America: Starting with the acquisition of MGM...

Chapter 157, Question 156: How to leverage 10000 trillion?

"Eric, that guy Anthony Ferrante still won't compromise and insists on a 5% share of the gross profit."

"Both I and Bemma have spoken with him several times, but it seems that the box office success of 'The Purge' and the invitations from outside have given him enough confidence. In short, his attitude is very tough."

"Even if we raise his fee to $70, it won't be enough. Ferrante means that other companies offer me contracts with bonuses."

"As a veteran who pioneered the company's expansion, he was very dissatisfied and saddened that his treatment was worse than that of outsiders."

Inside the office, Warren reported on the recent progress of AK Films.

Eric chuckled coldly; he'd seen plenty of wolves that couldn't be tamed.

Some people just don't understand that you should wear the right size underwear for your size buttocks, otherwise your crotch will sag when you walk.

"It seems he really thinks the film's success is all his own doing. Since we can't work together, don't bother trying; just tell him to get lost!"

The fact that Warren came to report this matter today means that he and his wife have given up on Anthony Ferrante.

He immediately nodded in agreement: "Berma and I think so too, so let's start looking for a new director."

"Hmm, has anyone chosen yet?"

"Yes, it's Kieran Everett Wayans, the director we initially planned to invite for the first Sharkturm movie. Just like you said, a director who can make Scary Movie will definitely be able to bring even greater breakthroughs and creative ideas to Sharkturm."

"Waynes? Didn't he look down on 'Sharknado'?"

"People change. Back then, people looked down on it because no one thought such a terrible movie could actually become a hit. Now, if we advertise the job openings, a lot of people will be scrambling to apply."

"In addition, excluding 'The Purge,' the company filmed a total of 15 movies in the first half of the year. At the busiest times, we had up to four film crews working at the same time. Eric, I think AK Films is short-staffed. 50 people are not enough."

Eric remembers that the initial goal he set for AK Films was to produce 20 knock-off movies a year, but he didn't expect that they would complete three-quarters of them in just six months.

However, it's definitely not feasible to transfer more people from MGM. There will be more and more projects here, and even the richest family won't have enough resources left.

"If you don't have enough manpower, then recruit externally. You can submit a report to me based on your actual needs."

Warren took a sip of coffee: "Okay, then there's the issue of profits. The total production cost for the 15 films was $1237 million. So far, 13 have been successfully sold, and the other two are being marketed."

"The gross profit was $3499 million. After deducting filming costs, taxes, and operating costs, the net profit is currently $1865 million."

"If these two films are sold, the net profit will definitely exceed 20 million US dollars."

Upon hearing the figure of 20 million, Eric couldn't help but smile. A bunch of poorly made junk had actually brought him a profit of 20 million in just six months.

Although it can't compare to excellent movies, it has already made a fortune.

Especially for MGM, which has to spend money on everything these days, they wouldn't mind spending even a penny more.

Assuming the workload remains the same in the second half of the year, a net profit of approximately $4000 million would be comparable to that of "Sharknado".

This money can be used to support the development and research of Facebook, YouTube, and Lionheart. It should last at least until the end of this year.

More importantly, it's a sure-fire way to make money, with absolutely no risk of losing money. There are so many businesses like this in the world, no wonder other companies are also interested in taking this path.

"Warren, you've been in this industry for almost a year now, running a company. How's it going?"

Warren hesitated for a moment: "I feel like I've learned a lot. At least I understand the production process and marketing of a movie, and I also have some of my own opinions on the market."

"Anyway, I'm more mature now. At least I'm not as flustered as when I first started working. Everything has its own procedures."

Eric smiled and looked at him: "Maturity is a good thing. Maturity means you can take on more responsibility. Have you ever thought about taking on an even bigger burden?"

"A bigger burden? Eric, what do you mean?" Warren's eyes widened slowly.

"I plan to set up another film and television company, which will operate independently and will not be affiliated with MGM in name, but will actually be the same as AK Films."

"This company doesn't make knock-off movies, but independent films. Its main focus is on niche themes or art films such as religion, cult, gender identity, and horror. Basically, the new company does what the big studios don't usually do."

"If you were asked to leave AK Films and manage this new company, would you be confident?"

Upon hearing that he would be in charge of a new company, Warren's mind went blank, as if a giant bell had been tolling.

He is no longer the naive newbie he was a year ago; he can see things more clearly and understand them better now.

Especially after he got together with Bermahadi, she often shared her workplace experience with him.

Last time at the movie theater, he and Béma ran into Eric and Nicole, and Béma Hardy was worried that Eric would be suspicious of their relationship.

Although Eric seemed magnanimous and didn't offer any hints, it somewhat influenced Warren's judgment.

Now, suddenly a huge burden, or rather, a highly coveted opportunity, falls on your head. It would be a lie to say you have no doubts.

Was Eric testing him? Was Eric trying to break them up? Or did he genuinely trust him?

However, given his qualifications and abilities, there are clearly more suitable candidates within the company. Moreover, the benefits always seem to fall on his head. What would Judy, Billy, and Bordeaux, who came out with him, think?

"What are you thinking about? Why aren't you saying anything?"

Seeing Warren in a daze, Eric asked.

"Eric, although I have a year of experience, I feel that my abilities are still insufficient. I am afraid that I will be unable to manage a company on my own now."

Taking a deep breath, Warren still declined the huge offer.

"What? You lack confidence in yourself? In the company, the four of you are the ones I trust the most. However, Billy is too impulsive and can't sit still. Perhaps he can take on more work after a few years when he becomes more stable."

"Judy can't be moved for now; I have other plans for her. Bordeaux's performance in the marketing department hasn't been outstanding, so I need to find him a new position to unlock his potential."

"I've seen your work performance this year. If you're not confident in taking over the new company, you can continue to stay at AK Films."

"However, I still have to increase your responsibilities. You will have to take on AK on your own. I plan to transfer Bema to the new company. She is capable of running a new company on her own."

After Eric finished speaking, Warren's serious expression vanished, and he immediately smiled.

It seems that Eric doesn't distrust his wife and son, but genuinely trusts them; otherwise, he would have continued to test them and then let them leave.

The two chatted for a while longer, and Warren told Berma to tell her the news so she could be mentally prepared.

After seeing the fat man off, Eric leaned back on the sofa and considered the new company; its establishment was definitely a must.

Why do major Hollywood studios establish their own independent production and distribution companies? The reason lies in the inherent contradiction between commercial interests and independence.

To make money, you should lower the movie rating to G as much as possible, meaning it can be watched by everyone. Such movies will basically not contain scenes of profanity, gore, violence, or torture.

G-rated movies receive the green light all over the world, even in the Middle East, without needing any cuts.

Independent films or art films are almost always rated R, not to mention those from conservative countries in the Middle East.

Even in the United States, some of the more popular films couldn't be shown and ended up being sold on videotape.

A large film company that produces and distributes too many R-rated movies.

They could very well be blacklisted by some countries due to some taboo, such as blasphemy against God or lesbianism, and then be completely banned.

The consequence of being banned is that your company's G-rated films will not be able to be released in that country, a consequence that many film companies cannot afford.

For example, with Marvel's "Shang-Chi," Disney's arrogance led to all Marvel movies being affected and banned in China until a new president took over and relations were eased.

That's why big companies need a branch office as a fig leaf, even though everyone knows you two are from the same family.

However, if the younger brother is blocked, the older brother is generally not affected, which is the main reason why many large companies want to set up independent subsidiaries.

In addition, Eric's new company is an independently operated entity, not a subsidiary, which is also to make it easier to control the company after it goes public.

Keep in mind that once the company goes public, it won't belong to you alone anymore. Even if you are the largest shareholder, your equity will be significantly diluted.

Furthermore, as the group grows, its equity will be diluted less and less.

For example, in the Samsung Group, Lee Jae-yong actually owns less than 2% of Samsung's shares, but the huge Samsung Group is under his command. Why is that?

Lee Jae-yong uses a nested shareholding structure, which is also a common way for many wealthy individuals to control their companies.

For example, if company A has a market value of 10000 trillion, and company B is the largest shareholder of company A, then controlling company B means controlling company A.

However, Company B's market capitalization is 5000 billion, which is still too high for the average person, so Company C was created.

Company C is the largest shareholder of Company B, but its market value is only 100 billion, a tenfold reduction in size.

But 1000 billion is still too much, so they continued to nest the companies, resulting in companies D, E, F, and G.

Until the emergence of Company H, the largest shareholder of Company G, whose market value was only 10 billion.

A billion is something a wealthy person can afford, so he became the largest shareholder of company H.

Ultimately, he could gain control of the large conglomerate A by controlling company H, leveraging less than 10 billion to control 10000 trillion.

When MGM, Facebook, YouTube, and Lionheart go public in the future, their market value may have exceeded one trillion in ten years.

Eric needs to follow this path if he wants to retain control of these companies.

By establishing branch offices in advance and creating equity nesting, and by laying a solid foundation step by step, we can prevent the enemy from exploiting any loopholes.

Time flies, and it's already early July.

The Purge is in its final week of widespread release, with fewer than 800 theaters still showing it.

The last major overseas film collection, set in Japan, also opened for release a few days ago.

Surprisingly, "The Purge" was a huge success in Japan, with a rating of 3.9 on Yahoo! Movies, far exceeding the 60-70 ratings in other countries.

Many reviews say it was inspired by battle royale, but it's filmed in a very American style.

Fantastic! My owner has finally accepted my ideas and creativity. I must support them!

This is a gift from dad to son, it's fantastic!

Although it hasn't been a week since the premiere, it's expected to easily surpass $20 million.

The Purge is currently grossing $9300 million in North America, $3700 million overseas, and $1.3 million worldwide.

At the MGM Grand, auditions for "House of Cards" are underway.

Eric, Andrea, Julio, and two people from the audition agency were sitting here.

Today is a comprehensive audition to select several important roles, but the most important one is the casting of the female lead, Claire Underwood.

He should be around the same age as Kevin Spacey, and his acting skills must be top-notch.

Eric had wanted to invite Julianne Moore, who met all the requirements.

After some consideration, I decided against it. It's already difficult to win an Oscar for Best Actor, let alone Best Actress; it might cause even more trouble later.

Later, they simply opened auditions, letting anyone with talent who wanted a role come and try their luck.

However, Eric heard that many actresses who were originally interested in working with Kevin Spacey backed out when they learned they would be competing against him, and those who dared to show up today were all quite capable.

"Thank you, Hatcher."

As Terry Hatcher left, Andrea looked at Eric: "I think Hatcher is capable of the role, both in terms of appearance and acting skills."

Eric shook his head slightly: "Let's wait and see. Her short hairstyle is too cold and ruthless; she looks more like an assassin than a politician."

"Next!"

The door opened, and another short-haired mature woman walked in. Like Terry Hatcher, Felicity Hoffman would become a Desperate Housewife in the future.

After trying on several looks and performing a short scene, Hoffman walked out.

Everyone else looked at Eric.

"Her acting is alright, but the styling doesn't match my image. It's too soft. Hatcher is too fierce, while she lacks fierceness."

"Next!"

The 15th short-haired mature woman came to the interviewer; she was Cynthia Nixon from Sex and the City.

She walked through a scene with grace and confidence, shared her understanding of the character, and gained everyone's approval, expanding the scope of those awaiting evaluation by one more person.

The audition quickly went on for another hour, and as the 26th actress walked in, the person Eric was most looking forward to appeared.

Robin Wright from Forrest Gump, at 37 years old, looks quite good standing next to Kevin Spacey, but it remains to be seen how his acting is.

"Robin, what kind of person do you think Claire is?"

"Independent, intelligent, calm, and ambitious, she is more like a business partner to her husband than a couple."

Eric nodded: "Do you usually watch the news? Do you follow politics?"

Robin Wright chuckled and retorted, "Director, don't you know Hollywood is the Democratic Party's stronghold?"

Everyone couldn't help but smile; this was indeed a long-standing tradition.

"Okay, you're very confident. I like confidence. Politicians are all confident. Come on, give it a try."

As Julio recited his lines, Robin Wright instantly got into character, his expression changing and his entire style transforming.

Five minutes later, after a short scene ended, she immediately switched gears, grinned, and asked, "How was it? I practiced very diligently at home."

Eric stood up, walked over, and extended his hand, saying, "Welcome to House of Cards!"

(End of this chapter)