[Chapter 504: The Market Value of Firefly Films]
The dia in North Arica, interested in Firefly's revenue situation, began to analyze information collected through other channels after being denied access to Firefly's public annual financial reports and having their interview requests rejected by the higher-ups at Firefly.
The professional financial dia provided sowhat reliable data, whereas the non- professional entertainnt outlets didn't bother with fact-checking, often concocting sensationalized stories purely for attention.
Before long, speculation about Firefly's operations flooded various publications, with most of them making baseless exaggerations that remarkably boosted their sales. Within just a few days, articles claid that Firefly's annual profit had skyrocketed to $2.6 billion, leaving even Eric puzzled as to how the magazines had arrived at such figures.
Jeffrey pushed open the door to Eric's office and found Eric deeply sunk into his leather chair, legs propped up on a dark red desk. Eric casually flipped through a thick printed docunt when Jeffrey knocked on the doorfra.
Eric straightened up, set the docunt on the table, and gestured to Jeffrey, "Jeffrey, what's on your mind?"
Jeffrey walked over, pulled out a chair to sit across from Eric, and glanced at the docunt Eric had been reading. Curiously, he asked, "Is that a new script?"
"No," Eric chuckled, sliding the docunt toward him. "Take a look; it's from Chris." Seeing it was sothing from his son, Jeffrey took the docunt and discovered it was a draft contract for an incentive plan for the managent of IE Company. After skipping through a few pages, Jeffrey began to feel dizzy; it was over a hundred pages long and looked more like a thick book than a simple contract. The clauses were even more complicated than the agreents Hollywood stars signed with production studios.
"Chris and I discussed this during Thanksgiving. We plan to grant around 20% equity rewards to the managent of IE, Yahoo, and Hotmail based on their performance in 1995," Eric explained upon seeing Jeffrey set the docunt aside so quickly.
Given the market expansion shown by both IE and Yahoo, both of which had previously exited product lines but were now valued at over a hundred million dollars in the capital market, the 20% equity incentive was significant. Chris had negotiated with managent from all three companies for a full month before reaching an agreent. Furthermore, the contract detailed every possible scenario ticulously, which surprised even Eric when he first saw it. But upon reading it, he realized all the clauses were well-founded, showing Chris had dedicated substantial effort to this matter.
"I don't really understand all this," Jeffrey said with a smile, shaking his head. Then he added, "Carolyn has already completed the annual financial report. You should have a look." With that, he handed Eric another docunt he had brought in.
"Oh, that was quick! I thought it would take another week," Eric remarked, taking the docunt. New Year had just passed, and he hadn't expected the finance departnt to work so efficiently.
"I pushed Carolyn a few tis," Jeffrey said, watching Eric go through the docunt. "With all the commotion outside, I figured it was better to get it done sooner rather than later. Say, Eric, should we ask Carolyn to hold a press conference to reveal a bit of information? Otherwise, the dia won't let up."
Eric, perusing Firefly's 1992 financial report, responded, "They already inflated Firefly's annual profit to $2.6 billion. Anyone with any sense knows that's nonsense, so let them guess. We're not obliged to satisfy their curiosity."
Jeffrey chuckled, looking quite pleased. "Even though $2.6 billion does sound outrageous, if the North Arican and overseas film and entertainnt markets continue to expand at this rate, Firefly could reach that level in a few years."
"Of course, that's just a matter of ti," Eric agreed.
...
Currently, Firefly's primary revenue streams included film and entertainnt, rchandise, the parks, and television. Unlike a decade later when film and entertainnt profits represented only a small fraction of revenue for dia conglorates, at that ti, revenue from Hollywood's top seven studios was still the main cash cow.
In Firefly's 1992 financial report, total revenue from film and entertainnt -- covering North Arican box office, overseas box office, and video distribution -- amounted to $4.2 billion. Although overseas box office revenue led with $1.8 billion, its profit margin was the lowest; after deducting costs such as theater shares and distribution budgets, profits from overseas stood at around $250 million with a re 14% margin. In contrast, North Arican box office revenue was highly profitable, bringing in $1.5 billion, of which Firefly netted $520 million after deducting marketing and production costs. Finally, the profit margin from video distribution was the highest, yielding $580 million from $900 million in revenue after production costs, and even surpassed North Arican box office earnings.
The rchandise earnings primarily ca from the Disney rchandise stores. After acquiring Disney, Firefly delegated the developnt rights for the hit Toy Story rchandise to Disney's relevant departnts. As a result, Disney store sales reached $1.6 billion this year, yielding $330 million in profit. Earnings from the parks and resorts amounted to $3.7 billion, but with a hefty operating cost, the profit margin was only about 10%, generating $360 million.
Additionally, the financial departnt classified the television show licensing earnings from Firefly's films under the television business segnt. The total profit from shows like Friends, The X-Files, and Who Wants to Be a Millionaire, along with Firefly's 10% stake in Fox Television Network, reached $720 million.
If operating expenses were ignored entirely, the total profit from these streams would equate to $2.76 billion, which was quite close to the $2.6 billion annual profit reported in the dia.
However, even with so costs already deducted, the salaries for the thousands of employees within Firefly's system, along with other expenses, remained substantial. Firefly also needed to provide ongoing funding for the technical departnts of Digital Domain and Pixar Studio, as well as start paying off part of the $2 billion debt owed from the Disney acquisition. After all these deductions, Firefly's profit narrowed down to around $1.5 billion.
That didn't even account for the profit that actually fell into Firefly's pocket. Let's not forget that the state tax rate in North Arica was a staggering 35%. After paying taxes, Firefly's net annual profit ca down to about $980 million.
...
"980 million!" Eric exclaid upon seeing the final figure, feeling a strong urge to battle the tax issues with the IRS.
"Yes, $980 million!" Jeffrey's tone was quite exhilarated. Among the seven major studios in Hollywood, due to owning higher-profit entities like Turner Broadcasting, Warner's annual profit stood at $950 million. Warner had maintained its dominant position in Hollywood for nearly a decade, but Eric's report marked the mont Firefly would surpass Warner as Hollywood's top dog. Jeffrey could not help but inquire, "Eric, what do you plan to do next?"
Eric set the financial report down, shaking his head. "I haven't made any further plans yet -- at least not until next year."
"Why not? We already have all this cash on hand. It would be a sha not to invest it," Jeffrey countered, surprised.
"But we can't just invest for the sake of investing, and this cash might not even cover my needs," Eric replied. According to historical trends, as film investnt scales grew, profits in film and entertainnt tended to diminish; anwhile, television network profits had been steadily climbing. In a decade, they could represent more than half of all revenues for any
dia conglorate.
Thus, Firefly's next expansion plan would undoubtedly need to pivot towards television. However, even though the three major television networks in North Arica had yet to fall into the hands of any dia conglorates and their values hadn't begun skyrocketing, attempting to acquire them wouldn't co cheap. The oil crisis during the Gulf War was a rare opportunity for large profits, and Eric didn't want to heavily leverage investnt institutions. The best strategy was to accumulate funds through Firefly's own strength.
While this year's profitability had already energized the company, if next year's Jurassic Park could achieve the sa sensation and record-breaking box office as in the original tiline, then Firefly's profits would surge once more, allowing them to gather sufficient funds for
acquiring a television network.
...
While Eric was sharing his future plans with Jeffrey, Allen knocked a few tis on the office door and, after receiving permission, walked in.
"Eric, there's an interview request here for you. I think you need to see this," Allen said,
nodding at Jeffrey as he approached.
Eric was puzzled. He had told Allen to reject all dia interview requests, and since Allen had
brought this one to him, it likely wasn't a typical invitation.
"From Forbes magazine?" Eric raised an eyebrow at the interview invitation, sensing
sothing unsettling.
Allen nodded, looking quite pleased. "This is an invitation from Steve Forbes himself, the editor-in-chief of Forbes Magazine. There are so materials attached."
Eric acknowledged with a murmur but continued reading.
Since the early 1980s, Forbes had published a sensational list of Arica's billionaires. In
1985, due to the rapid rise of Walmart, Sam Walton had been atop that list as the richest
Arican.
However, unfortunately, Sam Walton had passed away last April, with his wealth of over $20 billion distributed among his wife and children. Under such circumstances, although the Walton family remained the richest in the U.S., none of its mbers could climb to the top of the North Arican wealth rankings again.
At that mont, the materials accompanying the interview request from Forbes outlined an overall valuation of Firefly Films, which ca to $10.5 billion. After accounting for Firefly's liabilities and assessing Eric's assets from the Firefly Investnt Company, Forbes estimated Eric's net worth at $9.5 billion, a figure capable of securing the top spot on the Arican billionaires' list.
In the original tiline, in 1995, Bill Gates had skyrocketed in wealth thanks to the success of
Windows 95 and topped the wealth list at over $12 billion. Yet in the current context, the North Arican economy hadn't begun its recovery, and with Sam Walton's passing, Eric's valuation of $9.5 billion was sufficient to take the number one spot.
Counting carefully, Eric held over 98% of Firefly's assets, while Jeffrey and Michael Lynn's
shares had been diluted after the acquisition of Disney. Jeffrey's share was down to 1%, and Michael's was even less, while Pixar executives like John Lasseter, Ed Catmull, and Stan Winston rely held stakes in corresponding subsidiaries. Therefore, it could be said that Eric owned nearly all of Firefly.
If Firefly had been a publicly traded company, given its performance this year, crossing Forbes' valuation of $10.5 billion wouldn't have posed much of a challenge once the annual report was released. However, Forbes seed acutely aware of the volatility of film investnts, and thus provided a relatively accurate valuation. This number, minus Firefly Films' liabilities, reflected Eric's net worth. Additionally, after Cisco's many expansion- oriented rgers and acquisitions, Firefly Investnt's shareholding has slightly decreased, but it still maintains a 36% shareholding, which at Cisco's current valuation was worth around a billion dollars, representing Firefly Investnt's most valuable enterprise. The cash reserves of a billion dollars in Firefly Investnt evidently eluded Forbes' grasp. Putting it all together, $9.5 billion seed to align closely with Eric's current wealth status.
*****
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