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Monday Mouse Watch: Marvel acquisition offers significant challenges, huge potential rewards for The Walt Disney Company

Monday Mouse Watch: Marvel acquisition offers significant challenges, huge potential rewards for The Walt Disney Company

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Mickey, meet Spidey. Spidey, Mickey.

In a deal that (I’m sure) the Disneyana community will have trouble wrapping its head around, The Walt Disney Company announced plans today to acquire Marvel Entertainment, Inc. in a stock and cash transaction worth an estimated $4 billion.

As to what actually drove the Mouse to pursue Marvel & its library of over 5,000 characters … As Disney CEO Bob Iger explained in an investor’s conference call earlier this morning, this wasn’t a deal that either company really had to make. But from a creativity, technology and global reach point of view, Marvel & its stable of superheroes had a lot to gain by joining forces with the Magic Kingdom.

Mind you, a lot of folks are now trying to draw parallels between The Walt Disney Company’s acquisition of Pixar Animation Studios back in 2006 and today’s deal with Marvel Entertainment, Inc. Though – to be honest – a more apt comparison would probably be Mickey purchasing the Muppets & the “Bear in the Big Blue House” characters back in February of 2004.

You see, back when Disney hammered out that deal with The Jim Henson Company, they had to agree to honor all of Henson’s pre-existing licensing deals, film production & TV distribution agreements. Waiting – in a lot of cases – for years ‘til those rights ultimately reverted back to The Walt Disney Company’s control.

Only in the past year has the Mouse really had been in a position to start taking full advantage of Fozzie Bear & friends. Which is why you’ve only recently begun to see the Muppets enjoy a more elevated status within Disney’s world. With those characters now starring in the Disneyland Resort’s upcoming promotional campaign, and a new Halloween TV special as well as a Muppet theatrical release being in the works for 2010.

Such is the case with Marvel Entertainment, Inc. as well. Given that Marvel Studios already has deals in place with Sony (for Spider-Man), Paramount (for Iron Man), Fox (for the X-Men) and Universal (for the Incredible Hulk), it’s going to be the better part of a decade (if not longer) before The Walt Disney Company finally reclaims the film rights for most of these franchises.

Marvel Comic logo 

Likewise when you factor the theme parks rights for many of these properties have already been farmed out (EX:  The deal that Universal Studios has in place for use of these characters in the Marvel Super Hero Island section of its Islands of Adventure theme park. Not to mention that “Amazing Adventures of Spider-Man” attraction that’s been wowing Guests for years at IOA as well as at Universal Studios Japan) … Disney really has to be in this for the long haul in order to get maximum value out of this $4 billion acquisition.

But that’s exactly what The Walt Disney Company seems to be willing to do here. Take the long view. They’ve already seen the positive impact that running 20 hours of programming featuring the Marvel characters has had on the ratings over at Disney XD. And over the next 10 years or so, they hope to leverage Marvel Entertainment, Inc. stable of superheroes in ways that will make the Mouse far more competitive in the fields of video gaming, MMORPGs as well as with emerging technologies.

Getting back to the Pixar acquisition now … One important thing that Disney took away from its $7 billion deal to acquire Pixar is how important is not to meddle. To let an already-successful company keep its pre-existing corporate culture. And that’s just what the Mouse allegedly intends on doing with the Marvel Entertainment, Inc. acquisition deal. They’re just going to let Marvel be Marvel. More importantly, stay Marvel.

But – that said – Disney officials are planning on still using their Company’s global reach as well as their pre-existing relations with retail giants to super-charge Marvel’s earnings potential. I mean, this is Mickey that we're talking about here.

Speaking of potential … As part of today’s investors teleconference, Iger did mention that John Lasseter – prior to Disney formalizing this acquisition deal – sat down with the creative team at Marvel. And as John brought up the idea of Pixar making movies that featured the Marvel characters and the folks at Marvel brought up the idea of producing comic books that featured the Pixar characters, it was up to the Disney attorney in the room to put the brakes on. In essence say “Slow down. We haven’t actually made this deal yet.”

Well, as of this morning, there is a deal in place for The Walt Disney Company to acquire Marvel Entertainment, Inc. And provided that Marvel shareholders do approve this deal (which would involve them receiving $30 in cash plus approximately 0.745 Disney shares for every Marvel share that they own), things could all be wrapped up before the holidays. Which makes for one hell of a present for all us pop culture fans out there.

I mean, imagine that: Donald Duck and Howard the Duck will soon be part of the same corporate family. Who’d have thunk it?

Your thoughts?

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  • Well Jim, you said they were looking for ways to increase the number of boys watching Disney. Four billion to do so seems like overkill though, doesn't it? The implication I draw is an admission by Disney corp that they can't come up with concepts that will appeal to the male audience and had to reach back to properties 30-40 years old and drop a ton of cash to solve that little conundrum.

  • Age of the properties is irrelevant - the fact is, Marvel's superheroes are HUGE right now.  Thanks in large part to their movies, Spider-Man, Iron Man, the X-Men, and all of Marvel's other superheroes are definitely in the public eye, and are arguably just as or more popular than they've ever been before.

    This seems like a win-win for both companies.

  • Your story was featured in DisMarks! Here is the link to vote it up and promote it: http://dismarks.com/Media/Jim_Hill_Marvel_acquisition_offers_significant_challenges_huge_potential_rewards

  • I just remembered something that happened last March that may have been a HUGE influence in the buy...

    http://www.wolfstad.com/dcw/blog/2009/03/gemstone-ends-disney-license/

    Pretty extreme way to get somebody to take over the license?

  • Marvel's superheroes are indeed huge... right now.  The question is, will they still be huge in 10 years when Disney can finally start really taking advantage of the properties?

  • As long as Disney keeps Spiderman AWAY from Mickey Mouse - perhaps in the Hollywood Studios area of WDW, for instance - and doesn't mix the genres, I suppose that it won't besmirch the Disney legacy TOO much. But it still kind of sucks that the suits think the way to expand the Disney brand name is to buy up characters from other companies. You'd think the massive failure of the Muppets purchase would have taught them something. (And don't you Muppet geeks give me stuff about how Disney hasn't really tried, blah blah; if the Muppets need so much effort and capital just to get people to even look at them, then they weren't worth the millions spent acquiring them. The Marvel characters, on the other hand, already have a massive audience and will be money-makers for the Mouse right out of the gate. That's the only reason I feel okay with this...sort of.)

  • The best Disney can do initially is reaping the licensing fees and revenues from the existing film library. Beyond that will depend on how successfully Disney is able to produce films of equal or better quality as the previous films developed by the other studios.

    Personally, I haven’t been all that impressed with what Disney has done outside of the films Bruckheimer has been involved with (and even there I haven’t found Pirates II and III worthwhile). So, if Disney’s action-adventure films fail to meet the expectations of existing fans (possible) they will have wasted their money since it will take decades to recover their investment by licensing and revenue from existing films alone.

  • Gargoyles was Disney's effort at creating a comic book-style universe in-house, according to this interview:

    http://www.comicmix.com/news/2008/07/17/interview-greg-weisman-talks-gargoyles/

  • I think they paid too much for this. While it's understandable that they need content for Disney XD and the ability to reach tween and teen boys, they could've conceivably bought a lot of talent for that much money, or a couple of small studios. Hopefully, they'll get something out of this, but call me skeptical for now. I can't see where this is going to payoff anytime real soon.

  • From a business point of view, I think this is a smart move. It'll pay off over the long run. But there is the question that's been raised already by previous posts.

    Couldn't they spend that money on developing their own characters and their own movies?

  • From a business view, this IS a smart move.  Almost instantly Disney gets a theme park in in Dubai   http://www.superherohype.com/news.php?id=5370

    And Universals agreements with Marvel only apply to the United States and Japan where they have attractions.  Which means Disney is perfectly free to build a theme park in France that is Marvel themed.  I guess they finally answered Universal when they took Harry Potter....(Disney to Universal....Gratz on your new Harry Potter themed area, we're sure it will be a success...by the way, after your licenses expire on your Marvel section, you will have to retheme that area as well...oh and mail current and future royalty checks to Disney Corporate in Burbank, c/o Robert A. Iger.)

    Also, this isn't the first time Disney has used something that didn't seem to fit but took a bigger hammer then made it fit.....see Star Wars and Indiana Jones.  Whats also a nice win, with the existing agreements on the Movies, the other studio's do all the work...Disney collects the royalties.

    Not too mention, Disney comics get a new home and gets access to another demographic besides people wanting to be Pirates.

    This indeed is a long term investement that will payout over the long run (something Eisner stopped caring about sometime back and sacrificed it for immediate profits).

  • The Muppet acquisition was a "massive failure"?  Perhaps we might ought to wait a few years (you know, after the next theatrical feature planned for next year) before issuing proclamations?

  • The Muppets will have to make a LOT of successful movies to bring any profit to Disney, because Disney paid too much for THEM too.

  • Why didn't they work harder on creating more stuff in-house? If you believe Partick Goldstein at the Los Angeles Times, it's because Disney's creatively bankrupt:

    http://www.latimes.com/entertainment/news/la-et-bigpicture1-2009sep01,0,2258308.story

    I'm not sure if I agree with him, but with Disney's recent track record, he may have a point.

    This is definitely a smart move long-term - it brings the Company an audience they've never really been able to reach, but they won't really be able to exploit it for several years (but the royalty checks will help the Disney execs get over it).

    Kind of puts Disney's decision to make a deal with Stan Lee's entertainment company a few months ago in a new light.  Did Disney make the deal with his company to stem a potential source of opposition to the Disney-Marvel deal, or Disney realize that they needed to add Stan's best known creations to bolster the bottom line in addition to profiting from any new characters Stan creates? Could Stan the Man find himself back at Marvel in some sort of role? Stay tuned, true believers...  

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