from his desk, and handed it to him.

The moment Ernst received the document, he was immediately drawn to the headline, which prominently displayed the words "NFL NFC and MLB Broadcast Rights Bidding Proposal".

No wonder they called me here; it turns out the mouse was pulling the log, and the big end was at the back.

If MGM manages to raise the funds to win the rights to these two events, its debt will indeed skyrocket, certainly exceeding 50%.

However, once the copyright is acquired, the huge future revenue will cause MGM's valuation to soar rapidly.

Ernst quickly skimmed through it, and when he finished, he found that the conference room had fallen silent at some point.

He held up the documents in his hand, looked at everyone, and said, "That's quite a big deal, a transaction that adds up to more than four billion US dollars."

"I think it's worth it. With these two major events, users will feel a sense of belonging to MGM Television Network. Only then will the franchisees dare to sign long-term contracts with us, and only then will GG merchants take money out of the pockets of the three major networks."

Orwell explained, "It's different. Without the Free Television Network, we can build our own sports channel, but securing exclusive broadcasting rights for these events is a sure-fire way to make money."

"Impossible," Lynn interjected. "Acquisition is the simplest and fastest way."

"Through acquisitions, we can expand the reach of our sports network. As for the areas we don't cover, we can use secondary broadcasting rights as leverage to attract affiliated channels while selling them the broadcasting rights."

Ernst chuckled, as if you'd already acquired the broadcasting rights.

You've discussed and reached a consensus on the important matters, and you're now considering my opinion on the minor ones, right?