Marvel Comics --Saved by their Movies

"Marvel has done a very good job of ha
Marvel Enterprises spins web of success

Marvel Enterprises has Spider-Man and the Incredible Hulk on its side, but the company's comeback from bankruptcy five years ago has depended on three mild-mannered men in New York -- and a colorful creative executive in Hollywood.

Originally a comic book company best known for its superheroes, Marvel Enterprises was deep in debt after a decade of ill-timed acquisitions by its previous owner, Ronald O. Perelman, and was operating under Chapter 11 bankruptcy protection when Isaac Perlmutter won control of it in 1998.

Perlmutter, who owned an action-figure manufacturing company called Toy Biz Inc., hired F. Peter Cuneo, who had turned around the Remington Products Co., to do the same at Marvel.

At the heart of his strategy were the rights to the X-Men, Captain America, Daredevil and hundreds of other characters that have been created over the years for Marvel's comic books. Cuneo and his team remade Marvel as an entertainment company focused on licensing its characters to movie makers, toy makers, video game makers and television producers.

Marvel, which has been run by Allen S. Lipson since Cuneo retired in December, is now less a comic book publisher than a toy manufacturer that is remaking itself into an intellectual-property company with a movie-production subsidiary. About half its $299 million in revenue last year came from making toys, down from more than 70 percent in 2000. Only 21 percent came from publishing comic books last year.

The remainder -- just more than 26 percent -- was from licensing Marvel's characters to other companies, including filmmakers. That is up from 8 percent in 2000, and has been a catalyst in Marvel's rebound. Starting with "X-Men" in 2000, which sold $157 million in tickets in the United States, movies based on Marvel characters have proved remarkably popular.

"Spider-Man," released last summer, has pulled in $403 million at the domestic box office; "Daredevil," released earlier this year, has done more than $100 million worth of business; and "X2: X-Men United," released just two weeks ago, has already sold $149 million in tickets. Arriving in theaters next month will be "The Hulk," based on the character from The Incredible Hulk comic.

"What happened was our own realization that the core strength of the company is our intellectual property," Lipson said. "Coming out of bankruptcy in 2000 with $250 million in high-yield notes, we needed a business model that was not capital-dependent. This is a low-risk, low-capital model."

So far, the model is working. In the first quarter, Marvel posted net income of $41.1 million, reversing a loss of $7.9 million in the corresponding period a year ago. Revenue grew 53 percent, to $87.4 million.

While licensing revenues soar, Marvel is also back on top in the comic book business, selling 43 percent of all comics bought in the United States, according to John Jackson Miller, editorial director of the comic and games division of Krause Publications, a trade and hobby magazine publisher. DC Comics, which publishes Superman and Batman comics, among others, and is owned by AOL Time Warner, has 32 percent of the market.

Since January, Marvel's stock price has doubled, closing at $28.58 on Friday. When Marvel emerged from bankruptcy in 1998, the shares traded at $6.75.

"Marvel has done a very good job of having good movies made based on their characters," said Martin Brochstein, executive editor of The Licensing Letter, an industry trade publication. "But I can't emphasize enough the 'good movies' part because if they were bad movies, we wouldn't be having this conversation."

While Marvel is on an extraordinary roll, it remains to be seen whether it has built a franchise like "Star Trek" or "Star Wars" that will last for decades or is enjoying a burst of success that fizzles, as the Superman movies did in the 1980s.

Some people said they were skeptical.

"Unquestionably, the superhero film genre is hot," said Seth M. Siegel, co-founder of the Beanstalk Group in New York, an international licensing agency. "But usually with trends and fads, the wheel turns and the popular passion cools. It's unlikely it will last forever."

The three khaki-clad men at the top at Marvel's headquarters in Manhattan, on East 40th Street near Fifth Avenue, appear an unlikely team to run a comic book empire: Lipson, 59; William E. Jemas Jr., 45, the chief operating officer, who oversees the publishing unit; and Alan Fine, 52, who runs the toy business.

All of them acknowledge that they had little more than a passing interest in comic books when they were boys. But each has insight into Marvel's new business model.

Lipson, who worked with Cuneo at Remington Products, said Marvel now had hundreds of licensing agreements in markets from toys to video games and films. In film, Marvel has struck several deals in which it gets not only a licensing fee for the rights to characters but also a percentage of gross box-office sales.

In publishing, Jemas has rebuilt the Marvel comics business by expanding sales to bookstore chains, by introducing new imprints, and by hiring new talent, starting with a new editor in chief, Joe Quesada, a veteran illustrator.

Fine's Toy Biz division has offered popular new toys like last summer's hit, the Spider-Man Web Blaster, which shoots webs the way the superhero does.
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