Chapter 142: PolyGram

In the Embassy Films conference room, Michael Davenport gathered Robert Lee and Garcia Rodriguez.

Michael asked Garcia directly, "How is the recruitment for establishing overseas channels going? Is it progressing smoothly?"

If Embassy Films could find suitable personnel, there would be no need for alternative methods.

Garcia shook his head. "It's not going well at all," he explained. "Simply recruiting individuals is of little help in establishing overseas distribution channels. We need an entire team. However, any company with distribution capabilities in Hollywood is much larger in scale and platform than Embassy Films. We've approached six small team leaders and members, and all have refused."

Robert added, "We discreetly contacted New Line's overseas distribution team, but they reported us to New Line's higher-ups, who sent us a formal warning."

Michael asked with concern, "Any other troubles?"

"No," Robert replied. "We immediately stopped contacting New Line's people, so the issue has blown over for now."

Michael noted this and reminded, "Keep an eye on New Line in the future."

Poaching people from other companies was bound to make them very unhappy.

Garcia continued, "Key distribution positions usually come with breach-of-contract clauses. If we were to poach people, the penalty fees alone would be substantial."

Michael nodded slightly, understanding the situation. This was quite common; key employees at Relativity Entertainment and Embassy Films also had penalty clauses.

He recalled the enormous scandal when the Japanese first entered Hollywood.

After Sony Entertainment acquired Columbia Pictures, the Japanese, aware of their inexperience in the film industry, were recommended Jon Peters and Peter Guber from Warner Bros. to head Columbia Pictures after careful consideration.

However, for some reason, Sony didn't discover that Jon Peters and Peter Guber had a breach-of-contract agreement with Warner Bros. Warner Bros. took them to court, and Sony had to pay $800 million in damages for the poaching!

Of course, Sony must have thought these two were worth the money.

In reality, these two were infamous troublemakers in Hollywood in the late 80s.

They invested in Spielberg's "The Color Purple," but Spielberg had a clause in the contract that barred Jon Peters and Peter Guber from entering the set!

To be so feared by the legendary Spielberg, their disruptive capabilities were clearly exceptional.

Sony Entertainment's collaboration with these two was a tragedy. From the acquisition of Columbia to their dismissal in 1994, it's rumored that they caused over $3 billion in losses from movies and related industries.

Akio Morita's resignation was partly due to Sony Columbia's poor management and hiring these two.

But they weren't entirely useless. Jon Peters and Peter Guber had a good eye for investment. Particularly Peter Guber, who later founded a film investment company and became a co-owner of the Golden State Warriors over a decade later.

Robert said, "Poaching not only costs a lot but also risks making us industry enemies."

"Relying solely on poaching won't solve the problem." Michael had come to this realization.

If poaching could solve overseas distribution, DreamWorks wouldn't have struggled with it for so long.

Michael asked, "Have you heard of PolyGram Filmed Entertainment?"

"I've heard of it," Garcia responded. "A small film company under the record label PolyGram. However, this company... how should I put it, has an overstaffed and bloated structure."

Robert provided more details, "Earlier this year, PolyGram's parent company, Philips and Siemens, sold its main entity, the record label, to the French media giant Seagram for $10.6 billion. Seagram was previously the parent company of Universal Pictures, but it's not anymore. They've agreed with Vivendi, a French water company, to hand over Universal Pictures to Vivendi."

Michael had checked this online last night and found Robert's information accurate. He said, "Initially, the deal didn't include PolyGram's film subsidiary. However, with Vivendi and Seagram's agreement, Universal Pictures wants the new owner to acquire PolyGram Filmed Entertainment because of its valuable film library."

He envied the titles in that library: "Four Weddings and a Funeral," "The Usual Suspects," "Trainspotting," "Lock, Stock and Two Smoking Barrels," "Fargo," "Dead Man Walking," and more.

Everyone knew that a film library was a film company's most valuable asset.

"Universal Pictures is only interested in PolyGram's film library?" Garcia, experienced in distribution, roughly guessed Michael's intentions.

Michael nodded slightly. "I heard this by chance. Universal Pictures has its own comprehensive distribution channels and doesn't need to add a large number of people to disrupt its mature setup. Additionally, PolyGram is based in the UK, and Universal plans to lay off most of PolyGram's staff, especially the distribution personnel, which they don't need."

Robert raised his voice slightly. "This is our chance!"

Garcia, knowing the industry better, added, "PolyGram has never distributed a film in North America. 'The Usual Suspects' was distributed by Sony Columbia, and 'Fargo' and 'Dead Man Walking' were handled by Gramercy Pictures."

Michael frowned. "I found online information indicating that PolyGram has its own world-class distribution channels."

Could the online information be false? Michael wondered, given the plethora of fake news on the internet.

"I was only referring to North America," Garcia clarified. "I don't know much about their overseas operations."

Embassy Films' business was currently limited to North America, and given the American tendency to focus domestically, there was limited attention to overseas matters.

Michael looked at Robert. "Can you check the relevant details about the deal between Vivendi, Seagram, PolyGram, and Universal Pictures, focusing on their stance toward PolyGram Filmed Entertainment and its operations?"

Robert, having more unconventional connections, readily agreed. "I'll start today."

Michael then turned to Garcia. "Do you know anyone at Universal Pictures? If so, can you get some information?"

Garcia understood the importance of this for the company's future and said, "I'll ask around."

Michael emphasized, "Prioritize this matter."

After Robert and Garcia left, Michael called lawyer Diana at Stenith Law Firm. The firm had operations in the UK and a London branch specializing in entertainment and media law.

Michael then personally went to Stenith Law Firm and had a face-to-face meeting with Diana.

Diana provided him with a contact. "This is a private investigator we sometimes collaborate with at Stenith. He's very familiar with the UK entertainment scene. You can hire him to investigate. I'll call him shortly."

Michael knew that this world wasn't black and white, and many law firms had connections with fringe elements. He suspected this was a private investigator of some sort.

He agreed and contacted the investigator that day. Stenith Law Firm also had dealings with PolyGram and would help him gather relevant information within legal limits.

After just two days, Michael had compiled all the information from various sources. There was a lot of material to sift through to find the valuable details.

Having not stopped learning since he arrived, Michael had analyzed countless cases, and this task didn't overwhelm him.

After an afternoon of reading, he had a good grasp of the situation.

France's Seagram Media Group, Universal Pictures' parent company in recent years, had begun acquisition talks with PolyGram in 1997. This billion-dollar deal took two years to complete, with PolyGram Records merging into Universal Music for $10.6 billion.

However, Seagram soon realized the acquisition was a heavy burden. Coupled with worsening other businesses, they had to sell Universal Pictures, including PolyGram Records, to Vivendi. The deal was finalized last month, with a share transfer completed this month.

Universal Pictures wanted not only PolyGram Records but also the valuable film library of its subsidiary, PolyGram Filmed Entertainment. To gain Universal's support, Vivendi agreed to acquire PolyGram Filmed Entertainment.

Compared to the over $10 billion PolyGram Records deal, PolyGram Filmed Entertainment was insignificant.

As for PolyGram Filmed Entertainment's staff, Universal had no interest.

PolyGram, a typical international company, had a diverse workforce, and PolyGram Filmed Entertainment was no different.

These employees were long stationed in London, while Universal Pictures' film operations were centered in Los Angeles. Moving these employees to LA was impractical, considering the relocation expenses and potential unwillingness of the staff.

Universal had already negotiated for PolyGram's film library, but other details were yet to be finalized. From the current information, Universal had no need for PolyGram's staff.

These employees were numerous, highly paid, and unwilling to leave London, making them of little use to Universal.

Michael didn't need all these people; he only needed a small portion—the distribution department staff.

PolyGram Filmed Entertainment had distribution capabilities!