In Omaha, the capital of Nebraska, in a dusty typical middle-class house on Farnham Street in the center of the city, Warren Buffett hangs up a call from New York and stands at the studio window on the second floor with eyebrows drawn Looking out the window with a trace of irritability.
Today is Saturday. Although he did not go to work at Hathaway, Warren Buffett still maintained his working status.
On the side of the road outside the window, a conspicuous Cadillac stopped, and a well-dressed family of four got out of the car, pointed at Buffett's house, and then excitedly took pictures with each other.
Buffett always felt a little proud when he saw this kind of situation in the past. He also proudly told his friends in a joking tone that he might be one of the few people in the United States who was still alive and someone took pictures in front of his house of legends.
But today, seeing this situation, Buffett has no complacency. Thinking of what happened in the past few days, Buffett frowned again.
Since Firefly Pictures suddenly and uncharacteristically announced its annual financial report in January, Buffett had anticipated Firefly Pictures' intentions.
According to their own situation, the time for annual financial statistics varies from year to year, some at the end of the year, some after the tax season, and some in the autumn after the peak season. ABC usually counts financial information as a complete fiscal year after the spring program is completed, but in order to fight back, ABC deliberately announced its performance information in 1993 in advance.
However, although the media in the abc camp tried their best to exaggerate how rare it is for abc to reach a market share of up to 100%, and repeatedly emphasized the uncertainty of the profits of the film companies. Including the fact that most of the shareholders have only seen the 'superficial' fact that Firefly's annual profit is more than twice that of ABC. In order to attract attention, many media also followed this trend and touted the status of Firefly Pictures to be higher and higher. .
Since Firefly Pictures disclosed the news of entering the TV industry, Buffett has not stopped researching on Firefly Pictures. He discovered that Eric made his fortune with "Home Alone" in the first few years. All of them rely on comedy films or horror films that are somewhat slanted to make huge profits from the box office market in a short period of time. Although these films that created box office miracles have proved the young man's outstanding vision in film production, these small and big It is simply impossible for a low-budget film to be successful consistently, especially after other studios increase their investment in the same type of film. If Firefly Films does not succumb to the big studios, its competitive advantage will become smaller and smaller. Perhaps like many independent film production companies that disappear like meteors, this miracle film production company may also fall quickly. go down.
But things didn't go that way.
Since three years ago, Firefly Pictures has abandoned this kind of production idea of small and big. And relying on Pixar Animation Studios and digital field special effects companies, it has opened up two very stable profit routes for 3D animation films and special effects films. The foundation of Firefly Films in Hollywood was laid time and time again, and eventually Firefly Films annexed Disney, an established film company, and became one of the seven major film companies in Hollywood.
Buffett very much advocates a theory called 'bridge toll booth'. Simply put, if you have a 'bridge channel' from b to b, then you can use this 'bridge' to obtain stable and huge profits. Buffett's investment decisions in The Washington Post, Coca-Cola, and ABC Television Network have all been influenced in part by this 'bridge tollbooth' theory.
In the process of researching the information of Firefly Films, Buffett found that Pixar Animation Studio and Digital Domain Special Effects Company under Firefly Films have this kind of bridge tollbooth effect. Eric Williams invested tens of millions of dollars in "Toy Story" and "Terminator 2" before the release of these two companies. This is basically impossible for major Hollywood film companies where most investment decisions are heavily constrained by the board of directors and shareholders.
Eric Williams' huge investment years in advance of other companies has created the unique two "toll bridges" of Firefly Pictures. In the past three years, Firefly Pictures has been enjoying this exclusive Huge dividends from this monopoly 'toll bridge'.
Judging from the popularity of CG special effects films and 3D animation in North America and even the global market, as long as Firefly Pictures can maintain the technological advantages in the digital field and Pixar Animation Studios, in the future many years, Firefly will have a bridge effect between the two subsidiaries. Neither will fail.
On the other hand, abc, although the abc television network earned a high profit of 520 million US dollars last year, the television network is still in crisis. Even ten years ago, the American TV industry was still firmly controlled by the three major TV networks ABC, NBC, and CBS. At that time, even if the business of the three major TV networks was not ideal. Can easily get 3% market share. However, since the rapid rise of national cable TV channels in the 1980s, the days of the three major TV networks have been worsening day by day. In the late 1980s, Murdoch from Australia created the Fox public television network and successfully gained a foothold in North America. Once again shaken the market position of the three major TV networks.
In this case, Buffett realized that the 'toll bridge' effect of the abc television network has become less and less. Therefore, after Firefly Pictures offered an olive branch to abc, Buffett quickly became interested in the business.
However, Firefly Pictures is far more difficult than he imagined.
Buffett never felt that he was a very greedy person, so he met him for the first time. So he gave what he thought was a very kind merger offer, but the young man rejected it without even thinking about it, and the proposed cash acquisition plan made Buffett realize that Eric didn't really care how much Firefly spent in terms of money, he just He wanted to pay as little as possible for the shares of Firefly Pictures, and the subsequent formal negotiations also proved this point.
Ever since he felt that the bridge tollbooth effect of the abc television network was failing, Buffett had already had the idea of selling the abc shares held by Berkshire Hathaway for cash. Before Firefly Pictures proposed the acquisition, he successively sold part of the stock. However, in the face of Firefly Pictures' insistence in the negotiations, Buffett, who also has a stubborn personality, did not make much concessions, and the private contact ended in failure.
But Buffett is a very sensible person, since he is optimistic about this business. Buffett will not give up easily, and he also knows that Firefly will never change the acquisition target so easily. After Firefly Pictures publicly announced the acquisition information, Buffett also took advantage of the trend to promote the acquisition negotiations between the management of the two parties.
Then, especially the last week. Buffett found that the matter had started to spiral out of control.
The last time this sense of loss of control occurred was when Salomon Brothers suffered a crisis four years ago, and then Salomon, the king of Wall Street in the 1980s, declined in just a few years. Because Buffett took over the company amid the investigation into Salomon Brothers, many blame him for Salomon's decline.
While thinking about how to deal with recent events, Buffett saw a black car driving into the courtyard, and his investment partner, Charlie Munger, who is also the vice chairman of Berkshire Hathaway, got out of the car.
Charlie Munger looked up and saw the figure in front of the window. He waved to Buffett.
When they came to Buffett's studio, Charlie Munger hugged Buffett and said, "The recent situation looks a bit bad. I think I should come here in person."
Buffett showed a relaxed smile, and ordered Estelle Monks, who was actually his live-in girlfriend, to prepare some Coke for the two of them, and then handed over to Charlie Munger some documents that had been turned over many times on the table: " Take a look first."
Charlie Munger has his own business. Although he is also a shareholder of Berkshire Hathaway, he does not pay as much attention to the progress of the abc acquisition as Buffett.
Until four days ago, the media suddenly reported that the acquisition negotiations between Firefly and ABC were about to break down, and then the "Los Angeles Times" also confirmed that the two parties had suspended contact. Charlie Munger had to pay attention.
In the next few working days, because of the stimulus of this bad news, the stock price of abc, which had already risen to a high of $52, quickly fell back. In just three days, it fell by 9.6%, and the stock price returned to the level at the beginning of the year. At the same time , because of a series of rumors that have not even been confirmed, the stock prices of the other three major public television networks nbc, cbs and fox have all increased by more than 5%.
After quickly browsing the information in his hand, Charlie Munger raised his head and said, "From the current situation, if we disagree with this transaction, other shareholders may initiate an extraordinary general meeting of shareholders to vote?"
Buffett found a letter from his desk and handed it to Charlie Munger. He said in a heavy tone: "It's not possible. This is a text message from David West, the president of State Street Global Fund. They have already planned to do this." gone."
Charlie Munger took out the letter paper and glanced at it. Some scolded angrily: "This group of idiots, don't they know which side they should stand on?"
Buffett didn't mind his friend's gaffe, he sighed slightly, and said, "If the United States only had abc as a public television network, of course they would firmly stand by our side. Unfortunately, Firefly Pictures does not only have abc This is a choice. If it weren't for the fact that abc's operating conditions are far better than the other two, maybe they have let go at this time. This is the reason why people like David West are so urgent. Everyone can see that the public television network Their business is shrinking, so they are unwilling to give up this opportunity to cash out at a high price, let alone get a part of the shares of Firefly Films, and there will not be more than 5 companies in the entire Federation that can achieve an annual profit of 1 dollar."
Charlie Munger felt a little lonely in Buffett's tone, and said with a smile: "But we are not bad at all, aren't we?"
The disappointment caused by the miraculous rise of latecomers only stayed in Buffett's mind for a few seconds. Hearing Charlie Munger speak, Buffett quickly recovered his usual confident smile and said: "Of course, we Not bad at all."
"Okay, man," Charlie Munger reached out and patted Buffett on the shoulder: "Let's discuss what to do about this now, do you have any good ideas?"
"Originally there was one," Buffett skillfully pulled out a piece of paper from the pile of documents on his desk and handed it to Charlie Munger.
Charlie Munger glanced down, and found that it was a movie release schedule cut out from a newspaper, some of which had asterisks behind them.
""Saving Private Ryan," "The Lion King," and "True Lies,"" Charlie Munger looked at the names of these movies, looked up and asked, "These three movies are the main movies of Firefly Pictures' summer vacation. Question?"
Buffett nodded and said: "Of course. "Saving Private Ryan" is a war movie, "The Lion King" is a traditional hand-drawn animation, and "True Lies" is a very ordinary big-scene action movie, and the cost is very high. One hundred million U.S. dollars."
Charlie Munger is not very good at movies, and he knows very well that Buffett is the same, but Buffett has done much more work than him during this time, so he can only keep nodding his head and listening patiently .
Buffett paused briefly. After giving my friend time to think, I continued: "I called Warner's Robert Daly to inquire about this matter. Hollywood has not produced a war movie as big as "Saving Private Ryan" for many years. The risk is very high, and Firefly's distribution strategy for "The Lion King" is also very different from the traditional distribution method. This kind of 2D hand-painted animation is generally screened for a long time at the end of the year. Although there is no competitor of the same type in the summer file, this kind of The highly competitive schedule will greatly shorten the screening time of 2D animation. The last is "True Lies". Last summer, two action films of the same type failed at the same time, and the protagonist of one of them was "True Lies". "The actor Schwarzenegger. Now Hollywood is very cautious about this kind of big-budget action movie project."
Charlie Munger recalled the materials he had just seen, and said, "You mean, Firefly Pictures has completely given up on the CG special effects movies and 3D animations that they were better at in the past few years this year. Fell up?"
Buffett nodded: "So, I think that if we can delay the negotiation to the summer file, as long as the film of Firefly Films' summer file fails, it will break the miracle of Firefly Films' film investment. We can regain the initiative again. .”
Charlie Munger nodded in agreement, but he quickly spread his hands and said, "However, the current situation is. Firefly will never give abc so much time, will it?"
Buffett smiled wryly, and said, "Yes, moreover. Judging from the recent signs of Firefly Pictures' frequent sales, I feel that if the deal cannot be completed this month, they may really want to let go."
"You started to sell abc stock at the beginning of last year, I think you must also want to make this deal very much, right?"
Facing friends who have known each other for many years. Buffett didn't hide anything, nodded honestly, and said, "Yes."
Charlie Munger said: "Then what do you think is the upper limit of Eric Williams' asking price? I think this data should not be difficult for you to guess, right?"
Buffett is best at data analysis, nodded and said: "The focus of the controversy is on the share of equity swaps. I think he may only sell 25% of the shares at most now." After saying this, Buffett was a little annoyed: "If If guys like David West can be more patient, the 3% trade plan I proposed this Monday may be able to work, and a maximum of two percentage points will be backed down."
"Otherwise," Charlie Munger tapped on the table, and suggested: "You can contact Tom, how about the three of us going to Los Angeles, and maybe we can join in the excitement of the Oscars."
Buffett shook his head slightly, and said, "I don't think this will make that young man make any concessions. Now he has taken advantage."
"I think the three of us old guys will come forward in person. As long as the young man is smart enough, he will definitely make some concessions."
Buffett knows what his friends mean by saying this. He, Charlie Munger, and Tom Murphy have all risen in the federal business world for decades, and they have countless tangible and intangible resources in their hands. In exchange, you can definitely get real benefits.
"But these benefits will not fall on us in vain. If we harvest in advance, we will still have to pay in the future. I don't think Eric Williams will let us take advantage of it."
Charlie Munger saw that even though Buffett said that, he had already agreed in his tone, picked up the phone on Buffett's desk and prepared to ask someone to arrange a private jet, and said: "I am becoming more and more interested in that young man, huh, There is also the cliff villa he built in Malibu. Last time he chatted with John Bonn, he said that the world may never find such an excellent location for building a private manor villa. If Eric .Williams is willing to make a move, and he is willing to pay 200 million US dollars to buy the Pointe Manor."
Although he has never had any special pursuit of material life, Buffett did not hide his true opinion, nodded and said: "That villa is really good, although the actual value is definitely not as much as 200 million US dollars, but Eric Williams must Won't sell it for $200 million, he's not short of money."
Charlie Munger dialed the phone, said a few words, then put down the phone and said, "Haha, I almost forgot about it, your title of richest man was taken away by him just after a year, isn't it a bit strange?" Lost?"
Buffett actually enjoys being in the limelight very much. Of course he was a little disappointed, but he still commented professionally: "It shouldn't be mine in the first place. He concealed the data last year. I can still see this." (unfinished) to be continued.)