Ever since coming back from Kansas City, Bruce had buried himself in research on AMC and Peter Brown. He had been at it all night without stopping.
Watching him from across the room, Wendy Solo could not hide her concern anymore.
"Mr. Guo, everyone hits setbacks," she said gently. "Trying to force an answer usually makes things worse, not better. Sometimes if you stop pushing so hard, the answer shows up on its own. And right now, more than anything else, you need sleep. You've been up for a full day."
Bruce looked up at her.
Her face, usually bright and composed, was a little pale now. She looked tired herself, and the concern in her eyes was impossible to miss.
Something in him softened.
"All right. I'll listen to you," he said with a faint smile. "I'm done for now."
He pushed the stack of documents away and stood.
The truth was, after grinding through more than a hundred reports and staying up this long, he already understood most of it. He had finally figured out why Peter Brown rejected what Bruce had considered a deal with no downside.
The first reason was structural.
AMC was different from chains like Carmike and Cinemark. Most of AMC's theaters sat in prime locations in major U.S. cities. More importantly, as one of the pioneers of the modern multiplex, AMC generated an unusually large share of its revenue from concessions and food service. Nearly forty percent of total revenue came from that side of the business, one of the highest ratios in the exhibition industry.
That meant AMC was not just in the business of selling tickets.
It needed major films to pull people into the building so it could make money on food and drinks too.
The second reason was timing.
DreamWorks had poured $103 million into Gladiator. Since opening on August 3, the film had done $34.819 million in its first week and immediately taken the top spot at the box office. Among all the films released in 2000 so far, it trailed only Warner's The Perfect Storm and Paramount's Mission: Impossible 2.
It was clearly headed for a breakout run.
And Paranormal Activity had the bad luck of running straight into it.
The third reason was Peter Brown himself.
After Stanley Durwood, the man who had led AMC for nearly four decades, died the previous year, Peter Brown took over. A Princeton graduate, Brown was known as a careful, conservative operator. During his first year in control, he had made almost no major structural changes to AMC's management or strategy.
Put those three things together, and Bruce's answer became obvious.
Peter Brown did not reject the proposal because it lacked logic. He rejected it because he did not have enough confidence in Paranormal Activity.
And even if the movie somehow did reach the fifty-million-dollar mark Bruce had projected, the incremental ticket revenue AMC would gain still might not outperform what those same screens could generate by continuing to ride Gladiator, both at the box office and at the concession stand.
One option required taking risk.
The other had already proven itself.
For a conservative operator like Peter Brown, the decision was almost automatic.
As for why AMC rejected the wager but still added fifty screens afterward, Bruce's working assumption was that the extra screens came from AMC's largest multiplex locations, sites with six screens or more, often much more.
Those locations had already reserved enough capacity for Gladiator. The remaining screens could be used to diversify the lineup and serve different audience tastes without materially harming AMC's core economics.
Once Bruce worked through all of that, the frustration finally started to lift.
He understood the logic now.
And understanding made it easier to let go of the sting.
"Wendy, send Buddy in," he said.
Then, seeing the concern still lingering on her face, he added with a smile, "Don't worry. Once I finish settling the release plan, I'll go home and sleep."
She gave him a skeptical look.
"You mean that?"
"I do."
That finally brought a smile to her face.
"Good. Then I'll go bring the car around first."
"Sounds good."
Bruce watched her tall, graceful figure disappear through the door.
Then he began gathering the files on his desk. He had just stacked them neatly on the shelf by the wall when Buddy Morris stepped in.
"Mr. Guo, you wanted to see me?"
Bruce pointed to the chair across from his desk.
"Sit."
Buddy took the seat, then said at once, "Wendy told me you've been in this office working nonstop for a full day. You really need to take care of yourself."
Bruce nodded. "I appreciate it. I'm going home to sleep after this."
Then he went straight to the point.
"Now that we've locked in Cinemark, how many screens are we at?"
Buddy answered immediately.
"With the smaller chains we added afterward, we're at 927 screens total."
"927."
Bruce nodded slowly.
"It's still short of where we wanted to be, but not by that much."
Buddy gave a firm nod.
"Honestly, I think it's already a very strong result. We're a small company with no real market weight yet, and this is a $1.5 million horror picture. Even if we handed the movie to Miramax or Lionsgate for distribution, I'm not sure they'd get us much more than this."
In Buddy's mind, companies like Universal and Warner were still in another universe entirely. For him, Lionsgate and Searchlight already counted as major players.
Bruce understood the point.
And he also knew 927 screens was the practical ceiling for a film like this before release.
"All right," he said. "Then we move forward. Set the release."
Buddy brightened, but only for a second.
Then the concern came back.
"Mr. Guo, should we push the release date back a little? Gladiator is still on fire."
Bruce wanted Paranormal Activity in the market as quickly as possible. He had plans stacked behind it, and every delay pushed everything else back. But he also knew better than to smash directly into a film like Gladiator without a reason.
He thought it through, then gave the answer.
"Move it to August 18. Give it a two-week buffer. By then, Gladiator should be past its peak."
Buddy nodded.
"I'll let Kevin know right away."
He started to rise, but Bruce stopped him.
"One more thing."
Buddy sat back down.
"I want you to find me an operations executive with real theater-chain management experience."
Buddy stared at him.
"A theater-chain operator?"
Bruce nodded.
This time, the lesson had landed.
Peter Brown's rejection had partly come from Bruce's own misread of the economics, but it had also exposed something he no longer wanted to tolerate: Matrix Pictures had no control over exhibition.
And Bruce was done being weak at the end of the pipeline.
Matrix Pictures was not one of the Big Six. It did not have the content leverage those studios could use to force favorable terms on exhibitors. If he could not close that gap in the short term by turning Matrix into a major studio overnight, then the best move was obvious.
Build his own chain.
The old Paramount Decrees that once prevented studios from owning theaters had been gutted for years. Since the Reagan era, that barrier had been fading fast, and by now it was little more than a shell. Viacom already owned both Paramount and National Amusements. Later, Wanda would own both AMC and Legendary.
The wall was gone.
Buddy hesitated.
"That kind of investment takes serious capital. We don't exactly have..."
Bruce cut him off.
"I'll handle the startup capital. After that, if Paranormal Activity hits the way I expect, the rest of the funding problem solves itself."
Buddy did not know the future, so he had none of Bruce's confidence in what Paranormal Activity was about to become.
Bruce did.
He knew the series would eventually do around $200 million worldwide at the box office. And for films, the real money did not stop with theatrical. Home video, TV rights, streaming down the line, merchandising, it all added up. Bruce estimated that Paranormal Activity as a property could generate close to $400 million in total revenue. Of that, Matrix Pictures should ultimately keep something between $80 million and $120 million.
That was enough to build three to five premium multiplexes in prime areas of major cities like Los Angeles and San Francisco, even if they bought the real estate instead of leasing it.
Buddy, of course, had none of those numbers in his head.
But he was CEO, not owner. If Bruce gave the order, his job was to execute it.
Bruce continued.
"I have four requirements.
"First, the locations have to be in high-traffic zones in major and mid-sized cities, preferably right next to major retail centers.
"Second, every site needs at least nine screens."
Single-screen and small-format theaters were going to get crushed by the internet over time. Multiplexes were the future. If Bruce was going to do this, he wanted to do it right the first time.
And he had no delusions about becoming the next AMC or Cinemark.
That was not the point.
He did not need to dominate exhibition nationwide. He just needed enough controlled screens that Matrix Pictures had real leverage when releasing its own films and negotiating with bigger studios.
He added, "And every location needs one IMAX auditorium."
That was where the industry was going anyway. Better to build for it now than pay to retrofit later.
Buddy looked like he wanted to comment on how expensive that would be, but then thought better of it.
Bruce kept going.
"Third, every theater has to include a proper food operation. Not just popcorn and bottled water. I want pizza, burgers, hot dogs, sandwiches, drinks, alcohol. I want customers to get an experience there they can't get from any other chain."
In the internet era, the real money in exhibition was not ticket sales. It was food and beverage. Better service meant stronger customer loyalty, and Bruce had already seen where the industry would eventually go.
"Fourth," he said, "we buy the real estate too. Twenty percent down, finance the rest, stretch the repayment schedule."
Rent accounted for roughly eighteen percent of a theater chain's expense structure. That was too large a drag to ignore if there was a way around it.
And Bruce also knew something else.
Within two years, U.S. real estate was going to surge. Before the subprime collapse, prices would climb dramatically, and even after the crash, values in prime urban areas would still sit well above current levels.
So buying now, especially in dense city-center locations, was not just a strategic move for the exhibition business. It was also a real estate trade.
Buddy finally said what he was thinking.
"Mr. Guo, with your specifications, each site could easily cost more than ten million dollars. In cities like New York, Los Angeles, or San Francisco, it could be double that."
"I know," Bruce said. "So structure the financing with back-loaded repayment. That keeps the near-term pressure manageable. And for this plan, I'm committing at least sixty million dollars to the company this year. Separate from film production capital."
Buddy looked at him for a second.
Rich men made decisions one way.
Everyone else made them another.
There was not much more to say.
"Understood," he said. "I'll contact the headhunters and start looking for the right operator."
"Keep me updated."
Buddy nodded, then stood.
"One more thing, Mr. Guo. You really do need to get some sleep."
Bruce gave him a tired smile.
"I'll leave as soon as I finish putting these files away."