[Chapter 459: The Acquisition of MGM Studios]
Ring ring~
While Link was busy with the assistant, the phone on the desk rang. Greg Davis called, saying that Kirk Kerkorian accepted the terms he proposed earlier and was willing to sell MGM Studios to Guess Pictures for 4.2 billion dollars.
"Link, what do you think?" Greg asked.
"Not bad, we can start acquisition talks," Link replied. He hung up the phone and patted the woman's backside to wake her up. Then he had Aishwarya notify the board and senior management to hold a meeting to discuss the MGM acquisition.
...
Guess Pictures had performed very well over the past several years, and the company shareholders trusted his capability. When Link proposed acquiring MGM Studios, the topic was unanimously approved by the board.
At the senior management meeting, Michael Leeson, Jon Gordon, Mark Amin, and others got very excited upon hearing the official acquisition of MGM.
...
Founded in 1924, MGM Studios was one of the veterans in Hollywood's film industry and a symbol of Hollywood itself. It had released hundreds of classic films including The Wizard of Oz, Gone with the Wind, Tom and Jerry, Singin' in the Rain, One Flew Over the Cuckoo's Nest, The Graduate, Rocky, and the James Bond series among other famous IPs.
MGM was also a conglomerate with subsidiaries including MGM Entertainment, MGM-United Artists, MGM Pictures, Modern Times Films, Metro International Theaters, Comcast TV channels, and the management rights to eight-star hotels and resorts including MGM Grand Hotel and Mandalay Bay Hotel.
Successfully acquiring MGM and its affiliates would undoubtedly be a qualitative leap for Guess Pictures, turning it from a single entertainment company into a large conglomerate involved in movies, TV, theaters, animation, real estate, dining services, and tourism.
The total market value would exceed 10 billion dollars.
But swallowing MGM, such a giant, was not easy for Guess Pictures.
Firstly, the group had been struggling financially. Around 1970, Kirk Kerkorian acquired MGM Studios and Western Airlines with debts.
To pay off debts, Kerkorian treated MGM as a cash cow, constantly draining it or mortgaging its shares for other investments.
This resulted in MGM's deteriorated performance. Although it released box office hits like One Flew Over the Cuckoo's Nest, The Graduate, Rocky, and the Bond series in the 80s, the situation did not improve.
By the 1990s, MGM was squeezed by rising competitors like Guess Pictures, Miramax, and New Line Cinema. Its box office revenues declined further.
Once ranked last among the Big Seven studios, it sometimes ranked ninth, tenth, or even beyond.
MGM's debt accumulated from tens of millions to a staggering 3.8 billion dollars.
Even though its subsidiaries had annual revenues of hundreds of millions, they could not cover bank interest.
Faced with such a huge burden, Guess Pictures would face difficulties if the debt was not handled properly; it might be dragged down by this.
Hence, Guess Pictures had to plan carefully to avoid this acquisition affecting their development.
...
"Link, MGM hotels and resorts are not our core business. I suggest we sell these assets after acquisition to raise funds and ease the debt pressure," proposed Mark Amin, COO of Guess Pictures, at the meeting.
"Can we imitate Disney by building MGM theme parks inside the hotels and resorts? Our company has many movie projects suitable for theme parks, and more may come in the future," Link asked.
"That's quite difficult. First, building a movie theme park requires a lot of capital, and after acquiring MGM, the company's funds will be tight, so we can't invest outside movies in the short term. Secondly, the eight MGM hotels and resorts are mainly in Las Vegas, focused on dining and gambling. Building theme parks there is unnecessary and unfeasible. Also, Disney and Universal have an edge in theme park construction; we lack competitive advantage," Mark Amin replied.
Link nodded, agreeing with Mark's opinion but not fully. Currently, Guess Pictures indeed lacked funds, manpower, and suitable projects for theme parks. But in the long run, things might change.
He was confident he could help MGM pay off its debts within five years after the acquisition and make it a profitable company.
Once profitable, they would no longer lack funds to invest in other projects.
Currently, Guess Pictures and MGM lacked film projects fit for theme parks, but that would change.
In the coming years, Guess Pictures planned to make several fantasy and sci-fi films, including the Pirates of the Caribbean series, Lord of the Rings series, Fast and Furious series, and they owned Harry Potter rights, also films like Final Destination, Scream, and Interstellar novel adapatations, which are suitable for thriller-sci-fi theme parks.
Moreover, Pixar Animation Studios was producing more animations like Toy Story and A Bug's Life.
So in the future, the company could have the capacity and conditions to build theme parks.
However, Mark's point about hotels and resorts in Las Vegas being unsuitable for conversion to theme parks or themed hotels was valid.
After acquiring MGM, they could sell these assets and buy land elsewhere in the world to build theme parks or hotels once funds allowed.
"Link, I also have a suggestion. After acquiring MGM, we could merge our commercial film production departments. Let MGM handle commercial film distribution, and merge the independent film divisions to be distributed by Guess Pictures. This will make management easier," Daniel DeVito proposed.
Daniel's proposal received support from most people at the scene.
One reason was that Guess Pictures sounded a bit casual compared to the Big Seven studios and lacked formality. Since 1994, there had been suggestions to rename the company to something more grand like Pacific Pictures or New World Pictures.
But Link hadn't agreed.
Now that they acquired the classic MGM name, it was perfect to rename.
Link thought it over and didn't refuse. The company name was not important to him; as long as they could make movies and earn money from films, the rest didn't matter.
Also, MGM was a globally influential brand; releasing commercial movies under MGM might achieve better results, while Guess Pictures could continue producing and distributing independent films, maintaining its reputation and influence in indie film.
"These matters can be gradually implemented after the acquisition succeeds. The current priority is to secure MGM smoothly."
"Yes, boss!" Michael Leeson and over a dozen senior executives responded in unison.
Since the acquisition was long-term, and Link needed to focus on new films, he delegated the acquisition work to Mark Amin, James Schamus, and Lily.
...
"Link, I am in PR. The acquisition doesn't relate much to our department. Why involve me in the acquisition team?" Lily asked while following him into the office after the meeting.
"Buying MGM involves many things, like public opinion. Once the acquisition becomes public, it will attract attention and discussion, possibly opposition exploiting media to attack Guess Pictures. Then the PR team needs to coordinate. Also, you're my woman. Having you on the acquisition team will encourage everyone to perform more responsibly. Lastly," Link pulled her close, stroking her soft curves. "You've done very well in PR for over four years. After acquiring MGM, I expect you to take on more responsibilities. Joining the acquisition team lets you learn a lot about MGM, which will make future transitions easier."
"Alright, basically you don't want me to be idle and want to give me more work? Are you treating me like a workhorse?" Lily pretended to be angry, pouting with her delicate finger almost poking his face.
"Of course not. I think you're very talented, and just doing PR is beneath you. I want to give you a bigger stage to shine so everyone will know you're a beautiful, capable career woman whom many admire and respect. Isn't that good?"
"No! You just want me to work like a mule. You're so mean," Lily said, punching his chest with flushed cheeks.
Link held her soft fingers. "Alright, if you don't want to be a workhorse, we'll assign it to someone else."
"No! I want to go myself. I don't trust anyone else," Lily said, her beautiful face stern.
Link smiled softly, whispering something in her ear. Her cheeks and earlobes blushed as she twisted her waist to ask him to let go so she could return to work.
Under his persuasion, she stayed half an hour longer before happily leaving.
*****
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