While the announcement of ten new films sent shockwaves through Hollywood, Daenerys Entertainment quietly completed its mid-year financial audit.
Simon, juggling his other responsibilities, still took three full days to pore over the dozens of pages compiled by the finance department.
Overall, the first half of the year's revenue still hinged on the four films released at the end of last year: Scream, Steel Magnolias, Dead Poets Society, and Rain Man.
From January 1 to June 30, those four films continued to pull in $263 million at the domestic box office. Daenerys Entertainment's share came to $121 million. The reason it fell below the usual 55% split was the tiered theater agreement—once a film had been running for a while, the studio's percentage gradually decreased.
Overseas, the four films together earned $356 million: Scream brought in $95.15 million, Steel Magnolias $12.37 million, Dead Poets Society $86.32 million, and Rain Man $163.65 million.
Those numbers would still grow in the second half of the year, but the remaining potential was limited.
Compared to the original timeline Simon remembered, overseas performance had shrunk noticeably. Steel Magnolias suffered because its subject matter had narrow appeal abroad, but the others were held back mainly by Daenerys's still-weak overseas distribution network and the fact that many key markets remained closed to American films.
Even in countries that had opened their markets, most imposed heavy taxes, low revenue shares, and delayed release windows to protect their domestic industries. Daenerys's average overseas split was only 33%.
In smaller or more restrictive markets, the company had no choice but to sell the rights outright for a flat fee. Those box-office totals still counted toward the overseas figure, but Daenerys received no percentage.
Simon remembered that these restrictions would ease dramatically after the 1990s.
After all the calculations, the four films contributed $116 million in overseas revenue to the company.
As for this year's new releases, by June 30 the six films that had opened in the first half, Blue angel, Metropolitan, and others—had earned a combined $123 million. The Sixth Sense, which opened on June 30 itself, was excluded from this tally. The six films together delivered $73 million in studio share.
On the home entertainment side, When Harry Met Sally, released on video at the end of last year, sold 2.93 million cassettes in the first half at $29.90 each, generating $87.6 million in sales.
Although the standard union agreements treated 80% of video revenue as recoupment and only 20% as profit to be split, in reality studios typically kept 40–50% gross margin per cassette. For a breakout hit like When Harry Met Sally, the margin was even higher.
That single video release alone brought Daenerys more than $46 million in gross profit.
Adding in smaller ancillary income streams, Daenerys Entertainment's film division generated nearly $900 million in industry-wide revenue across theatrical and home video in the first half, of which $395 million flowed to the company itself.
Strong revenue, however, came with equally heavy expenses.
More than ten films were in active production, with Batman alone budgeted at $50 million. Substantial spending was also required for The Bodyguard, The Sixth Sense, Uncle Buck, Scream 2, and others.
The company poured significant marketing dollars into both domestic and overseas theatrical distribution.
Then there were major corporate expenses: construction of the Daenerys Studios in Malibu, the establishment of overseas subsidiaries, repayment of maturing loans, and—crucially—taxes. After everything, the film division's net profit for the first half came to just $51.19 million, a margin below 13%.
The television division was less impressive.
Compared to film, TV results were underwhelming. Revenue still relied heavily on the four reality shows. Early in the year the TV department had signed deals for three new scripted series, but two shows from last year had been canceled after poor spring ratings.
All told, Daenerys Television was currently running exactly ten projects: six scripted series and four reality shows.
Since the high-margin reality shows had largely fixed revenue, the television division posted $232 million in total revenue for the half. After allocating substantial overhead, net profit was $36.82 million, a margin of 16%, nothing spectacular.
The comics division drew attention when the Batman project launched, but Marvel Entertainment remained low-profile. Its $39.71 million in revenue and $2.26 million in profit barely registered on the parent company's books.
There was, however, one bright spot in the mid-year report: the consumer products department led by Nancy Brill.
After several restructurings, the department now focused on merchandise for the company's film and TV properties, soundtrack releases, and select advertising partnerships.
Sponsorships for the big reality shows like Who Wants to Be a Millionaire remained under the TV division's ad team. Consumer products handled only the merchandise for those shows, while its advertising work consisted mainly of product placement deals in Daenerys films and series.
The energetic little woman had spent the first half investing in Blockbuster, founding Daenerys Analytics, and launching Blizzard Studio, activities that might have looked like distractions yet she never neglected her core department.
By focusing merchandise efforts on Scream and Beverly Hills Brides, two very different properties, she broke the division wide open. The two lines successfully established separate retail channels: one aimed at teens, the other at housewives, the two most lucrative consumer demographics.
Once those flagship programs proved successful, merchandise for the rest of the slate rolled out smoothly.
On the soundtrack side, releases for Dead Poets Society and Rain Man didn't reach the heights of The Bodyguard album, but still performed respectably. Rain Man's largely instrumental soundtrack had already sold over 5 million copies by June 30, an impressive feat for a score album.
Simon had been extremely cautious about product placement to avoid alienating audiences.
Nancy didn't push aggressive integrations either. Still, after last year's string of hits, brands were lining up to partner, offering generous terms. Working within Simon's guidelines against over-commercialization, she secured lucrative deals for Batman, Angels in the Outfield, Pretty Woman, Ghost, and others.
As a result, a division that had barely registered revenue last year posted $207 million in the first six months of this one.
Because Nancy prioritized long-term growth over short-term profit, pouring money into manufacturing, distribution channels, and marketing the division had quietly acquired a toy factory in Rhode Island on the East Coast. After sharing corporate overhead, its profit margin was only 9.5%, yielding $19.71 million in net profit.
All told, Daenerys Entertainment recorded total revenue of $873 million for the first two quarters, with net profit of $110.78 million.
Compared to the massive gains Cersei Capital had just reaped in Japan's financial markets, $110 million seemed almost trivial. Yet Simon had always understood that this company was his true foundation. Opportunities in finance wouldn't appear every year, and as his profile rose, profiting there would only grow harder. Tech investments typically took ten or twenty years to mature.
The modest profit figure also reflected the company's rapid expansion.
Even so, $110 million in half a year was hardly insignificant. At that rate the company would easily rank in the top hundred of Forbes' list of America's largest companies.
More than fifty kilometers off the Los Angeles coast, a luxury yacht over sixty meters long lay quietly at anchor.
It was Sunday, August 6.
This weekend Simon had chosen rest over work, though it wasn't pure relaxation.
James Rebould had flown in from New York a few days earlier to discuss business and, more importantly, to introduce Simon to certain people. Politicians, to be precise.
The meetings took place aboard the yacht.
Simon intended to build political relationships strictly within public rules; nothing illegal. Still, he preferred maximum discretion. He had no desire to appear alongside any politician in the newspapers.
Over two days he met six candidates Daenerys had already committed to support. Besides David Dinkins, who was in the final stretch of his New York mayoral campaign, the others were one California state senator, two California state assembly members, one U.S. senator from New York, and one U.S. representative from California.
All were Democrats. Having chosen a side, Simon saw no reason to hedge in the near term.
He also avoided high-profile names, selecting instead capable but unaligned rising talents after careful vetting. Congressional elections happened every two years, frequent, yet incumbents almost always won reelection. Some career politicians served ten terms or more.
Simon didn't expect immediate returns.
This first round of "investments" was about building a network, so that if trouble ever arose, Daenerys wouldn't be blind at the federal level.
Long-term, if any of these people could facilitate the company's growth in three to five years, that would be good. If in ten years one of them reached real power and remained an ally, it would be a windfall.
As evening fell, Simon concluded the weekend's final meeting.
He personally saw the New York senator off via helicopter, then joined James at a table on the top-deck terrace near the helipad.
The sun sank in the west, painting the horizon with blazing clouds that stretched across the sea and sky.
Jennifer brought them a pot of coffee herself, then settled at a separate table nearby, quietly reading a magazine.
James glanced at his daughter, sighed inwardly, and continued speaking to Simon. "I'll send you the files on the other candidates when I get a chance. There's also a new consulting firm that does polling and campaign strategy for the party, Schlapp Consulting, based in Greenwich, Connecticut, just outside New York. It's only recently been founded, but the founder, Joseph Schlapp, and his family have deep political roots and connections. I think it's a solid opportunity. We could set up a dedicated fund to support them long-term."
Political investment couldn't demand direct financial return; a nonprofit fund would also convert contributions into tax advantages.
"I'll look over the materials," Simon said without committing immediately. Then he added, "We can also transfer another $50 million from Daenerys to your side. We definitely won't need the overseas funds within the next year."
"Fifty million is plenty. I reviewed our finances recently. The tech companies we invested in last year paid about $37 million in dividends in the first half, lower than last year, mainly because Microsoft and a few others skipped dividends. Still, with our existing reserves, we have more than enough to keep operations running."
James paused, then remembered something else. "Of the three positions we flagged for possible sale, AMD's stock has been sliding. Its market cap is now 50% below what we paid two years ago. I don't see the point in holding on."
AMD, Intel's perennial underdog.
Can't prop it up after all, huh.
Simon recalled that when they bought in two years ago, AMD's market cap had been around $900 million; they'd invested roughly $45 million. If James was right, the company was now worth perhaps $600 million, compared to Intel racing toward $60 billion.
Yeah… no comparison at all.
Still, AMD had somehow limped along for another twenty-plus years in his original timeline. No need to sell at a loss now; a sudden rebound could erase the paper loss.
Simon smiled and shook his head. "We're not short on cash. Let's keep it."
James nodded.
Business concluded, they chatted idly about Daenerys's recent moves.
After half an hour on the terrace, the helicopter returned. Simon, James, and Jennifer boarded and flew back to Malibu.
Once ashore, the Rebould declined Simon's invitation to join him at Warner Bros.' party that evening, heading instead to dinner with Jennifer's uncle, George Norman, and his family.
Simon rested briefly at his house on the west side of Point Dume, then drove into downtown Los Angeles.