Is Disney Up to the Challenge?

Disney (NYSE: DIS  ) announced its plans to acquire Marvel Entertainment (NYSE: MVL  ) back on Aug. 31, and the $4.2 billion deal is nearing completion this week. Disney shares have risen more than 20% since the deal was announced; according to a recent AP report, the rise is partly pinned on investors' hopes for new character development and better use of Marvel heroes in movies, stores, and theme parks.

In addition, the article goes on to explain, "Disney would benefit the most from new characters that Disney and Marvel develop together, because the company would own the franchises outright, instead of simply receiving licensing fees from the movies that Sony Corp. (NYSE: SNE  ) and News Corp.'s (Nasdaq: NWS  ) Fox produce on their own."

Clearly, there's a good case for the acquisition. However, it's an expensive purchase at a 40% premium at the time of the announcement. Also, the question remains whether movie-goers will embrace Marvel's more obscure characters, and whether Disney is up to the challenge of making them a success.

What do you think? Will "Ant-Man" be the next big thing? Let us know in the comments box below!

Claire Stephanic does not own any of the companies mentioned. Disney is an Inside Value and a Stock Advisor recommendation. Marvel is a Stock Advisor recommendation. The Fool has a disclosure policy.


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  • Report this Comment On December 30, 2009, at 9:45 AM, sas912 wrote:

    I loved my Marvel stock and thought that the acquisition by Disney made no sense to Marvel's shareholders, especially with Disney paying a premium for the stock. I sold my Marvel at a high and can still buy Disney at basically the same price if I decide later that I like the deal going forward. For now, the new Sherlock Holmes franchise that NWS has looks like it has legs and I'm thinking of buying NWS.

  • Report this Comment On December 30, 2009, at 10:51 AM, reeshau wrote:

    Disney doesn't have to look at totally new franchises. (new to movies) How about a decent Punisher movie? If Punisher was as edgy as Sin City was, it would be a hit. And how about a decent Captain America movie? Surely a storyline could be had, given global terrorist concerns. And what about the building Avengers storyline? X-Men showed the success a large cast of heroes had. Marvel can use the Avengers to test new spin-off characters, as Wolverine was from the X-Men.

  • Report this Comment On December 30, 2009, at 4:24 PM, meatmog wrote:

    Disney is not equipped to handle the marvel Company. It simply took Marvel out of a strong position to avoid being acquired themselves in 3 yrs time. Disney has no serious penetration in the teenage marketplace. It's characters do not have any audience pull after the age of 12. the marketplace is now emerging with more intelligent focused entertainment brands leaving Disney's own products way behind.

    I was concerned this year that so many ex Disney employees came to Marvel. (source: a well known business networking site site) This is a good move for Disney, but a very very bad move for Marvel.

    In entertainment terms this is in my opinion the equivalent of Ford's acquisition of Aston Martin - buy in a company that fits a new marketplace. The problem is they don't fit well, rather Disney is hamstrung by it's historical image. This is a brand management challenge.

    It is hard to see aside of the short term shareholder gain , the appeal of this move. I see a tragedy of a Company that could have been one of the Great American icons that oin my opinion would have acquired the ailing Disney in the future

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