Chapter Five Hundred and Ninety First It Shouldn't Be Mine

In Omaha, the capital of Nebraska, in a typical middle-class residence with gray dust on Farnham Street in the city center, Warren Buffett hung up a call from New York and stood in the studio window on the second floor, eyebrows Looking out the window with a hint of irritability.

Today is Saturday, and although he didn't go to work at Hathaway, Warren Buffett is still working.

On the side of the road outside the window, a conspicuous Cadillac stopped, a decently dressed family of four got out of the car, pointed at Buffett's house, and excitedly took pictures of 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 America who was still alive and took pictures in front of his house. of legends.

Today, however, Buffett, who sees this situation, is not at all complacent. Thinking of what happened in the last few days, Buffett's brows furrowed again.

In January, when Firefly Pictures suddenly and uncharacteristically released its annual financial report, Buffett anticipated Firefly Pictures' intentions.

According to their own circumstances, the time for annual financial statistics varies each year, some at the end of the year, some after the tax season, and some in the autumn after the peak season. Usually after the spring program is completed, the financial information will be counted as a complete fiscal year, but in order to fight back, it deliberately announced its own performance information in 1993 in advance.

However, although the media of the camp has tried their best to exaggerate how rare it is to have a market share of up to 23%, and repeatedly emphasized the uncertainty of the profit of film companies, Firefly's huge profit of 1.19 billion US dollars is full of luck, but ordinary people even include Most shareholders have only seen the 'superficial' fact that Firefly's annual profit is more than double. In order to attract attention, many media have followed this trend and touted the status of Firefly Pictures more and more.

Since Firefly Pictures revealed the news that it would enter the TV industry, Buffett has not stopped researching Firefly Pictures. He found that Eric made his fortune with "Home Alone" in the first few years. They all rely on some slanted comedy films or horror films to make huge profits from the box office market in a short period of time. Although these films that have created box office miracles all prove that the young man has excellent vision in filmmaking, but these are small and big. It's simply impossible for a low-budget movie to be a consistent success, especially as other studios ramp up their efforts in the genre. If Firefly Pictures does not succumb to the big studios, its competitive advantage will become smaller and smaller. Perhaps like many independent film production companies that are fleeting like shooting stars, this miraculous film production company may also quickly fall. go down.

But things didn't go down that trajectory.

Since three years ago,

Firefly Pictures has abandoned this small and broad production idea. And relying on Pixar animation studio and special effects companies in the digital field, it has opened up two very stable profit routes for 3D animation films and special effects films. It has laid the foundation of Firefly Pictures in Hollywood time and time again, and finally prompted Firefly Pictures to annex Disney, an old film company, and become one of the seven major Hollywood film companies.

Buffett highly advocates a theory called 'bridge toll booths'. Simply put, if you have a 'bridge channel' from B to B, then you can use this 'bridge' to obtain stable and lucrative profits. Buffett's investment decisions in The Washington Post, Coca-Cola, and television networks have all been influenced in part by this 'bridge toll booth' theory.

In the process of researching Firefly's information, Buffett found that Firefly's Pixar animation studio and digital special effects company have this bridge toll booth effect. Eric Williams invested tens of millions of dollars in Toy Story and Terminator 2 before they were released. This is largely impossible at major Hollywood studios, where most investment decisions are constrained by boards and shareholders.

The huge investment of Eric Williams years ahead of other companies has also created two unique 'toll bridges' for Firefly Pictures. In the past three years, Firefly Pictures has been enjoying this kind of uniqueness. Huge dividends brought by this monopoly 'toll bridge'.

Judging from the pursuit of CG special effects films and 3D animation in North America and even the global market, as long as Firefly Pictures can maintain its technological advantages in the digital field and Pixar Animation Studios, in the next many years, the toll bridge effect of these two subsidiaries in Firefly's hands will not fail.

On the other hand, although the TV network made a high profit of 520 million US dollars last year, the TV network is still in crisis. Even ten years ago, the U.S. television industry was firmly dominated by the three major television networks, CBS, and CBS. At that time, the three major television networks were not in ideal business conditions. Can easily get 30% market share. But since the rapid rise of national cable channels in the 1980s, the days of the three major TV networks have been getting worse. In the late 1980s, Murdoch from Australia founded the Fox Public Television Network and successfully established itself 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 TV network has become less and less. Therefore, after Firefly Pictures threw an olive branch, Buffett quickly became interested in the business.

However, Firefly Pictures is far more difficult than he imagined.

Buffett has never considered himself a very greedy person, so he was in the first meeting. He gave a M&A offer that he thought was very kind, but the young man refused without thinking, and the proposed cash acquisition made Buffett realize that Eric didn't care how much Firefly spent on the amount, he just Wanted to pay as little as possible for Firefly's shares, and the formal negotiations that followed proved it.

Ever since he felt that the bridge toll booth effect of the TV network is failing, Buffett has already had the idea of ​​selling Berkshire Hathaway's shares to cash out. Before Firefly Pictures proposed the acquisition, he successively sold some shares. . But in the face of Firefly Pictures' persistence in the negotiation, Buffett, who also has a stubborn side in his personality, did not make much concessions, and the private contact ended in failure.

But Buffett is a very rational person, since he is optimistic about this business. Buffett will not give up easily, and he also knows that Firefly will never change its acquisition target so easily. After Firefly Pictures publicly released the acquisition information, Buffett also took advantage of the situation to promote the acquisition negotiations between the managements of the two sides.

Then, especially the last week. Buffett found that the matter was starting to spiral out of control.

The last time there was such a sense of loss of control 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 during the Solomon Brothers investigation, many blamed Solomon's decline on him.

While thinking about what to do with the recent events, Buffett saw a black car drive into the house, 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. Waved to Buffett.

Coming to Buffett's studio, Charlie Munger hugged Buffett and said, "The recent situation looks a little bad, and I think I should come over in person."

Buffett smiled lightly and instructed Estri Monks, who was actually his cohabiting girlfriend, to prepare some Coke for the two of them, and then handed 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 is not as concerned about the progress of the acquisition as Buffett.

Until four days ago, there was a sudden news in the media that the acquisition talks between Firefly and Firefly were breaking down, and then the Los Angeles Times also confirmed that the negotiating parties had suspended contact. Charlie Munger had to pay attention.

In the next few working days, because of this bad news, the stock price, which had already risen to a high of $52, quickly fell back. It fell by 9.6% in just three days, and the stock price returned to the level at the beginning of the year. At the same time, The other three major public television networks, CBS and their shares have all risen more than 5% on a string of rumors that haven't even been confirmed.

After quickly browsing the information in hand, Charlie Munger raised his head and said: "From the current situation, if we do not agree with this transaction. May other shareholders initiate an extraordinary general meeting for voting?"

Buffett found a letter from his desk and handed it to Charlie Munger, with a heavy tone: "It's not possible, this is a text message from David West, president of State Street Global Fund, and they have already planned to do this. already."

Charlie Munger took out the letter and glanced at it. Some scolded angrily: "These idiots, don't they know which side they should stand on?"

Buffett didn't mind his friend's gaffe, sighed slightly, and said: "If there is only one public television network in the United States, of course they will stand firmly with us. But unfortunately, Firefly Pictures is not the only one. Choice. If it wasn't for the operating conditions of the other two, perhaps they had let go at this time. This is the reason why people like David West are so urgent. Everyone can see that the business of the public television network is growing. shrinking, so they are reluctant to give up this opportunity to cash in at a high level, not to mention that they can also obtain a part of the firefly film industry, and the company that can achieve an annual profit of 10 US dollars will not exceed 50 in the entire federation.”

Charlie Munger felt a little loneliness in Buffett's tone, and said with a smile, "But we're not bad at all, aren't we?"

The disappointment caused by the miraculous rise of the latecomers only stayed in Buffett's mind for a few seconds. Hearing Charlie Munger's words, Buffett quickly regained 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?"

"There was originally one," Buffett skillfully pulled out a piece of paper from the piles of information on his desk and handed it to Charlie Munger.

Charlie Munger glanced down and found that it was a movie release schedule cut from a newspaper, with asterisks behind several of the movies.

"Saving Private Ryan," "The Lion King," "True Lies," Charlie Munger looked up at the names of these films and asked, "These three films are the flagship films of Firefly Pictures' summer program. Problem?"

Buffett headed: "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-scenario action movie, and the cost is very high. One hundred million U.S. dollars."

Charlie Munger is not very good at movies, he knows Buffett is the same, but Buffett has done a lot more work than him during this time, so he can only nod his head and listen patiently .

Buffett paused briefly. After giving his friend time to think, he continued: "I called Robert Daly of Warners to inquire about this, Hollywood has not produced a war movie as big as "Saving Private Ryan" for many years, because it failed The risk is very high, and Firefly's distribution strategy for "The Lion King" is also quite different from the traditional distribution method. This kind of 2D hand-painted animation will generally be screened for a long time at the end of the year. Although there are no competitors of the same type in the summer season, this kind of The very competitive schedule will greatly shorten the show time of 2D animation. The last is "True Lies". Last summer, there were two action films of the same type that ended in failure. One of the protagonists was "True Lies". ” actor Schwarzenegger. Hollywood is very cautious about this kind of big-budget action movie project right now.”

Charlie Munger remembered the information he had just seen, and said, "You mean, Firefly Films completely gave up this year the CG special effects movies and 3D animations that they were better at in previous years, and this year it is very likely that they will be featured in these three films this year. Upside down?"

Buffett headed: "So, I think, if we can drag the negotiation to the summer season, as long as Firefly Pictures' summer movies fail, it will break the miracle of Firefly Pictures' film investment in all directions. We can take the initiative back again. ."

Charlie Munger nodded in agreement, but he quickly spread his hands and said: "However, the current situation is. Fireflies will never give so much time, right?"

Buffett showed a faint wry smile and said: "Yes, and. Judging from the recent signs of Firefly Pictures' frequent shots, I feel that if the deal is not completed this month, they may really have to let go."

"You started selling stocks early last year, and I'm sure you'd really like to get this deal done, right?"

Facing friends who have been with each other for many years. Buffett didn't hide it, 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. He nodded and said, "The focus of the dispute is on the share of equity swaps. I think he may only sell 25% of the shares at most." After saying this, Buffett was a little annoyed: "If If guys like David West can hold on a little longer, the 30% trade plan I proposed this Monday might be able to work, with a maximum concession of two percentage points."

"Otherwise," Charlie Munger knocked on the table and suggested: "You can contact Tom, how about the three of us go to Los Angeles, and maybe we can join in the fun of Oscar."

Buffett shook his head slightly and said, "I don't think this will make any concessions for the young man, and now he has the advantage."

"I think we three old guys came 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, Tom Murphy, and others have been rising in the federal business world for decades, and they have countless tangible and intangible resources in their hands. Doing the exchange can definitely be exchanged for real benefits.

"But these benefits will not fall on us in vain. If we harvest them early, we will still have to pay in the future. I don't think Eric Williams will give us any advantage."

Charlie Munger saw Buffett say so, but he agreed in his tone, picked up the phone on Buffett's desk to prepare for a private jet, and said, "I'm getting more and more interested in that young man, heh, And the cliff villa he built in Malibu. The last time I chatted with John Bonn, he said that the world may never find such a perfect location to build a private manor villa. If Eric . Williams is willing to sell, he is willing to pay $ 200 million to buy the pointy manor."

Although he has no special pursuit of material life, Buffett did not hide his true views, nodding: "That villa is really good, although the actual value is definitely not as much as 200 million US dollars, but Eric Williams is sure He's not going to sell it for $200 million, he's not short of money at all."

Charlie Munger dialed the phone, said a few words, then put down the microphone and said, "Haha, I almost forgot about this, your title of richest man was taken away by him just a year ago, isn't it a little bit? Lost?"

In fact, Buffett really enjoys the feeling of being in the limelight. Of course, he is a little disappointed, but he still commented professionally: "It shouldn't have been mine. Last year, he hid the data. I can still see that." to be continued.)