Disney-Marvel Deal Would Bring Together Creative Powerhouses

Marvel Comics' "Wolverine"
Marvel Comics' "Wolverine" (Courtesy Marvel Comics)
By Frank Ahrens
Washington Post Staff Writer
Tuesday, September 1, 2009

If this were 2000 and the Walt Disney Co. wanted to grow, it probably would have purchased another string of radio stations or a cable channel or maybe one of those new Internet portals.

But in 2009, after the collapse of the mega-media mergers, after the financial system meltdown, after the achieved knowledge -- at least temporarily -- that bigger is not necessarily better, Disney has bought a comic book company.

In truth, Marvel Entertainment -- home to the Amazing Spider-Man, the Incredible Hulk, Iron Man and the X-Men -- is much more than a comic book company these days. That's why Disney plans to pay $4 billion for it, a sum and a deal that caught everyone by surprise. There was no hint of it coming over the weekend, which probably is due to the fact that the deal was dreamed up not by dozens of bankers and advisers, but came about because of the personal relationship between Disney chief executive Bob Iger and his counterpart at Marvel, Ike Perlmutter.

In Marvel, Disney gets much more than a company that cranks out comic books and video games. It gets a ready-made, up-and-running incubator of blockbuster movies.

The modern Marvel Comics was launched in 1961 from the pen of Stan Lee, the father of the Fantastic Four, Spidey and numerous other comic book characters. But the money really began to flow in when studios started licensing the characters and churning out holiday hits, including three (so far) Spider-Man films; two versions of the Hulk; and last summer's surprise critical and commercial hit, "Iron Man," which has brought in $585 million in box-office receipts worldwide. Star Robert Downey Jr. has filmed the sequel due out next summer.

All told, Disney gets 5,000 Marvel characters in the deal, so viewers can expect Marvel-derived content for the next several years, if not decades.

Disney also gets a way to latch onto new boy fans, Iger said during a CNBC interview on Monday morning, a demographic the company has overlooked in recent years. Disney has successfully repackaged female characters such as Cinderella and Pocahontas into a "princess" line of merchandise. The move brought in more girls as fans but largely excluded boys.

In addition to the $4 billion in cash and stock, the deal would allow Marvel to essentially become a major motion-picture studio. The company had been able to produce only a couple of full-length theater films per year on its own. Instead, it did co-production deals with major studios and licensed its characters, such as the deal it struck to allow Sony Pictures to produce the "Spider-Man" films.

"Disney is the perfect home for Marvel's fantastic library of characters, given its proven ability to expand content creation and licensing businesses," Perlmutter said in a statement. Like Pixar, Marvel will maintain its artistic independence under Disney, the latter's chief financial officer, Thomas Staggs, said in an interview Monday.

Staggs said Marvel had long been on Disney's wish list, but it was only earlier this year that Iger personally met with Perlmutter and the two began exploring potential partnerships. Initially, the talk was not of acquisition.

"Marvel is a solid company; they were not for sale," Staggs said. However, "as the conversation went on," Staggs said, both sides began to see a strategic fit.

Unlike a number of big media deals in the early part of this decade, Disney's purchase of Marvel would require little if any additional debt. That's a departure from the media buyout spree of the past decade, when companies put together highly leveraged deals based on the assumption that projected earnings -- cost savings and other synergies -- would easily cover the cost of the loans. Instead, such savings often failed to materialize, crippling corporate balance sheets.

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