I am Hollywood

[Chapter 1065: Where Did All the Money Go?]

After Merissa Mayer left, Eric tidied up briefly and headed home to East 75th Street with a folder and package that his assistant had just handed him. Cindy was already home, taking a shower. Answering the door was her recently hired personal assistant, Catherine Neumann.

Considering Cindy needed someone trustworthy by her side, Eric had insisted on a thorough review of a few girls she had shown interest in. In the end, the German girl with the smart bob cut sitting in front of him matched his criteria perfectly. Catherine Neumann hailed from Frankfurt, Germany, a hub of industrial strength, and had just turned 24.

As one might expect from the stereotype of Germans, Eric noticed a meticulousness while looking through Catherine's resume. From the beginning of her education, she consistently earned A+ grades. After high school, she secured a full scholarship to Harvard and graduated with degrees in Economics, Psychology, and a Master's in Business Administration over six years.

In addition to being fluent in German and English, Catherine also spoke French and Spanish proficiently. Beyond her academic credentials, her manners and interpersonal skills were impeccable.

If there was a single shortcoming, it might have been that she came from a single-parent household. Cindy, however, dismissed it, accusing Eric of bias and pointing out that he himself had grown up in a similar situation.

To be fair, Eric had long felt that the original owner of this body had left him with several personality flaws. However, since Cindy appeared satisfied, he agreed.

Once inside, Eric handed the folder and package to the girl and asked while changing his shoes, "Put the folder in the living room. I'll look at it after my shower. Can the package be sent to my study? Have you started preparing dinner?"

Catherine accepted the items with a nod. "Yes, Mr. Williams. Is there anything special you need?"

Eric had never been particularly particular about food, so he shook his head casually and asked when Linda would be back. He then moved towards the bathroom where Cindy was showering. He knocked lightly on the door, hinting that the woman who loved her long baths shouldn't take too long. He switched to a different bathroom to take a quick rinse.

It was the hottest time of the year in New York. Although he spent most of his time in air-conditioned rooms, by the end of the day, he could still not avoid sweating quite a bit.

...

After a quick shower and a change of clothes, Eric emerged fresh and headed to the living room where he began flipping through this week's Nasdaq market analysis report he had brought back.

Three weeks after the crash, as of four o'clock this afternoon, the Nasdaq index had fallen back to 3056 points, a drop of 13.3% from last week.

Though the decline had begun to slow down, in just three weeks, the Nasdaq index had plummeted back to the level it had four months ago. Compared to the peak of 5000 points, the overall decline had reached 40%, wiping out more than $3 trillion in wealth in the entire Nasdaq market.

Focusing specifically on the Firefly Group, Yahoo's stock price continued to drop by 19.1% this week, bringing its market capitalization down to $134.9 billion. Compared to the peak of $257.9 billion, it had nearly been cut in half. It was reasonable to assume that if no action was taken, Yahoo's market cap might fall below $100 billion next week.

In the past few days, with the support of the chips in Eric's hand, Yahoo had reached an agreement with Microsoft.

After next week's high-level meeting, the entire Firefly Group planned to unveil a series of measures to boost the stock prices of its new tech companies, aiming to avoid a chain of unlimited declines for firms like Yahoo.

While reading the document, a whiff of perfume caught Eric's attention. He turned to plant a kiss on Cindy's cheek as she sat down beside him. "It's been so hot these past few days. You don't need to be running around at the set of America's Next Top Model. Our little one is what's important."

"I know, but I feel like staying at home leads to trouble," Cindy said, settling closer to Eric and glancing at the document in his hand. "How much did it drop this week?"

"13.3%. The downward trend is slowing, but the situation is still grim."

Cindy nodded, adjusting her position. "Eric, I want to discuss something with you."

Hearing her serious tone, Eric sat up straight, concern flooding his voice. "What is it?"

"Didn't you just buy that agency for that girl?"

"I just wanted her to learn a bit," Eric explained softly, then chuckled as realization dawned on him. "You want to buy one too, don't you?"

Cindy nodded, responding affirmatively. "IMG."

Eric was a bit surprised. "IMG Models or IMG Group? This company should be doing quite well. Why would they consider selling it to you?"

IMG, which stood for International Management Group, had IMG Models as one of its subsidiaries. Although IMG was more powerful than Elite, it was not a publicly traded company. Even though Eric hadn't kept a close watch, he understood that IMG thrived and that the shareholders wouldn't randomly want to sell.

"Of course, I mean the entire IMG Group. I have no desire to forcibly buy someone else's company; the major shareholder from IMG reached out to me," Cindy responded as she linked her arm with Eric's. "The McCormack family still holds 55% of the company. While Mark McCormack has been chairman, health issues have kept him from engaging with the company's affairs, and his children have no interest in taking over."

"Well, there's no real reason to sell, especially to you," Eric remarked.

"Because of this stock market crash," Cindy said. "Mark McCormack's two sons put up their IMG shares as collateral to buy tech stocks a few months ago and lost over $100 million. The situation has worsened recently, and banks started demanding repayment. I heard old McCormack had even been hospitalized due to the stress but ultimately had to agree to transfer IMG shares, or else they would face forced liquidation by the bank."

Understanding the situation now, Eric realized that countless individuals -- from billionaires to everyday middle-class workers -- had seen their fortunes evaporate due to the Nasdaq crash in recent weeks.

...

The Tiger Fund, which Eric closely monitored, had suffered major losses since Julian Robertson pivoted to shorts and began buying tech stocks when the Nasdaq crashed.

The fund's current capital stood at less than $5 billion, a nearly 80% drop from its peak two years ago.

Facing such significant losses, the Tiger Fund struggled to continue, and Julian Roberts had to start liquidating the nearly defunct hedge fund, returning the remaining capital to investors.

Additionally, Eric had recently received a handwritten letter from Diane Disney Miller, daughter of Walt Disney, requesting that the Firefly Group make a donation to the Los Angeles Disney Concert Hall to ensure the project wasn't halted due to a funding shortfall.

The Disney Concert Hall had been initiated by a $50 million donation from the Disney family, but over the years, costs had escalated, and the Los Angeles County government had even issued bonds to raise funds.

Eric learned from Katzenberg that the Disney family had initially planned to contribute an additional $25 million to the Concert Hall.

However, due to significant losses in the stock market crash, it was difficult for the Disney family to come up with that $25 million in cash, leading them to seek help from the Firefly Group, which held the Disney brand.

Despite often facing criticism regarding brand dilution, Eric had never considered weakening the Disney brand. On the contrary, he wished to diminish the prominence of the Firefly brand, but that was a challenge.

While the Disney Concert Hall was primarily a philanthropic project for the Disney family, it also benefited the Disney brand. For the Firefly Group, $25 million wasn't a huge amount, and the philanthropic donation could offset some taxes, so Eric readily agreed.

The Tiger Fund, the Disney family, and the $50 million Linda had invested in tech stocks were mere reflections of the dismal investment climate following the Nasdaq crash.

It could be said that anyone who jumped into the market during the last few months of the Nasdaq bubble ended up with losses.

After several weeks of market decline, these investors couldn't even sell their stocks at bargain prices, as there was no one willing to take them on. They watched helplessly as once-valuable tech stocks turned to worthless paper.

Of course, some might ask where all that money went with so many people losing it.

Simply put, the bulk of that wealth was captured by the public companies during their IPO processes.

Some might notice that many new stocks experience over 100% gains after listing, suggesting that public companies made more than investors. However, that's incorrect. The profits from stocks post-IPO are spread among many investors; hence no individual investor can gain more than what the public company receives.

Then the game of passing the parcel began. If stock prices kept climbing, everyone who passed the 'parcel' early stood to profit until the last unlucky player came along.

In the current Nasdaq market, there were many with unfortunate outcomes, along with a small group of investors who had managed to avoid the crash and were secretly relieved.

As for the Clover Fund, it was an entirely different story. No stock fund had ever made a move like Eric did, investing hundreds of millions several years in advance.

Lastly, it's worth mentioning that due to recent reckless spending by new tech firms, the substantial funds they gained from IPOs were now being quickly depleted. It was safe to say that aside from the chaotic mess they left for the information industry, there weren't many winners left in this tech bubble.

...

At this moment in the living room, even though Eric understood that the McCormack family was primarily targeting him, he still asked Cindy, "So what price are they asking?"

"$750 million," Cindy knew Eric had figured everything out and didn't bother to hide anything. "IMG has been consistently earning over $100 million in net profit in recent years. On a normal valuation, IMG would sell for at least $1.5 billion. So, the offer from the McCormack family is quite reasonable. I discussed with Linda; she has $100 million, and I have $200 million here. The remaining portion will have to come from you."

$750 million for controlling a top-tier talent agency in the world was certainly tempting for Eric.

Having learned from previous investment lessons with UTA, Eric conducted a detailed legal risk assessment before investing in WM, arriving at a conclusion that the plan was viable.

The law requiring the separation of talent agencies from production companies applied only within Hollywood's film-making realm. This legislation stemmed primarily from lobbying by the two major actor unions in Hollywood.

However, outside of Hollywood, no such powerful group existed in the music or fashion industries, and the federal government wouldn't risk angering capitalists by actively implementing related regulations.

Thus, in the music industry, singers were typically signed artists of record labels.

In terms of the modeling industry, there were even fewer restrictions, as many models were simply employees on fixed salaries under agencies, similar to the early days of Hollywood.

Given that IMG Group was an international talent agency encompassing agent representation, program production, and film distribution, the only distinction was that IMG represented supermodels, sports stars, and pop singers instead of actors.

Cindy was attentively watching Eric's expression, patiently waiting, before softly stating, "Eric, what are you thinking?"

Eric nodded in agreement but added, "$750 million is quite a sum; I'll need to see some information about IMG Group first."

"I have it ready," she said, observing Eric's looser demeanor. She quickly got up and retrieved a thick file from a shelf in the living room. "Here, Linda and I already reviewed it."

Eric ran his fingers over the file, chuckling, "You really got this from IMG? Don't you worry about them trying to deceive you?"

"Not at all," Cindy said, glancing toward the kitchen, unable to spot her short-haired assistant. "We collected the information ourselves, so it shouldn't be a problem."

"Alright, I'll take a look in the next couple of days and let the legal department evaluate it. If everything checks out, you can touch base with the McCormack family next week."

*****

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