The TV was on, and Viacom's sudden press conference at its New York headquarters was over.
Elizabeth switched several channels in a row before finding a picture on CNN of Tom Freston, the co-president of Viacom, pushing aside the frantically questioning reporters and hurriedly fleeing the press conference.
Even so, through the subsequent introduction of the CNN anchor, Eric quickly figured out the ins and outs of the matter
Just now, Tom Freston announced that in order to further optimize the company's asset structure and avoid operating risks, Viacom plans to divest the Blockbuster chain stores whose operations cannot keep up with the company's overall development pace from the group business. Formation of a separate operating holding company. After the split, the shares of the Blockbuster chain will be listed and traded separately, and will no longer overlap with the Viacom Group.
Elizabeth sat sideways on the bed and listened to the debate between the two CNN anchors on this topic with interest for a while, before she said to Eric beside her, "Now what do you do?"
Theoretically, Viacom has spun off Blockbuster, and the blockade of Blockbuster by the Firefly system seems to have no impact on the entire Viacom group.
But in fact, this is obviously only wishful thinking of some people.
Eric grabbed Elizabeth's waist and said, "It's a smart decision to cut the tail to survive. However, Viacom seems to have made a mistake. They are not lizards being prey, and fireflies are not chasing from behind. A snake. So, it has nothing to do with the survival instincts of nature."
Elizabeth leaned on Eric along with his strength, fiddled with the remote control in her hand, and said: "But it works, Viacom Group is completely a public company, except for the Redstone family, basically There is no other major shareholder with a shareholding ratio of more than 5% in the world, and most of these investors will only make their own judgments based on news from the public market, and perhaps Viacom’s share price will rebound next week.”
"It's not that simple," Eric said: "Although Blockbuster is not doing well, as a large retail chain store, its biggest advantage is that it can provide a large amount of cash flow for the parent company Viacom Group. The main purpose of Shi Dong’s acquisition of Blockbuster. But it also means that in order to successfully complete the split, Viacom must first sort out the complex financial relationship between Blockbuster’s chain stores and other businesses. That's enough to keep Viacom busy for a month or two."
When Redstone first launched the acquisition of Paramount, due to lack of sufficient funds, it adopted a roundabout tactic. First, it annexed the Blockbuster chain store, and then raised a large amount of money through the cash flow support and asset mortgage of the Blockbuster chain store. sum of money, and finally completed the acquisition of Paramount.
Now, in order to split Blockbuster, Viacom must return the cash it has withdrawn from Blockbuster over the years to sort out the accounts, which is relatively easy to handle. After all, even after the split, whether it is Viacom or Blockbuster, the shareholders are basically the same, not to mention the control of Viacom has always been in the hands of Redstone.
However, once the split is completed, Viacom will definitely not be able to enjoy the convenience of the cash flow of the Blockbuster chain in the future.
But another problem is more difficult.
That's the Blockbuster chain's debt problem.
In order to acquire Paramount, Redstone mortgaged the assets of the Blockbuster chain store. Viacom has been expanding rapidly over the years, and there is simply not enough funds to pay off the debt left over from the beginning.
According to the financial data of Viacom Group that Eric read some time ago, the current debt scale of the Blockbuster chain store still reaches 2.6 billion US dollars. Compared with the market value of the Blockbuster chain store of more than 8 billion US dollars a few years ago, this Money is certainly not an exaggeration. Even now, $2.6 billion in debt is nothing if diluted across the entire Viacom group.
But if it is to be split, Blockbuster has now fallen to a valuation of less than US$3 billion, and the debt of US$2.6 billion almost makes the company's debt ratio reach 100%.
So the problem arises.
How to solve the $2.6 billion in debt.
Leave it all to Blockbuster, and Viacom Group will definitely agree in every way, but the debtor will definitely blow up the sky. With Blockbuster's current operating conditions, who knows if this chain store has the ability to repay the loan? If the management is not good and the company goes bankrupt, who should pay back the money
But if it is all undertaken by Viacom Group, neither Redstone nor other shareholders will be happy.
The final result can only be apportionment, but how to apportion is bound to cause a stalemate.
Eric and Elizabeth were discussing this matter when the mobile phone on the bedside table rang.
Seeing that it was Katzenberg calling, Eric answered it casually.
After a brief conversation, Eric hung up the phone.
Elizabeth, leaning over Eric's chest to eavesdrop, waited for him to hang up the phone, and immediately said, "Carl Icahn?"
Eric nodded and said: "The other party wants to invite me to dinner at noon, and go together?"
Elizabeth nodded, and said again: "He wants to do something to Viacom?"
"Obviously."
Among the famous corporate snipers on Wall Street, Carl Icahn is undoubtedly much more famous than Ron Perelman.
Ron Perelman's hostile takeover targets are often only companies with a market value of less than US$1 billion such as Revlon and Marvel, but Carl Icahn's hunting targets are often world-class corporate giants such as TWA and Motorola. The difference between them is clear at a glance.
After the new century, the trend of corporate mergers gradually cooled, and a group of famous Wall Street corporate snipers gradually fell silent, including Ron Perelman. But Carl Icahn has been very active. Eric vaguely remembers that Carl Icahn also launched the acquisition of Lionsgate Films later.
…
Not long after Viacom released the news of the split of Blockbuster, without Eric’s instructions, Yahoo Portal quickly posted a headline article, analyzing a series of thorny problems that Viacom would face in splitting Blockbuster. He pointed out that Viacom did this only to divert the attention of investors, and the split plan cannot be implemented in the short term.
The media, which is not a big deal to watch the excitement, also followed up and joined the heated discussion, generally holding a pessimistic attitude towards Viacom's split.
Those who are familiar with the situation are even more aware that the target of the Firefly system is the entire Viacom Group, and it is impossible to give up because of Redstone's tail-docking.
In addition, the creditors of the Blockbuster chain also issued a statement soon, saying that they would pay close attention to Viacom's split plan. Some vigilant creditors even issued a blunt warning, asking Viacom to fully consider the interests of creditors and not to make unwise decisions.
New York.
Viacom headquarters at Rockefeller Center in Manhattan.
It's already afternoon on the East Coast.
Although today is Saturday, a large number of employees at Viacom headquarters are still busy.
Since last Monday, in the face of the sudden attack of the Firefly system, the entire Viacom Group has been in a restless atmosphere.
Although it is impossible to see the detailed ins and outs of the whole incident, most employees in the media industry can guess why Viacom is facing this dilemma.
Think about Eric Williams' tough stance in the last Internet gossip incident, and the subsequent silence of the entire Internet media circle, the complete shutdown of the "Hollywood Gossip" website, and the forced resignation of important partners of Sequoia Capital, etc. As a series of events unfolded, concerns about the company's future were on the minds of most Viacom employees.
Although we know that Viacom Group will definitely not collapse like the 'Hollywood Gossip' website, but looking at the current chaotic situation within the group, some people are even thinking about changing jobs. After all, if Eric Williams refuses to let it go, even if the Viacom Group cannot be brought down, the company will definitely be hurt.
In fact, the Blockbuster chain is now in a shambles.
As the season of videotape and DVD sales approached the summer vacation, the industry’s No. 1 home entertainment video chain store suddenly lost the content support of more than half of Hollywood’s major film companies. Last year’s series of popular movies that should have been released in the near future, such as "The day after tomorrow", "Charlie's Angels 3", "Midnight Ring", "Mission: Impossible 3", "Teddy Bear", etc., will not appear on the shelves of Blockbuster chain stores.
It is conceivable that Blockbuster's operating conditions in the next few months will definitely be very bleak.
Moreover, although the Blockbuster chain store, the largest retail chain channel, is abandoned, the Firefly system will not actually lose much.
After all, whether it is a movie gallery, Hollywood Video and other similar video tape and DVD retail companies, or a large supermarket chain such as Wal-Mart, they can provide sufficient terminal sales channels for the films of the Firefly system, and movie fans basically will not be affected by Blockbuster. Out of stock troubles.
Even customers who are used to renting and selling videotapes and DVDs at Blockbuster can easily buy the movies they want by going to other stores. On the contrary, the loss of this part of loyal customers will be a disaster for Blockbuster.
Inside Viacom, after his public appearance on Monday, Redstone, who has a tough personality, strictly prohibited any high-level company from trying to contact the Firefly system, a situation of confrontation to the end.
However, looking at the stock price that has been declining for a week, as well as the continuous negative feedback from various media after the morning press conference, the mood of Viacom executives gradually became more and more gloomy. Later, when they heard the news from Los Angeles that Eric Williams was meeting with Wall Street corporate sniper Carl Icahn, several core executives of Viacom could no longer sit still.
After some discussion, Tom Freston, co-president of Viacom Group, who personally presided over the press conference in the morning, still knocked on the door of Redstone's office.
Although it was the weekend, Lei Shidong also did not rest.
After getting permission, Tom Freston opened the door and entered. Seeing that Redstone was talking with the group's legal counsel, he stood by and waited patiently for a while, and then walked over after the legal counsel had left.
"Tom, sit down," Lei Shidong pointed to the sofa opposite the desk, and said, "I've heard the news."
Tom Freston didn't know if Redstone was talking about the meeting between Eric Williams and Carl Icahn, so he sat down on the sofa and said, "Summer, Williams and Carl Icahn Kan contact, it is likely to launch a hostile takeover for Viacom."
"I just discussed it with Fisher," Redstone said with the same serious expression: "If Williams and Carl Icahn really do this together, we can just file a complaint with the SEC and ask for an investigation into the malicious behavior of the Firefly Group. Manipulation of Viacom stock price violations."
"Williams won't let us get the evidence, and his dinner with Carl Icahn doesn't mean anything." Tom Freston shook his head, hesitated, and said: "Summer, we This cannot continue and the company should settle with Williams as soon as possible."
Lei Shidong immediately lowered his face: "You mean, let me, an old man, apologize to that little guy?"
"You don't know anything about the incident last time, Summer," Tom Freston said, "As long as you agree, we can handle this matter."
"I'm not going to put someone off with a poor excuse of 'not knowing', it makes me look like a hypocritical politician."
"I understand, but we still have to face the situation," Tom Freston said: "Since Carl Icahn is in contact with Williams, he must be in the game by now, as long as Carl Icahn gets the Victoria If Yacom owns more than 5% of the stock, he can initiate an extraordinary general meeting of shareholders. Summer, you have to understand that this is likely to change the company's shareholding structure, and we don't have any strong resistance measures now. Even if the SEC in the future Carl Icahn and Williams launched an investigation, and all of this may have nothing to do with us. According to Carl Icahn's character, if he gets Viacom, he will definitely dismantle your life's hard work. "
Lei Shidong finally fell silent.
After a while, he spoke again: "Do you think that little guy would be willing to reconcile with us? Look at what he did to that 'Hollywood Gossip' website, all the employees of that company were banned by him , it’s totally out of the question.”
Tom Freston clearly shared this concern, but he was quick to say: "But if we don't do anything, the situation will only continue to get worse."
Lei Shidong once again fell silent. With a strong and aggressive style, he doesn't mind confronting the Firefly system, even if both sides suffer.
But Eric's contact with Carl Icahn really made Redstone start to worry.
Redstone has always been very afraid of losing control of the Viacom Group. Therefore, although he is 76 years old this year, as long as someone intends to divide the power in his hands, even if it is his children, Redstone will not hesitate. Kick it away.
Because of these, in recent years, Lei Shidong's relationship with almost all his children has been very tense.
After hesitating for a long time, Lei Shidong said: "Then, you call Los Angeles and let Shirley contact there first."
Tom Freston said: "I think it would be more sincere if I flew there myself."
Lei Shidong frowned, but finally nodded in agreement.
…
A restaurant in Venice Beach, just sent Carl Icahn off, got into the car with Eric, and Elizabeth couldn't wait to say: "MTV and Showtime, Carl Icahn is so generous and has completely captured you mind."
During the lunch together just now, Carl Icahn proposed that as long as Eric can continue to put pressure on Viacom and hit the company's stock price, after taking control of Viacom, he can take Viacom The two major cable TV stations under Com Group were split and sold to Firefly System.
Obviously, the other party is very keen to see that Eric has been focusing on expanding the cable TV business of the entire Firefly system in recent years, and the development momentum of the entire cable TV industry is also quite rapid, which is why he proposed such an attractive condition.
The four major film companies already owned by the Firefly system had a share of more than 70% of the box office in Hollywood last year, and the profit scale was unmatched by the other three major film companies. Therefore, Eric continued to annex Paramount's mind and Not strong. As long as the four major film companies in their hands are managed well, more box office and profits are seized, and the living space of other film companies is continuously squeezed, the Firefly system is destined to become the overlord of Hollywood. Down is much stronger.
Therefore, for the Viacom Group, the cable TV assets such as MTV and Showtime happened to be the most exciting thing for Eric.
Thinking of this, Eric said with a smile on his face: "If he doesn't hand over what I want most, how can the entire Firefly system help him build momentum? There are not many idiots on Wall Street, let alone Carl Icahn."
Elizabeth leaned over and hugged Eric's arm affectionately, and said, "So, what are you going to do? You know, if we really cooperate with Carl Icahn to attack Viacom, there will definitely be lawsuits in the future?"