Can a mouse and a spider make lots of money together? We'll soon find out. The entertainment world was rocked Monday morning by the news that Disney plans to buy Marvel Entertainment for a cool $4 billion. Even the Kingpin would say that's a lot of dough. Marvel's 5,000+ library of characters, including such licensing and publishing powerhouses as Spider-Man, the X-Men and the Hulk, join Disney's classic characters to create an IP library of fearsome might.
The deal was announced by Disney president and CEO Bob Iger at an investor’s conference call, where details of the new Marvel emerged a bit. Iger said buying Marvel made sense for Disney because “Marvel has done a good job of understanding its characters and story lines. What was attractive to us about this deal was that it was about acquiring writers who know these chraracters and story lines well.” Marvel’s chairman and principal stockholder, Ike Perlmutter, will remain in charge of Marvel’s operations, and Iger stressed that the current Marvel management team has been doing a great job and would be allowed to continue doing it.
Marvel shareholders will receive $30 per share in cash, plus 0.745 Disney shares for every Marvel share they own. Marvel's stock immediately went up 25%, or $9.72, closing at $48.37. However, Disney shares fell 80 cents, to $26.04, perhaps reflecting the question marks over certain aspects of the acquisition.
While the most attention was turned to the potential for Marvel's film and licensing business, the company's publishing arm has seen continued success in recent years, with operating income of $47.3 million in 2008. (Licensing accounted for $242.3 million in operating income, while film brought in $102.7 million.) Marvel’s periodical comics line has been the industry leader for most of the past decade, and graphic novel sales have also surged with such titles as the homegrown Marvel superhero series, Civil War and 1602, and graphic novel licenses from bestselling prose novelists Stephen King and Laurell K. Hamilton.
Disney, of course, has its own highly successful licensed publishing arm—Hyperion and Disney Worldwide Publishing, the biggest children's publisher in the world—and has taken a renewed interest in comics and graphic novels in recent years with such existing projects as the kids' graphic novel series based on Artemis Fowl and a future Prince of Persia graphic novel tie-in with the film. Its current deals include licensing comics periodicals to independent comics houses Boom! Studios and Slave Labor Graphics. Although it's expected that these agreements will be honored, once they run out, it would be a natural to bring the comics back in-house. Boom! did not respond to an inquiry about the deal.
Disney also has a graphic novel development arm called Kingdom Comics, which is run by Ahmet Zappa and Christian Beranek. Beranek issued a “No comment” when queried on that project, and Kingdom's fortunes remain unknown.
Disney’s comics publishing line has had its own share of reversals. While still strong in Europe, domestically Disney recently ended its license with Gemstone, which published trade reprints of such Disney classic comics as Donald Duck and Mickey Mouse, and several of the books were picked up by Boom! Studios.
Obviously, there’s a long list of positives about this deal for both companies. Marvel, which opened its own movie studio a few years ago, now gains access to Disney's unsurpassed licensing team. (Disney is the world’s #1 licensing company; Marvel is #4.) Tangible benefits include increased financing for Marvel's film slate and greater access to overseas marketing. There’s also the potential for “synergy” between Disney's various divisions. Pixar head John Lasseter has already met with key Marvel creative personnel, and reportedly ideas flew around so enthusiastically that the lawyers had to remind everyone that the deal hadn't been done yet.
For Disney, the acquisition adds even more licensed characters of proven appeal and fills the Magic Kingdom's nagging weak spot in boys’ entertainment. Although Disney has long dominated entertainment for girls—from the Disney Princesses and Fairies lines to Hannah Montana and High School Musical—the company has a historical weakness attracting teen boys. Marvel's stable of characters like Spider-Man, Iron Man, Wolverine and the X-Men fills that niche nicely, and Disney already airs more than 20 hours of Marvel programming on its boy-targeted Disney XD cable channel.
However, it’s not all golden for Disney and Marvel: Marvel’s pre-existing deals in movies, video games and theme parks mean that in some cases it could be many years—or even never—before Disney gets control of key franchises such as Spider-Man. For instance, Sony has the rights to make Spidey movies forever. Likewise, Marvel Studio's next five movies will be distributed by Paramount, although Iger expects to change that deal as soon as the contract runs out. Although Hulk and Thor costumed characters and rides would be a natural at Disney's theme parks, here also a pre-existing deal with Universal means that Spidey and Co. will stay at Uni's Island of Adventure area in Florida; a spokesman for Universal hinted that Marvel's license with Uni will last “in perpetuity.”
The greatest skepticism over the new Marvel deal was expressed by fans worried that Disney might meddle with Marvel characters—after all, one of Marvel’s most popular characters is a tough guy who slices people up with razor sharp claws. Iger pointed to the Pixar deal as the model here, stressing that Marvel knows what it is doing and will receive minimal intrusion. “The goal here is not to rebrand Marvel/Disney, in fact, the opposite, to put an even brighter spotlight on Marvel as a brand and to really work with the Marvel team to help grow it more,” he told stockholders.
Questions and analysis will continue until the deal becomes final at the end of the year -- subject to he approval of shareholder. One thing is already clear, though: Ike Perlmutter made a nice profit. As the owner of about 37% of Marvel's stock, he ended the day $1.5 billion richer. Just call him the new Scrooge McDuck.
Breaking Down Disney's Acquisition of Marvel
This story originally appeared in PW Comics Week on September 1, 2009 Sign up now!
Sep 01, 2009