mchenry-crisis.org Chapter 70 Orion
Chapter 70 Orion
Chapter 70 Orion
"Acquiring Orion?"
Ernst had just finished his painting practice that morning and was preparing to tip the model a fortune when he received a call from Robert Iger, who said that Harrison from 20th Century Fox wanted to meet with the two of them to discuss the Titanic project.
Ernst took this project very seriously. After hanging up the phone and quickly finishing up, he drove to the MGM headquarters.
As soon as Ernst stepped into Robert Iger's office, the latter dropped a bombshell: he was going to acquire Orion Pictures. This sudden decision left Ernst stunned.
Ernst knew a bit about Orion Pictures. It was originally founded in 1978 by three senior executives from United Artists who disagreed with the parent company.
In 1986, Viacom International strategically acquired a 15% stake in Orion Pictures and began broadcasting Orion Pictures films on its own pay-TV channel, Showtime.
This move had a profound impact on Hollywood. Viacom International's strategic entry undoubtedly injected a strong boost into Orion's development. It was also from Orion that independent production companies were established one after another in Hollywood.
In ten years, the number of well-known independent film companies has increased by hundreds.
In the same year, John Kruger, a friend of founder Krim, purchased a 6.5% stake in Orion through his company, Metro Media.
No one expected that this seemingly insignificant share acquisition would become the fuse for the battle for control of Orion.
After a year and a half of competition, Urban Media Company finally acquired 67% of Orion's shares, gaining control of the company.
However, this victory did not bring prosperity. Instead, the founders left, the top management fell apart, and Orion finally declared bankruptcy in December 1991.
In the following years, Orion negotiated acquisitions with New Line Cinema, Republic Pictures, and Savoy Pictures, but all deals fell through because they could not agree on the price.
Today, Orion has long lost its former glory and is in a state of semi-death. Each year, it can only survive on some films produced in the past but not yet released, and some film and television copyrights.
Ernst simply couldn't understand why Robert Iger would be interested in such a company.
He picked up his coffee cup, took a sip of the slightly bitter coffee, and asked with a slight frown, "What's the reason?"
Robert Iger was clearly well-prepared and had been planning this for quite some time. He took out a document and placed it in front of Ernst.
"First of all, there's Orion's film library. Orion Pictures owns classic works such as 'The Silence of the Lambs' and 'Terminator,' and its film library has accumulated more than 200 films."
"By acquiring Orion, MGM not only directly obtains the copyrights of these IPs, but also the potential development value of those unreleased or unapproved projects. Moreover, it can monetize them through traditional channels such as DVDs and television broadcasts, providing a foundation for subsequent reboots or derivative developments."
Ernst flipped through the documents, images of these classic films flashing through his mind.
It must be admitted that Orion during its heyday was a company that every Hollywood giant envied. Its productions or distributions, such as "Amadeus," "Platoon," "Dances with Wolves," and "The Silence of the Lambs," all won the Academy Award for Best Picture. In its most glorious year, it received 15 Oscar nominations, putting all other Hollywood production companies under its thumb.
"The second point is the art film market. Orion has always been known as an independent art film company, and its team is good at discovering niche themes and new directors. After the acquisition by MGM, this advantage can be continued by retaining this part of the creative team, making Orion a subsidiary of MGM specifically for Oscar contention."
Upon hearing this, a flicker of interest crossed Ernst's eyes. This inevitably reminded him of Miramax Films' development path, a company whose achievements in the art-house film genre were undeniable.
For many Hollywood actresses.
They've already made the money.
But the desire for fame only grew stronger.
To put it bluntly, he wanted to establish himself and prove to everyone that he could gain a foothold in Hollywood not because of those unfounded rumors, but because of his solid acting skills.
The Oscars are undoubtedly the best proof. If Orion can become MGM's weapon in their quest for the Oscars, then its value is indeed not to be underestimated.
"Thirdly, and most importantly, I need to get around Warner," Robert Iger's tone suddenly turned serious.
Ernst frowned. "How does this get involved with Warner?"
Robert Iger gave him a knowing look and retorted, "Do you know who releases MGM's home videos?"
"Isn't it Blockbuster?" Ernst blurted out.
This North American home video giant claimed that 70% of Americans could find a Blockbuster rental store within a ten-minute drive, and at its peak, a Blockbuster opened every 17 hours.
"That's North America, I'm talking about overseas."
Ernst shook his head; he really hadn't paid attention to these things "related to Warner?"
"That's right," Robert Iger said, taking two more contracts from the filing cabinet and handing them to Ernst.
"In 1990, after the Italian consortium acquired MGM, in order to quickly recoup its investment, it reached an agreement with Warner Video, granting Warner Video the exclusive right to distribute MGM and United Artists films on home videotape overseas."
"At the beginning of the year, the two sides negotiated again. Warner Pictures' Studios wanted to be responsible for distributing MGM and United Artists films on laser discs, but the two sides have not reached an agreement due to price issues."
"Damn Italians!" Ernst cursed after reading the contract.
He simply couldn't understand how such an exclusive distribution agreement could be so short-sighted. Anyone with a modicum of business sense knows that maintaining some degree of choice in a partnership and choosing to cooperate with the highest bidder is the wise move.
"So Orion can solve this problem?"
This made Ernst very suspicious; how could Orion have achieved something that even MGM didn't?
Robert Iger nodded affirmatively. "Starting in 1982, Orion began to build its own copyright distribution channels and successfully established Orion Home Video in 1984."
"While this company's distribution channels cannot compare to Warner Video, it has offices in many parts of the world and has accumulated a certain network of contacts and resources."
"We can use Orion's channels as a foundation to invest heavily in developing MGM's overseas film and television rights distribution channels. In my opinion, this is crucial for MGM's long-term development."
Ernst nodded; it was a sure-fire deal.
The overseas distribution of films has always been firmly controlled by the Big Seven, and video rights are also a long-term business.
"Moreover, Orion also has a television production company and its own pay-TV channel, which are great additions to MGM."
"The most crucial factor is the price. Urban Media's valuation of Orion is $5.37 million. We only want its core assets: its film library, film and television production department, home video distribution channels, and television stations. The price of $2.5 million should be enough to entice Urban Media."
In addition to these assets, Orion also houses its own office buildings, North American distribution channels, filming facilities, editing and filming equipment, props, and more.
The filming studio, editing and filming equipment, as well as props and costumes, are all very valuable.
Especially in North America, the distribution channels aren't that big, they're enough to make independent film companies envious.
What MGM took away wouldn't be a major blow to Orion; in fact, it lightened their burden.
Because the remaining assets are a complete production company, as long as someone acquires it, they can pick it up, recruit some talent, and start making movies without any large investment.
"Once you've made up your mind, just do it."
Robert Iger is the manager of MGM; Ernst is just the chairman.
Generally speaking, Robert Iger wouldn't need to inform Ernst about such matters. However, MGM is a bit special. Ernst now holds considerable power and can influence the management. Robert Iger is also willing to consult with Ernst before acting.
Upon seeing Sarah push open the door and enter, Ernst stood up. "Let's go, let's go and meet this powerful woman from Fox."