readease Chapter 77 The Idea of Building a Television Network
Chapter 77 The Idea of Building a Television Network
Chapter 77 The Idea of Building a Television Network
"What brings you here today?"
Based on Robert Eitel's understanding of Ernst over this period, this MGM boss never comes to the company unless there's a specific reason.
"You mentioned before that you wanted to acquire Orion." Ernst's fingertips tapped lightly on the leather sofa armrest, making a rhythmic tapping sound. "How's it going now?"
"It can't be that fast," Robert Iger said, glancing at Ernst with a puzzled look.
While Orion isn't a giant, it's not exactly a small company either. Contacting, negotiating, and conducting financial audits—it's not something that can be completed so quickly.
Moreover, Ernst initially had doubts about acquiring Orion, so why is he suddenly so concerned about it?
"What exactly are you trying to say?"
Ernst held up one finger. "One month. Is there any way to take down Orion in one month?"
"A month?" Robert Iger thought he had misheard and exclaimed, "A month is probably not enough time for the negotiations to end, unless we make huge concessions on the price, which will cost us a huge amount of money, at least twenty million dollars."
Twenty million dollars? Ernst's fingertips rubbed lightly on his knees as his gaze drifted to the blurry, giant sign on the Hollywood Hills outside the window.
Twenty million is indeed a large sum, but after thinking about the plans I'm about to implement, I feel it's not unacceptable.
"Then it's settled." Ernst withdrew his gaze, his tone resolute. "Start negotiations as soon as possible. We must acquire Orion's core assets within a month."
Robert Iger did not refuse, but he needed an answer: "I need a reason."
Although Ernst is a major shareholder and owner of MGM, MGM is not owned by the Garfield family, and he also needs to consider the interests of other shareholders.
"The television network, MGM and Playboy's television channels have too small a reach. I need a wider distribution channel to broadcast 'Playboy Spy' and build MGM's television network."
"TV network?"
If Ernst's earlier demand to take Orion in a month was an exclamation, then at this moment, that word was like a thunderclap in his ears.
Robert Iger abruptly stood up from his chair, scattering documents all over the floor with his sudden movement, "Are you crazy? How are we supposed to guarantee the stability of our content supply and viewership?"
In the United States, television networks and television stations are two completely different concepts.
For example, you can call NBC TV station, or you can call it NBC National Television Network, but you can't call it NBC National Television Station.
Television networks are composed of multiple television stations that broadcast the same programs in different regions, forming a national or regional program supply network.
A television station is a specific broadcasting organization; it can be independent or affiliated.
Simply put, they have different functions and scales, hence the different names.
Television networks are responsible for program production, with diverse content covering multiple fields such as sports, news, entertainment, and television movies. They have a large reach and a substantial audience.
The television station is responsible for broadcasting the programs. Apart from local weather forecasts and some local news and current events, it basically does not produce any other content, but purchases it from the television network or production company.
A television station's coverage area is very small; usually, a television station is considered quite large if its signal can cover an entire state.
The two parties acted like partners, with one providing high-quality content production and the other reducing costs through broadcasting on multiple television stations.
One option is to purchase programs produced upstream in order to reduce costs.
Therefore, setting up a television network requires less investment than setting up a television station, and it is much cheaper. However, setting up a television network is much more difficult than acquiring all the television stations within a television network.
After all, no matter how many TV stations you acquire, theoretically it can be done as long as the funds are in place.
But television networks are different. They are responsible for all the television stations within the network. You can't expect those stations to have no programs to broadcast, can you? Otherwise, who would want to join your television network?
Even if you have confidence in the Playboy Spy, a TV station can't broadcast a program all day, right? Where does the content for other time slots come from? Do you know how much the broadcasting rights for sports events cost?
How much would it take to build a global news gathering and editing network? And then there are TV dramas and variety shows—these are bottomless pits!
While building a television network doesn't require as much investment as acquiring so many television stations, it's still a significant investment project.
The first issue to address in supplying sports programming is copyright.
Regardless of the type of event, broadcasting rights are a significant expense.
News programs, on the other hand, require a large number of reporters and offices all over the world, all of which are extremely expensive.
Does producing a TV series require investment? Does producing an entertainment program require investment?
All things considered, MGM's only advantage is its movies; at least in that respect, it has a vast library of films.
This doesn't even include the cost of venues, personnel, and equipment. Setting up a state-level television network requires an investment of no less than five or six hundred million US dollars, and that's with a budget that's already being frugal and cost-controlled.
"I know all this, but I think this is a once-in-a-lifetime opportunity. We can start by establishing a presence in a few states on the West Coast and gradually develop those small, local stations that are not well-regarded by the local authorities."
"As for the content provided for TV dramas and entertainment programs, you don't need to worry about that; I have it all figured out."
Ernst was confident in the Playboy Spy Show, and he didn't need to worry about TV dramas or entertainment programs either, as he had too many ideas in his head.
As for news and sports, news can first be developed domestically in the United States, with foreign news outlets and related organizations signing news supply contracts.
The advantage is that it greatly reduces costs, but the disadvantage is that there are no exclusive news stories.
As for sports, if you can't afford full rights, buy some cheaper matches related to local events.
Ultimately, entertainment programs and movies are the content that a TV station broadcasts the most, so he's not worried about that at all.
There are so many television stations in the United States that many small stations want to join the networks of large corporations, but they are all unwilling to be acquired.
As long as we can win them over, there's no need to worry about any TV stations joining MGM's network. "Moreover, once we establish a network, we can generate revenue as long as we achieve the expected results. We can use this as development capital to develop sports programs in reverse and expand the reach of our news programs."
Content buying in the United States differs from that in the East. In Asia, content buying is done on a per-episode basis, such as for a TV series or a season of a variety show. Once purchased, the television station's profits and losses are no longer related to the production company.
But in the United States, it's different; revenue is based on the number of viewers.
For example, MGM's "Playboy Spy" is provided to a TV station, and the two parties first negotiate a price, that is, how much users pay to watch the program through this TV station.
If the contract is for three dollars per episode, and one million viewers watch the episode through the television station and reach the stipulated duration, then three million dollars will be paid.
The same principle applies to TV dramas, movies, variety shows, and so on.
As for how the TV station and GG (Google Games) negotiate, that's none of the TV network's production company's business.
This is why television networks typically only choose to cooperate with one or two television stations in a region. Since it is an exclusive content supply, the key is whether the program is good or not, and it has nothing to do with the number of television stations broadcasting it.
Even if all the TV stations in a city broadcast this program, no one will watch it; it will only increase operating costs.
Are you really sure?
If MGM were to build its own television network, it would be utter nonsense to say that Robert Iger wouldn't be tempted; it would greatly enhance MGM's influence and status.
As long as Ernst can guarantee the quality of the content, building a television network would be a huge profitable project for MGM.
If, as Ernst claims, they can provide high-quality television dramas and entertainment programs, then only some initial investment is needed to set up MGM's television network.
"You have to believe in my talent. Haven't you seen 'There's Something About Mary'?"
Filming for "There's Something About Mary" had just finished, and Robert Ike had already seen the rough cut once.
Based on his experience, this is definitely a rare family-friendly comedy. He can't say how much it will gross, but it will certainly be a profitable project for MGM.
Robert Iger, who also worked on "The Man from Earth" and "Playboy Spy," pondered for a moment and decided to take a gamble with Ernst.
"In that case, we'll need a loan, and I can only allocate a maximum of $200 million to start this project."
"loan?"
Most of the box office revenue for "The Man from Earth" has been secured, and the video rental contracts and television broadcasting rights in North America have also been negotiated. What follows is a steady stream of revenue.
MGM should have at least $200 million in cash flow on its books, and that will only increase in the future.
Ernst hadn't expected that he would need a loan now.
Robert Iger rolled his eyes. "Why don't you just say how much trouble you cause? (From *Tomorrow Never Dies*)"
"Even excluding sponsorships and investments you bring in, this project will still require at least $5000 million for film production and post-production marketing."
"And then there's 'Playboy Spy,' this season's production costs plus the grand finale show would have been at least $40 million."
"The acquisition of the Playboy Group and the Titanic project, although paid in installments, still amounted to no less than $50 million a year, not to mention the funds invested after acquiring the large ship project."
"MGM doesn't have much money left right now, and there's the Orion acquisition and the production of several MGM films this year."
Huh? Ernst realized what was happening and exclaimed with delight, "Fox agreed?"
With an annual installment payment of $50 million, how could Fox have incurred so many expenses if they hadn't agreed?
Robert Iger nodded. "Harrison called me this morning. You got what you wanted."
Ernst was so excited upon hearing the news that he almost jumped for joy. "Make sure to contact Cameron and transfer the funds as soon as possible to get the film produced."
This summer, Ernst wants everyone to see MGM's strong comeback, using this big ship to overcome all obstacles.