Chương 95: Book 3 - Chapter 17 B

The next morning I went to visit Time Inc. Like the others, it was a surprise visit. I relaxed Nick Nicholas talking about publishing and how my Marvel Comics were doing.

"American Wireless is doing really well. It won't be much longer until we take the number one spot for subscribers after taking your number two spot. We haven't even moved east of the Mississippi yet either." Nick visibly bristled at that.

"We are more than a cable company," he said with some derision.

"You're right," I responded immediately.

"I'm jealous of the management talents you develop here. Right now I'm running into trouble. I'm looking at acquiring a couple movie studios, but they don't come with any good managers.

"Time Inc is the epitome of good management," I said, complimenting to smooth his ruffled feathers.

"I'm interested in two things: acquiring Time Inc and putting its management over all my media and distribution acquisitions and using the purchase to move my assets onto the stock market."

"A reverse IPO?" Nick asked.

"Sort of? In a traditional reverse IPO you would buy American Wireless, but it would be in control as it is the more valuable asset. The key change I'm looking for here is having voting and non-voting stock," I explained.

"You don't have that, so I had to come up with a way to create it."

"That is a very interesting difference. How would you propose creating voting stock?" he asked.

"A traditional merger creates new shares and distributes them according to previous ownership percentages. My idea is to have two sets of shares issued instead, a Common Share and a Voting Share."

"That is a fascinating solution. What would you put into the merger?" Nick said, sitting taller and alert.

"I'd be leveraging the value of my media-related assets and cash from other sources," I told him.

"So a buyout and merger of how many companies? I assume that it is similar to the multi-company merger you successfully organized in Europe?"

"Very similar. I'm going to give you the names of the companies I'm looking at, but I want you to keep it to yourself. None of them know who else I'm talking to, but I'm telling you because I want you at the top if it happens.

"Do you agree to not discuss it with anyone until I give you the okay?"

"You have my word," Nick said with seriousness.

"Okay, Warner, Gulf Western and Time plus American Wireless," I said, ticking off the four fingers.

"That's a dream team, and much more than taking the medium level companies and creating something larger like you did with Euro Motors. What makes it successful?" he asked. I appreciated his questions. They confirmed he was the man for the top. He understood immediately the broad strokes and what the important details were. He also had a much better idea of who I was than Martin Davis at Gulf Western.

"What makes Euro Motors work is Georges Besse's ability to manage and direct supply chains and production. What will make this work is Time's Church and State approach. The separation of media producers and media distribution. That and your fantastic management training program." He sat quietly as he contemplated it. I waited. I was in no hurry.

"Since you want Voting Shares, you must want control. How do you plan to divide that?" he said after a few moments.

"Part of the merger agreement will be setting a price for the Voting Shares. They will have no tangible value, unlike the Common Stock which signify ownership and receive dividends. I expect American Wireless to be worth around 40% of the new company."

"So much?" he questioned.

"Yes. It's been an incredible thing, like finding a unicorn," I told him. He laughed at the description but nodded in understanding.

"Go on," he said, "I interrupted."

"Right, the voting stock. I expect to get 40% for my share of American Wireless, I'll buy the rest of it from the shareholders. I have an investor who will take 30% and I plan to hand out 10% to each of the CEOs involved."

"That's quite the sweetener," he said.

"It's clear you want control, but not management." If you stumble upon this narrative on Amazon, it's taken without the author's consent. Report it.

"The key is control," I said.

"And I am willing to pay for it in cash."

"Time is a thirteen billion dollar company. To really make this work you need a good numbers guy. Do you have that?" he asked.

"Do you have someone to recommend?" I asked, recognizing that he was looking for a way to help.

"Gerald Levin, he's Vice Chairman here at Time. I'm sure the other guys have their go-to person. Getting the big egos to come to an agreement will be difficult. I've been looking at Warner and the slimmed down Gulf Western as a merger partners for a while now just for those same reasons. I like Warner better, they have excellent overseas distribution," he said, positive, yet still cautious.

"Then I'll be in contact in a few days. We'll get everybody in the same room, and talk things out." I returned to my hotel suite, the blueprints for TWP Media were long complete in my mind. The merger was a massive structural play, but the real profit lay in the timing. I needed the stock prices of Time, Warner, and Gulf Western to be as low as possible during the final valuation window. My memories of the future gave me the tools for the financial battle to come. They were excited by what I had done in Europe.

I made it clear from the beginning, this time I was seizing control, not just participating. I picked up the phone and dialed the private number for my broker at the bank in the Caymans.

"Mr Rollins," I said, once the call was connected.

"John, a pleasure as always. Your accounts are quiet, as you instructed."

"That's about to change. I need you to execute a series of very specific short-selling orders. These are aggressive, Mr Rollins, and must be timed perfectly. My name and connection to these trades cannot surface, under any circumstances. This is why I use your firm."

"Understood. What are the targets?"

"Time Inc, Warner Communications, and Gulf Western."

"Those are large caps, John. You want a short position on three major media companies simultaneously?"

"Yes. But the timing is everything. Begin building the positions quietly now. I want all three stocks, but especially Time Inc, shorted aggressively starting October 12th, 1987. I want you to sell into the volume that will be generated by an upcoming merger announcement."

"Selling into a spike... a dangerous strategy, but profitable if the floor drops out."

"The floor will drop out. I want you to use the maximum leverage allowed on my margin, hitting all three stocks hard on October 12th, 13th, and 14th. Then, you will wait. On October 19th, 1987, the market will experience an unprecedented correction. At the end of that day, you are to close out all short positions at market price." Mr Rollins whistled softly on the other end.

"Closing out shorts after a market correction that's potentially a massive profit, John."

"Exactly. But that's not the only shorting you'll be doing. I'm going all in with this. Everything left in my accounts after Euro Motors. Everything in my Grandpa's accounts too. Use every penny, and mortgage everything else and run on the biggest margins you can get."

"How big a drop are you expecting?" he asked, the news concerning him.

"Nearly 25% in the US, other places nearly 50%."

"My God!" he gasped.

"Is it the start of a new great depression?"

"No, it'll recover. A year or two and it'll be back to where it was. But in the short term, this is the most profitable financial event of the decade, and we are going to capture every cent of the global panic." Rollins was silent for a moment, clearly trying to process the magnitude of the revelation.

"John, I have never handled an order this large. To short three major US stocks and then have enough capital left to play a global correction... this is unprecedented."

"That's why you have your instructions for the US markets. Now, you need the schedule for the rest of the world. The panic will travel like a tidal wave across the time zones. We will be positioned to ride the crest in every major market."

"Here are the instructions for the rest of the capital," I continued, speaking slowly and deliberately.

"First, Europe. You need to have short positions ready in London, Frankfurt, and Paris. I want you to short the major European indices—the FTSE and the others—aggressively at the market open on Monday, October 19th. These markets will react immediately to the early US selling. You will hold those positions and then close them out at the market close on Tuesday, October 20th. That second day will capture the full realization of the American disaster."

"Second, Asia-Pacific. This is where the panic will crest. You must focus on Hong Kong, Sydney, and especially Tokyo. I want you to open massive short positions on the Nikkei and the Hang Seng at the open of their trading day on Tuesday, October 20th, local time. You will hold them through the worst of the panic selling."

"When does that stop?" Rollins asked, his voice now purely focused on the trade mechanics.

"The Asian markets will be chaotic, and they will see the biggest percentage drops, nearly fifty percent in some cases. The freefall stops the following day. Close out all Asian short positions at the market close on Wednesday, October 21st, local time."

"So, we use the cash from the US exit to fund the European exit, and then use that capital to fund the Asian exit," Rollins summarized, his confidence returning as he saw the capital recycling plan.

"Exactly. It's a chain reaction. We sell into the panic, secure the cash, and move immediately to the next market before they stabilize. We will be exiting the global positions on Wednesday, October 21st. All that cash—a significant, undeniable profit—must be fully settled and transferred into my Grandpa's investment account by Friday, October 23rd, end of day, New York time. That is the day I'll start spending the money, buying out the investors who are still panicking." Rollins took a deep breath.

"This is a beautiful, if terrifying, set of instructions, John. When you say you're going all in, you really mean it. I will begin preparations immediately to handle the liquidity and the jurisdictional transfers."

"Do not fail me, Mr Rollins. The world will be in chaos, but we will be entirely prepared." I hung up the phone, a small smile of satisfaction settling in my stomach. They called me 'Billionaire Boy' after Europe. I'd need a new nickname after this.