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🕑 Added 2025-06-02 16:28:30 +0000 UTCChapter 226: The Old Rules
Penelope Cruz, a well-known actress from Spain, had been to plenty of high-end places, but she’d never seen anything like the breathtaking private estate of “Mid-Hill Manor.” It was straight out of a fairy tale—everything you could ever want, right there.
“I love it here!” Penelope said, linking her arm with Dunn’s and taking a deep breath of the flower-scented breeze, her face glowing with delight.
Dunn smiled. “If you like it that much, stay as long as you want. I’ll set aside a room for you.”
Penelope pursed her lips, hesitating for a moment before giving a soft smile. “I’m good with whatever you say.”
Dunn nodded lightly. “Later, take a look around and see what kind of car you’d like. Just tell the butler, and we’ll order a few.”
“Huh?” Penelope’s eyes widened as she stared at him. “A Lamborghini?”
“Sure.”
“What about… a Bugatti Veyron?”
“Yep.”
“I love Koenigsegg—the red one. It’s so gorgeous!”
Dunn chuckled, pulling her close by the shoulders. “Anything you want, we’ll get. If you’re staying here, I’ve got all the expenses covered.”
The film market in Spain is tiny, and actors don’t make much. Even in Hollywood, Penelope was just a minor player, pulling in a max of $250,000 per gig—barely enough to keep up her glamorous lifestyle. Now, with one generous word from Dunn, she could have the supercars she’d always dreamed of. She was over the moon.
“Dunn, you’re amazing!” Penelope bounced with excitement, wrapping her arms around his neck, her cheeks flushed. “I get it now—why all those women love being with you.”
She snuggled into his arms as they walked into the mansion, chatting and laughing. The first thing that hit her was the stunning classic decor. The second? She nearly collapsed in shock.
If Dunn hadn’t been holding her tight, Penelope might’ve crumpled to the floor.
Coming toward them was a familiar face—Natalie Portman!
Dunn could sense Penelope’s embarrassment and felt a little guilty himself. Putting on a calm front, he smiled and said, “Nat, this is Penny—Penelope Cruz. She’s a new friend who’ll be staying with us for a bit. Penny, this is my girlfriend, Natalie Portman.”
Penelope’s face went pale. She couldn’t even muster a word.
Natalie shot Dunn a quick glare before plastering a polite smile on her delicate face. “Hi, Penny. I’m Natalie. Welcome to our home.”
Penelope’s mind was racing, trying to figure out what was going on between Dunn and Natalie. She’d heard Natalie was a Harvard student—super smart, no doubt. There’s no way she couldn’t see what was up between her and Dunn. Were they… in an open relationship or something?
Since the lady of the house had greeted her so warmly, Penelope quickly stepped away from Dunn and stammered, “Hi, Miss Portman. I’m Penny, from Spain.”
Natalie didn’t glance at Dunn again. Instead, she stepped forward, took Penelope’s hand with a bright smile, and said, “Come on, I’ll show you around and help you pick a room.”
“Thank you, Miss Portman. You’re so kind.”
Penelope was seven years older than Natalie, but in front of this poised young woman, she couldn’t pull off any big-sister vibes.
After dinner, while Penelope was soaking in the tub, Dunn finally got a moment alone with Natalie. With a sheepish grin, he asked, “You mad?”
Natalie rolled her eyes hard, her tone dripping with sarcasm. “Two just left, and now another shows up. The women around you never stop coming, do they?”
Dunn plopped down beside her, pulling her into a hug with shameless confidence. “What can I say? When a guy’s this great, women just keep throwing themselves at me. I can’t even shoo them away!”
“You’ve got some nerve,” Natalie scoffed, shooting him a disdainful look. “They can’t force you if you say no, you know.”
Dunn grinned cheekily. “I’m too much of a gentleman to keep turning them down.”
“You’ve always got an excuse.”
Natalie pouted and turned away.
Dunn lowered his voice. “Come on, are you really mad?”
“No!”
“You’re definitely mad.”
“I’m not. I’m used to it by now.” Natalie paused, letting out a quiet sigh. “I just think if word gets out, everyone’s going to laugh at me.”
“Laugh at you?” Dunn’s face hardened, and he huffed. “Don’t worry. Once we’re married and you’re my wife, let’s see who dares laugh then!”
Natalie pursed her lips. “That’s exactly why they’d laugh—can’t even keep her husband in check…”
Dunn smirked confidently. “Relax, I’ve already got it figured out. I’ve got a plan that’ll not only stop anyone from mocking you but make you the most respected woman in the industry!”
“Really?” Natalie’s face lit up. “What’s the plan?”
Dunn said, “I’ve told you before—I’m going to make you the greatest actress in Hollywood history!”
“You mean… an Oscar?”
“Of course!”
Natalie looked skeptical. “The Oscars aren’t your personal playground.”
Dunn shrugged casually. “Trust me, I’ll find a way. Just focus on finishing school. By the time you graduate, I’ll have a solid foothold in Hollywood. Then… you and me, husband and wife, we’ll take over the place!”
Natalie’s cheeks turned pink. “What are you blabbering about? Husband and wife? I never said I’d marry you.”
“Huh? If not me, then who?”
“I… I haven’t decided yet.”
Dunn leaned in with a goofy grin, planting a kiss on her cheek and whispering, “Babe, Penny’s in the bath right now.”
Natalie narrowed her eyes at him. “What are you up to?”
Dunn teased, “How about… we join her?”
Natalie snapped, “Dunn, you’re pushing my limits step by step!”
Dunn played innocent. “I think it’s pretty normal. Think about it, honey—you’re only 19, I’m 22. We’ve got decades ahead of us. Right now, things are hot and heavy, but over time, it’s bound to cool off.”
Natalie stared at him coldly. “What’s your point?”
Dunn said, “If we bring another woman into the mix, it’s like a little spice for life—mentally, physically, it’d keep things fresh. Especially if we switch up the spice now and then, right?”
Natalie fumed. “So after all that, you just want me to team up with other women to… fool around with you?”
Dunn didn’t flinch. “A while back, with Sophie and Charlize, we all had a good time together. They were into it too. It wasn’t that wild, honestly.”
“Well, I’m not okay with it!”
Natalie kicked him in the shin.
Dunn shrugged and stood up. “Just putting it out there. We’ve got years ahead, and stuff like this is bound to happen. You should prep yourself for it.”
“Dunn, you’re such a jerk!”
Natalie grabbed a throw pillow from the couch and hurled it at him.
Dunn dodged with a laugh, glancing toward the bathroom. “If you’re not coming, fine. I’ll just go join Penny in the tub.”
“Go! Get out of here!”
Natalie chucked a few more pillows in a huff. As Dunn reached the corner and was about to disappear from sight, she shouted, “Old rules—don’t forget!”
His figure vanished, but his voice floated back: “I know!”
The “old rules” were something Natalie had set with Dunn back when Sophie Marceau and Charlize Theron were staying at the house.
She didn’t care how much Dunn messed around with them—she wouldn’t interfere or stop him. But every night, no matter how late he stayed out playing, he had to come back to her room and sleep with her in his arms.
It was one of the few “claims” Natalie could hold onto when she couldn’t curb Dunn’s wandering ways. It might’ve just been a symbolic claim, but… better than nothing.
Chapter 227: The Edge of Knowing What’s Coming
The ban was just a skirmish at Hollywood’s top tier—it didn’t ripple down to the regular crowd.
Dunn Films’ acquisitions of Good Machine and Dick Clark Productions were chugging along smoothly. The Good Machine deal was on track to wrap up by the end of the month. Dick Clark Productions, being a public company, was a slower grind—privatization would likely take over three months.
At the office, Bill McNick told Dunn he’d already chatted with the heads of the major studios. They’d all voiced support for Dunn Films.
Dunn had seen that coming a mile away. He snorted, “Crocodile tears for the mouse!”
Bill blinked, thrown off. “What’s that supposed to mean?”
Dunn waved it off. “Let Ovitz handle this one. I’ll fill you in on the details later. Bill, I need you to pull together some info for me by this afternoon—I’m meeting Michael Ovitz.”
“Files?” Bill sounded surprised. He was the president of Dunn Films, not Dunn’s personal assistant. Digging up paperwork wasn’t exactly his gig, right?
Dunn clarified, “You ran 20th Century Fox back in the day. I need a rundown of their profits over the past few years—nothing confidential, just the internal rate of return on their movies. And with your connections, see if you can get a read on the other studios too.”
…
At 2 p.m., Dunn showed up at AG Agency with the compiled files, escorted by his secretary.
Michael Ovitz was ready, a thick stack of papers in front of him. He’d been waiting.
Today’s meeting was a big deal. They needed a plan to pull Dunn Films out of its mess and chart a solid path forward for AG Agency.
After a quick hello, they dove right in. Ovitz kicked things off. “Dunn Films is in a tight spot. The Big Six might team up without even planning it, and they’ll hit harder than they did with DreamWorks.”
Ella Fisher, the petite secretary sitting next to Dunn, tensed up. Her pen, scribbling notes, started to tremble.
Dunn stayed cool as ever. “No permanent enemies, just permanent interests. There’s no thawing things with Disney—even if they back off, I’m not letting it slide. So, we’ve got to show the other five majors some real, tangible benefits.”
Ovitz gave him an approving nod. “Exactly! These old-school studios have deep roots and huge audiences. Small-time perks won’t even register with them.”
Dunn agreed. “Right. We need something big enough to make them sit up and take notice.”
“What do movie studios need most?” Ovitz asked, glancing at Dunn instead of answering. Dunn grinned, and they said it together: “Cash!”
Yup, money!
Hollywood movies might rake in a third of the global box office every year, but do they actually turn a profit from tickets alone?
Dunn had the numbers in hand. Over the past few years, less than 7% of Hollywood films made money purely from box office revenue!
In other words, without side income like licensing, over 93% of Hollywood movies would lose money!
That’s why traditional studios either got swallowed by media giants or turned into media giants themselves. Movies only paid off through intellectual property earnings pushed across wide channels.
For giants like Sony, Time Warner, Viacom, and Disney, their film divisions weren’t the cash cows. In fact, studios like Columbia, Universal, and Paramount weren’t exactly swimming in profits.
So why were these conglomerates so gung-ho about movies? Because they brought unmatched advertising clout and prestige. In short, filmmaking was their “image project”!
That setup led to one big catch: the parent companies wouldn’t pump cash into their film arms. The studios’ output was modest anyway—just enough to keep going, churn out movies, and polish the corporate image. No one expected them to be profit machines.
So, cash flow was every studio’s headache.
Tax rebates and pre-selling rights were the go-to fixes.
Take this summer’s Warner Bros. disaster flick The Perfect Storm. Budget? A whopping $140 million!
Even with Warner’s deep pockets, they weren’t betting the farm. Of that $140 million, Warner only shelled out $65 million.
Where’d the other $75 million come from?
Tax rebates from Germany and the UK handed Warner $25 million free and clear. Germany’s rebates were especially clutch—Dunn himself had leaned on that loophole when cash got tight shooting Spider-Man.
Then there’s pre-selling rights.
When The Perfect Storm got off the ground, Warner tapped its global reach and George Clooney’s star power to pre-sell rights.
Deals with Japan, the UK, Australia, Italy, and France netted them $50 million upfront. Sure, they’d miss out on box office cash from those countries, but it slashed the risk if the movie tanked.
And it paid off—The Perfect Storm had already pulled in $140 million in North America. Warner recouped its costs from that alone.
The rest—overseas ticket sales, DVDs, VHS, TV rights? Pure profit.
But The Perfect Storm wasn’t the norm.
This “financing game” only worked for big-budget blockbusters with A-list casts and top-tier crews.
Tax rebates hinged on future profits—how much could niche films really promise?
And pre-selling rights? Overseas buyers usually waited for a rough cut before committing. Only heavy-hitter commercial films gave them the guts to pay up front.
“Hollywood’s financing tricks are unreal,” Dunn said with a sigh.
Ovitz shrugged it off. “Dunn, it’s the 21st century now. Times have changed!”
“Oh? How so?”
“I’ll give you some numbers. Ten years ago, Hollywood could pre-sell rights to cover 80% of a movie’s budget! Some films didn’t even cost Hollywood a dime to greenlight. But this year? That number’s down to 47%!”
Dunn nodded, getting it. “It’s the way things are going. A decade ago, Hollywood films were the blockbusters—everyone worldwide was hooked. Now, tons of countries have their own booming film markets. Korea, Japan, Australia, Germany, even Eastern Europe—they’re growing fast. Hollywood’s not the only game in town anymore.”
“Spot on,” Ovitz said. “Lots of countries are pushing policies to boost their own films and curb Hollywood’s reach. That old pre-sale financing trick? It’s getting tougher to pull off.”
Ovitz’s words jogged Dunn’s memory. “I heard Germany’s tweaking its tax laws—movie investments won’t be able to hide behind copyright loopholes anymore. If that door shuts, Hollywood’s not getting big rebate cash anymore.”
“Exactly!” Ovitz nodded enthusiastically. “After a decade of this, the Germans have wised up to Hollywood’s playbook. German marks have been the fall guy for too long. Take Mission: Impossible—a third of the first film’s budget came from German investors. But once Paramount saw the payoff, they ditched them for the sequel.”
Dunn sighed. “Money’s the root of all evil. If Hollywood keeps this up, overseas funding’s gonna dry up!”
Ovitz grinned. “That’s why I saw the writing on the wall. I’m taking CAA’s old packaging model and building AG into a one-stop shop.”
Dunn gave him a thumbs-up. “Smart move—I’m in!”
Right now, with overseas cash tightening, Hollywood was facing a financing crunch.
Not for companies—for movies.
Middle Eastern and Asian tycoons were happy to bankroll studios. A board seat at a big film company gave them a voice in Hollywood.
But funding a movie? That’s straight-up venture capital. Investors can’t meddle in production or company decisions. They just get a cut—if that. No rights, no control.
Even if it pays, the mega-rich don’t bite.
If Dunn and Ovitz could team up to solve this financing riddle for the studios, forget crushing Dunn Films—they’d be treating Dunn like royalty!
Ovitz’s smile turned bittersweet. “It’s a solid idea, but a one-stop shop needs big stars and sharp agents first. Without that, good luck reeling in investors.”
Dunn’s eyes flickered, a smirk tugging at his lips.
For the first time since meeting Michael Ovitz, he felt a quiet surge of superiority.
His foresight gave him an edge—even over a Hollywood legend like Ovitz. He had the know-how to steer him right.
That’s the perk of seeing what’s coming.
Chapter 228: Internal Rate of Return
To Dunn, Michael Ovitz’s way of thinking was stuck in the past.
Michael believed his ability to secure film investments hinged on his control over the production crew. With big-name directors and stars as his leverage, he could convince investors to fund a movie. He could even swap out directors or leads based on an investor’s preferences or toss a flashy role to their “honey” to sweeten the deal. By managing the crew this way, he’d win over investors, fulfilling his service promises to the film company with a full package—stars, crew, and funding all wrapped up.
It’s a solid idea, no doubt. Movies are a star-making machine, but they’re not always a goldmine. Plenty of rich folks invest in films not for profit, but for favors, prestige, image, or to impress a girlfriend. That kind of thing was everywhere in the early days of the movie market.
Take old Hollywood, for example. There was this popular “BD” dynamic—B for “sugar baby,” D for “sugar daddy.” Plain and simple, a “dry daughter” and her “dry dad.” But as society shifted and the film industry matured, that setup faded from Hollywood’s core, lingering only on the fringes of the entertainment world. Girls in that game had a nickname: “wannabes”—people dreaming of stardom but not quite there yet.
Across the ocean, in a certain developing powerhouse, as the movie market boomed, a similar “dry dad” culture popped up, along with its own version of “wannabes”—known locally as “peripheral girls.”
Dunn, though, had a vision that outstripped the times. His perspective was broader and sharper than Michael’s. He knew what a proper, healthy, rational, and mature film market needed for financing. And it sure wasn’t relying on big stars or peripheral girls to reel in the cash!
Dunn chuckled. “Michael, I think… your approach is too narrow.”
“Hm?”
Michael wasn’t thrilled to hear that.
He’d admit Dunn was unmatched in film production, but when it came to strategic vision for a company, he’d never bowed to anyone. Back at Disney, if he’d been willing to just follow orders, he wouldn’t have clashed so hard with Michael Eisner.
Dunn took his time. “Michael, times have changed. Star power’s pull at the box office is fading. The old trick of using big names to snag investments—it’s losing its magic.”
Michael’s tone soured. “Stars don’t work? Fine, then tell me—what else is going to draw investors in?”
“Profit, obviously!” Dunn shot back without missing a beat.
Michael replied coolly, “Sure, if they could see a big enough return, everyone and their dog would be throwing money at movies. Problem is, most investors are outsiders. They don’t get films. Without stars as a guarantee, how do you convince them? With smooth talk?”
Dunn burst out laughing. “Smooth talk? Not a chance. Even Reagan’s charm couldn’t pull that off!”
Michael raised an eyebrow, squinting at Dunn. “From the way you’re talking… you’ve got a plan, don’t you?”
“You bet!”
Dunn puffed out his chest, radiating unshakable confidence.
Michael, half-skeptical, said, “If you can actually crack this, you’d be pointing Hollywood in a clear new direction. The whole industry would owe you—and Disney’s mess would sort itself out.”
Dunn grinned. “I’m still young, so I’ve only got a rough idea. The nitty-gritty details? I’ll need your help to flesh them out and connect with investors.”
Michael waved a hand. “Of course. It’s not just for you—it’s for AG too.”
Dunn reached out, signaling his secretary to bring over a carefully prepared file. He handed it to Michael. “First set of numbers: in 1975, the average U.S. film budget was $5 million. By 1987, it hit $20 million. In 1999, it’s over $40 million, with marketing costs at $15 million. You can bet that’ll keep climbing. Investors won’t just see a few star names and dive into that kind of risk anymore.”
Michael flipped through the data, his expression grim. “With budgets ballooning like this, even if overseas markets hold steady, pre-selling rights won’t cover the funding gap.”
“Exactly!” Dunn snapped his fingers, a smile breaking out. “Second set of numbers—good news this time: film companies’ internal rate of return.”
“Internal rate of return?”
Michael’s eyes sparked with curiosity.
Dunn grinned. “Yep, the return on movies. Take Columbia Pictures—sure, they’ve been losing money for years, but their film returns never dipped below 14%. In 1997, with hits like Men in Black, Air Force One, As Good as It Gets, and My Best Friend’s Wedding, their internal return hit [insert percentage]!”
Since Sony bought them out, Columbia’s been in the red. But that doesn’t mean their movies are flops! The losses come from clashing U.S. and Japanese management styles, skyrocketing operating costs, and a global distribution team of over 10,000 eating up salaries. After the acquisition, a lot of Columbia’s old partners jumped ship to other studios, leaving them with a massive distribution arm but not enough films to push. Still, their movie profits—while not up to Warner, Fox, or Universal’s level—have stayed solid.
Michael wasn’t quite following. “What’s that prove?”
Dunn waved him off. “Hold on, hear me out. Over the past few years, Twentieth Century Fox and Warner have ruled the box office. I’ve got a detailed five-year breakdown of Fox’s internal returns here—take a look. The low point was 1995 at 17%. The peak? 1997, with Titanic, hitting 36%!”
Michael frowned, still lost on Dunn’s angle.
Dunn’s voice rose, his excitement bubbling over. “Michael, don’t you see? Strip away operating costs, staff salaries, project cancellations, breaches of contract—all that overhead—and the film industry’s return rate would be the envy of every investor on the planet!”
“But… cutting out operating costs? That’s impossible,” Michael said, his voice low.
Dunn smiled. “Eliminating a company’s overhead? Yeah, that’s a pipe dream. But the investments you bring in—they’re for the movies, not the company, right?”
Michael’s eyes lit up, a realization dawning.
Dunn pressed on, striking while the iron was hot. “No studio can guarantee every film’s a winner, but every major player’s internal return rate is solid. What does that tell you?”
Michael jumped in quick. “It means the big earners offset the losers. That scale of production is why film companies have such strong internal returns.”
“Bingo!”
Dunn clapped his hands, practically buzzing. He’d been worried Michael might be some stubborn old fossil, too set in his ways to buy into Dunn’s half-baked theories. But now? Michael’s insight proved he was still a cut above.
Dunn had laid it out in just a few words, and Michael got it.
Michael’s own excitement kicked in. Dunn’s pitch was like a divine revelation, opening a new window in his career. He’d always thought stars were the key to landing film investments. That’s why, after building AG into a “one-stop shop” agency, he’d been chasing Hollywood’s A-listers. But with his frosty ties to Disney and little chance of collaboration, top stars wouldn’t touch AG—leaving his investment plans dead in the water.
Then came Dunn’s spiel.
It hit him like a ton of bricks: stars weren’t the golden ticket to investors’ hearts. It was the film industry’s stellar, jaw-dropping internal rate of return!
Investing in just one movie—even with the biggest director and hottest stars—still carried a flop risk. But scale it up like the studios do? Fund 20 films, let the winners cover the losers, and even Columbia, the weakest of the Big Six, could pull a minimum 14% return in a year! In a good year, it might top 20%. Hit a Titanic or Spider-Man? You’re looking at over 30%!
Dunn’s data handed Michael the ultimate weapon to hook investors.
And Dunn wasn’t done. His next line nearly sent Michael cheering—
“You know I’ve got some buddies on Wall Street. According to Merrill Lynch, hedge funds there aim for a 12% to 18% internal return. But when a crash like this year’s hits, they—”
