Chapter 616
Taking Over the Gucci Group
Mattel Corporation is now a large publicly traded conglomerate in the United States (with a market capitalization of US$18 billion). Its businesses include Mattel Toys, Mattel Comics Studios, Fox Film Corporation, 21st Century Fox Television Network, Mattel Property Management, Mattel Investments, and others.
Mattel Group successfully transformed from a toy company into the multinational conglomerate it is today. Its most dazzling investments, dating back to the 1980s, include four major assets: Fox Film Corporation, 21st Century Fox Television Network, Disney, and Pearson.
Of these four assets, Fox Film Corporation and 21st Century Fox Television Network are wholly owned subsidiaries; Mattel is only a major shareholder of Disney and Pearson, but does not hold a controlling stake or control the board of directors or management, and is considered a strategic investment.
Since acquiring Fox Film Corporation in 1983 and forming 21st Century Fox Television Network, the achievements of these two companies have been quite remarkable.
After being acquired, Fox Studios supported the young George Lucas, drawing inspiration from the Vietnam War and Akira Kurosawa's *The Hidden Fortress*, to produce the classic *Star Wars* trilogy, the biopic *Patton*, and the 1980s box office champion *Ghost*. In the 1990s, Fox's *Harry Potter and the Deathly Hallows* once again created a miracle, ushering in the era of the 'Harry Potter money-making effect'.
Among the eight major Hollywood studios, 21st Century Fox has effectively become number one. Moreover, in May 1990, Fox won the bid for the script of "Jurassic Park." In addition, Universal Pictures paid an extra $500,000 to have author Crichton personally adapt the script. The film was scheduled for release in 1993.
Under Barry Diller's management, 21st Century Fox achieved great success, especially after acquiring the rights to "Who Wants to Be a Millionaire?", which sparked a ratings frenzy in the United States, making it one of the most profitable programs in America with advertising revenue of millions of dollars per episode. 21st Century Fox also became the fifth largest television network in the United States.
A series of outstanding investment results propelled Mattel's market capitalization into the top 50 of listed companies in the United States. It's worth noting that Procter & Gamble, ranked ninth, only had a market capitalization of $364 billion, while Mattel's market capitalization had reached $182 billion.
The $180 billion market capitalization is primarily supported by Mattel's major IPs, each a major money-making force. Of course, the company also possesses substantial assets, such as invested properties and strategic investments in Disney and Pearson.
On this day, 40-year-old Chen Wenou, in his capacity as executive director of Mattel Group, visited the headquarters of 21st Century Fox Television Network.
Although he was an executive director, everyone in the group knew he was Audrey Hepburn's son and the rightful successor. Moreover, the entire group highly regarded Chen Wen-ou, given that after graduating from university, he pioneered the "cabbage doll" marketing strategy, and ten years ago he spearheaded the acquisition of Fox and the establishment of Fox Television Network, laying a crucial foundation for Mattel's development.
Group Chairwoman Audrey Hepburn was now more like a retired woman, and the board of directors fully approved of Chen Wen-ou taking over.
Chen Wen-ou moved his business to the United States and naturally became a citizen there, and he also married an American woman. As for his other business—Red Bull Europe—it is currently managed by professional managers, with his younger brother Chen Wen-west becoming a shareholder and director. He is focusing his efforts on developing Mattel Group.
"Barry, how's the preparation for The Voice going?" Chen Wenou asked Barry Diller, president of Fox Television Network.
After the network was established, Mattel's original children's television station was naturally brought under its umbrella, and other television stations were also expanded significantly. Barry Diller was a high-ranking executive at Paramount, and he was exceptionally capable.
Of course, during this period, Chen Wen-ou had Fox TV buy Hong Kong's "Who Wants to Be a Millionaire," which was an extremely clever move that instantly made Fox TV one of the five major television networks.
The only thing Fox TV is lacking these days is its television dramas, which are still missing something.
Furthermore, "The Voice of America" also purchased the rights to "The Voice of Hong Kong," essentially a left-hand to right-hand transaction. Of course, the massive success of "Who Wants to Be a Millionaire" leaves no room for argument.
“Victor, you know, such an excellent program naturally deserves our careful preparation, so it will definitely be able to officially launch next year (1993). I just have some concerns, though, about whether this program will affect ‘Who Wants to Be a Millionaire’?”
According to their management's idea, the main focus should naturally be on the show "Who Wants to Be a Millionaire," since the show has become the most profitable program in the United States since it premiered in 1990, with advertising revenue of millions of dollars per episode.
"No, no, on the contrary, if we only stick to 'Who's the Millionaire?', the audience will eventually get tired of it."
Barry Diller and other senior executives agreed with Chen Wen-ou's views, and they no longer doubted the future of Voice of America.
After inspecting the Fox News headquarters, Chen Wen-ou left in good spirits.
By this point, Mattel had laid the foundation for its future in film and television—the world's most profitable film company and one of the five major television networks in the United States.
Although he is of mixed race, and his son is only one-quarter Chinese, he still considers himself 'Chinese' at heart.
Today, Mattel has established itself in the United States and become a multinational corporation.
After his trip to Fox Television, Chen Wen-ou flew to London, England, on a private jet.
A few years ago, Red Bull Europe moved its headquarters from Austria to London in order to better position itself for the global development of functional beverages.
Upon arriving in London, Chen Wen-ou had no time to rest and went directly to Canary Wharf.
After several years of development, seven skyscrapers stood in Canary Wharf, and some businesses moved in. However, with Thatcher's resignation, the fate of Canary Wharf suddenly became uncertain, as a transportation route was forced to shut down.
Regardless, Red Bull Europe moved its offices into Canary Wharf to support its business.
"elder brother"
Chen Wenxi also attended the European Red Bull management meeting, where he is a director.
"Wenxi"
The two brothers embraced warmly upon meeting, as they don't usually have an easy time seeing each other due to their work.
"Let's go, let's have a meeting first!"
"Um"
In the conference room, a dozen senior executives from Red Bull Europe were waiting for the two brothers.
Red Bull Europe is a privately held company, with brothers Chen Wen-ou and Chen Wen-west holding 70% and 20% of the shares respectively, and the remaining 10% held by management and employees.
Chen Wenou flipped through the documents and said, "This senior management meeting was held to determine the future strategy of Red Bull Europe. When the headquarters moved from Austria to London, I considered that Red Bull Europe needed a complete transformation in order to firmly maintain its leading position in this competitive environment."
Although Red Bull was the world's first energy drink, after entering the US market, companies such as Coca-Cola and Pepsi entered the market, creating significant competition for Red Bull.
In countries including Germany and the UK, various counterfeit products and competing products from large corporations have emerged.
"Firstly, I plan to outsource production, and from now on we will only be responsible for marketing."
These words surprised everyone.
Of course, some management teams were the first to react.
President Williams then said, "Red Bull's formula isn't a big secret, unlike Coca-Cola and Pepsi. In terms of production, outsourcing would save us a lot of energy, allowing us to focus on marketing."
Everyone offered their opinions.
Chen Wenou concluded by saying:
“A mixture of taurine, caffeine, and sugar is actually easy to replicate. But what really sets Red Bull apart is a unique marketing strategy.”
Ultimately, the resolution was passed. The withdrawal from Austria meant ending their own production and instead opting to manufacture through contract manufacturers.
Next, Chen Wenou continued:
"In terms of marketing, we also need to continue to adjust our strategies. What we need to do is to do our best to lead the cultural dialogue and always attract the market's attention until we have a specific attribute and become a 'beverage symbol' that consumers repeatedly choose."
"First, Red Bull needs to focus on topics that interest consumers. Extreme sports, concerts, and music festivals are just a small part of Red Bull's reach. Our content should cover any event or place where Red Bull is needed. Second, we have the ability to sell our brand without promoting the product. Our content focuses solely on consumer enjoyment, not pushing the beverage. In turn, consumers will begin to associate Red Bull with the content they like. Finally, in addition to regular content marketing, another Red Bull marketing strategy is to create 'crazy' promotional gimmicks."
Red Bull may have done this before, but today's event is undoubtedly a comprehensive 'marketing summary and strategy development' conference.
Chen Wen-ou's speech convinced his subordinates, proving he was indeed a boss who rose to power through marketing skills. The "cabbage doll" remains a legend in the marketing world.
After the meeting, Chen Wenou and Chen Wenxi had a private chat in the office.
"Does the Canary Wharf Group need financial assistance?"
Chen Wenxi shook his head and said, "Father has arranged everything. I can afford to wait even ten years, let alone a few. It's the London government that can't afford to wait. After all, such a huge unfinished project will leave a bad impression on politicians and even the London government."
Construction on a major subway line has been halted due to budget constraints in London. Without its completion, transportation to the Canary Wharf area will be less convenient, and office occupancy rates will remain low.
For a typical developer, they definitely couldn't afford to delay this process.
However, Chen Wenxi began to make huge profits from the late 1970s and early 1980s by speculating on gold futures, London securities (during the British bull market of the 1980s), and the British pound (due to the Plaza Accord of 1985), so he naturally had plenty of funds.
Chen Wenou nodded and said, "That's true! Perfect, it frees up your energy to focus on developing the Harold Group."
Chen Wenxi immediately smiled and said, "Speaking of Harold Group, Maurizio of the Gucci family has recently been heavily indebted, and Gucci has not been doing well under his management. It's time to acquire the 50% stake he has saved."
Chen Wenou smiled and said, "In this way, Harrods Group itself is a European luxury department store company, and with brands such as Latour and Gucci under its umbrella, the foundation of the luxury group that Father envisioned has been built."
Don't rush, take it one step at a time.
"But are you confident about running Gucci?"
Chen Wenxi said, "I plan to change the design director and invite the design master Tom Ford from the United States to take the position."
"Okay, you've worked in the luxury and fashion industry for so many years, I believe you can do it."
Chen Wenou cares for his younger brother in every way. Besides their good brotherly relationship, he also receives the lion's share in the distribution of assets and business.
The younger brother, Chen Wenxi's Canary Wharf Group, is worth only three to four billion US dollars, and the key issue is that it is currently facing problems; as for Harrods Group, its total value is only around 10 billion US dollars.
Gucci Group, a subsidiary of Harrods, has an annual revenue of only $2 million, but it actually loses money every year, and the losses amount to tens of millions of dollars.
A few days later, Chen Wenxi, representing Harrods Group, met with Maurizio, the fourth-generation leader, at Gucci headquarters. He was accompanied by other senior executives of Harrods Group, including his sister, Chen Daiyi.
Back then, Chen Daiyi ignored her family's advice, and Chen Guangliang only revoked her status as an heir, but still gave her 15% of Harrods Group's shares as a dowry and allowed her to serve as a director of Harrods.
In recent years, Chen Guangliang has gradually come to terms with it, and Chen Daiyi has been able to further participate in Harold's management and assist her brother.
“Mr. Maurizio, Gucci’s sales reached $2 million last year, but the losses amounted to $3000 million. This situation has continued for two years and has not improved this year. Therefore, we have specifically requested to meet with you, hoping that you can give us, as partners, some explanation.”
Force the palace.
Maurizio gave a wry smile.
When West Hepburn (Chen Wenxi) approached him, she offered to help him defeat his uncle's family, which meant buying 50% of their shares with his assistance. She also promised that Harrods would only strengthen its partnership with Gucci and would not interfere with Gucci's operations.
Now, it's clear they've changed their minds.
We will make changes.
Chen Wenxi shook his head and said, "I don't see such a thing. And according to our investigation, your personal debts have already reached 4000 million US dollars."
Maurizio's father left him a fortune of $2 million, which has now been squandered. It's said that wherever Gucci stores open, Maurizio has mistresses everywhere.
Back then, Maurizio was also a 'lovestruck man,' willing to have a huge fight with his father and then leave home in order to marry the Black Widow. However, starting in the late 1980s, Maurizio and the Black Widow's relationship broke down, and a confrontational drama began.
Upon hearing the other person mention his debts, Maurizio couldn't help but ask, "West, what do you plan to do?"
Chen Wen said regretfully, "I have always respected the Gucci brand and the Gucci family, and I can't bear to see such a brand decline. If you, Maurizio, are willing, we are willing to buy the remaining 50% of your shares."
Maurizio was prepared, but he didn't expect it to happen so quickly. He didn't try to resist because he knew West was not short of money, and his mother was the famous Audrey Hepburn, one of the greatest businesswomen.
What price are you offering?
Chen Wenxi said, "1.2 million US dollars. In addition, we invite you to continue serving as honorary chairman, and we will give you a remuneration of 100 million US dollars per year, with no time limit."
Maurizio's heart skipped a beat; the offer was simply too good to pass up.
Gucci has suffered losses of over 3000 million for two consecutive years, and this year (1992) will not be different. His confidence in running Gucci has also diminished.
The price of 1.2 million is actually reasonable and not exorbitant.
But with an annual reward of $100 million, valid for life, it's clearly a gamble worth taking.
"not enough"
Maurizio started to raise the price, after all, he was short of money.
Chen Wenxi frowned. This down-on-his-luck guy actually had the nerve to bargain, but he still started negotiating with Maurizio.
After all, Harrods Group cannot truly be a luxury goods group without Gucci.
Fortunately, the two sides eventually reached a preliminary agreement. (End of Chapter)