In the second half of 2004, the entire Hollywood scene was captivated by the acquisition battle for the veteran film studio MGM Film Company, with news of Sony and Time Warner vying for controlling stakes in MGM continuously making headlines.
In Beverly Hills, at the headquarters of Endeavor Talent Agency (ETA), Charles Capet specifically came to discuss Capet Pictures' commissioned plan to acquire the Canadian independent distributor Atlantis Pictures.
Atlantis Pictures was just a small Canadian independent distributor, not highly valued, as its business was concentrated solely in Canada.
Entrusting ETA to assist with the acquisition presented no major issues!
In Evelyn Capet's office, after discussing business, Charles naturally chatted with his mother for a while.
"Charles, Atlantis Pictures won't exceed 10 million US dollars in price, but it does have its own distribution personnel in several major Canadian cities. Its copyright library, however, doesn't hold much significant value!"
Charles, sitting on the sofa, played with a Rubik's Cube in his hand and smiled, "Acquiring Atlantis Pictures is also for operating a film studio in Canada in the future."
"More and more of the company's films now need to be shot overseas. The UK and Australia are a bit far, and Canada's tax rebates are also good, plus it's closer. I plan to build a film studio in Toronto that includes at least ten sound stages and an outdoor set of no less than 50 acres!"
Evelyn nodded. Operating a film studio complex could not only be used in-house but also leased, which was very convenient.
"Charles, Sony, in conjunction with Doncaster, Pacific Ocean Insurance Fund, DLJ Capital, and other companies and Wall Street investment institutions, has bid 12 US dollars per share for MGM and is willing to assume all of MGM's debts."
"Time Warner has already withdrawn; their highest bid was 10 US dollars per share!"
Charles stopped his movements, "Is it an all-cash acquisition?"
Evelyn nodded, "Sony and Doncaster each contributed 300 million US dollars, other investment institutions jointly contributed 1.1 billion US dollars, and JPMorgan Chase provided the remaining 1.2 billion US dollars in loan guarantees."
"A total of 2.9 billion US dollars in cash, plus MGM's existing debt of 1.9 billion US dollars, makes it a 4.8 billion US dollar acquisition!"
Charles held the Rubik's Cube in his hand, a slight smile on his face, and said, "That casino magnate, he's made another good deal. This is his third time selling MGM Film Company, isn't it!"
Las Vegas casino tycoon Kirk Kerkorian was buying and selling MGM for the third time. Was MGM a film company or a casino resort group?
After all, Kirk Kerkorian's casino hotel group was also called MGM!
"Kirk Kerkorian currently owns over 70% of MGM Film Company's shares. Ten years ago, when he acquired MGM for the third time, it only cost him over 1.3 billion US dollars, right!" Evelyn also greatly admired him. MGM in his hands was like the toy Rubik's Cube in Charles's hand.
"Sony, in conjunction with other capital, formed MGM Holdings to take control of MGM, also for their battle over the next-generation high-definition blu-ray dvd format standard. Getting the operating rights to MGM for 300 million US dollars, this deal is truly not a loss at all!" Charles put down the Rubik's Cube, which he had completely solved.
MGM's film library was powerful and most valuable. Sony could directly release high-definition blu-ray dvds, winning the format war against the HD-DVD format led by Toshiba in terms of content.
DVDs were indeed the most profitable segment of the film industry at the time, not to be overlooked. Sony was only interested in MGM's vast film library! And the distribution contracts for subsequent James Bond films.
"Sony's chairman will soon be replaced. The successor is the head of Sony Entertainment, the British-American Howard Stringer. The current president, Nobuyuki Idei, will soon step down from his position!" Evelyn explained.
"Howard Stringer, he has always been responsible for Sony America Entertainment, right? The merger of Sony Music and Bertelsmann (B) was his doing," just recently, the two major record labels, Sony Music and Bertelsmann (B), merged to form Sony BMG Music Entertainment, with each company holding 50% of the shares!
"Uniting with Wall Street to control MGM was also the result of his lobbying. Otherwise, Sony would not have appointed a non-Japanese person as the president of Sony Group," Evelyn further explained, adding that Howard Stringer had worked at Sony for many years, and his management of the entertainment business had been very successful.
Charles nodded. The Japanese side was still very exclusive. If Howard Stringer could become Sony's chairman, he would be the first foreign president.
"MGM originally held an AA seat, but with Sony's controlling stake, there are only six of the seven AA seats left. What a pity!" Charles expressed regret over this matter.
Evelyn smiled, "MGM was the last independent distributor among the Big Seven, and now it's gone."
"Charles, the only independent film distributors of significant scale now are DreamWorks and Lionsgate Films!"
"Unfortunately, after DreamWorks lost DreamWorks Animation, its debt ratio has become terrifying. Without Jeffrey Katzenberg's management, will it rely on the semi-retired David Griffin or the avaricious director Steven Spielberg?" Charles shook his head, somewhat sarcastically.
"Spielberg and Griffin seeking to sell DreamWorks to Universal Pictures is no longer a secret!"
Evelyn nodded, "DreamWorks and Universal Pictures have always had many collaborations, and selling to Universal Pictures is indeed a very good choice!"
Charles shook his head, "But Universal Pictures' parent company is General Electric now. Jeff Immelt has a typical Wall Street financier's mindset. GE Capital is now General Electric's main revenue module. With such a high debt ratio for DreamWorks, how much return does it generate annually?"
"The General Electric Board of Directors will not offer too high a price; what they want is not to operate the film and television industry well!"
"Alright, I'm heading back to the company too. These large-scale acquisitions are still quite far off for me right now."
As Charles spoke, he prepared to leave. Evelyn walked over and hugged her son, then straightened his tie with a smile, "Start with small companies first; Atlantis Pictures is a good beginning."
Afterward, Evelyn saw Charles and his two assistants off at the company gate.
After watching Charles and his two assistants get into the G-class business car, Evelyn returned to her office.
"ETA will help us complete the acquisition of Atlantis Pictures within a month. The time will mainly be spent on calculating the value of the film works in Atlantis Pictures' Canadian copyright library!" Donna Williams held the commissioned acquisition agreement in her hands.
Charles nodded. CAA had also done a good job when it helped Sony acquire Columbia Pictures and Panasonic acquire Universal Pictures back then.
Charles also believed that ETA would not waste much time on such a small acquisition.