Chapter 402: Strategy (10/10)

After acquiring Jon Feltheimer's shares, Link's stake in Lionsgate increased to 55.5%, giving him control of the company. To fully consolidate his power, he made an offer to the second-largest shareholder, John Malone.

Malone countered with a price of $280 million.

Link refused, offering to buy Malone's 32.2% stake at the price from half a month ago when Lionsgate's market value was $630 million, which amounted to about $200 million.

John Malone declined.

Unfazed, Link announced a board meeting and declared his intention to acquire Palm Beach Pictures for $150 million.

This decision immediately faced opposition from John Malone. Although Palm Beach Pictures had produced a successful film last year and had two more ready for release, its market value was estimated to be no more than $50 million.

However, Link's offer was based on a detailed assessment by a Wall Street consulting firm and approved by an arbitration committee, making it a reasonable price. Additionally, as Lionsgate's major shareholder and chairman of the board, Link held more than half of the voting rights.

In essence, Link had the final say in Lionsgate's affairs. The board now consisted of only him and John Malone, with a combined shareholding of 87.7%. The remaining 12.3% was held by Lionsgate's management and ordinary shareholders, none of whom held more than 5% and lacked the right to attend board meetings and vote.

"Mr. Baker, I think we need to talk," John Malone addressed the young man across the long table in Lionsgate's conference room.

Both he and Link were dressed in black suits. Link, with his meticulously styled hair and formal attire, exuded the aura of a billionaire, commanding attention.

"Alright," Link smiled faintly, looking at the 69-year-old man who still appeared energetic.

Lionsgate's CEO, Steven Beeks, stood up and left the conference room. Other executives, including Vice President and Chief Strategy Officer Michael Burns, Chief Operating Officer Brian Goldsmith, General Counsel Wayne Levin, Chief Financial Officer James Barge, and International Operations Officer Andrew Kramer, followed suit.

Only the two men and their assistants remained in the room.

"Mr. Baker, I can sell you the rest of my shares, but $200 million is out of the question," John Malone said in a deep voice.

"Mr. Malone, I believe $200 million is a very reasonable price," Link replied, spreading his hands with a smile. "If you don't believe me, wait until the media reports Lionsgate's decision to acquire Palm Beach Pictures for $150 million. Lionsgate's stock price and market value will plummet. Our shares will lose more than half their value, and then you won't be able to sell them for $200 million."

John Malone furrowed his gray eyebrows, displeased.

Not long ago, he had been entrusted by his old friend Harvey Weinstein to intervene in the casting of "The Hunger Games." For a major shareholder like him, it was a simple matter, requiring just a word.

However, the subsequent events had exceeded his expectations. No one had anticipated that Jennifer Lawrence's rumored boyfriend, Link, would go to such lengths over this minor issue, borrowing $200 million and selling his popular stocks to acquire Lionsgate.

This extreme reaction had caught him off guard. To teach Link a lesson, he had also purchased Lionsgate shares, becoming the largest shareholder.

He had planned to join forces with Jon Feltheimer on the board to suppress Link, but unexpectedly, Feltheimer had turned around and made a deal with Link, exchanging all his shares for 3.2% of Twitter's stock.

Upon receiving this news, he was disappointed but understood Feltheimer's choice. Twitter's stock was performing well and was a hot commodity in the investment world, more valuable than Lionsgate's fluctuating shares.

If he were in Feltheimer's shoes, he would have made the same choice. It was just that Link hadn't offered him a deal at the time.

Now, with only two members left on the board and Link holding more than half of the voting rights, Link had complete control. If he insisted on making foolish decisions that could ruin Lionsgate, Malone's shares would become worthless.

John Malone looked at the young, ambitious man across from him. Link was only 22 years old and already worth over $2 billion. Malone had been in investment banking for over 40 years and was only worth a little over $1 billion.

Compared to Link, Malone had to admit that he was indeed old, and this was the era of the young.

"Mr. Baker, $250 million, and I'll sell you all my shares. From then on, Lionsgate will be yours alone," John Malone said.

"Mr. Malone, have you considered not selling your shares and staying with Lionsgate?" Link asked. "I've looked into your background. You have a lot of influence in the media industry and have experience in company management and film investment. If we join forces, we can definitely make Lionsgate bigger and stronger, a major studio rivaling the Big Six. By then, the value of our shares will increase dozens of times. Mr. Malone, I suggest you think about it carefully."

John Malone frowned and looked at Link, trying to find a hint of a joke on his face, but there was none. Link's expression was serious, as if he were stating a fact, not a dream.

But the more serious Link seemed, the more Malone wanted to get rid of his Lionsgate shares. Everyone knew Link was a boxer, singer, and actor, with no experience in company management. He had made his fortune in the past two years by luck and guts, betting on a few stocks. He knew nothing about company management, and his companies were all run by professional managers. He didn't know much about film investment either. How could such a person make a company bigger and stronger? It was simply wishful thinking.

Getting off this sinking ship early was definitely a wise choice.

"Mr. Baker, I'm willing to sell you all my shares for $200 million, but I want your remaining Twitter shares and $84 million in cash," John Malone said.

He was also an investor in the media industry, holding shares in several media companies. With an additional 2% of Twitter's shares, his media empire would gain a crucial piece.

"Mr. Malone, that's a good offer, but given the current market conditions, Twitter's market value is growing by $1 billion every month and is expected to exceed $10 billion by the end of the year. Lionsgate's market value has already declined, even lower than the initial $630 million. Trading in this way is obviously unfair. My offer is 2% of Twitter shares and $25 million in cash."

"Impossible! Twitter's current market value is $5.8 billion, and 2% is worth $116 million. We can't calculate based on the year-end market value. No one knows how much Twitter will be worth by then. Although Twitter's stock is rising, there's still a risk of it falling," John Malone said in a deep voice.

Link frowned when he heard Malone's refusal. After acquiring the initial 26.8% of Lionsgate shares, he was already burdened with over $200 million in debt. Continuing to borrow would mean tens of millions of dollars in interest payments each year, which was quite a burden.

"Shares plus $30 million in cash. That's my bottom line."

---

While the two were bargaining in the conference room, several Lionsgate executives were frowning in the next room.

In recent years, Lionsgate had acquired Trimark Holdings and Artisan Entertainment to expand its distribution capabilities. In 2006, it spent over $60 million to acquire Trimark and Debmar-Mercury to enhance its TV production capabilities. In 2009, it acquired TV Guide Network for $220 million. Last year, it acquired MGM's distribution company for $50 million.

The cost of continuous acquisitions was a severe financial deficit. The company's market value was $630 million, but it had a deficit of $180 million. Now, the company had undergone a board shakeup, with the inexperienced Link as the new leader.

It was foreseeable that the company would face even more serious crises in the future. With numerous film companies going bankrupt in Hollywood each year, management talent was saturated. If Lionsgate went bankrupt, it would be difficult for them to find better jobs in the industry.

Steven Beeks sighed. He never imagined that a mere movie role could lead to the company's acquisition and board restructuring. These rich people were truly capricious.

He also remembered the words of President Mandy Gomez: If a company's operations had to follow the orders of outsiders, it wasn't far from bankruptcy. This was precisely the situation Lionsgate was facing now.

He regretted not resisting the board's pressure and helping Weinstein, which had led to the company's acquisition. If the management was poor, the company would go bankrupt, and he would lose his job. He should have stood his ground and not replaced the actress.

Knock, knock, knock!

Someone knocked on the door of the small conference room. A middle-aged woman with a round face stood at the door.

"Is President Beeks in?" the woman asked.

Beeks's eye twitched when he saw her. The last time she had scolded him to his face, he had been depressed for days. Now that she was here again, it couldn't be good news.

But the current situation didn't allow him to avoid her.

Beeks took a deep breath and forced a stiff smile. "President Gomez, we meet again."

---

"Mr. Baker, I have a question. I wonder if you can enlighten me," John Malone asked at the coffee table.

"Please go ahead."

"What's your purpose in acquiring Lionsgate? The rumors say it's to help your rumored girlfriend get back a role that belonged to her. Is that true?" John Malone inquired.

Link smiled. "Yes, I promised Jennifer Lawrence that I would help her get that role. I keep my word, no matter the cost."

John Malone furrowed his gray eyebrows, asking in disbelief, "Spending hundreds of millions of dollars for an actress?"

"I think it's worth it. I'm a boxer, and the thing I love most is defeating opponents and winning matches. For me, helping my woman get back a role is a competition. To win this competition, I will mobilize all resources within my capabilities to defeat my opponent. As for how much money I lose, it's just a few appearance fees for boxing matches. I don't care. All I care about is winning or losing," Link said nonchalantly.

John Malone looked at him, astonished by the intense fighting spirit emanating from him. This was a man who would do anything for victory. Perhaps that was why he had become an undefeated boxing champion and a top singer.

"I heard you're going up against Harvey Weinstein. Will you also use every means to defeat him?"

"Harvey?" Link sneered, feigning disdain. "He's worthy of being my opponent? No, he's just a trivial stumbling block on my path to success. I can easily step over him."

John Malone was taken aback, chuckling dryly. He suddenly realized he couldn't understand this young man. Harvey Weinstein was currently the most powerful person in Hollywood, known as the Oscar maker and a gold medal producer, a big shot everyone in the film industry admired.

But in Link's eyes, Harvey was just a trivial stumbling block. This young man was too arrogant. He would eventually pay for his pride and arrogance.

John Malone wasn't Link's elder or friend and had no obligation to advise him. He shook his head, signed the letter of intent, said goodbye, and left Lionsgate with his assistant.

---

"Link, how did your talk with John Malone go?" Mandy Gomez asked as Link walked out of the conference room.

"Very well. Lionsgate is mine now," Link said, shaking the document in his hand.

After several rounds of bargaining, he had finally acquired John Malone's Lionsgate shares for 2% of Twitter's shares and $72 million in cash. Currently, he personally held 87.7% of Lionsgate's shares. Including the 4.7% held by several executives, only 7.6% of the shares remained in outside hands.

Seeing that all the executives were present, Link announced the continuation of the company meeting, with Mandy Gomez attending as a guest.

In the meeting, he listened to the work reports of Lionsgate's executives. Currently, Lionsgate had three films in release: "The Expendables," "Step Up 2: The Streets," and "Poor Miss," with average box office results.

There were six film projects in production, including "The Hunger Games," "The Cabin in the Woods," and "Insidious," all with production budgets under $15 million except for "The Hunger Games."

There was also one TV series in production, the fifth season of "Mad Men."

In addition to distributing its own films, Lionsgate also participated in the distribution of films from other companies like Relativity Media and Summit Entertainment, with four films currently in theaters.

Lionsgate currently had a debt of $180 million, leaving less than $30 million for film investment.

The company's valuable assets consisted of three main parts:

1. Through acquisitions of other production and distribution companies, Lionsgate owned the rights to 12,000 films and TV episodes. These generated a stable cash flow of about $80 million annually through royalties and other income, but due to the debt, this part was currently mortgaged to the bank.

2. Trimark Holdings, Artisan Entertainment, and MGM's distribution companies and channels, with a market value of about $150 million.

3. The Debmar television production department and TV Guide shares, with a market value of about $220 million.

These three parts were Lionsgate's main assets. If they were sold separately and the loans were repaid, the remaining amount would be less than $400 million.

This was much lower than Link had expected, but it was also within his expectations. If Lionsgate had been in good financial shape, the major shareholders wouldn't have agreed to sell their shares.

In the meeting, Link told the executives that there would be no changes in Lionsgate's management for the time being. Everyone would continue to perform their duties and try not to let the company's changes affect the production of film and television projects.

The executives were relieved to hear this.

The second item on Link's agenda was to delist Lionsgate from the New York Stock Exchange. He would continue to buy the remaining shares. The executives also held Lionsgate shares, and if they were willing to sell, he would buy them at the market value of $630 million. If they were optimistic about Lionsgate's development and wanted to continue holding the shares, they were welcome to do so.

The executives didn't react much to this. Link now held 87.7% of Lionsgate's shares, and the remaining portion wasn't much. Whether or not to sell their shares required careful consideration.

"Everyone, any other questions?" Link asked the eight core executives.

"Mr. Baker, regarding the acquisition of Palm Beach Pictures, if we want to fully acquire it, the company may not be able to afford it in its current state. We would need to mortgage more assets," CEO Steven Beeks said.

"Then let's wait and see. We'll talk about it when we have more money," Link replied.

In reality, the acquisition of Palm Beach Pictures was just a tactic to pressure John Malone into handing over his Lionsgate shares. Now that he had the shares, the acquisition of Palm Beach Pictures could be put on hold.

He planned to let Palm Beach Pictures operate independently, focusing on producing low-budget female-themed films, which could be distributed by Lionsgate, a win-win situation for both companies.

"Everyone, if there are no further questions, please return to your respective posts and do your jobs well. The real test for us is yet to come," Link said.

"Yes, Mr. Baker!" CEO Steven Beeks, Vice President Michael Burns, and the others stood up and replied in unison.

Link waved his hand, signaling the end of the meeting.

(End of Chapter)