Buffett himself is very optimistic about the video tape rental industry. For this reason, he has also studied Blockbuster's information in detail. Since the mid-1980s, the profits generated by the video tape industry have been no less than the movie box office. Starstar is undoubtedly the 'Wal-Mart' of the video rental industry. Blockbuster's annual profit last year was no less than that of the seven major Hollywood film companies. ↖, and the video rental giant also has the huge cash flow that Buffett likes most. It is true that the video tape industry has been thriving these years, but Buffett does not think that there is a bubble in this industry. Therefore, Eric’s contempt for Blockbuster in his words made Buffett very puzzled: “Eric, don’t you like video tapes? the prospects of the industry?"
Video tapes and the upcoming dvd rental industry will be prosperous for at least ten years. Of course, it is impossible for Eric not to be optimistic about this industry. At least what he is not optimistic about is that the Blockbuster chain store will be quickly eliminated in a few years. .
"Mr. Buffett..."
Just as Eric spoke, Buffett interrupted him softly, and said softly with a smile: "Eric, you can call me Warren, I don't want our communication to be like a formal business negotiation, what do you think? "
"Well, Warren," Eric nodded with a smile: "If you have been to some Blockbuster rental chain stores, you will find that it is always very troublesome to find some video tapes, and Blockbuster's various The charges are also very unreasonable. I believe that if a better video rental business model emerges, Blockbuster will almost certainly be eliminated.”
Buffett didn't have the posture of a rich man at all, and continued to ask: "I think you must have considered a better business model you said?"
"Of course. For example, the Internet. We can build a special video tape rental website. Customers want a movie, just enter the name of the movie on the website, and they can easily find detailed rental information about the movie. We can even Establish a dedicated postal system to make it easier for customers to rent video tapes."
Buffett doesn't pay much attention to the high-tech industry, which can be seen from his investment portfolio. Berkshire Hathaway's operations are basically traditional industries, however. Because of the information superhighway plan that the Clinton administration is currently vigorously promoting, Buffett has also come into contact with a lot of relevant information: "Eric, don't you think there are too few Internet users now?"
Eric has not paid attention to the growth of North American Internet users recently, but he can easily find similar examples: "It's not too many, but users who can log on to the Internet often have considerable spending power. And When the personal computer was first produced more than ten years ago, perhaps no one realized that this expensive household appliance that seems to be of little use can now sell millions of units every year. The world has accumulated tens of millions of users with personal computers. These people’s economic strength is usually not too bad, and as Internet content becomes more and more abundant. I believe most people will choose to get involved in the Internet.”
In the process of researching Eric's personal information, Buffett also deliberately logged into the Yahoo portal and set up his own online email account. Although many people think that his personal style is very conservative, Buffett never forgets A person who learns and accepts new things. He thinks that online email is much faster than mail, but because of the current hardware and software constraints, Buffett can’t figure out where the profit prospects of these online services are. Buffett has always been a profit-seeking investor. , and strictly adhere to the principle that investment must be returned. If tens of millions of dollars have been invested but cannot be returned, he can't think of one thing and there is any need to continue doing it.
"Eric, before I came here, I saw the Yahoo portal you invested in. What I want to know is whether you built this website for investment or pure public welfare?"
"Of course it's investment," Eric felt that Buffett had obviously taken the topic awry. Today, he was going to discuss Firefly's acquisition of the TV network. However, Eric also knew very well that Buffett is a person who has a strong desire to ask questions. He can see from many of Buffett's materials that when Buffett is interested in a company, he often bombards the person in charge of the company tirelessly with questions. However, Eric didn't mean to be impatient at all. In fact, many business transactions are finalized in this kind of small talk between you and me. As for the kind of fierce business negotiations, it is often a detailed negotiation after the transaction intention is reached.
"So, for example, Yahoo Portal, when and how are you going to make it profitable?"
"In the past few years, I have never considered that Yahoo can be profitable, and it is still in the market cultivation stage," Eric replied slowly: "Warren, imagine that if Yahoo has more than 100 million users, those advertisers will How much are you willing to pay to advertise on Yahoo's website?"
100 million users!
Buffett narrowed his eyes slightly, and didn't take Eric's words as a fantasy. As Eric said just now, ten years ago, no one knew that personal computers could sell millions of units every year. If Internet users really grow by millions or even tens of millions of users every year in the future, then 100 million users is not out of reach.
Because of the advertising profits of newspaper media, Berkshire owns a number of newspapers, but the current average daily circulation of the largest "Washington Post" is only a few million copies, but even with these millions The sales of copies can bring hundreds of millions of dollars in profits to the Post Company every year. Therefore, after an Internet media with 100 million users finds a suitable means of profit, its profits will definitely exceed that of any traditional paper media.
Although Buffett is not an impulsive person, he was obviously motivated at this time, but this little impulse did not allow him to immediately join the Internet wave.
After a quick moment, Buffett took a few sips of the Coke in front of him, and gently put down the cup. Looking at Eric, he said: "Eric, this prospect is indeed very attractive. I am looking forward to seeing Yahoo appear in the future as you said. Then, let's talk about the TV network, I hear Said that you talked with Barry Diller a few days ago?"
"Yes," Eric said with a regretful expression, "but unfortunately, he didn't intend to join Firefly."
Buffett's expression remained unchanged: "So, if I agree to sell ab to you, how do you plan to arrange Tom. You know, we are good friends, and I need to consider the interests of my friends."
"If the acquisition of ab can be successfully acquired, Firefly will not make too many adjustments to the personnel of ab, and the performance of ab in the past few years is enough to prove Mr. Tom Murphy's management ability. Therefore, in the next few years, Firefly will mainly Increase ab's investment in content. We all know that the TV network is also like a sales platform, and TV programs are the "commodities" it sells. Any customer will be more willing to patronize with quality at the same price Higher Merchandise Store."
Buffett was obviously satisfied with Eric's answer. He began to ask other questions he cared about, involving Eric's various questions that may arise after the acquisition of the TV network in the future. The two of them seemed to be chatting about an insignificant thing from the beginning to the end, and they never talked about the most important thing. The question of purchase price.
After more than an hour, the two drank a large bottle of Coke before Buffett finally said: "Eric, overall, I am quite satisfied with your various plans after the acquisition of the TV network, so we now We can talk about the purchase price now."
Buffett and Tom Murphy now own most of the shares of ab TV network, which means that as long as these two people nod, Firefly Pictures will hardly encounter much support in acquiring ab.
However, Eric was not too relaxed at this time, because he had already realized something else. If Buffett just planned to sell ab to Firefly for cash, he would not have talked with himself for so long, maybe he would just be very direct Quote a selling price.
Sure enough, Buffett immediately said: "Eric, although I am more optimistic about this transaction, I do not intend to cash out all the shares of ab. Tom and I have already talked about this matter, and we will only trade in cash at most I want to sell 30% of the shares of ab in my hand, and the other 70% I hope can be used as capital to invest in Firefly Films."
Eric had already anticipated Buffett's attempt. From the bottom of his heart, he did not want to exchange in the form of cash plus shares, but now it is different from when it acquired Disney. When Firefly acquired Disney, Disney's performance was in a downturn, and Firefly, which was not too big at the time, swallowed Disney completely in a gesture of swallowing an elephant. Most investors are not very optimistic about Firefly's acquisition. In addition, Disney does not have a major shareholder like ab that almost reaches the controlling stake, and the equity is quite scattered. Therefore, Firefly Pictures can realize the cash acquisition attempt.
But in the past two years, the performance of Firefly Pictures has been too dazzling. Although this year's financial report has not been released, there is almost no suspense for the net profit of more than 1 billion US dollars.
Except for the Time Warner Group, which is bigger than Firefly, no film company in Hollywood can achieve such an annual profit. Therefore, those investment institutions all over the world have been focusing on Firefly Films. I am always looking forward to the news that Firefly Pictures will release such as going public. In this case, Firefly wants to expand to the TV network. Whether it is AB, or the less powerful NB and BS, they will definitely not give up this investment in Firefly. Great opportunity.
As for Buffett's plan to buy 70% of ab's shares in Firefly, Eric was not in a hurry to bargain, but asked: "So, Warren, I want to know, how much Firefly Films do you plan to exchange for 70% of ab's shares?" shares?"
"49%," Buffett replied quickly, obviously having considered it for a long time: "Eric, we can use the current stock price of ab to calculate, and the valuation of ab is about 10 billion US dollars. For Firefly Pictures, I give A valuation of 15 billion US dollars, and I know that you will never give up the absolute controlling stake in Firefly Pictures, so we do not require controlling stakes, you are still the largest shareholder, and I will not interfere in the management of Firefly in the future, you how do you feel?"
How, of course not.
Although Firefly's business is not as extensive as that of Time Warner, Firefly's annual profit is absolutely comparable to that of Time Warner. Although many people will definitely think that this profit margin is only temporary according to the normal development trajectory of Hollywood film companies, but AI Rick is very confident that Firefly will definitely be able to maintain a high growth rate for a long time. Even if there is no TV network, Firefly's future profits will only increase steadily. After all, movies or TV series produced by film companies are also a commodity, but Eric has the ability to produce and select 'high-quality products' that is incomparable to everyone.
"Warren, this price is too high, I definitely won't agree to it," Eric said directly without beating around the bush: "Firefly's net profit last year was close to one billion US dollars, and this year it may even surpass Time Warner, and we all You know, the market capitalization of Time Warner Group is close to 30 billion U.S. dollars, but Firefly’s valuation is only 15 billion U.S. dollars, don’t you think this is too low?”
"Eric, I admit that Firefly's performance in recent years has been very dazzling, but we all know that the return on investment in the film industry is very unstable. Although everyone recognizes your talent in film, this does not mean that It means that you will not fail in the future, just like Spielberg, Hollywood was almost dominated by Spielberg throughout the 1980s, but just entering the 1990s, Spielberg ushered in "Hawk" The failure of "Captain". Moreover, we are also very clear that the market value of a company must not be calculated based on the profits in a few years. Time Warner owns all industries such as film, television, publishing and music, which means that its The ability to resist risks is very high. Even if there is a major loss in a certain business in a certain year, it will not affect the overall revenue of Time Warner. However, relatively speaking, Firefly’s business scope is a lot of downloads, and businesses such as peripheral income basically They are all very dependent on the performance of the film.” (To be continued.)