The Alliance Comes Apart

"I'm heading out," Ethan told Sergey. "Look after everyone. Enjoy the party."

"You're the guest of honor. We were waiting for you to get it started."

"Another time. Tonight I have someone to see."

Sergey studied him. "You said 'see' like you were about to visit the president."

"An Adams."

"Which Adams?"

"The family that traces its history back to the founding."

That ended the argument. Sergey thanked him for stopping by and promised the others would manage without him.

Ethan had come to New York for Hasbro's shareholder meeting. The success of Iron Man and Captain America had sent Marvel merchandise out of warehouses almost as quickly as Hasbro could fill them. He had ordered a larger production run before either film opened. The gamble had paid off: the latest sales reports showed more revenue in a few months than some older Marvel lines had made in a year. Licensing from MGM's other properties helped too.

Profits settled arguments. Shareholders who had once accepted Ethan's influence only because they had to were starting to welcome it. Hasbro and Twin Star Entertainment were exchanging staff and production knowledge below the executive level. Once Twin Star reached the public markets, Ethan hoped to bring the companies into closer coordination. Their products served many of the same customers. Separate silos would waste an opportunity.

John Adams had been warned Ethan was coming. He met him at the door, smiling broadly, and embraced him. Months earlier, Ethan had shown him a proposal for a five-percent advisory stake in Lionheart's infrastructure subsidiary. Adams had neither accepted it nor touched the memo. Any such arrangement would have to wait until after his retirement and cooling-off period, and would require ethics clearance. Even a possible future tie made a conversation about government policy delicate.

After the household staff left them alone, Adams sat across from him. "What brings you here in person? I doubt you flew across the country to discuss a movie."

"A movie business question. The kind that changes who gets to show one. Do you know the Paramount consent decrees?"

"I know Paramount Pictures. Start from the beginning."

Ethan described the old studio system. A handful of companies had once controlled production, distribution, and many of the theaters where their films played. That power reached beyond actors and directors to the audience buying tickets. A smaller producer could make a film and still struggle to put it on a screen. The federal antitrust case and the resulting court decrees had forced the majors to divest their theater chains and changed the industry's structure for decades.

"You want those restrictions changed," Adams said.

"I want the industry to be able to examine them honestly. They were written for a different market. Production costs keep climbing, and we negotiate separately with exhibitors, distributors, and regulators in every territory. Theater ownership could give a studio another way to invest in audiences."

Adams let him finish. "That argument will have opponents. The large chains will see a threat. Independent producers will remember why the decrees exist. And these aren't a law a president can simply repeal for you. You're talking about courts, antitrust officials, and evidence about the market as it exists now."

"Then that's where the case has to be made."

"By counsel, with a record. Not by a private promise from a friend in uniform." Adams glanced at him. "Given the proposal you showed me, I cannot take part in any official matter involving your companies. Ethics counsel will need to review even a referral."

Ethan had expected resistance. He had not come thinking Adams could sign away six decades of competition policy over a drink. What he wanted was a sense of the terrain and of the people who would be willing to discuss it in public.

"What about the politics?" he asked. "Hollywood spends most elections supporting Democrats. Bush was inaugurated again last month."

"Politics can change the climate, but it doesn't decide a court case," Adams replied. "Your platforms reach millions. Both parties will come asking you for access or support. Be careful about trading that reach for a favor you cannot lawfully receive."

Ethan thought of Facebook and Lionheart. Politicians still spent heavily on television and newspapers, yet online audiences had already proved they could gather around a single story in minutes. He had seen what a live stream could do during a major event. The next campaign would notice too, regardless of which party made the first call.

"You favor one side?" Ethan asked.

"The military doesn't have that luxury. My relatives have their own views and businesses. Don't confuse those with my office."

That answer was less convenient than Ethan wanted, and probably more useful. He could support a lawful public argument for revisiting old restraints; he could not treat Adams's name as a switch to flip whenever an acquisition drew scrutiny.

"The first test may come sooner," Ethan said. "I intend to bid for Warner Bros. Disney will object."

"Have your lawyers build the case," Adams said. "If they think a meeting with independent antitrust counsel would help, my lawyers can tell yours who handles such questions. I won't intervene in a transaction involving a company with which I might someday have a private arrangement."

Ethan nodded. "Fair enough."

Adams asked when Lionheart would go public. Ethan said he had no date; he wanted the service's fundamentals secure and expected at least another year. They discussed its prospects, then let the policy question rest. The old advisory proposal remained with Ethan's counsel, unsigned and conditional.

A week had passed since the meeting at Spielberg's house. Ethan still did not know everything the six companies had said after he left. He did know Paramount and Universal had each contacted him privately.

Brad Grey was furious when he called. The proposal the six had put in front of Ethan was not equally generous to its members. Disney had wanted fifteen percent of Lionheart and Warner ten. The remaining four would divide fifteen percent among themselves, less than four percent apiece. Ethan had offered each of those four 7.5 percent under negotiated terms. For Paramount, the difference was too large to ignore.

Grey had one condition before he broke with Disney. Paramount owed it money. He needed a bridge loan to settle that obligation cleanly. Ethan agreed in principle, with documentation and review by the parties' finance and legal teams. He would not quietly pull cash from Lionheart's operating accounts to finance a personal alliance. The amount was substantial, but the opportunity was larger.

Late February approached. The Grammys were days away, and the Oscars would follow. Hollywood had nearly finished taking stock of 2004. Paramount chose that moment to make its break public.

Its statement called the previous year's release fighting unhealthy for audiences and damaging to the writers, crews, and performers whose work depended on schedules that stayed put. Paramount would resume cooperation with MGM and discuss opportunities in streaming. MGM and Lionheart answered with a warm statement of their own.

Less than an hour later Universal issued one too. It wanted deeper talks on streaming and a transaction that could bring Hulk and Namor film rights back toward Marvel, subject to the contracts governing them. Marvel promptly confirmed that a new Hulk project was being explored.

The speed of those announcements shook Sony and Fox. Both called Ethan before evening. By nightfall, they had announced frameworks to discuss joint development of Spider-Man, the X-Men, Fantastic Four, and Deadpool across their existing licenses and Marvel's connected film plans. No rights had magically changed hands. To fans, the prospect alone sounded enormous.

Disney and Warner still had their choices to make. The alliance they had led no longer did. The campaign against MGM, known inside the studios as Operation Leo, had come apart in a single day.