Chapter 665: Investigation with the help of external brain
There is no doubt that Crédit Lyonnais's series of investments in Hollywood ended in spectacular failure.
This long-established Bank of China has been the most powerful state-owned financial giant in Europe since it and two other banks were nationalized by the Government of China in the 1940s.
In the mid-1980s, he also acquired the Schlavenberg Bank of Rotterdam, which was the first European bank to develop overseas business in America at that time, becoming the bank with the largest business in America in Europe at that time.
This was a very unusual thing during the Cold War, when cross-border acquisitions and businesses were not as developed as they are today.
The business of Schrafenberg Bank in Rotterdam is actually not surprising. At that time, there were only three types of customers who needed such large-scale financial business across Europe and the United States: those selling illegal drugs, those who laundered money from American gangs, and those who made movies in Hollywood.
of.
Of course, these three types of customers are often intertwined. To put it bluntly, they provide a kind of underground finance to help big cities such as New York and Chicago. By investing in some art films that do not care about box office returns, they can once again enter America and turn into legal income.
.
The Dutchman Frans Afman has been engaged in this work of connecting with Hollywood at Schrafenberg Bank in Rotterdam and the merged Credit Lyonnais Bank.
This man is the financial backer behind many well-known directors and producers in Hollywood. He has served as a producer on many of Oliver Stone's film projects, as well as for Carolco, Castle Rock, and even Wintraw.
We provide bridge loans and direct investment as backbone investors to medium-sized studios such as Cloth Pictures.
However, Crédit Lyonnais’ biggest adventure in Hollywood has nothing to do with Frans Afman. It was the hundreds of millions of dollars in credit lines they directly provided to Italian financial swindler Giancarlo Parretti a few years ago to acquire
Cannon Pictures acquired MGM Pictures from casino tycoon Kerkorian.
The next thing everyone knows is that this financial liar Giancarlo Parretti not only appointed his 21-year-old daughter as the company's financial executive, but his main business at MGM-Cannon is to provide
Many beauties in the industry made empty promises and turned the company into a platform for him to pick up girls.
After his clumsy deception was exposed, MGM was turned into an empty shell by him, and the production and distribution business were suspended. He himself was arrested by the FBI and was about to file a lawsuit. Credit Lyonnais also had to take over
MGM-Cannon Pictures to prevent MGM from going bankrupt instantly and causing banks to have huge asset write-downs.
Credit Lyonnais, a financial company, managed a Hollywood studio like MGM Pictures. It had no talent and no projects. After two years of hard work, it suddenly felt that Ronald's DDH was a potential
If you are a good buyer, ask someone to help you and seek an opportunity for negotiation.
"They may have discovered from the joint counterattack between you and Tom Cruise that you are the right person to take over their business..."
Michelle Cannold, who was in charge of distribution, knew that MGM was the domestic distributor of the movie in which Quentin starred. These gringos, Hollywood laymen, seemed to feel from Ronald's counterattack that he would intend to buy it.
MGM.
"This bank is very rich. The recent big project in Carloco, the pirate movie 'Cutthroat Island', is a bridge loan funded by Crédit Lyonnais. They are a state-owned bank, so they invest without blinking an eye.
In the absence of good profitable projects, have you considered Ronald’s investment history and offered MGM?”
David Simkins, who is in charge of the script, most hopes that a sponsor with such a big wallet can invest with his eyes closed.
"What do you think?" Ronald asked CEO Ed Bastian when he saw that he was silent.
"I think we should be cautious about this matter. I took the initiative to approach you and offered good acquisition conditions. No matter how you look at it, this thing is too beautiful to be true." Bastian flipped through the other person and tentatively mentioned it.
In addition to all the assets of MGM and the acquired Cannon Pictures, as well as the historical film library, the acquisition invitations also include studios, factories, and land property rights in Hollywood, as well as their television production
company……
All the large-scale assets are only priced at US$1.5 billion. Compared with the nearly 9 billion Viacom acquired Paramount, and the previous asking prices for Sony and Panasonic to acquire Columbia and Universal respectively, this price is the same no matter how you look at it.
Big bargain.
As a listed company, DDH Media can acquire MGM if it uses additional issuance, share exchange, and some cash.
Moreover, the plan conveyed by Crédit Lyonnais also comes with a plan. Through some bonds and the reorganization and transfer within the banking system, they can also solve the liabilities currently held by MGM in a package, and will never let them
The buyer is trapped in a Viacom-like debt crisis.
This is what Bastian said, the asking price is too good to be true. If this is true, then why doesn't anyone from Hollywood or Wall Street bid? You must know that Columbia's highly leveraged buyout has
This triggered a bidding war between the two big guys.
"But there are also good aspects to this acquisition... There are some valuable things that will not be written on the balance sheet."
Some executives who are not responsible for money do not understand valuations and asking prices, but they are people in the industry and know some of the important assets of MGM-Cannon Group.
For example, MGM's entire film library from its inception to today. After the boom of the video tape market and the TV on-demand market, it can generate much more cash flow than before, and its current valuation is rising.
For another example, MGM is a board member of the MPAA and has great influence on CARA, the committee responsible for film ratings.
This chapter is not over, please click the next page to continue reading! Generally speaking, the directors of several companies, Disney, MGM, Universal, Sony Columbia, Warner Bros., 20th Century Fox, Paramount, and their movies
, can get better ratings under the same standards.
Movies made by independent production companies are more likely to be rated R due to foul language, nudity, violence, etc., while movies produced by these seven companies are more likely to be rated PG-13.
These are also the two ratings that have the greatest impact on box office in the American TV market. They also have scenes of violence and handsome men and beauties. The difference in box office revenue between the two ratings can be as high as 50% or even 100%.
Unless the films produced by Daydream Pictures cooperate with the seven major studios or are distributed by them, they will also be subject to strict requirements by the rating committee.
We cannot directly complain about the seven major studios, because this differential treatment is achieved in a very subtle way.
CARA, the Film Rating Committee, actually employs independent people as raters. After multiple people watch the copies of the movies submitted for review, they then independently score them in a comprehensive evaluation.
This process is very secretive. The work of the nine junior raters, part-time or full-time, is kept confidential. Their families only know that they work for the MPAA, and one person cannot work for more than five years.
Their evaluation opinions on the film are also sent to a senior evaluator through a handwritten evaluation questionnaire. These opinions are summarized by the senior evaluator and then archived in the MPAA's large warehouse.
The senior evaluator then verbally conveys it to the director and producer of the film. From beginning to end, it is impossible for the director and producer to see the first-hand opinions of the nine evaluators who have actually watched the film. They are all passed by the senior evaluator.
comprehensively conveyed.
The best thing is that these evaluators are anonymous, and the seven major studios do not know who evaluates their movies. Therefore, it is difficult to find institutional evidence that the seven major studios are receiving preferential treatment.
However, junior evaluators are only paid $30,000 a year and have no career path. Which applicants are recruited is also determined by the MPAA. Senior evaluators who earn more and have positions at other studios are also recruited.
Appointed by the President elected by the MPAA Board of Directors.
Therefore, through some roundabout effect, the seven major studios were given priority in the ratings. Evaluators who did not do this would face dismissal and not being assigned important work. After all, they want to see big productions as soon as possible.
The queue of applicants is very long, and watching those boring independent films is the evaluator's least favorite job.
The list of this board of directors has also gone through many changes. It mainly depends on who in the industry can reach a certain proportion of annual investment in the industry. If you are an important player, then after a period of time, you will be invited to join the board of directors.
For example, the founding member of RKO at that time was revoked as a member because he withdrew from mainstream production. United Artists Pictures, which was acquired by MGM, was also an important member of the board of directors and was the only company owned by
Artist-controlled film studio with board seats.
Today, United Artists still retains this seat, but their voting rights have been delegated to MGM, because United Artists' label is only occasionally used for film production and distribution, and is not very much an independent company.
Exercise voting rights. It is estimated that after some time, when the next MPAA reorganization occurs, United Arts will completely withdraw and lose all its privileges in the MPAA.
Ronald is also hesitant. These are tickets that are difficult to obtain. For example, even if they invest a large budget in making large-scale commercial films every year, they still do not have a seat on the board of directors and can only serve as a member of the newly established DreamWorks.
Ordinary members express their views at the general meeting.
Moreover, these privileges cannot be bought with money. They also depend on chance, old players are acquired, or there is a new major reorganization and the power structure is re-divided.
On the one hand, Ronald felt that the opportunity was rare, but on the other hand, he felt that Bastian's concerns were justified. If his more than ten years in Hollywood taught him anything, it is that if a deal seems to meet your needs, then this must be it.
A scam specially customized by others to fool you.
"By the way, how much did Crédit Lyonnais lose in this mess like MGM?" Ronald thought of an idea. Since I can't tell whether the other party's intentions are malicious, I can start from those quantifiable
Where to start, for example, why are they eager to sell MGM now?
"It's difficult to measure. We don't have the talent and information base like Goldman Sachs and JPMorgan Chase, so independent investigations may not be able to get accurate results." Ed Bastian is from PricewaterhouseCoopers. Even if he comes from his old employer,
It may not necessarily lead to a correct assessment...
After all, Crédit Lyonnais is a state-owned enterprise. In many cases, it actually exists as a tool for the Chinese government to project overseas influence. Sometimes its actions cannot be measured by purely commercial considerations.
"Are there any new developments in the country's politics recently?" Ronald suddenly asked.
"Yes, their mayor of Paris, Mr. Jacques Chirac, has announced that he will run for office next year." Some colleagues in Ronald's company are still familiar with the political situation in the country.
"It turned out to be Jacques. He really liked my movies and said good things about my movies back then."
Ronald laughed. It turned out to be the mayor who is a super movie fan. While he loves comedies with Chinese characteristics (such as Escape from the Tiger's Mouth), he is not repelled by Hollywood movies. He even said that he liked his own Dirty Dancing back then.
"Oh, hahaha, it's the love from politicians. Isn't it likely that he will come to power next year?" Some people began to imagine impatiently.
"Hahahaha..." Everyone said something to each other and started to flatter Ronald. It turned out to be the love from the next commander-in-chief.
"This matter is interesting. Ed and I will continue to have further discussions with the bankers on Wall Street. We will adjourn today."
After disbanding the meeting, Ronald retained Ed Bastian.
"Ronald, would you like to think about it again?" Seeing that Ronald enjoyed being his fan so much, it was hard for him to object directly.
"Why? The opportunity is fleeting..." Ronald waved his hand, saying that if this is a really good opportunity, he will regret it if he misses it. "Since we have our own talents and knowledge, we cannot complete the background check.
, then why not borrow the brains of Wall Street’s top investment banks and hire them to help complete this acquisition, and they will naturally mobilize their global resource base and talents to complete the investigation of the real situation for us.
Especially how much money Crédit Lyonnais lost on MGM..."
"Hahaha..." Ed Bastian felt reassured. The boss was still very cautious and smart.
"I will contact Mr. Paulson of Goldman Sachs. He has been selected as the new president and COO. Our DDH Media IPO is an important achievement for his rise to power. This is an opportunity for him to return the favor."
"Returning the favor? No, no, no, you are mistaken. We gave him another favor, allowing him to easily make money and have the opportunity to conduct a cross-border merger and acquisition. He owes us another favor."
"Hehehehe, the two of them laughed knowingly."
"Thank you DDH for trusting us at Goldman Sachs..."
After Paulson was promoted, his mental state became more high-spirited. Although he said thank you, the subtext revealed in his expression was that we are the best on Wall Street, and you were smart to choose us.
"Of course, I can't imagine another company coming to do M&A for us..."