Chasing Stars in Hollywood

The day after the Oscars, the predictable award results occupied only a small portion of the newspaper headlines. Most media attention was drawn to the news of the Westeros system blacklisting the Hearst Corporation.

Early Tuesday morning, many major print media outlets broke the story that "inside sources" had revealed Simon Westeros personally ordered all companies within the Westeros system to sever all ties with the Hearst Corporation. Media covering the Melisandre party provided direct evidence, showing that journalists from Hearst-owned media were barred from entering the Sunset Tower Hotel, leading to minor conflicts.

When questioned by the media, Hearst Corporation executives declined to comment.

The Westeros system, however, made no attempt to conceal the matter.

With numerous media outlets verifying the news, it was confirmed that the Westeros system's companies, including Daenerys Entertainment, Egret, and Melisandre, had indeed received orders to immediately cease all cooperation with the Hearst Corporation.

Moreover, "The Hollywood Reporter" followed up with another piece of news on Wednesday.

Warner Bros. quietly canceled several planned advertisements for "The Dark Knight Rises" in Hearst-owned media.

Set for a June 3 release, "The Dark Knight Rises" launched its first trailer in early March, marking the start of an $80 million promotional campaign for this DC Universe blockbuster.

It was clear that not only the Westeros system but also companies partnered with it were being asked to "choose sides."

When asked if Warner Bros. would also cancel ads for other film projects in Hearst-owned media, a senior executive in charge of film distribution gave an ambiguous but leaning answer, indicating that Time Warner had its own traditional media platforms and that print media's role in film promotion was not significant. Thus, not cooperating with Hearst would not have much impact.

It took only two days for the news to spread and be confirmed.

For the general public, both the Westeros system and the Hearst family were colossal entities, one rapidly accumulating wealth and the other an established old family. This made the incident a major point of interest.

As the news spread, the Hearst Corporation could no longer remain silent.

On Wednesday afternoon, surrounded by a swarm of reporters at the Hearst Corporation headquarters in Manhattan, William Randolph Hearst III, visibly upset, stated that the Westeros system was abusing its market position for unfair competition and that the Hearst Corporation would take all possible measures to protect its rights.

With confirmation that Simon Westeros was indeed taking on the old Hearst family, public attention quickly shifted to the reasons behind the conflict and its potential impact.

By Thursday, two East Coast newspapers had uncovered the truth.

An article in the New York Post, owned by News Corp, provided a detailed account of the events leading to the conflict.

The public was finally enlightened.

It turned out the conflict between the Westeros system and the Hearst Corporation had long-standing roots.

Three years ago, to alleviate the heavy debt burden from the Reynolds-Nabisco merger, Reynolds-Nabisco Group decided to sell a significant portion of its assets, including a 20% stake in ESPN, owned by the Metropolis/ABC Group.

Daenerys Entertainment, seeing great potential in cable television, made a bid. The Hearst Corporation, also looking to diversify, was interested in the shares as well.

At the time, Egret was in its early stages and desperately needed news content support from traditional print media.

The Hearst Corporation used the promise of content support for the Egret portal as leverage, convincing Daenerys Entertainment to withdraw from the bidding for ESPN shares, ultimately acquiring them.

However, after securing the ESPN shares, the Hearst Corporation reneged on its promise, refusing to cooperate due to concerns that internet media would impact the traditional print media industry.

This was the beginning of the feud.

The article highlighted that Daenerys Entertainment had offered $200 million for the ESPN shares, but after withdrawing, the Hearst Corporation secured the deal for $180 million, saving $20 million, with an additional tax avoidance maneuver worth at least $20 million.

Despite this significant advantage, the Hearst Corporation was not content. Not only did they refuse to honor their initial agreement, but they also felt Daenerys Entertainment's bid had forced them to pay more for the ESPN shares. Consequently, they used their media outlets to attack the Westeros system.

For instance, the San Francisco Chronicle, owned by the Hearst Corporation, had been in direct opposition to the Westeros system for several years.

The tipping point for the conflict came from recent events.

Congressman David Melrose, supported by the Hearst family, repeatedly used his power to launch unjustified investigations into the new tech companies within the Westeros system. The real motive was not to protect voters' interests or address alleged monopolies but to safeguard the interests of traditional print media giants like the Hearst Corporation, threatened by Egret's free internet services.

As evidence, the New York Post article included a photo of William Randolph Hearst III and Congressman David Melrose looking like close friends at a party.

For the public, this photo, more than many serious staged photos, strongly suggested collusion, quickly leading many to suspect ulterior motives.

The article prompted the Hearst Corporation's spokesperson to issue a rebuttal, but the initial impression had already taken hold.

Under heavy scrutiny, Congressman David Melrose also denied the allegations, but his efforts were largely ineffective.

Egret portal soon followed with more articles linking Melrose to the Hearst family, revealing that he had received substantial political donations from the Hearst Corporation in his three previous election campaigns, and was receiving similar support for his current re-election bid. Articles from Hearst-owned media were filled with praise, completely ignoring his minimal contributions to his district over the years.

Moreover, as a political representative of the Hearst family, Melrose had recently been advocating in Congress to lift the "cross-media ownership ban" that limits media ownership concentration. If this ban were lifted, the daily news accessible to Americans would be controlled by a few media giants, severely impacting press freedom.

In essence, this congressman's "double standard" in promoting traditional media monopolies while attacking emerging internet industries was utterly shameless.

While the Hearst Corporation and Melrose struggled to handle the fallout from the article, another related article in the Wall Street Journal also garnered significant attention.

"Do You Want to Be a Friend or an Enemy?"

This article didn't delve into the rights and wrongs of the conflict but analyzed its potential impact in detail.

Though not a publicly traded company, the Hearst Corporation still published its financial performance.

In 1993, the Hearst Corporation's total revenue was $2.11 billion, with a 9% growth rate and a net profit of $169 million, reflecting a 12% growth and an 8% profit margin.

Traditional print media companies, much like the American automotive industry, were constrained by powerful unions and couldn't relocate production overseas, resulting in high operating costs. The Hearst Corporation's 8% profit margin already exceeded the industry average.

Currently, the Westeros system alone contributed $65 million in advertising to the Hearst Corporation last year, accounting for 3% of its annual revenue. Losing this revenue would significantly impact the Hearst Corporation's performance in 1994.

Moreover, if Simon Westeros leveraged his influence to make other partners choose sides, the additional negative impact could be at least twice that of the Westeros system's withdrawal.

Assuming the Hearst Corporation's 9% revenue growth from 1993, this conflict could halt its revenue growth entirely in 1994.

For the declining traditional print media industry, stagnating revenue growth essentially meant regression.

Companies must ensure consistent growth to maintain normal operations, considering factors like inflation and natural wage increases.

If revenue growth stalls, increasing costs due to inflation, wages, and debt will immediately impact profits.

Once profits are eroded by stagnating revenue, the next steps are layoffs, business sales, and cost-cutting.

If the situation doesn't improve, bankruptcy looms.

Even industry giants like Reynolds and Nabisco, with impressive revenue and profit records, faced this fate. Five years after their record $33 billion merger, massive debts led to a series of chain reactions, bringing them to the brink of bankruptcy in recent years.

Reynolds-Nabisco, a colossal entity, could fall rapidly; how much more vulnerable was the smaller Hearst Corporation?

The Wall Street Journal concluded that if the Hearst Corporation couldn't resolve this conflict quickly, even a year-long standoff could severely harm its operations.

In contrast, apart from potential public and legal backlash, the Westeros system, far larger than the Hearst Corporation, would suffer no substantial harm.

Simon Westeros's personal wealth was already $200 billion, while the combined wealth of the Hearst family's descendants was under $2.5 billion—a disparity of over 80 times.

Moreover, the Hearst family's once-feared media empire was no longer a threat to the Westeros system.

Not to mention the Egret portal within the Westeros system, Simon Westeros had recently allied with a powerful entity equivalent to the Hearst Corporation: The New York Times Company.

In the booming internet industry, traditional media cannot transition smoothly to the digital age without engaging with the Westeros system.

The New York Times Company made a very wise choice.

Although Simon Westeros clearly intended to control traditional media narratives to avoid negative press, the benefits offered to the New York Times Company were substantial. The move to relinquish Egret portal's exclusive news content rights also undermined accusations of monopolizing internet media.

Most importantly, this collaboration would encourage more traditional media, currently critical of the Westeros system, to reconsider their stance, seeking opportunities to transition to the digital era.

Thus, the question arose: for the Westeros system, do you want to be a friend or an enemy?

The New York Post's exposé was clearly orchestrated by the Westeros system, but the Wall Street Journal's

 report surprised Simon.

However, it was only a slight surprise.

In Western capitalist society, capital truly is everything.

Westeros System vs. Hearst Corporation.

Even if the conflict cost Simon $10 billion, it would be only 5% of his personal wealth. Meanwhile, the Hearst family, with total assets under $2.5 billion, could lose everything.

On the other hand, the Westeros system's assault on the Hearst Corporation had already shown positive effects in just a few days.

From the beginning of the month, Cisco and AOL, the two core publicly traded internet companies of the Westeros system, had seen their stock prices decline by over 5% due to media and political pressure.

Given the nearly $60 billion market cap of these companies, a 5% drop meant a combined $3 billion in paper losses for shareholders.

The sudden revelation of Egret's collaboration with the New York Times on Monday, coupled with the Westeros system's aggressive stance against the Hearst Corporation, significantly boosted market confidence, causing Cisco and AOL's stock prices to rebound.

The previous decline in Cisco and AOL's stock prices stemmed from market concerns over government responses to public pressure. Given the companies' robust financials and growth, a crash was unlikely.

Now, with the New York Times siding with the Westeros system and Simon Westeros delivering a heavy blow to the Hearst Corporation, the situation reversed swiftly.

From Monday to Wednesday, Cisco and AOL's stock prices recovered to their highest points before the recent volatility.

On Thursday morning, Cisco's stock price broke new ground, pushing its market cap past the $60 billion mark.

By the East Coast close at 4:30 PM on Thursday, Cisco's market cap had reached $61.5 billion, followed by AOL at $57.3 billion. The Nasdaq tech sector surged 1.7% driven by these tech giants.

Many hedge funds, betting on a tech bubble burst since the start of the year, had suffered heavy losses by March.

Struggling to hold on until March, the renewed pressure on the Westeros system made short-sellers hopeful for a burst. However, the events since March 21st erased three weeks of accumulated short-term gains, turning them into losses.

Cersei Capital's Cersei Fund Management Company had maintained a long position in tech stocks worth over $5 billion since the start of the year.

With short-sellers becoming active again in early March, Cersei Fund Management increased its long position to $12 billion.

Backed by ample funds and using only three to five times low leverage, the short-term decline in Cisco and AOL's stock prices posed no liquidation risk for Cersei Fund Management.

Now, with the tech sector's strong rebound in recent days, Cersei Fund Management quickly erased over $600 million in paper losses and gained further profits.

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