I am Hollywood

[Chapter 1088: Quarterly Financial Report]

Noticing Julia pointing at them, Holly Hunter and a few others who were chatting made their way over. Eric had no choice but to get up and engage in a few pleasantries with them. Once they left, he shot a frustrated glance at Julia, who looked completely innocent.

Julia shrank back a little, her eyes filled with hope as she whispered, "Eric, you're mad at me, right? Are you going to discipline me?"

"No," Eric shook his head and replied, "I will treat you well, in the gentlest way possible."

"Uh-huh, uh-huh," Julia nodded vigorously like a little chick pecking at rice, clearly not averse to that approach.

Well, that meant he couldn't get mad at her.

...

Monday mornings typically involved breakfast with Katzenberg, where they would discuss the recent company affairs. Elisabeth was still on her 'fight trip,' and it was only yesterday that Eric learned during a phone call that the issue revolved around Fox Broadcasting. Murdoch wanted to place Wendi Deng at Fox, which Elisabeth naturally opposed.

Eric didn't feel it was appropriate to meddle in family matters.

Waking up in Julia and Elisabeth's Beverly Hills mansion that morning, Eric initially thought Julia would want to sleep in, so he planned to head to work early. However, Julia also got up, although she remained a bit sleepy until they reached the Firefly headquarters in Burbank.

"Good morning, Eric," Katzenberg bustled into the dining room, as lively as ever, shaking Eric's hand, then enthusiastically greeting Julia, "Morning, Julia!"

Julia perked up and nodded at Katzenberg, "Jeffrey, good morning."

After the greetings, Eric and Katzenberg took their seats at the breakfast table, with Julia lazily sitting next to Eric.

Katzenberg seemed to understand Julia's state and, thinking that the matters for discussion today were nothing to be shy about, didn't mind, placing their breakfast order. He couldn't wait to ask, "Eric, have you seen AOL's quarterly financial report?"

Most publicly traded companies released their quarterly financial reports in late January or early February. Since it was just January 18, Eric didn't expect AOL to announce its quarterly report so early. However, considering AOL's recent circumstances, it was understandable that they would want to get things out in the open sooner rather than later.

After all, only a solid financial report could completely chase away the negative buzz surrounding AOL and give the company more leverage in its merger with Time Warner.

In1998, the Nasdaq index had settled at 2733 points by December 31. Meanwhile, a series of tech companies listed on Nasdaq saw their stock prices reach historical highs, with Microsoft's market cap smoothly breaking the $400 billion mark, reaching $418.5 billion, firmly securing its position as the number one company globally.

Among the best-performing tech companies under the Firefly umbrella, Cisco's market cap also hit $166.6 billion, ranking tenth on the global corporate valuation list. Yahoo, after experiencing a booming IPO, had its stock prices fluctuating. But before the year ended, its market cap maintained a high of $106.7 billion.

In 1997, all the tech companies under Firefly's investment control had assets totaling less than $200 billion. Now, just Cisco and Yahoo had exceeded $270 billion. Additionally, compared to last year, Nokia's market value had doubled, reaching $66.5 billion.

Including the non-public but valued over $100 billion media conglomerate Firefly Group, the Firefly system thus owned three enterprises valued over a hundred billion dollars.

If the Nasdaq index collapsed as Eric predicted, this year would mark the pinnacle of his personal wealth. Although not yet officially calculated, Eric's net worth on the Forbes billionaire list would likely exceed the unprecedented $300 billion level, especially when compared to the $265 billion reported by The New York Times back in November.

It was easy to predict that after the Nasdaq crash, it would take at least ten years for Eric's wealth to reach its current level again, based on the historical development trajectory of the tech industry. However, by that time, should Eric's net worth match this year's level again, the bubble component of his assets would absolutely not be as severe as it currently was.

Having processed these thoughts, Eric shook his head and said, "Not yet. So, what's the situation right now?"

Katzenberg waved to his assistant nearby to bring over a laptop. After opening it and displaying the information to Eric, he continued, "AOL just released their numbers. For the fourth quarter last year, AOL reported revenues of $1.1925 billion, a staggering 46% increase compared to last year and a 21% rise compared to the last quarter. Their quarterly profit reached $190.5 million, marking a 41% year-on-year increase. All the relevant figures far surpassed Wall Street's expectations."

Here at Firefly's headquarters restaurant in Burbank, Eric had intentionally set up the WiFi network in advance. As Katzenberg spoke, he skillfully switched pages to display AOL's stock price.

By then, it was almost eleven o'clock Eastern Time, and Eric only saw a sharply rising curve on the graph. Over an hour after the market opened, AOL's stock surged 11%, lifting its market cap to $73.6 billion.

Eric meticulously reviewed all the stats displayed on the browser, then smiled, "This is good news! AOL is set to repurchase that 3.1% of shares held by Clover Fund next month. With this increase, we just made a few hundred million more." Saying that, he opened the calculator on the laptop and did some quick math, "At the current stock price, it should be $2.28 billion, and maybe it will rise quite a bit in the coming weeks. Ultimately, we might even end up with $2.5 billion."

"$2.5 billion," Katzenberg couldn't help but express a bit of awe. Although Clover Fund had bought into the stock at what was considered a high price, if they could recover $2.5 billion, they would have made several times profit compared to the initial investment. Remembering something, Katzenberg added with a grin, "Just in time, that money might be enough to buy Hasbro."

Although Hasbro hadn't yet released their fourth-quarter report from the previous year and given that Star Wars: Episode I came out in late December, even with the report, the disappointing sales of Star Wars merchandise wouldn't substantially impact Hasbro's Q4 revenue data.

However, after more than half a month, the news about the poor performance of Star Wars toys had spread, and Hasbro's high stock prices were starting to show signs of decline.

Hearing Katzenberg bring up Hasbro, Eric asked, "Speaking of which, has the consumer products department released the report on Star Wars' disappointing sales?"

Katzenberg nodded, "I've been keeping an eye on it. I should be able to transfer the detailed documents to you in a few days, but the basic issues are quite clear. Hasbro's failure this time was mainly because they were too greedy. A $100 million licensing fee allowed them nearly half the peripheral products from Star Wars. According to the consumer products department's investigation, Hasbro's new line of toys based on the latest characters from Episode I was still very popular, but because there were too many different products, it ended up affecting consumers' shopping choices. As a result, most of the products, apart from the core group of hot sellers, languished unsold. I believe we should categorize and restrict the types of peripheral products we develop for our movies in the future."

Eric listened attentively, "This year, our Iron Man, Cars, and The Fellowship of the Ring all have great potential for peripheral product development, so it would be best if you kept a close watch on this. I don't want the consumer products department to merely summarize their experience without putting it into practice."

"Of course," Katzenberg agreed. Just then, the waiter brought their breakfast, and the conversation paused briefly. After the waiter left, Katzenberg continued, "Also, regarding the '4200' plan, Eric, although the final contracts for North America are still under negotiation, 2,000 3D screens and 100 IMAX screens have been basically confirmed for a full rollout with the release of Gravity later this year. However, overseas, I think there may be a delay of one to two months."

Originally, Eric hoped that the rollout of 3D and IMAX screens could happen globally simultaneously, but after a year of preparation, he began to realize the realities. The North American market was somewhat manageable, but the overseas film markets were impacted by various complex factors, such as national market policies, making it impossible for something to happen simultaneously.

Certainly, the IMAX theaters completely controlled by Firefly Group might achieve that goal, but expanding those 2,000 3D screens overseas would prove to be quite challenging.

And just the mere 100 IMAX screens scattered across other countries globally clearly wouldn't suffice, as Firefly could not launch Gravity and The Fellowship of the Ring in those scant 100 screens.

Eric didn't doubt Katzenberg was giving this matter his all. The fact that he brought it up meant that it was unavoidable.

"Well then, let's just ensure the North American release is synchronized," Eric said, although somewhat disappointed, he quickly added, "As long as North America can succeed, I'm sure overseas expansion will follow swiftly."

"Absolutely," Katzenberg nodded, adding, "However, in North America, I met with representatives from several major theater chains last week. They still have some concerns, mostly regarding the film supply. From the release of Gravity in November to The Fellowship of the Ring in December, there's only one month gap. Given the excitement surrounding both films, theater chains are optimistic that they can support a two-month 3D movie market. However, from The Fellowship of the Ring in December to next year's Easter weekend release of Sleepy Hollow, that's a full four-month gap. Even if The Fellowship of the Ring could carry a two-month window, those 2,000 3D screens would face two months without supply. So, the exhibitors demanded we provide at least two more 3D films to ensure a monthly rollout."

At the current technological level, the main difficulty with sourcing 3D films still lay in costs. Time costs were secondary; merely shifting and copying the films for those 2,000 screens could add up to several million dollars to a movie's budget. For productions under $50 million, these two aspects alone could increase the overall production budget by over 10%.

Not to mention even more expensive IMAX versions, which cost about ten times more than regular 3D copies. If both formats were employed, distribution costs would skyrocket.

However, since they were determined to push ahead, there was no room for second thoughts. After thinking for a moment, Eric asked Katzenberg, "What's your take on this?"

Katzenberg replied, "Placing the company's big productions in the off-peak months of January and February is too risky. If we choose lower-budget films, they may limit showcasing the visual advantages of 3D and IMAX. I believe we could select some classic blockbusters from our film library for conversion. This approach could reduce risks while maintaining visual quality."

Hearing this from Katzenberg, Eric immediately thought of a series of 3D remastered blockbusters from his timeline. However, he quickly shook his head and said, "No, it's not the right time yet."

While he recalled many 3D remastered films doing very well at the box office, most of those instances occurred after a movie had been out for ten or twenty years.

The rise of Hollywood's blockbuster with special effects hadn't even been around for a decade. Before the 90s, Eric couldn't come up with many films worth remastering for 3D. However, post-90s, he could think of plenty, and Firefly Group alone owned a considerable number of movies like Jurassic Park, Terminator, Twister, and Independence Day, all of which had the potential for 3D conversion.

Yet, compared to the past, the release ages of these films were still too recent to mine nostalgia effectively. Moreover, although he was very satisfied with the 3D technology developed under Firefly, Eric still hoped this technology would evolve for another ten years before rolling out 3D versions of those classic films.

Katzenberg didn't expect Eric to flatly refuse, saying, "Eric, according to Disney's practice of re-releasing animated films every seven years, it's actually a good time already. Although these are adult films, the rationale is the same: seven years will bring about a whole new group of adult viewers."

"That's not what I mean," Eric shook his head, "Re-releasing every seven years is indeed the case, but I don't want to rush to exploit the commercial potential of these films now. Perhaps waiting another ten years until these films become classics in a generation's collective memory, then re-releasing the 3D versions would yield greater rewards. Right now, just to fill the gap, pulling these classic films out would be too much of a waste."

"In that case," Katzenberg pondered and seemed to be persuaded by Eric's argument, "We'll have to select from our existing films. Speaking of which, that Underworld series would be neat. Its austere Gothic style and violent gunfight scenes would probably translate really well into 3D. However, New Line has already slated that film for a summer release."

*****

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