“Brother-in-law, something doesn't feel right about this situation!” Leng Zhimeng, having been a CEO for several years, had seen her judgment steadily improve. She quickly sensed something amiss.
“Oh? What doesn’t feel right?” Huang He countered.
“Firstly, the United States is the most popular and economically developed region. It makes no sense that there isn’t a bid from them yet to surpass Fusang’s offer. This price is too low. Also, the way these people are bidding is very strange. According to normal bidding logic… take the bidding from Fusang just now, the initial price directly surged. The second bidder immediately raised the price from 4 million US dollars to 12 million US dollars. This way, they can use momentum to scare away many hesitant bidders and prevent people from getting carried away and driving up the price.”
“But the bidding from the United States is too harmonious. Every bid is an increase of 1 million, with no intention of overpowering others with price. You’d say these companies aren’t interested in participating, but all five major television networks have bid, and everyone is constantly making calls, communicating via the network, appearing determined to win!
“This is simply unreasonable!” Leng Zhimeng pouted.
“Indeed!” Boss Huang rubbed his nose. Just then, someone approached Huang He and whispered a few words in his ear. Huang He’s face immediately showed a hint of coldness.
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“Little John, what exactly do you want by gathering all five of us together this time?” Let’s rewind two days. After the representatives of the five major television networks arrived in Shanghai, four of them simultaneously received an invitation and gathered together.
The one who summoned them was Little John, a representative from CNN. These representatives usually mingled in the same circles and were all very familiar with Little John; many were also friends. Naturally, they all accepted the invitation and came.
However, they were unclear about Little John’s true intentions in gathering them.
So, after several rounds of drinks, someone directly asked.
“Tony, don’t be so hasty. I’ve gathered you all here naturally because there’s a great opportunity to share. I just don’t know if you’re all willing to join in this beneficial endeavor!” Little John said with a smile.
“You tell us the matter first!” Tony said. Little John smiled slightly. “Alright, then I’ll be direct. Since you’ve all come, you must be determined to acquire the television rights for ‘Misty Journey.’ So, I’m very curious to ask, what is your board’s reserve price?”
As soon as this question was asked, all the representatives present changed their expressions. Someone snorted, “Little John, do you think we’re fools, or have you become a fool yourself? Who would answer such a question?”
This was true. The so-called reserve price was the highest price authorized by the boards of directors for their representatives to bid. Below this price, the representatives could directly purchase it on the spot. However, if it exceeded this price, they would have to seek instructions from the board of directors directly… Given that larger companies are always more complex, the time to get approval would be longer, making it essentially impossible to get a response from the board of directors at the auction.
Unless the entire board of directors did nothing else and collectively stayed in a conference room waiting to communicate remotely with their representatives, which was clearly impossible.
Therefore, the reserve price authorized by the board of directors was basically the highest price that each representative could bid on the spot. Knowing the other party’s bottom line would undoubtedly give them a significant advantage in the entire bidding competition, so this was information that absolutely could not be revealed.
Moreover, even if someone intended to reveal it, they would not do so in a gathering of representatives from five companies with Little John. If this information got out, the consequences for betraying the company would be dire.
“Fine, if you won’t say it, I’ll say it myself. Our CEO’s board of directors has given me a reserve price of 140 million US dollars. As long as it doesn’t exceed this price, I can bid as I please. If it exceeds this price, the board of directors will still have room for consideration.”
“When the formal auction begins, three directors will gather to evaluate it, and they can give me a higher price if necessary!” To everyone’s surprise, Little John preemptively revealed his hand, and his price was terrifyingly high, reaching 140 million US dollars.
This was probably the most expensive single-season television series bid in US television history. To surpass this price, one would have to wait for the future birth of ‘A Song of Ice and Fire.’
“What, Little John, are you trying to scare us away with this price?” Tony said, narrowing his eyes. Everyone was somewhat bewildered by Little John’s actions, completely unsure of what this guy was trying to do.
“Ah, actually, I don’t think my price is that high. Let me guess, the reserve prices you all have should already exceed 100 million US dollars! Some of you might even have higher prices than me. Am I right?” Little John retorted. No one else refuted him.
After all, at this moment, saying anything would reveal their respective bottom lines.
“Gentlemen, don’t you think this is utterly ridiculous? We, gentlemen from the great United States, are fighting tooth and nail over something produced by a bunch of inferior yellow monkeys, even willing to bid over 100 million US dollars to compete.”
“This gives me a feeling of returning to ancient Roman times thousands of years ago. This is a colosseum, and we are the beasts and slave gladiators tearing and attacking each other in the arena. And sitting in the stands enjoying our struggle are a bunch of detestable yellow monkeys. Don’t you think this is the most absurd thing in the world? God himself would probably curse us for losing our dignity as a superior race!” Little John said passionately.
These words made everyone present understand. Then, someone said, “Little John, are you suggesting we reach a price agreement in advance to avoid competition among the five television networks, which would lead to excessively high bids? Are you trying to rig the bid?”
“That’s more or less the idea!” Little John nodded.
Sellers want to maximize their profits through bidding, which is an open scheme. However, some companies are unwilling to be harvested by the sellers and instead wish to seize this opportunity to counter-harvest the sellers, thus giving rise to a practice called bid rigging.
Bid rigging is a professional term in bidding and tendering, also known as bid collusion. It refers to an agreement among several bidders to mutually agree to raise or lower their bids and submit them, thereby restricting competition, squeezing out other bidders, and allowing a stakeholder to win the bid to gain profits. This practice is also very common in the business world. For example, the very familiar movie scene where the gangster boss Tony Leung sits majestically in his seat and says, “I’ve spoken. Who agrees? Who opposes!”
As a result, someone jumps out and shouts, “I oppose.”
Then he is immediately slapped and sent flying, doing a 360-degree rotation in the air.
Everyone is familiar with this classic scene, but perhaps many are unaware of the story behind it.
Simply put, Tony Leung, as the gangster boss, was participating in a bid for a project. However, there were many other companies in the industry that also wanted to bid. So, he gathered the heads of these companies.
He told them to give him face, to bid extremely high prices during the bidding. He would then win the project at a relatively lower price, which, however, was still several times the profit margin compared to the project cost. He would then give some of the spoils from his fingertips to these companies as payment.
Then he asked, “Who agrees? Who opposes?” That’s more or less the story. This is a very typical case of bid rigging, and the company representatives he found were the collusive bidders.
At this moment, Little John’s proactive gathering of everyone and his speech clearly indicated his intention to rig the bid. However, he wanted the representatives of the other four television networks to bid low, allowing him to acquire the exclusive broadcasting rights for the ‘Misty Journey’ television series at a relatively high, but actually extremely low, price.
So, will Little John’s goal be achieved?
“Well, if I may be blunt, Little John, you are still too young. This consensus cannot be reached!” Tony said with a cold laugh.
“We at CNN are willing to cede some benefits to all of you!” Little John said directly.
“No need!” another person said directly. “Little John, we’re all old hands in this business. You know very well how popular ‘Misty Journey’ is this time around. Whoever secures this drama will secure huge viewership and massive advertising revenue. Our respective boards of directors have issued strict orders to do our utmost to acquire this drama. No one is interested in being a collusive bidder for you and eating scraps from your fingertips!”
The other few, though silent, had the same expression, clearly agreeing with the attitude of these two. Therefore, Little John’s attempt to rig the bid was essentially impossible.
After all, for a company to succeed in bid rigging, there are only two possibilities.
Either they use violent threats and intimidation, like Tony Leung, to force other companies to withdraw their bids. But the five major television networks have been competing for so many years that everyone knows each other’s capabilities and what means they can employ, so they are not afraid of each other at all.
If they were afraid, they would have been eliminated by their opponents long ago.
The second possibility is to offer sufficient benefits for sharing. But this ‘Misty Journey’ drama is visibly going to be a massive hit. If the benefit sharing is too little, no one will notice. If the benefit sharing is too much, they will lose money even after winning the bid, so this is also impossible. Therefore, Little John’s bid rigging plan is basically impossible.
But at this moment, he still wore a smile on his face.