Daenerys Entertainment headquarters.
Nancy Brill had barely stepped off the plane when a driver whisked her straight here. Outside Amy Pascal's office she caught Amy escorting three tall, striking women out the door. The women didn't know Nancy, but they all offered polite hellos before heading down the hall.
Once they were gone, Nancy followed Amy inside and asked, "Those the three Wonder Woman finalists the boss picked?"
Amy circled behind her desk and nodded. "Yeah. We lined up a few small parts for them; they just finished auditioning."
Nancy settled into the chair opposite. "I liked the one in the black trench coat. The other two, one's too soft, the other's got too much baby face. Not quite right."
"Linda Carter had a baby face too," Amy said. She dropped into her chair and got to the point. "Wayne Huizenga called this afternoon. He says you're driving him insane."
After the acquisition by Huizenga and his partners, Blockbuster's headquarters had been set up in the small town of Morrison, south of Denver, Colorado.
Nancy had flown to Morrison yesterday afternoon to attend this morning's routine board meeting, nothing major on the agenda.
Yet during the meeting she had suddenly rallied several other directors to pressure management into funding an upgrade of the data-management system and creating a dedicated analytics team.
When Daenerys took its 35% stake, it had promised not to interfere with management for three years. Everyone Daenerys and Blockbuster alike knew such promises were never absolute.
Blockbuster had already accepted Daenerys's earlier suggestion (Nancy's idea) to add merchandise counters inside stores.
Rapid expansion, however, kept the company perpetually cash-strapped.
After arriving yesterday, Nancy had privately pitched her new data plan to Huizenga. At a projected $20 million, he had no choice but to refuse.
Then this morning happened.
Daenerys's board representatives were temporarily restricted from certain votes, but the other directors were not. Nancy had quietly convinced them to back her.
Understanding why Amy had intercepted her straight from the airport, Nancy pulled a file from her bag and handed it over. "Amy, Blockbuster is adding stores fast, but can you believe they're still running basically the same system David Cook built years ago? It only spits out crude data, like which tapes sell best. Fine for a few dozen or a hundred locations. Once you hit thousands, it's primitive and inefficient."
Amy listened while flipping open the file: a survey of Blockbuster operations in several major California cities.
When Nancy finished, Amy glanced up. "Still, Nancy, you should have talked to us first."
"Sorry. I only got this report yesterday afternoon before leaving L.A.," Nancy said. Then she continued, "The video-rental barrier to entry is low. If we just keep expanding without raising operational standards, we'll end up with a six-hundred-pound gorilla that can't even walk. Any healthier competitor will lap us on the track."
Amy gave a small nod and fell silent, reading the report carefully.
Through hard data, Nancy demonstrated why Blockbuster needed the upgrade and an analytics team.
Walmart, Aldi, their success rested heavily on passing savings to customers. But sustained low prices required thin margins, which in turn demanded ruthlessly low operating costs.
Walmart and Aldi achieved that through streamlined, efficient systems.
Blockbuster's current share of the rental market was barely 5%. To grow and stay dominant, it had to emulate them.
For a video chain, a sophisticated data system would let the operations team precisely track terminal sales and adjust purchasing, inventory, and logistics in real time. Higher efficiency meant lower costs and fewer employees.
Walmart at its peak employed over two million people, retail labor was astronomical. Blockbuster, with just five hundred stores, already had over three thousand staff.
Finishing the report, Amy understood why the other directors had sided with Nancy.
Anyone with a little vision would see the long-term benefit.
Even Huizenga, in his complaining call, had conceded the idea was sound; he simply wanted delay it, cash flow was too tight.
Of the $120 million Daenerys had invested, more than half had vanished in the past month paying debts and payables. The remaining $60 million, plus ongoing store revenue, would keep the company afloat perhaps six months.
Management was already thinking about second-half financing.
Closing the file, Amy said, "All right, Nancy. I'll send this to Simon. We'll let it slide this time, but no more surprise attacks."
Amy wanted to move on, but Nancy wasn't finished. "Huizenga only approved ten million for the system upgrade. The analytics team and movie-database proposal got shot down. I'm wondering, could the company fund it? It wouldn't just help Blockbuster; it would be huge for Daenerys too."
The report also recommended a dedicated analytics team and eventually a comprehensive movie-information database.
The idea had actually been sparked by recent turbulence in Japanese markets.
When news broke that Simon was playing Japan, ordinary people suddenly paid attention to financial news and that shifted entertainment habits.
Nancy's research team found customers at many Blockbuster stores asking clerks to recommend finance or corporate-intrigue films. Too often the clerks didn't know the titles or the stores lacked stock.
Most Blockbuster employees were just earning a paycheck; many were part-time. No one could expect encyclopedic film knowledge from them.
The primitive data system also meant customer demand never reached management quickly enough to adjust inventory.
All of it bred inefficiency.
Nancy was convinced her proposed team and database would fix that and even create opportunities.
For instance, this time: if an analytics team had caught the uptick in demand for financial dramas, procurement could have instantly pulled matching titles from the database and redistributed stock.
Finer-grained data could even predict regional differences, avoiding waste in purchasing, warehousing, and shipping.
And with company-backed data, even a less knowledgeable clerk could confidently say, "Oh, you like that genre? You might enjoy Oliver Stone's Wall Street."
Across the desk, Amy felt the urge to rub her temples. "Nancy, a team and database like that might help Blockbuster a lot, but it won't generate direct revenue or profit. If we fund it, we don't make money, we keep spending. The company can't do that."
"I already talked to Huizenga," Nancy replied. "Daenerys could set up a separate subsidiary, then sign a cooperation agreement with Blockbuster. Run it a few years; when Blockbuster is strong enough, they buy the subsidiary and we recoup the investment. Or, if the value is obvious, we could demand a stock-swap merger and gain more Blockbuster shares."
Amy almost argued further, then hesitated. "I'll forward the report to Simon. If he approves, I'll get you the budget. But you just launched Blizzard, you're still running consumer products, if you add this company, are you sure you can handle it all?"
"No problem," Nancy said. Seeing the matter settled, she stood to leave. "If there's nothing else, Amy, I'll head out."
Amy walked her to the door. "Tomorrow night's Rain Man celebration, are you coming?"
From February 10 to 12 the ninth weekend, Rain Man had finally crossed the $100 million mark. In those seven days it added another $6.63 million, bringing the cumulative total to $100.632 million.
Daenerys had announced Monday that a celebration party would be held Saturday evening, part victory lap, part Oscar push.
Nancy had nothing scheduled tomorrow night, but she declined anyway. "I'll pass."
Amy didn't press. "Then tomorrow pick out a gift or at least a card and have someone deliver it to Janet."
Nancy paused. "Hm?"
Amy explained, "Wednesday is Simon's birthday. Janet probably flying to Melbourne the day after tomorrow."
Nancy stood there a moment, then smiled. "I figured you'd be the last person to remind me."
Amy was thirty this year; Nancy, though shorter and looking younger, was actually several years older and had more industry experience. She was well aware of the subtle wariness Amy had shown her lately.
Simon's twentieth birthday party last year had been huge, but without Amy's nudge Nancy would have forgotten entirely. If everyone else sent cards or gifts and she alone ignored it, Simon might notice.
"I'd love for you to forget," Amy said, holding the door open with a shrug. "But still…"
Nancy lingered instead of leaving. "I'm terrible at this stuff. What are you getting our little boss?"
Amy answered, "A box of pencils."
Nancy blinked. "Kind of cheap, no?"
"I had them brought in specially from Germany. And honestly, what could we possibly give him that would surprise him? Even if something exists, you and I probably can't afford it."
"True enough," Nancy said. Thinking about Simon's ever-swelling fortune, she pondered her own gift choice. Aloud she added, "I definitely can't afford it. You, though, maybe."
Amy's compensation package wasn't secret: 5% of annual net profit plus equivalent long-term equity. On last year's $238.73 million profit, that meant over $20 million.
By comparison, Robert Rehme and Robert Iger's deals capped annual bonuses at $3 million beyond base salary. Nancy's own three-year contract offered $150,000 salary plus up to $1 million bonus.
Those three packages aligned with major-studio equivalents.
Everyone understood: Amy had left a Fox vice presidency to bet on an unproven kid. Failure would have made her a joke in the industry. The rich terms were fair reward for risk.
In a real sense, Amy was Daenerys's co-founder.
Nancy felt no resentment; she didn't care if others did.
Amy had joined in March 1987; her bonus would settle next month. With post-New-Year splits from Rain Man, Dead Poets Society, and others rolling in, her cash this year would actually exceed 5% of the stated profit.
Still, aware some colleagues felt the imbalance, Amy let the topic drop and simply smiled. "The full 1988 numbers finished this morning. Consensus is to keep them quiet. If you want to see them, come by my office next week, no taking the file out, no sharing."
Nancy nodded. "Understood."