Simon's trip to New York this time was mainly focused on the upcoming Verizon IPO and the subsequent expansion of the Westeros system within the telecommunications industry.
On May 6, after long preparations, Verizon officially submitted its first IPO prospectus to the U.S. Securities and Exchange Commission (SEC), marking the return of the regional telecommunications giant, which had been privatized by the Westeros Company five years ago, to the capital market.
From the end of 1990, when Simon acquired Bell Atlantic (Verizon's predecessor), to May 6, 1996, when Verizon filed its prospectus, five full fiscal years had passed. During that period, while fixed-line telephone services in the U.S. had stagnated, Verizon's growth was fueled by the rapid expansion of the mobile communications industry. Over the past five years, Verizon had achieved an average annual growth rate of 31%.
In the 1995 fiscal year, Verizon's revenue reached $15.36 billion, which represented a 3.8x increase compared to 1990 when it was acquired. Despite making significant investments in mobile communications, Verizon still achieved a net profit of $1.35 billion in 1995.
In 1990, excluding $1.7 billion in debt, the Westeros Company had acquired Bell Atlantic for $7 billion in cash.
By 1996, according to the prospectus submitted on May 6, Verizon had a total of 3.673 billion shares, with plans to issue 500 million shares in its IPO. The preliminary offering price was set at $10.25 per share, valuing Verizon at $37.6 billion—5.3 times its initial acquisition price.
A fivefold return in five years, even if not as astronomical as some of the core companies within the Westeros system, was still an impressive investment outcome.
Similar to the Tinkerville IPO in February, out of the 500 million shares being offered, only 300 million were newly issued, while the remaining 200 million shares—170 million from Westeros Company and 30 million from Verizon's senior executives—were part of a sell-off.
Thanks to Verizon's rapid growth, Simon had been generous with stock rewards for its management.
Before the submission of the IPO prospectus, the last round of stock grants was completed, reducing Westeros Company's stake in Verizon to 92.7%, with 3.405 billion shares. Another 7.3%—about 268 million shares—was held by Verizon's management, awarded through stock grants or purchased at preferential rates.
At the IPO valuation of $37.6 billion, the 7.3% share was worth $2.75 billion. Verizon's Chairman and CEO, Raymond Smith, held a 2.8% stake, translating to $1.05 billion, making him another billionaire.
Unlike startups like Igrette, where founders could benefit from IPO windfalls, Verizon was an established company. For Simon to give out such a large amount of stock rewards was a highly generous move.
On the other hand, with a preliminary offering price of $10.25 per share, the IPO was expected to raise a total of $5.125 billion.
Another $5 billion raised.
Since the beginning of the year, the surge in the NASDAQ index had boosted the total market value of its stocks by $1.4 trillion, with the total market capitalization reaching $5.1 trillion. In comparison, Simon's cumulative cash-outs of just over $10 billion from the end of last year seemed negligible.
However, many understood that in the capital market, cash is king—stock prices and market capitalization are just numbers on paper until shares are sold for cash.
While the NASDAQ's market value had seemingly increased by $1.4 trillion, if even a tenth of that—$140 billion—were cashed out, it would likely trigger the collapse of the already inflated NASDAQ bubble.
As such, regardless of the paper value of the market, Simon was the biggest beneficiary of the tech stock frenzy in terms of real cash-outs.
Currently, no one knew the exact amount of cash held by Westeros-affiliated companies, nor what Simon Westeros planned to do with such a massive amount of liquidity. But the more people understood the terrifying power of capital, the more fearsome Simon's next moves appeared.
What would Simon do? Expansion, of course.
Take the Verizon IPO, for example. The primary goal was to facilitate a series of mergers and acquisitions once the company was publicly traded. This was a key topic in Simon's meetings with Verizon and AOL executives upon arriving in New York.
After the IPO, Verizon's first target would be NYNEX, one of the seven regional Bell companies in the northeastern U.S., which would allow Verizon to dominate the entire Boston-to-Washington metropolitan corridor. Following that, Verizon and AOL would collaborate on consolidating their respective resources.
Initially, Simon had considered merging AOL and Verizon, but later dismissed the idea.
Forcing the two companies to merge would have presented enormous challenges in terms of integrating their operations and passing regulatory antitrust reviews. Therefore, the two companies would continue to operate independently, though, since they shared the same owner, they would cooperate extensively.
As for their individual focuses, Verizon would continue to prioritize fixed-line and mobile communications, with the latter being its core focus for future growth. As long as Verizon dominated mobile communications, it would become a colossal company.
AOL, meanwhile, would focus on internet services and cable television.
With this arrangement, the much-hyped concept of "three-network convergence" promoted by the media after the passage of the latest U.S. Telecommunications Act at the end of last year would not be pursued by the Westeros system.
In the original timeline, the U.S. never achieved true three-network convergence, even twenty years later. In contrast, across the Pacific in China, a single fiber-optic cable could bundle telephone, television, and internet services—sometimes even a mobile number, achieving what was effectively four-network convergence.
The reason, of course, was profit.
Three-network convergence allows operators to maximize resource utilization, reducing costs and passing savings on to customers.
However, if these services are separated, with different fees charged for each, operators naturally stand to make more money—so why not?
Capital is driven by profit.
Capital is ruthless and driven by profit.
Without strong external forces to intervene, capital will instinctively choose the path that maximizes its own benefit.
Just like the Westeros system.
Given Simon's personal wealth, he was the biggest capitalist on the planet—bar none. While Simon might be a decent boss to his employees and didn't ruthlessly squeeze every last drop of profit from the industries the Westeros system controlled, the capital under his control would inevitably follow its own logic.
It would inevitably turn to evil.
Because that's the nature of capital.
Why?
Take the Westeros system, for example. With millions of employees, all of them have clear objectives under the modern corporate system—whether in research, promotion, sales, or other areas. If they fail to meet these objectives, they face penalties, ranging from pay cuts to dismissal.
So they give it their all.
And all these objectives boil down to two words: pursuit of profit.
The pursuit of profit by capital.
That's why Karl Marx's description of capital in Das Kapital—"capital comes dripping from head to toe, from every pore, with blood and dirt"—is as true as it is brutal. No one should harbor illusions that capital might become benevolent or moderate because of any individual or system.
On May 10, the day after Simon arrived in New York, the North American summer movie season officially began.
That day saw the release of three major films: Warner Bros.' blockbuster Eraser, starring Arnold Schwarzenegger, New World Entertainment's Romeo + Juliet, starring Leonardo DiCaprio, and Orion Pictures' crime thriller City of Violence. Several other smaller, less significant independent films were also released.
Among the three major films, Schwarzenegger's Eraser opened on 2,816 screens, Romeo + Juliet on 2,017 screens, and City of Violence on 474 screens.
Due to Simon's high expectations for Romeo + Juliet, even with a marketing budget of just $15 million, New World Entertainment made the most of it. Advertising campaigns covered print, television, and online platforms, and the film's cast was pushed to promote the film tirelessly, even stirring up rumors about the two leads' off-screen relationship.
Meanwhile, New World Entertainment deployed some less-than-honorable tactics against Eraser, its primary competitor, deliberately leaking negative rumors about the film's poor quality during internal screenings. This forced Schwarzenegger to address the issue on his official Facebook page.
However, even Schwarzenegger's Facebook posts, along with news about Eraser, were quietly throttled on various online platforms—platforms controlled by the Westeros system.
After all, the internet belonged to the Westeros family.
Throttling news? Just a flick of a switch.
Despite the widely known alliance between Daenerys and Time Warner, this was just the ruthless pursuit of profit by capital.
Even if neither Simon nor General Electric CEO Jack Welch, the current top boss at Time Warner, would condone such tactics, their subordinates, eager to meet their performance targets, would instinctively employ every competitive edge available.
The first day of the summer season brought box office numbers that once again reminded Hollywood of the dominance of Daenerys Entertainment.
Eraser, unsurprisingly, took the top spot with $8.69 million on its opening day.
Right behind it.
Romeo + Juliet grossed $6.92 million on its opening day!
At first glance, Eraser seemed to have the edge. However, aside from the vast difference in production and marketing costs between the two films, just looking at
the screen counts—2,816 for Eraser and 2,017 for Romeo + Juliet—the theater averages told a different story. Eraser averaged $3,086 per screen on its first day, while Romeo + Juliet averaged $3,431 per screen.
The $15 million romantic film unexpectedly outperformed the $100 million blockbuster in terms of theater averages.
And this wasn't a case of comparing limited-release films; both movies had wide releases. While Romeo + Juliet had nearly 800 fewer screens, which likely boosted its average, it was still a failure for a $100 million blockbuster to be outdone by a low-budget romance film in such a key metric.
Moreover, the critical reception for both films followed the same pattern.
While New World Entertainment had planted rumors about Eraser, they hadn't exaggerated. The film received a paltry 3.7 out of 10 in aggregate media reviews, almost identical to Schwarzenegger's previous flop, Last Action Hero, which had scored 3.6.
In contrast, Romeo + Juliet earned an impressive 8.1, an "excellent" rating.
Although some of this high score could be attributed to good public relations, no reputable North American critic would give a poor-quality film an "excellent" rating, unlike the 3.7-rated Eraser.
After the first day, headlines of "David vs. Goliath" filled the entertainment news, boosting the already strong interest in Romeo + Juliet, thanks to its connection to a universally recognized story.
With such a strong start, securing additional screens for Romeo + Juliet was hardly a problem for Daenerys Entertainment. After seeing the opening day box office numbers, New World Entertainment immediately contacted theater chains, expecting to increase the screen count to around 2,500 by next week.
While this still wouldn't match Eraser's 2,816 screens, it would be enough for Romeo + Juliet to fully exploit its box office potential.
The first weekend passed quickly.
Box office numbers were tallied, with Eraser taking in $24.57 million over its opening weekend, while Romeo + Juliet brought in $20.17 million.
A difference of just over $4 million.
With Romeo + Juliet now at the center of a media blitz, Leonardo DiCaprio was rapidly transitioning from a promising young actor in What's Eating Gilbert Grape to a full-fledged Hollywood star.
Daenerys Entertainment didn't miss the opportunity to build on this momentum, starting to tease Titanic, set to begin filming in June. Meanwhile, Rachel Weisz, the female lead in The Mummy, also appeared on The Late Show with David Letterman to promote the film, helping to generate cross-promotion for both Titanic and The Mummy.
Romance, adventure, and action—sparks flew everywhere.
By the end of the week, Eraser comfortably held the top spot, grossing $36.42 million in its first seven days.
In second place, Romeo + Juliet earned $31.46 million.
As for City of Violence and the other smaller films, they barely made a ripple in the market, with all eyes focused on the top two films.
Although Eraser's $36.42 million first week wasn't terrible, it was far below Warner Bros.' expectations of $50 million to $60 million. Given its $100 million production cost and $30 million marketing budget, Eraser needed to gross $400 million worldwide to break even.
Now, optimistically, Eraser might scrape past $100 million domestically. Even if international box office doubled that, the global total would barely hit $300 million.
Warner Bros. would have to hope for long-term returns from other distribution channels.
In contrast, Romeo + Juliet, with a $31.46 million first week, had already recouped most of its $15 million production and $15 million marketing costs through its initial box office receipts. It was all but guaranteed to turn a profit in its second week.
Had Romeo + Juliet only grossed around $30 million in total, that might have been easier to swallow. But this was just the beginning.
Given the film's strong reviews and the buzz among audiences—especially its target demographic of teenagers and young women—it was clear that Romeo + Juliet's final domestic total could very well surpass Eraser.
With The Mummy and Austin Powers: International Man of Mystery set to release the following week, the competition would only intensify.
The Mummy, co-produced by Daenerys and Fox, had a final production budget of $70 million. Fox had spent a hefty $35 million on marketing, and the film would open on 2,986 screens.
Austin Powers, produced by Disney, had a production cost of $40 million, with a $20 million marketing budget, and would open on 2,187 screens.
Originally, everyone had predicted that Eraser and The Mummy would be the direct competitors in May, with Austin Powers as a dark horse if it could replicate the success of Mike Myers' previous franchise, Wayne's World.
But no one had expected Romeo + Juliet to emerge as a surprise hit. As its popularity continued to grow, particularly among teenagers, it had created a real buzz among its target demographic. While it might not appeal to all audiences, who could underestimate the spending power of young women?
The situation had become delicate.
If The Mummy underperformed—even though that was highly unlikely—the summer season would take an unexpected turn. Meanwhile, the growing popularity of Romeo + Juliet was also siphoning attention away from Austin Powers.
In Los Angeles, while most people were focused on the newly released films and their box office performance, some were not so calm.
In the affluent Brentwood neighborhood of Santa Monica, a luxury car pulled up to the residence of Fox Studios' president, Joe Roth. Arnold Schwarzenegger stepped out of the car and, after greeting Roth, was ushered into the party already in full swing. Immediately, he felt the many glances directed his way, filled with different meanings.
Few in Hollywood had never experienced failure—well, maybe one person excepted—but Eraser wasn't a total failure. At least, it was doing better than Last Action Hero three years ago. However, after Last Action Hero flopped, Schwarzenegger had quickly bounced back thanks to True Lies, which hadn't impacted his status much.
This time, though, it was different.
Everyone could feel the shifting tides in Hollywood over the past few years.
The most obvious change?
The rise of the DC cinematic universe and the growing dominance of special effects-heavy blockbusters had reduced the value of once top-tier movie stars. For someone like Schwarzenegger, the decreased value wasn't just a matter of shrinking paychecks—it also meant that Hollywood was less forgiving of failure.
In the past, a superstar could fail once or twice and still bounce back with another hit. Now, a single flop could make it difficult for that actor to secure top-tier projects. With Eraser's lackluster start, people realized that Schwarzenegger might be the first superstar to find himself in such a predicament.
And it wasn't just Eraser that led to this situation.
It was the result of a series of accumulated failures.
First, Eraser's disappointing performance hinted that Schwarzenegger's once-beloved macho action hero genre was no longer in demand. This trend had been apparent for years—True Lies had been an exception, but films like Cliffhanger, Demolition Man, and Judge Dredd, starring Schwarzenegger's peers Sylvester Stallone and Kevin Costner, had all underperformed. Now Eraser joined that list.
The genre's decline wasn't insurmountable.
But the real problem was Schwarzenegger's failure to adapt.
After the Last Action Hero debacle, Schwarzenegger hadn't fully learned his lesson. Following the success of True Lies, he still believed the market had a place for his preferred type of films. This led him to pass on a golden opportunity last year.
That opportunity? Jumanji.
Not only was it a franchise, but it was also a special effects blockbuster—a perfect representation of Hollywood's new direction.
For superstars commanding high salaries, offers for such effects-driven blockbusters were rare. Producers generally preferred more affordable actors for films where the special effects were the main attraction.
Securing a suitable role in such a film was even rarer.
Hollywood is an open book when it comes to gossip.
Everyone knew that Simon Westeros had initially favored Schwarzenegger for the lead role in Jumanji, offering a generous deal. But Schwarzenegger pushed for more, and the opportunity slipped away.
Even juicier for gossip was the fact that the role eventually went to Schwarzenegger's longtime rival, Stallone.
For years, Schwarzenegger had enjoyed the upper hand over Stallone.
Now, that was about to change.
By turning down Simon Westeros' offer, Schwarzenegger may have left a bad impression. And in today's Hollywood, everyone knew that all the best projects came from Daenerys Entertainment, controlled by a 28-year-old mogul.
Inside Joe Roth's Brentwood mansion, Schwarzenegger tried to ignore the curious looks and exchanged pleasantries with some familiar faces before slipping away with Roth to a private sitting room inside the house.
Both men, as well as the party guests, could guess the reason for the private conversation.
It wasn't difficult to figure out.
With
Eraser struggling at the box office, Schwarzenegger was clearly looking for a way to regain his standing.
In the original timeline, Schwarzenegger chose Batman & Robin in 1997, securing a massive $25 million paycheck, though it resulted in an even greater box office disaster.
But this time, there was no Batman movie for Schwarzenegger to join.
So, what was left?
Of course, there was only one option.
The Terminator franchise.
Currently, the Terminator rights were jointly owned by Fox and Daenerys Entertainment. In the films, Schwarzenegger was humanity's savior, and outside the films, Terminator was practically his lifeline.
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