In Hong Kong, we build a global business empire

The Hollywood Big Eight studios appear to be equal on the surface, but in reality, there is a clear hierarchy.

Universal, Paramount, and Warner Bros. are in the first tier, while MGM, due to its decline in recent years, ranks sixth, which is considered the bottom. Even after acquiring United Artists, it cannot change the fact that it is gradually declining.

All of this is thanks to Kirk Kecorian, the boss who had no interest in running the film business, which naturally led to its gradual decline.

His capital operations and de-filmization strategy turned a sick but still vibrant film studio into an arbitrage tool and hotel asset, accelerating its collapse.

Lou Wasserman is pleased with MGM's bottom-ranking performance.

A weak MGM means that the licensing prices of its film library can be driven down, that its high-quality IPs can be poached at low prices or even for free, that it has no say in various industry alliances, and that the distribution of power in Hollywood never needs to take MGM's opinion into account.

But now, things have changed.

MGM suddenly changed owners, and the new owner has more financial resources than all of Hollywood combined. This inevitably makes Lou Wasserman worry about the future of Hollywood.

Lin Haoran's entrance was like the boy who cried wolf, making everyone uneasy.

The metaphor lingered in Lou Wasserman's mind for a while, refusing to leave.

Here comes the wolf.

In Hollywood, a land that has been too peaceful for too long, the major film studios are like a group of complacent herbivores.

Universal occupies the most fertile grasslands, Warner guards the widest river valleys, and Paramount guards the most lush forests in the north.

Each group occupies its own territory. Although there are occasional minor frictions and conflicts, they generally maintain a tacit balance. The entire Hollywood is almost entirely controlled by these "squid men."

This balance has been maintained for nearly twenty years.

Over the past twenty years, there have been instances of foreign beasts attempting to break in.

But in Lou Wasserman's view, those so-called "beasts" were nothing more than a flock of sheep with tusks.

But Lin Haoran is different; he is richer than any of the conglomerates that have tried to enter the market before.

This will harm the interests of the squid people.

“Fuck, Kirk Kocorian sold the company without even consulting us. No, I need to talk to the others about how to deal with this young man from Hong Kong!” Lou Wasserman muttered to himself.

In Lou Wasserman's view, Hollywood is Hollywood for squid, and no one else should be allowed in easily, especially a Chinese tycoon whose wealth far exceeds theirs.

Otherwise, the power structure of Hollywood will be completely rewritten, and the balance will be completely broken.

Previously, almost all of Hollywood's eight major studios were controlled by the "squid man," such as Universal Pictures, Paramount Pictures, Warner Bros., 20th Century Fox, Walt Disney, Orion Pictures, and even MGM Studios, all owned by Kirk Koccorian!
Columbia Pictures was the only exception.

Founded in 1919, this long-established film studio is one of the oldest companies in Hollywood and a product of the same era as MGM.

However, it changed hands several times during the wave of mergers and acquisitions over the past few decades, and was finally acquired by Coca-Cola last year for $750 million, becoming a subsidiary of the world's largest beverage company.

This marks the first time a major Hollywood studio has fallen into the hands of a non-squid-born individual.

This news caused quite a stir in the industry at the time.

Jewish communities have controlled Hollywood since the early 20th century, and for decades, the industry's lifeline has been almost entirely in their hands.

From Louis Mayer to Jack Warner, from Carl Lemler to Adolf Zukor, these founders and pioneers of Hollywood were all squid immigrants from Eastern Europe and Russia.

Hollywood, to some extent, is a cultural enclave established by Jewish people on the American continent.

This enclave is small, but its influence is astounding.

Its films, music, and television programs subtly influence the aesthetic preferences and values ​​of people all over the world.

Controlling Hollywood is tantamount to controlling the discourse power of global popular culture.

This is why the Jewish community has regarded Hollywood as its exclusive domain for decades, not allowing any outside forces to interfere.

Oil tycoons want to get in? No way.

Japanese conglomerates want to get involved? No way.

European capital wants to come in? No way.

They guarded this enclave with an almost instinctive vigilance.

Columbia Pictures and the others tolerated it, after all, Coca-Cola is a global consumer giant with a total market value far exceeding any of the eight major Hollywood studios, and even several times larger than the combined value of the eight studios. It also has many powerful American conglomerates behind it, which they cannot afford to offend and do not want to offend.

The power behind Coca-Cola is too great.

Chase Manhattan, Citibank, Morgan Trust...

Any one of these true masters of Wall Street is more powerful than Hollywood's biggest studios.

When Coca-Cola decided to acquire Columbia, although the Jewish community in Hollywood was uncomfortable, no one publicly opposed it.

It's not that I don't want to, it's that I don't dare.

They can wield immense power in Hollywood and keep oil tycoons and Japanese conglomerates out, but when faced with a competitor of Coca-Cola's caliber, and with the behemoth of Wall Street backing them, they choose silence.

This is a clear self-awareness, knowing where your boundaries are, who you can offend, and who you can't afford to offend.

Coca-Cola is one of those companies they can't afford to offend.

But what about Lin Haoran?
Although he was wealthier than Coca-Cola, he did not have a strong background, nor was he American; he was just a Far Eastern Chinese businessman, an outsider with no roots in Hollywood.

Do they still need to tolerate people like this?
Of course we can't tolerate it!
Even though he knew that the other party had a good relationship with Citibank and was even an executive director of Citibank, this acquisition was not a joint acquisition with Citibank, but a unilateral acquisition of MGM by Lin Haoran, with the funds coming entirely from his own pocket and having no connection whatsoever with Citibank.

Lou Wasserman had already confirmed this when he summoned the legal department to conduct due diligence.

The two companies that acquired MGM were connected through a newly registered private holding company in the United States by Lin Haoran. The funds were transferred entirely from Hong Kong, and were only temporarily held in Citibank's account because Citibank was the guarantor.

what does this mean?
This means that Lin Haoran is not representing Citibank to plant its flag in Hollywood, nor is he representing any American financial group to expand its influence.

He is who he is, Lin Haoran, a Chinese businessman from Hong Kong, an outsider with no roots in Hollywood.

Since he is an outsider, the Jewish community in Hollywood doesn't need to be polite to him.

Coca-Cola is truly a force to be reckoned with, but do you think Lin Haoran and his group are someone they can't afford to offend?

With that in mind, Lou Wasserman ignored Lin Haoran's press conference on television and instead picked up the phone to call the bosses of five companies: Paramount Pictures, Warner Bros., 20th Century Fox, Walt Disney, and Orion Pictures.

Including him, there are a total of six Hollywood moguls in charge, and they all have one thing in common: they are all squid!

At that moment, just as Lou Wasserman had imagined, the owners of the other five companies were watching the press conference and shared the same concerns as him.

The Hollywood pie is only so big. If MGM rises again, what would that mean?
This means that a piece of their interests will be taken away.

They were especially worried about people like Lin Haoran who were extremely wealthy.

Although no one is optimistic that Lin Haoran can bring MGM back to its peak, he will definitely invest heavily in its development in the early stages, especially since Lin Haoran also wants to privatize MGM Studios, which shows that he has great ambitions in Hollywood!
This means Hollywood's peaceful days are coming to an end.

As members of the capital market, these squid people naturally understand very well that the most direct way to compete is to burn money!

That's right, it's all about burning money.

This is the most ruthless, direct, and effective means of competition in the business world.

If you have money, you can hire the best director;

You have money; you can sign the hottest stars. You have money; you can buy the best scripts.

If you have money, you can create the most dazzling special effects.

When two projects are evenly matched in terms of creativity, talent, and production quality, the winner is determined by who is more willing to spend money on promotion.

Hollywood summer blockbusters often spend tens of millions of dollars on marketing, sometimes even more than half of their production costs.

Not every film studio can afford to burn through that kind of money.

If Lin Haoran decides to spend money on MGM, how far can he go?
And what about the other major companies? They either have to keep up, or they can only watch helplessly as their competitors devour more of the market.

So, should they follow or not?

Following means burning through profits that could have been earned.

Not following suit means losing market share, declining revenue, and shareholders still not making money, resulting in a drop in market value.

This is an unsolvable deadlock; the only difference is whether you die quickly or slowly.

They knew that Lin Haoran would definitely suffer greater losses in this process, and might even end up losing everything, ultimately losing faith in Hollywood.

But who knows how many years the other party can endure?
If it's only for a year or two, that's fine, but what if the other party persists for three to five years or even longer?
Therefore, they must prepare for the worst.

Lou Wasserman hadn't thought this intensely in a long time.

The last time was in the late 1970s when Universal faced a crisis, with the rise of television networks rapidly eroding movie theater audiences, and everyone in Hollywood thought the film industry was doomed.

At that time, he and his team locked themselves in a conference room for three whole days, sleeping only three or four hours a day and drinking dozens of pots of coffee. In the end, they came up with Universal's transformation plan: make blockbusters, make blockbusters, and only make blockbusters.

That was the most important strategic turning point in global history.

They cut all the mid-budget projects and concentrated all their resources on a few big productions.

Movies like Jaws, E.T. the Extra-Terrestrial, and Scarface were created during that period.

This strategy gave Universal a head start in the early 1980s film market recovery, establishing its position in the top tier.

Now, he needs to make similar strategic decisions again.

However, this matter was not just a matter for Universal Pictures alone, so he called on the other five companies to discuss how to deal with Lin Haoran's takeover of MGM.

The call went much more smoothly than Lou Wasserman had anticipated.

When Paramount's Barry Diller received the call, his tone was much warmer than during the previous night's conversation before the dinner.

Like Lou Wasserman, he had just carefully watched every frame of Lin Haoran's press conference and pondered every word the young man said.

Diller's conclusion is exactly the same as Wasserman's: once Lin Haoran takes over MGM Studios, he will definitely start a money-burning war!

Meanwhile, Marvin Davis, the owner of 20th Century Fox, E.C. Walker, the owner of Disney, Steve Ross, the owner of Warner Bros., Arthur Crim, the owner of Orion, and others all agreed that a brutal war of attrition was about to break out in Hollywood.

The consensus among these Jewish leaders was that a united front must be established before the war broke out.

As for Columbia Pictures, they did not make any contact. Columbia's purpose in acquiring Columbia last year was merely to provide content for its own television network and incidentally make a profit in the film industry; it was not a strategic move at all.

The people at Coca-Cola don't understand movies, nor do they intend to. They simply see Columbia as a content provider.

Such companies are insignificant in Hollywood's power games; they are neither allies nor threats.

Moreover, Colombia is already controlled by non-Jewish capital, which is not the same as these squid people.

At this critical moment, Lou Wasserman was unwilling to introduce an uncontrollable variable.

Who knows what those people at Coca-Cola are thinking?
Who knows if they might try to curry favor with Lin Haoran for short-term gains?

Rather than risk recruiting them, it's better to exclude them.

This xenophobia is an instinctive reaction within the Jewish community.

When faced with external threats, their first thought is not to expand alliances, but to consolidate their existing core.

Because they know all too well that the larger the alliance, the more internal divisions there are, the lower the decision-making efficiency, and the higher the risk of leaks.

Rather than bringing in a bunch of unreliable people to dilute consensus, it's better to keep the core members closely united.

Two hours later, the heads of the six major Hollywood studios—Universal Pictures, Paramount Pictures, 20th Century Fox, Walt Disney, Warner Bros., and Orion Pictures—gathered in a conference room at Universal Pictures!
This meeting room is located at the deepest part of the Universal Studios office area, and entry requires passing through three access control gates and two security checks.

Normally, this place is only used for the highest-level internal meetings of Global, and outsiders have never set foot here.

But today, six chairs were filled with people, six cups of coffee were steaming, and six of Hollywood's most powerful figures sat around the same table.

Lou Wasserman sat in the main seat, with Warner Bros.' Steve Ross on his left and Paramount's Barry Diller on his right.

Opposite them were Marvin Davis of 20th Century Fox, E. Catton Walker of Disney, and Arthur Crimson of Orion.

Six people, six styles, six ambitions, but at this moment their eyes are all focused in the same direction: the young man from Hong Kong.

The meeting room door was closed, and sunlight streamed through the gaps in the blinds, casting long, thin shadows on the floor.

The air conditioning system emitted a low hum, and apart from that, the room was so quiet that you could almost hear everyone breathing.

Normally, they are competitors and colleagues, and open and covert struggles are inevitable.

But now that they all feel a common threat, they put aside their prejudices and conflicts, sit down together, and discuss countermeasures.

At this moment, they are allies, teammates standing on the same front!
"Everyone, now that Lin Haoran has just acquired MGM, we still have a chance to suppress him and kill his ambitions before they even begin."

If we wait until he's established himself, consolidated resources, and built a team, it will be too late for us to make a move.

Lou Wasserman's voice echoed in the conference room, carrying a sense of urgency.

Paramount's Barry Diller chimed in, "Lou, you're right, but how exactly do we suppress them? Do we openly declare war, or do we sabotage them covertly? The consequences of the two are completely different."

Diller's question made the atmosphere in the meeting room subtle, because he was asking about something that they were all thinking about but dared not say aloud.

A public declaration of war means a complete breakdown in relations, it means Lin Haoran will treat them as enemies, and it means there will be no room for maneuver in this war.

To sabotage someone in secret means to maintain a facade of harmony while secretly employing various methods to cause trouble for Lin Haoran without leaving him any leverage.

The former carries higher risk but offers higher returns, while the latter carries lower risk but offers lower returns.

Those present have different preferences regarding the choice between rate of return and risk rate.

Most importantly, so what if they openly declare war? If they can't cause Lin Haoran any damage, and the other side has the funds, wouldn't they throw even more money at them to retaliate if they really want to overturn the table and completely break off relations?
By then, they not only failed to suppress Lin Haoran, but also put themselves in a more unfavorable position.

This is a classic case of trying to steal a chicken but losing the rice instead.

The air in the conference room seemed to freeze for a moment, and everyone fell silent.

They all felt that Lin Haoran, this young Chinese-American, was a very difficult opponent.

"So, our best approach is to secretly sabotage him and let him know that Hollywood is not a place where a Chinese person can make a living. The reason we called everyone here is to discuss how to make our moves, how to divide the work, and how to block Lin Haoran's path before he even realizes what's happening."

Now that Lin Haoran and Kirk Kocorian's equity transaction has been completed, it means we don't have much time left!
"If we allow them to take over, to burn through our money, and to steal our talent and resources, our market share will shrink significantly, which is something no one wants to see." Lou Wasserman broke the silence in the meeting room. (End of Chapter)