Chương 96: Book 3 - Chapter 17 C

At my hotel I arranged for an entire floor that included meeting rooms. Matt assisted me in putting up signs so that each delegation could have a private space to discuss things and take breaks in. There were two conference rooms, one I labeled 'Big Wigs,' the other 'Smart Guys.' The hotel provided food and drinks. Jennifer flew out and joined us, as did Thomas and the CEO of American Wireless. I gave them all their marching orders.

The invitations were sent out disguised as a gathering to discuss the modern media landscape. I gave Nicholas at Time permission to discuss it as a strategic partnership discussion with the guys he brought, but not to mention the other parties. Everyone else knew something was going on, but the final day in July would start it moving. Everyone but my group was local, so no one arrived on time. Security was tight, as I didn't want any leaks about this meeting getting out.

"Gentlemen, thank you for coming here today. I want to welcome you to what I hope will be the beginning of a successful venture. What we have here around the table are the pieces of the next great American Corporation," I began. I introduced everyone, then introduced myself and my staff. I handed out a sheet that described each company's strengths.

"As you can see there are a great many strengths, and by organizing these strengths we can maximize growth, stability and profits.

"For example, Warner makes movies, has a nice library and an okay cable company. Its greatest advantage is its overseas distribution. It also has a history of making acquisitions that cost it money, don't make a profit and are later sold at a loss," I said, accurately describing them, and getting chuckles from the other two groups.

"Gulf Western has a myriad of businesses that it is selling off, showing a profit doing so. Its core business is becoming movies and TV, which it does very well. It additionally has assets that are valuable but not needed. It has a capable commander who is very good at acquisitions and divestitures. He's got a team that's great at creating new shows. It has no dedicated distribution system.

"Time has a massive publishing empire, a large cable company, but not much of a library of media ownership. Its real strength is a management that understands the line that has to be drawn between media production and media distribution," I said and paused, looking around the room. I had all of their attention.

"Then we have me. I wholly own a hugely profitable cable company and an extremely popular cable channel, with four more in development as part of Heartland Media," I said, as they quickly dug through the paperwork to find out the details I was sharing for the first time.

"I can't believe that's the profit you're generating!" gasped Martin Davis.

"Just how rich are you?" asked Steve Ross. I ignored the question as they considered not only where American Wireless stood, but where it was projected to go as it continued its expansion across the country.

"So your prospectus shows the financial structure of my offer. I want to be perfectly clear about the stock exchange: the new company will operate using a dual-class share structure. For every share of stock exchanged in this merger, shareholders will receive two corresponding shares in the new company: a tradable Common Share which holds the financial value and pays dividends, and a separate Voting Share which carries no financial value but determines corporate control.

Your shareholders will receive a proportional amount of the new Common Stock based on the valuation of your companies.

"The value of American Wireless will give me 40% of the new company. Crucially, I am offering to purchase, for a substantial premium paid in cash outside the merger valuation, every Voting Share your existing shareholders receive. This cash buy-in guarantees two things for them: liquidity and a direct monetary bonus, while simultaneously ensuring I retain the clear corporate control necessary to manage this complex consolidation." I looked at the CEOs and their trusted team. They got the point.

American Wireless was the unicorn in the room.

"Now that the financial framework is established, the next questions to resolve are about the nature of the new company's management. I think examining the way Time Inc manages the separation of corporate control with editorial control is an excellent way forward."

"Are there any immediate questions?"

"Will you want to sell off our cable assets so they don't compete with the wireless cable?" Herb Siegel from Warner asked.

"Not at all. That would only create competitors. All that infrastructure is still valuable. In big cities like New York wireless cable is insufficiently reliable due to building shadows and reflections. Additionally, as technology progresses, all that cable will allow for two-way communication in the future. Offering things like on-demand-pay-per-view, telephone service and other future communication technologies will keep it profitable." This narrative has been purloined without the author's approval.

Report any appearances on Amazon. There were no more immediate questions, so I stepped out of the room to let them discuss. The discussions went on all day long, occasionally I got pulled back in to answer questions, but more and more they began to see how to work together. It also made it obvious despite my demand for ownership of the voting shares, that I was just the investor who had the resources to bring the companies together. The real merger was going to be their doing.

They liked the precedent that set and getting their hands on the incredibly valuable American Wireless made them eager. I did spend a few hours closeted with the accountants and money men. We used the 'Smart Guys' room. Thomas stayed there and rode herd on the group. The Warner guy and Gerald Levin impressed everyone with their ability to find financial solutions that made everyone happy. The final question was what to call the company. It's the stupid things that tend to drag on the longest.

Gulf Western Time Warner American Wireless was a mouthful. Mr Davis wanted his division to be called Paramount, so we played with variations of PTWAW. Time, since they were taking the management lead, thought they should go first. Everyone agreed that Time Warner sounded better than Time Paramount, and the idea had originated with Warner. I was fine with Wireless at the end, and even suggested cutting it out, leaving it just as Time Warner Paramount, or TWP Media.

It took months of intense negotiation, regulatory filings, and shareholder campaigning. The final agreement, covering everything from the post-merger board composition and CEO succession to the assurance that no major layoffs would occur, was reached only after satisfying the key terms set by the involved parties. We secured the overwhelming vote of shareholders across both public companies, who recognized the immediate opportunity presented by American Wireless's private, rapidly expanding assets.

With the initial agreement settled, we were finally clear to make the announcement. It was October 1st, and I chose to break the news not to a third-party outlet, but through my own. Heartland's acquisition of FNN had become WBN—World Business Network—and had quietly completed a few weeks prior, giving me the perfect platform to control the narrative and break the biggest story of the quarter.

We announced that the formal merger would complete after the markets closed on October 23rd—the agreed-upon date for the full exchange of shares and company valuation—though the final regulatory sign-off, which could take up to a year, would be the true closing hurdle. The news blindsided the traditional press, sending reporters at Time and other major outlets into a panic.

The sheer magnitude of the deal—the largest I had ever constructed—was unfolding under their noses, and not a single scoop had been leaked to the outside world. I was immediately christened 'The Little Mogul' in the press, a title I much preferred to the dismissive 'Billionaire Boy' moniker I was finally shedding. In the weeks leading up to the close, the public markets were volatile, but everything seemed on track until the Black Monday crash hit the market on October 19th.

The market dropped sharply, recovered slightly, and then plummeted again. The phone rang, cutting through the hotel suite's silence. It was Nick Nicholas, his voice strained and panicked.

"John, you see what's happening? The market is in freefall. We're losing billions by the hour. My board is in an emergency meeting right now, demanding we invoke the material adverse change clause and terminate the merger. We can't bind Time Inc to this deal when our market cap is hemorrhaging like this!"

"Nick, listen to me," I said, keeping my voice steady and low.

"This is not the start of a depression, it's a correction. It will recover. You know the true value of Time's assets, and I know the value of American Wireless. We are valuing this deal based on the close of business on the 23rd. Hold firm. Trust the plan."

"But what about the shareholders? They're terrified. They're going to sue us for negligence."

"After the merger closes on the 23rd, I will personally guarantee to buy any TWP Media common stock from your key institutional investors at a ten percent premium over the agreed-upon valuation price. Tell your board and your largest shareholders: I will backstop their losses if they stay in. The merger will proceed. Do not terminate the agreement. Just wait it out." The line went silent for a moment.

"A ten percent premium... John, that's insane."

"It's the cost of keeping the largest media deal in history together. Let everyone else know and call me back in 24 hours. It won't take long to see things start moving back up where they belong. Just hold the line." While the value of the public company shares fell, the agreed-upon exchange terms—which valued American Wireless at its closing price on the 23rd against the depreciated market cap of the public entity—remained firm.

When the merger officially closed on the evening of October 23rd, and TWP Media was born. American Wireless, as a private entity, had been valued at $25 billion on October 23rd. Which meant my pre-negotiated share exchange after the $9. 25 billion stock market loss between the three companies now gave me a significantly larger stake in the combined entity than originally forecast. During the market turmoil, Grandpa stepped in as my silent investor.

Using the cash generated from my ordered short sales, he strategically purchased an additional thirty percent of the voting stock from investors who were panicking and dumping their shares, worried about the continued loss of value. Seeing that I wasn't panicking, he also picked up all the common shares he could. I appreciated his confidence in me. The new TWP Media's debut was powerful enough to anchor a strong recovery when the market reopened the following Monday.

I had decided to keep Heartland Media out of the merger. It would make it easier to pass the coming antitrust review to not have the cable channels part of the merger. Using the cash provided by the short sales ensured the transaction didn't drain any funds. When all the dust settled, my personal stake in TWP Media stood at about 47 percent of the common stock and after distributing the promised Voting Shares to the CEOs, Grandpa and I controlled 70 percent of the voting stock.

Thinking they were being clever, the CEOs had strategically registered the new company in a state requiring board members to be eighteen or older, which meant I had to select a slate of directors, but I already knew that with my voting power, the Chairman position would be mine the moment I was old enough.