America: Starting with the acquisition of MGM...

Chapter 82. The Attitudes of Major Television Stations

My dad doesn't understand what I'm trying to do, but that doesn't matter, as long as he fully supports me.

He will understand when the initial results become apparent.

At the same time, Eric couldn't help but sigh that he was really lucky to have such a good father.

In Charlie Cooper's view, he would still try anything his son wanted to do, even if it seemed absurd.

The model Eric mentioned is naturally Netflix, and in China there are also Youku, Tudou, and Tencent Video, among others.

Although Netflix has been around for several years, the company is still focused on video rental and competing with Blockbuster for market share, so it can't afford to do anything else.

The limitations of the times have prevented it from realizing the importance of streaming platforms.

Then I'm sorry, I need to seize the initiative.

As for investing in or acquiring Netflix, firstly, Netflix would definitely not agree to an acquisition, given that Blockbuster is currently suffering setbacks while Netflix is ​​in a very favorable position.

Investing is not as good as doing it yourself; how can someone else's be better than your own?

But just as my father worried, once he actually created this platform, he would inevitably be seen as a thorn in the side by major TV stations.

It's conceivable that they would never license their own films and TV shows, leaving MGM in a situation where only its own film library is available for use.

To break through this impasse, the only way is to continuously produce high-quality content and increase user engagement through excellent works and price wars.

At the same time, Eric also needs to develop two supporting companies – Facebook and YouTube.

These two companies haven't appeared yet, so now is a good time to buy.

The former will provide strong social media support and traffic generation, while the latter can use MGM's new works for derivative works and promotion.

After the accounts are interconnected, a three-in-one structure is formed.

It could be paired with a chat application similar to WeChat or QQ for support, but with Microsoft's MSN and Google's already in the market, it's not easy to get one.

If you want to get involved, you can only wait until the overall situation stabilizes. Otherwise, if Google and Microsoft restrict your technical support, you'll be in trouble.

Then there's Twitter, which has a different style from the other three. It couldn't support each other immediately after it was launched, so it can be put on hold for a while.

By March 10th, Eric had flown to Oregon to check on the Transformers set. Everything was progressing smoothly, and Patty Jenkins was proving to be a very reliable executor.

They also went to Weta Digital to check on the progress of the special effects. The progress was not slow, and more than a third of the work was already completed.

The manager told him that more than half of the company's machines were running for Transformers, and even Peter Jackson's Lord of the Rings: The Return of the King had been compressed into smaller spaces.

Eric knew in his heart that the other party was definitely lying, but he still expressed his gratitude.

It's important to know that the Lord of the Rings trilogy was started simultaneously, and even if the progress was different, it's probably nearing its end by now.

Not everyone is as familiar with the plot as he is; Big Beard won't fight an unprepared battle.

Regarding the film, the script for "Get Out" has been completed, and Leigh Whannell went to Eric's house specifically to have him review it.

The two of them spent another whole day in the study revising the script, and the script was largely finalized.

Then we found a script doctor to add jokes that only the Black community would use, and to add some racial satire.

Neither Eric nor Reyworn are experts in this area, so we need to find a Black screenwriter. The film is expected to begin formal casting in about two weeks.

At AK Films, the script for "The Purge" was already finished, and Eric let them start filming without even looking at it, with an investment of $400 million.

The director didn't choose James DeMonaco from the original timeline. Eric looked into it and found that this guy was still just a screenwriter. Although he had been in the industry for quite some time, he didn't have experience in independent production and didn't have the courage to direct.

The position ultimately went to Anthony Ferrante, the director of "Sharknado".

His work schedule for this year is already set: filming "The Purge" in the first half of the year and "Sharknado 2" in the second half, gradually becoming more deeply involved with AK Films.

In addition, AK Films also sold the copyrights of its knock-off films "Chainsaw Elf" and "Dragonfly Man" to local TV stations.

"Chainsaw" was sold to 42 companies, and "Dragonfly" was sold to 61 companies, generating a total profit of approximately $480 million.

The two knock-off films had a total cost of only $150 million, no marketing or distribution, and a gross profit of $330 million.

In addition, since it is a small company, there are preferential tax policies and subsidies. In fact, of the $330 million, only about $10 in taxes need to be paid.

Even after deducting operating costs such as water, electricity, and labor, the net profit is roughly between $290 million and $300 million.

How long does it take to make this type of movie?

The answer is about a month, or even half a month or twenty days if you're fast, but the already rough quality will become even worse.

Eric set a target for AK Films: to produce no fewer than 20 films a year, with no upper limit on the number.

If we can ride the coattails of popular TV dramas and movies, we'll film them to our hearts' content.

As for DVDs and related merchandise, forget about these knock-offs; only films of the caliber of "Sharknado" deserve such treatment.

To date, approximately 24 copies of the "Sharknado" videotapes have been sold, and this number will continue to grow.

Wednesday, MGM Grand, Eric's office.

As the head of the marketing department, Volvo's efficiency remains as high as ever. He always manages to finish his work ahead of schedule, even if it's scheduled for Friday.

Volvo handed over the report.

"During this period, we visited all the major cable TV stations and completed internal screenings with them. The feedback from all the stations was very positive."

"They're all praising it, saying it's a groundbreaking TV series. Everyone is lavish in their praise, and every TV station wants to get the rights to it."

Volvo recounted his experiences over the past few days with a smile. He used to be just a manager of a small film company, and this was the first time in his life he had experienced something so glamorous.

Eric asked Volvo to sit down and carefully reviewed the report.

First, AMC, the original broadcaster of "The Walking Dead," offered $400 million per episode for the first three episodes, with the price depending on the ratings for the rest.

The ratings are calculated based on cable TV, taking the age range of 18-49 as the base, with 4% as the baseline.

For every 0.5 percentage point increase, the price for each subsequent episode will increase by $100 million, with no upper limit.

Regarding broadcast time, AMC is willing to allocate a near-prime time slot, which is between 7 pm and 8 pm.

If it's effective, it will be moved to prime time.

After reviewing the agreement offered by AMC, Eric felt it was barely acceptable and did not meet his expectations.

While ratings-based algorithms are fairer and acceptable to the 18-49 age group, a 4% base is still a rather low starting point.

Based on 2002 data, the total number of households in the United States was approximately 2.9 million, with a total of about 9700 million households, of which about 8500 million were cable channel subscribers, totaling about 2.5 million people.

这其中18-49年龄段的总人口大概是1.15亿人左右，订阅了有线频道的18-49年龄段总人口大概是9500万人左右。

4% of the 9500 million people is 380 million people.

In other words, when The Walking Dead airs, at least 380 million people need to watch it at the same time to meet the basic standard.

To move up a level, the viewership rating needs to be increased by 0.5.

To put it another way, if the viewership rating reaches 4.5% and 427 million people are watching at the same time, the subsequent episodes of "The Walking Dead" could fetch $500 million per episode.

If the ratings reach 5% and 475 million people are watching at the same time, the subsequent episodes of "The Walking Dead" could fetch $600 million per episode.

This data may confuse many people. Why must we use the 18-49 age group as the statistical standard? Why not use the entire age group?

The answer is no, because it relates to Google Ads' advertising. In the eyes of Google Ads, the 18-49 age group has the greatest consumer potential.

Merchants will invest heavily in GG fees for this age group. As for other age groups, a 50% cut is the least of their worries; in severe cases, a 30% cut is quite normal.

But some people might wonder, isn't it said that cable TV doesn't sell GG (Gold), but instead makes a living through paid subscriptions?

However, this understanding is not comprehensive. To be precise, cable TV is divided into two types: basic and advanced.

Basic cable channels will still sell GG (Ghosting). AMC is a basic cable channel, so even though users have to pay, it will still insert GG.

The trade-off was that the subscription fee was lower than that of premium cable channels; in 2003, a monthly subscription to AMC cost $8.99.

Premium cable channels offer pure content with no interruptions or glitches, but their subscription fees are much higher.

HBO, FX, Starz, etc. are all considered high-end cable channels.

Take HBO, the most powerful and with the largest number of paying subscribers, as an example. In 2003, it cost $12.99 per month to subscribe to it.

The difference between the two is $4, which is the cost of the GG fee.

In addition, subscribing to cable TV in the United States is not as simple as many Chinese people think.

In 2003, CCTV-1 was almost universally available nationwide, similar to public television stations like ABC, CBS, and NBC.

However, without installing a satellite signal receiver, also known as a satellite dish, relying solely on the antenna will generally only allow you to receive CCTV-1 and some local channels within your province. It will be almost impossible to watch channels from other provinces.

This large dish was what many people in China called cable TV or cable channels at the time. The whole process only required paying once, regardless of whether you got the set-top box from legitimate or illegal channels.

However, this is not the case in the United States, where the media industry is highly developed. In 2003, there were already more than 100 cable channels in the United States.

For viewers, they have to pay for the channel they want to watch. If you want to watch shows from both AMC and HBO, you have to subscribe to both.

If you want to continue watching FX and Starz content, you'll have to continue paying for a subscription.

Well-known cable TV stations all have their own unique selling points, enticing viewers to pay for their services.

However, most families cannot subscribe to all channels; they will only choose a few that they like.

Therefore, among the 8500 million cable TV subscribers, the proportion of each station is not the same.

HBO's strongest performance in 2002 was when it surpassed 4000 million subscribers.

AMC has around 2500 million users, Starz has around 2200 million users, Shoutime has around 2000 million users, and FX has around 2800 million users.

At the same time, just because a viewer subscribes to your channel doesn't mean they will watch all the programs on the channel; they might only watch one or two.

Any drama that achieves a 5% viewership rating on cable TV is an extremely rare occurrence.

Once you understand this logic, you'll see why Eric wasn't entirely satisfied with the agreement AMC offered.

He continued flipping through the reports. FX's terms were better than AMC's, while Shoutime's were much better. Sure enough, the higher-end cable channels knew their stuff.

HBO and Starz offer the best terms.

The former is willing to buy the entire season for $800 million per episode, and if the season brings HBO more than 300 million new subscribers, HBO is willing to pay MGM an additional $1000 million.

If the goal is achieved, HBO will have to spend a total of $106 million to buy the first season of The Walking Dead from MGM.

While the price doesn't match the $1.2 million of "Band of Brothers," it was, after all, a film by the renowned director Steven Spielberg and featured a large cast of stars. "The Walking Dead" falls far short in that regard.

Starz offered $700 million per episode, and if the show could bring in more than 500 million new subscribers to the channel by the end of the season, Starz would be willing to pay an additional $300 million per episode, totaling $1.2 million, which would match the price of Band of Brothers.

Seeing the intentions of the two television stations, Eric hesitated. He looked at Volvo and asked, "What do you think? Tell me your opinion."

Knowing the boss was going to ask this question, Volvo had obviously done its research.

"Personally, I prefer to work with Starz."

"reason."

Volvo organized his thoughts and said, "Choosing it will allow us to earn an extra fourteen million dollars, and I think that's the biggest reason. As for attracting 500 million new subscribers, I don't think that's a problem."

"Starz currently has only 2200 million subscribers, ranking second to last in market share among the major cable companies. In fact, everyone knows that the smaller the base, the easier it is to increase."

"The reason why many TV stations fail to develop is often not because of funding, but because of a lack of good creative ideas."

"That's Starz for you. It just needs a hit show. Once that show comes out, it will be easy to boost subscriptions. They can just steal them from other channels."

"On the other hand, for HBO, given its current size, 300 million new subscribers is not an easy feat. Even Band of Brothers only attracted a little over 300 million new users in the end."

"That was back in 2001, and as HBO has grown, that number has only become more and more difficult to achieve."

After Volvo finished speaking, he looked at Eric and then heard an unbelievable decision from the latter.

"Choose HBO, get ready to sign the agreement."

Volvo seemed not to understand, opened his mouth as if to ask, but seemed to think that questioning the boss's decision was not something a qualified subordinate should do, and Eric's decisions were always correct.

Seeing his astonished expression, Eric didn't explain further, waving Volvo out. He had his own reasons.

Once MGM's own video website is launched, it will definitely need to create hit shows to attract viewers.

According to MGM's current filming schedule, even if "Transformers" is released on the platform, it will have to wait until next year. Therefore, "The Walking Dead" can undoubtedly serve as this year's blockbuster.

Since it's a blockbuster, it needs to be known by more people, and HBO's base is obviously larger than Starz's, giving it a stronger advantage.

Considering the future, giving up that $1400 million is not out of the question.

After all, once the video platform is stable, the entire DVD business will be significantly affected, and it will be even more painful to cut that piece of meat.

Please vote for me and give me a tip.

(End of this chapter)