Chapter 163: Exposure of Relationships

Is it from the profits yet to be divided among the distributor, theater operator, and producer? Or from the profits that the distributor and producer haven’t split yet? Or is it shared with the producer? Or perhaps after all expenses are deducted by the producer?
Every difference in this basis, even every word in the contract, can lead to different incomes. Take Burton, who starred in “Batman”—that film brought him $50 million in earnings. His salary was at most $20 million, yet combined with other earnings, he ended up with $50 million, showing just how substantial this amount can be.
The closer the basis for the commission is to the source, the more one can earn. Based on “Spy Game’s” box office of nearly a billion, if distributed from the very beginning, Xiao Ran could get 5%—that’s $50 million. But this is impossible; no film company would accept such terms.
If the profits are divided after deducting the theater operator’s share, Xiao Ran could still get around $30 million. Even after accounting with the producer and distributor and deducting all expenses, he could still earn around $10 million—more than ten times higher than a director’s fee.
Although Wu Yushen and Xu Ke are far more skilled than Xiao Ran, they aren’t as famous as him, nor do they have his strong box office appeal. According to marketing surveys, whenever Xiao Ran collaborates with Stephen Chow, theaters are willing to reserve prime showtimes, and the box office in Southeast Asia can easily exceed $200 million.
Wu and Xu have considerable box office appeal locally, but still fall short of Xiao Ran. This means they have little chance to negotiate commissions with Phantom. Xiao Ran’s requirements for earning commissions are simple but not easy to meet. The condition is that both actors and directors must have significant box office appeal overseas to qualify.
Any new director who can achieve a global box office of a billion under Phantom’s distribution power definitely qualifies to negotiate commissions. Of course, if their next film fails at the box office, their chances of negotiating in the future are slim.
Xiao Ran set this condition not to make things difficult for Xu Ke and others, but to make everyone realize the importance of overseas markets, so that they can consider overseas audiences’ preferences during filming. This way, they can better cater to mainstream audiences commercially, rather than focusing solely on depicting local culture as in previous Hong Kong films.
Of course, Xiao Ran isn’t worried that mainland audiences won’t accept Hong Kong films in the future, because smuggled videotapes have already cultivated loyal audiences for them. That’s an absolutely formidable force—a whole generation’s strength, unimaginable in scale.
In short, working with Phantom guarantees incredibly substantial earnings. For example, Huang Yongheng, now one of Hong Kong’s most famous cinematographers, is worth $200,000—equivalent to what a top director earned three years ago, not including post-film bonuses and rewards. If the film succeeds both at the box office and in awards, earning $400,000 for it is no problem.

At the other three major companies, no photographer earns two hundred thousand, let alone forty thousand for a single film. That’s why talent now aspires to work for Phantom, hoping to catch their eye and even get signed to a contract.

DeBao has no objections to this, as they always need to retain talent; otherwise, even directors would flock to Xiao Ran, and there would be no point in making films. Only Zou Wenhuai stood up angrily, shouting, “It’s impossible to offer such high salaries!” before walking away in a huff.

Xiao Ran smiled faintly, not even bothering to look at Zou Wenhuai’s retreating figure. If Zou Wenhuai couldn’t see this clearly, he was doomed to be eliminated by Xiao Ran. With Zou Wenhuai gone, only Xiao Ran and the heads of the three major companies remained, along with Wu Siyuan, who didn’t know what to say.

Wu Siyuan had worked with Phantom before, such as in “Legal Affairs.” Phantom’s emphasis on filmmakers made him feel very comfortable, and coupled with extremely generous pay, he even considered giving up his own Siyuan Film Company to work directly with Phantom.

After leaving the Film Association, Yang Qi and Pan Disheng rushed up and asked, “A Ran, aren’t you worried that high costs will reduce profits?”

Xiao Ran sighed. Businesspeople are naturally driven by profit. After waiting for them a moment, he walked toward the elevator with them, patiently explaining, “We haven’t even captured the market yet—how can we talk about profits? Aren’t our current profits already high enough?”

Pan Disheng smiled bitterly. If anything, his DeBao probably invested the least in production costs. It wasn’t that he was unwilling to invest, but DeBao usually focused on artistic, female-action, and low-budget urban comedies, which didn’t require high production costs.

Originally, Yang Qi had no chance of succeeding in the industry. Without Xiao Ran’s support, his prospects would have been bleak. But though they were friends, business remained business—both Xiao Ran and Yang Qi were well aware of that. Without hesitation, Yang Qi asked the question that had been on his mind all along: “What if we lose the market, but everyone refuses to lower their salaries? What if production costs keep rising?”

Xiao Ran smiled faintly. He had already thought about these issues. Don’t think Hollywood is glorious twenty years from now—it’s built on extremely high risks. If stars’ salaries keep climbing and production costs continue to rise, collapse is inevitable.

So, he understood that strict control was necessary in this regard: “If the overseas market disappears, we’ll lower salaries to match the market conditions. It must be adjusted according to the market—there’s no room for indulgence. Production costs also need to be adjusted based on the market. If the market can afford an investment of 100 million dollars, then that’s the amount we can invest. Of course, risks come with that. Therefore, appropriate control and adjustment are essential. Isn’t that the role of the Film Association?”

Pan Disheng hesitated. He only had one last asset left, worth about 200 million, that hadn’t been sold yet. If he wanted to focus entirely on filmmaking, with production costs rising so much, his available funds might not be sufficient. After some hesitation, he decided to keep that business.

Yang Qi founded Tianluo Company through financing, and its current market value is 600 million. Debao is completely under Pan Disheng’s control, with a market value of only around 700 million. Good heavens! Xiao Ran groaned inwardly: Who will act as a backer then? With Phantom developing so rapidly, Tianluo and Debao simply cannot keep up with its pace given their current funds. This is exactly what Xiao Ran is worried about—he definitely can’t keep Jiahe. However, for such established companies, unless Xiao Ran offers an unbeatable price to acquire Jiahe outright, it will be difficult to completely eliminate them. But he also has no intention of letting Jiahe continue to disrupt the Hong Kong film market, so it seems the only option is to drive them out of the market and let them fend for themselves. After all, that’s how the world works—those who can’t keep up with the times will inevitably be eliminated. The problems with Tianluo and Debao have troubled Xiao Ran for a long time. When launching attacks overseas, he needs reliable allies, and it seems only Tianluo and Debao can play that role. If left to develop on their own, it might take another 20 years before they reach Phantom’s current market value. After thinking for a while, Xiao Ran could only force a bitter smile. It seems that to find two reliable allies, he’ll have to give up some interests. Turning to the two bosses who were silently pondering, he asked, “Gentlemen, are you interested in investing in a company?” Pan Disheng, snapping out of his thoughts, immediately became interested, his eyes gleaming with curiosity. “What kind of company? Why would it deserve Boss Xiao’s attention?” “Karaoke!” Xiao Ran couldn’t help but sigh again. He never thought he’d have to give up interests so reluctantly and reluctantly. “Karaoke?” Pan Disheng and Yang Qi were both confused. At that time, karaoke hadn’t yet become popular, so of course they weren’t aware of it. It really was karaoke! It was something Xiao Ran came up with on the spot. He vaguely remembered that karaoke became popular in the early 1990s, reminded by the plot of the movie “New Half a Pound.” The only thing that pleased him was that he had already secured this invention and had sent people around the world to apply for patents and register the brand name. “Go and investigate after you return. If you’re interested, consider investing! I can offer you 15% equity each!” At that moment, Xiao Ran felt like a saint—a stupid and ignorant saint, indeed. But he had no choice. Monopoly was certainly interesting and highly profitable. Yet it could also make Phantom lose its competitiveness. Most importantly, as mentioned earlier, Xiao Ran could make Phantom lead Hong Kong cinema, even world cinema, but he couldn’t become a savior. At the end of March, the investment department was officially separated and named Power Investment Fund, becoming another powerful company under Phantom. Karaoke also became one of Power’s key investments and projects, with at least 400 million invested in it in the short term.

What frustrated Xiao Ran even more was that both Pandi Sheng and Yang Qi showed no interest in this karaoke business at all and refused to invest. Before the Golden Horse Awards, Xiao Ran received several good news items. The first was that Leo Corporation’s market value had now reached nearly 400 million dollars. The second was that Sony had spent 3.5 billion dollars to take control of Columbia, becoming a leader in the U.S., only to be harshly criticized by the American media as trying to buy out the entire country. The third good news was that Guangmo had quietly acquired 15% of the shares, and several other major shareholders on Guangmo’s board were dissatisfied with its performance and wanted to sell their shares. Xiao Ran immediately instructed Fang Xiaoqiang that this was the perfect opportunity to take over Guangmo!

Before the Golden Horse Awards ceremony began, Xiao Ran was in a miserable mood because he realized that the company had very little liquid capital left. This was the consequence of constantly making investments, and he was extremely distressed. Now, he wasn’t very keen on acquiring a Hollywood film company, as Sony’s experience in the U.S., where it faced widespread backlash, served as a warning. Of course, it wasn’t impossible to do so, but currently, Xiao Ran had neither the money nor the right timing to do it. What frustrated him the most was that, aside from karaoke, which had the potential to generate quick profits within the year, most of his other investments would only yield results in five to six years or even a decade. Of course, the shares of Dell, which Phantom controlled, were already worth 500 million dollars, but that was still far less compared to their future value. This damned funding gap meant he didn’t even have the money to buy the film library from Shaw Brothers. Still, he was counting on karaoke to succeed. With the patents in Power’s hands, Power didn’t even need to do much—just outsource the work. With annual sales of tens of billions of dollars, Xiao Ran could make a fortune.

However, when April arrived, something happened that worried Xiao Ran and Lin Qingxia for a long time. The weather that morning was ominous, dark and gloomy as if it might rain, but no rain fell at all. After having breakfast with Lin Qingxia, who had just returned from filming “New Dragon Inn,” they left together. Xiao Ran went to the headquarters, while Lin Qingxia went to Thinking Company to work on the post-production of “New Dragon Inn.” When he arrived at the company, Xiao Ran felt that the atmosphere was extremely strange. Everyone stared at him with odd expressions, addressing him as “President Xiao,” giving him the feeling that the whole world was hiding something from him, which made him very uncomfortable. Full of confusion, Xiao Ran entered his office, where An Yuxuan was pouring him a glass of water. As soon as An Yuxuan saw Xiao Ran, she also gave him a strangely odd look and said, “President Xiao, there are some newspapers here. I think you’d better take a look!” Before Xiao Ran could even read the newspapers, less than two seconds after An Yuxuan left, the door was kicked open by Wei Dongling, who rushed in in a hurry. Wei Dongling’s expression was also abnormal, his face red, matching his angry demeanor.

Xiao Ran thought it was something related to work and hadn’t paid much attention. But when Wei Dongling quickly and urgently uttered the next sentence, he could no longer laugh: “A Ran, the relationship between you and Qingxia has been exposed by the Dongfang Daily!”
Shocked beyond measure, Xiao Ran was stunned, unable to utter a word. It seemed as if it took him a full minute to process this news. His mind became a mess, with no way to sort things out.
Wei Dongling’s anger had dissipated, especially upon seeing Xiao Ran’s distraught state, which made him even more worried. He stepped forward and gently patted Xiao Ran’s shoulder, saying, “A Ran, stay calm. It’s okay, it definitely will be fine!”
With a bitter smile, Wei Dongling knew full well how ineffective those words of comfort were. In Europe or America, it might not matter, but this was a world of Chinese people, a traditionally conservative one. What should Xiao Ran and Lin Qingxia do? Perhaps this was their first test!