A titan-level corporate acquisition was always brutally complicated. Early-stage financial and legal feasibility assessments, detailed negotiation of the acquisition structure after the launch, auditing assets and liabilities after reaching agreement, and so on. It usually took months, even one or two years, to truly finish.
After Sony acquired Columbia late last year, Matsushita began contacting Michael Ovitz, hoping to buy a major Hollywood studio as well.
Japan's stock market had fallen more than thirty percent over the past half year, but Matsushita, sitting on a large pile of U.S. dollars accumulated over the years, had not abandoned the idea of an acquisition.
For half a year, in order to keep things as secret as possible, Ovitz had led his team back and forth between Tokyo and Los Angeles countless times. He even forbade staff from telling their families the specifics of their travel. One of his deputies once brought his wife a kimono from Tokyo and had to lie and claim he bought it in London.
No one expected that after all that caution, the news would still leak early.
CAA headquarters in Century City.
Ovitz had spent all of yesterday scrambling. Coordinating with Matsushita, finding a reasonable excuse, contacting the press, unifying the team's story, finalizing their denial strategy for the Los Angeles Times report. By the time he personally reviewed the press release, it was already deep into the night.
Today, he still arrived at the office before eight.
After the routine Monday executive huddle, and after discussing media feedback and next-step response plans with the acquisition team, it was already nine-thirty.
Back in his office, Ovitz looked over the day's schedule while asking his assistant whether lunch with Dustin Hoffman at noon had been arranged.
Last year, forced by Simon Westeros's pressure, Ovitz had publicly "terminated" Hoffman and the others. But privately, he had continued to help them maintain their careers as much as possible, and for free. That, to a large extent, reduced the negative impact on CAA from the termination incident.
Dustin Hoffman being able to join Captain Hook, and Terry Semel and Peter Guber personally stepping in to speak on his behalf, were both the result of Ovitz pulling strings behind the scenes.
Of course, of the four people "terminated" last year, only three were truly salvaged.
Westeros had used Meg Ryan as the chicken to scare the monkeys, crushing her without leaving any room on the long-contract issue, and Ovitz had no way to stop it.
After finishing the lunch logistics, Ovitz was about to move on to the rest of the day's work when the assistant handed him a box office report for the weekend and said, "Mr. Ovitz, you might want to look at this."
Ovitz took the report and dismissed the assistant. He looked down, and surprise quickly spread across his face.
This past weekend, because the two new releases, Presumed Innocent and The Jungle Book, did not perform especially well, Total Recall, in its second week, still took the top spot with $15.06 million over the three-day weekend, even with a 41% drop.
After ten days, Total Recall's cumulative box office also surged past the $50 million mark, reaching $51.14 million.
That did not surprise Ovitz.
What he did not expect was the name in second place.
Ghost.
Entering its second week, Daenerys Entertainment's summer opener Ghost, whose first-week reviews and box office had failed to meet many people's expectations, did not drop hard like Total Recall.
It rose instead.
Compared to its $12.19 million opening three-day weekend, Ghost pulled a 2.7% reverse increase in its second weekend, earning $12.52 million.
Two point seven percent looked small on paper, but Ovitz knew exactly how difficult it was for a movie with only average critical reception to achieve a reverse uptick.
Ghost had done it.
Again.
Last year's The Sixth Sense had achieved a second-week uptick in the most natural way, because its word of mouth exploded and the topic heat was off the charts.
But now, what was going on with Ghost?
Ovitz's confusion was probably the same question Hollywood was asking itself early this morning.
Because a seemingly minor reverse uptick like that propped the entire box office curve upward. A film that many outlets had predicted would top out around $60 million domestically was now almost certain to push into the $100 million club.
It might even finish above Total Recall.
It was jaw-dropping.
So the media and other studios finally started paying attention to why this was happening.
The plot of Ghost made countless viewers cry.
The "Unchained Melody" theme struck a chord for many people.
Another wave of word-of-mouth spread.
In the end, the answer was simple.
Audiences loved the movie.
That was the most important, most direct reason, the reason countless filmmakers chased their whole lives and never found.
As the press rushed to cover the Ghost viewing craze and Hollywood frantically searched for similar ideas, many people remembered what their attitude had been when Ghost first opened. They could only laugh at themselves. And deep down, when it came to Daenerys Entertainment, they felt a powerless resignation.
Your old man was still your old man.
On Sunday, after discussing with Daenerys Entertainment's senior leadership how to respond if Matsushita launched an early bid for MCA, and after CAA publicly denied the report, Simon's focus shifted back to his other matters.
Still, even with CAA's denial, starting Monday, MCA's stock price rose over the next few days, briefly spiking as high as $52.
Clearly, capital had already begun moving in.
If Daenerys Entertainment had no intention of buying MCA, Cersei Capital could have started accumulating MCA shares heavily. Once Matsushita completed the acquisition, it would have been easy money.
Now, that opportunity had to be abandoned.
Strictly speaking, if no one wanted to make an issue of it, it might not even count as insider trading. But Cersei Capital was already too eye-catching in many people's eyes. Simon believed that if they did it, someone would absolutely decide to make an issue of it.
Over in Silicon Valley.
Because America Online's user growth in May exceeded expectations, the AOL leadership predicted that just in the second half of this year, the number of users accessing the Web through their service could reach 500,000.
And internet service providers outside AOL's service areas had already started reaching out to Ygritte, which held the core Web patents.
After years of accumulation, the nationwide base of network users across the United States was actually enormous. If they all shifted toward the Web, by the end of this year, the nationwide Web user count would be far more than 500,000.
So both America Online and Ygritte began planning to expand their data centers and network lines.
Ygritte's two current data centers on the East and West Coasts could only support 400,000 user-visits. This time, Ygritte planned to build two additional 300,000-user-class data centers on each coast, expanding total server capacity to the million-user level.
America Online's primary expansion was focused on its core network infrastructure.
Building a nationwide transmission backbone would be impossible without billion-dollar investment, but investing in main trunk fiber on the East and West Coasts was still within AOL's financial ability. In the short term, Simon did not plan to inject more capital and dilute other shareholders. If needed, AOL's next-stage financing would be done through loans.
As for the internet cafes, after confirming the model site and operating approach, the one hundred cafes were expected to open gradually around the end of July.
America Online held 60% of the Internet Bar subsidiary. Each cafe's base cost was more than $100,000, but AOL's own investment burden was only $3.5 million. The rest would be covered by sponsors and IBM's investment fund.
Malibu Daenerys Studios.
The date was Wednesday, June 13.
Ghost's unexpectedly strong box office was becoming undeniable. Although in the previous weekend's three-day window it had still trailed the number-one film Total Recall by nearly $3 million, once weekday numbers came in, Ghost, fueled by growing media heat and audience word of mouth, had already begun outperforming Total Recall on a daily basis.
Simon did not relax.
The first film in Daenerys Entertainment's ten-film plan, the Fox co-production Sleeping with the Enemy, was set to open on June 15. But its internal test screenings had produced consistently low ratings from media viewers, and general audience previews also failed to spark strong feedback.
Both Hollywood and ordinary audiences had high expectations for the ten-film plan.
Now, with Ghost already showing signs of becoming a major hit, if the externally partnered Sleeping with the Enemy flopped, it would not only weaken audience expectations for the rest of the ten-film plan. Other studios would inevitably start thinking their own thoughts as well.
Of course, Simon could not control how audiences ultimately responded.
But by now, quite a few studios had been tied to the ten-film plan, all on the same boat. This time, shaping the media response to Sleeping with the Enemy and securing at least a passing score was not difficult.
So as the new week began, Simon started calling in Daenerys Entertainment's accumulated media connections from the past few years. He also demanded Fox, and the other ten-film-plan participants as well, to push together. Everyone understood. If Sleeping with the Enemy stumbled out of the gate, it would create a brand effect that would drag down every other film tied to the plan.
In the top-floor conference room of Building One in the administrative district.
Daenerys Entertainment and Fox's distribution teams were discussing exactly this. Simon, Amy Pascal, and Fox's Joe Roth were all in attendance.
After several days of work, Fox's distribution team, with help from Daenerys Entertainment and other industry connections, had already "fixed" the critical direction at major newspapers such as the Los Angeles Times, The New York Times, the Chicago Tribune, and the San Francisco Chronicle.
Trade papers like The Hollywood Reporter and Variety also agreed to give a relatively forgiving evaluation.
Beyond print outlets, the team also contacted well-known critics such as Roger Ebert, and those people had also agreed.
Overall, the film might not get glowing praise, but securing a composite score above 6, a passing grade, was absolutely no problem.
Simon also did not worry about this kind of influence leaking out. Put bluntly, it was public relations, and Hollywood had done it before. Besides, even though Simon was still a relatively new player in town, he understood that this kind of thing could never be abused.
So before Sleeping with the Enemy, Daenerys Entertainment's other releases had not done this kind of work.
Once in a while, as long as it was not too frequent, the major newspapers and critics were happy to give Hollywood's big players some face.
Even if it ever got exposed, since it did not involve direct cash transactions and had no truly shameful secrets, just a shared understanding formed over coffee and phone calls, it would not cause a major storm.
America had many newspapers, but only a few truly mattered. Smaller outlets were easily influenced by the direction of the big ones.
Once The Los Angeles Times and The New York Times were handled, Sleeping with the Enemy's critical floor was secured.
In the midst of busy details, another week flew by.
June 8 to June 14.
Arnold Schwarzenegger's Total Recall dropped 41% for the full week and still earned $21.32 million, holding first place on the weekly box office chart. After two weeks, its cumulative total stood at $57.40 million.
But compared to Ghost, whose reception and momentum kept rising against the trend, Total Recall's advantage had become razor-thin.
In its second week, Ghost posted a 4% full-week increase, earning $20.55 million, leaving it less than $1 million behind the weekly champion, Total Recall. In only two weeks, Ghost's cumulative total had already reached $40.31 million.
Because of Ghost's surprise performance, Daenerys Entertainment moved quickly and increased the film's screen count for its third week to 1,866 screens. Compared to its opening on 1,521 screens, that was an increase of more than 300 screens at once. The film's third-week box office was expected to hold steady as well.
As for the other two new releases.
Harrison Ford's Presumed Innocent ranked third with an opening week of $11.71 million, unfortunately missing a $10,000 per-theater average.
In fourth was Back to the Future Part III, which took another $10.84 million in its third week, reaching $52.72 million total.
Disney's re-release of The Jungle Book ranked fifth, earning $7.70 million in its first week.
Outside the top five, Fire Birds, which opened the same week as Back to the Future Part III, had already collapsed by its third week. It earned only $1.78 million for the week. After three weeks, its cumulative total was just $12.01 million. After next week, most of its screens would be pulled. Its final domestic total would likely stall around $15 million, meaning Paramount could not even recover marketing costs from North American box office alone.
June 15 brought a new week and two new wide releases: Fox and Daenerys Entertainment's Sleeping with the Enemy, and Disney's comic adaptation Dick Tracy, starring Warren Beatty and Madonna.