[Chapter 449: Acquiring MGM?]
By the fall season, Guess Pictures had two movies released: The Ice Storm and Chasing Amy.
The Ice Storm premiered in 3 theaters for a limited release during its first week, earning $75,000 with per-theater earnings of $25,000, showing average performance.
In its second week, it was shown in 483 theaters and brought in $3.78 million. The third week expanded to 591 theaters, earning $4.66 million. The box office growth was rather slow.
With a production budget of $15 million, the current box office figures indicated that even if the film turned a profit, it wouldn't make much money.
Chasing Amy was a film project recommended last year by Ben Affleck, directed by Kevin Smith, starring Joey Lauren Adams, Ben Affleck, and Jason Lee. It was a romantic drama about a comic book artist named Holden who fell in love with a female lesbian, causing conflict with his friends.
The film had a budget of only $250,000 and premiered in 3 theaters for its first week, taking in $52,400, which was quite decent.
Theater count increased to 671 in the second week, and for two consecutive weeks it earned $8.24 million. The box office return was 30 times the budget, becoming a major sleeper hit of the fall season.
---
"Link, phone! Huh -- why did you fall asleep here? I told you not to stay out late messing around with Monica, Sandra and the others, but you prefer to fool around with them anyway," said Lily as she entered the nursery holding the phone.
She noticed Link had dozed off beside the crib with some newspapers scattered on the floor, and she couldn't help but smile.
Link sat up stretching and said, "I'm not sleepy, just watching the little ones sleep. Somehow I felt drowsy and nodded off here for a bit. Whose call is it?"
"I didn't answer it. Here, take a look," Lily said, handing over the phone. She quietly approached the crib, looking down at the sleeping babies with a gentle smile on her plump face.
Link checked the phone; the call was from Greg Davis, the Chief Investment Officer at Vanguard Capital Management.
Since Pixar Animation Studios went public, Greg rarely bothered him with calls.
Link wondered what it was about this time. He kissed Lily on the cheek, then stepped outside to return the call and asked what was going on.
...
Greg started by praising Guess Pictures' performance over the summer, leading the industry with excellent results. Then he shifted to MGM Studios, which had the worst box office returns for the summer.
Before September, MGM released 8 films. The best performer, Hoodlum, grossed just $23.49 million in North America against a production cost of $38 million.
Second was an action film Turbulence that debuted in January, earning only $11.53 million domestically, yet had a production budget of $55 million.
MGM's movies continuously flopped this year, pushing the company's financial deficit to $3.8 billion.
Because of money shortages and frequent movie losses, MGM had to cut back on production, reducing its annual output from nearly 20 films down to about 10.
Given the current situation, MGM was just one step away from bankruptcy.
"Link, I remember you mentioning a couple of years ago that you were considering acquiring MGM. I think now is the perfect time to buy. Would you consider it?" Greg asked.
"Acquire MGM? Their situation isn't hopeless yet. If luck favors them with a blockbuster, they might turn things around. It'd be difficult to buy in now. Better to wait until MGM officially declares bankruptcy so the price will be lower," Link replied.
"Many are eyeing MGM, waiting for bankruptcy, but if we move early to make the purchase, the chances of success increase," Greg said.
Link sensed a subtext in Greg's tone and smiled, "It's okay. MGM isn't essential to Guess Pictures' empire. Whether we acquire them or not won't impact us much. So regarding MGM's acquisition, we'll keep an observational stance. If the price is right, we'll take it; if not, then let it go. No need to force it."
Greg paused briefly then changed his approach, "Link, I know Kirk Kerkorian, the major shareholder of MGM. If you want to acquire MGM, I can act as the intermediary to connect you."
Link chuckled, "Acquiring MGM would be good for Guess Pictures, but their price is too high now, and with $3.8 billion in debt, any company taking them over would face a huge burden."
"Price is negotiable. As long as you're interested, I can handle talks to guarantee a reasonable price," Greg confidently stated.
"Alright, I'll consider it," Link smiled. He knew Vanguard Capital was also a shareholder in MGM. Now with MGM in chaos, their investment might become a mess. Greg probably approached him to take over and recover their investment.
"Great! Link, what's your target purchase price for MGM? Knowing your bottom line will help me negotiate better with Kirk Kerkorian," Greg asked.
Link thought and replied, "I've heard MGM's debt is $3.8 billion, meaning the banks hold the major shares. You can tell the banks in negotiations that if they hand MGM to me, I guarantee to repay the debt and interest within 10 years."
"Uh, Link, I meant your purchase offer -- how much you're willing to pay to buy MGM, not just how to handle the debt," Greg reminded him.
"Repaying the $3.8 billion debt is my offer. I doubt anyone else in Hollywood could guarantee paying off that loan within 10 years. I think that's a sincere number," Link said calmly.
"That... Link, MGM's market value exceeds $5 billion, and including other assets, at least $5.5 billion. You only agreeing to repay $3.8 billion loans won't cut it," Greg argued.
"That's a fair price. If MGM goes bankrupt, its asset values would drastically drop; no one would want $3.8 billion or even $3 billion of that. All shareholders' stakes would become worthless. If I take over and revive MGM into a profitable company, its shares will regain value and offer those who haven't exited a chance to recover losses. Greg, I believe you don't doubt my capability," Link said matter-of-factly.
Greg was silent for a few seconds, then agreed to consider it and to call back when he had news.
After hanging up, Link smiled softly. He originally planned to wait a few years before considering acquiring MGM, but Greg had unexpectedly offered help early. If the acquisition succeeded, Guess Pictures' influence and power in the film industry would grow significantly.
...
Link returned to the nursery where it was quiet.
Lily had just teased him for dozing off while watching the babies. Now she sat by the crib watching, resting her arms on it, stifling yawns -- looking cute.
Link gently smiled and embraced her from behind.
"What are you doing? You startled me," she said, tapping his chest and glancing at the cribs. "Put me down quickly, don't wake the little ones."
"Then let's go out and have some fun," Link said holding the soft woman and heading out, calling the nannies to watch the kids.
"Don't tease me. Monica and the others will be back soon," Lily blushed and punched his chest.
"They're not back yet. Before they return, how about we have some intimate time? Don't you want that?" Link said, playfully sucking her lips.
Lily rolled her eyes but her lovely eyes sparkled, her soft cheeks flushed with shyness and passion, the scent of milk on her skin more alluring.
Link stopped talking and pulled her quickly toward the bedroom.
*****
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