Marvel's New Generation

David Gardner: One more question for you as we look at the movie landscape for 2005. You have to have your eye a little bit on DC Comics' Batman character. Batman has a movie coming out that I am sure they are hoping is a big deal this summer. Are you rooting for the success of Batman, or is that your direct competitor and you are rooting against them?

Peter Cuneo: I don't think we have a point of view on that. I think that there is room for everybody as long as the creative content is quality. It is all about quality. If there are no quality fantasy movies put out in a year, then in fact you will have a lot of failure. If everybody is putting out quality films, there will be a lot of success. We don't view it as competition on the movie side. It is all about just making a quality film.

David Gardner: Final question about Marvel's (NYSE: MVL  ) business model. I think a lot of us probably tend to be Monday morning quarterbacks and look at how the box office was for a given new Marvel movie debut. But Peter Cuneo, you have made it clear that Marvel makes a lot of money in other ways: toys, the DVD sales later on, etc. In fact, could you generalize for us, just to give us a big picture sense of things ... how much for Marvel's top line, just the money that you pull in as sales, comes down to Hollywood box office and then what portion comes in all the rest, DVD, video games, toys?

Peter Cuneo: The proportion varies from film to film, so it is difficult to give you a reaction. For example, an R-rated film like Punisher would have a different proportionality between all of those ultimates. We call them ultimates.

David Gardner: OK.

Peter Cuneo: Than, say, a PG movie would have. Plus the fact that what really matters for us is the licensing that goes along with the movies. We make far more profit, far more revenue from that associated licensing than we do directly for any film.

David Gardner: And now to you, Peter Cuneo, we have talked in the past over the years here. These days you are the vice chairman of Marvel, and in the past you were the CEO. Could you explain for me exactly what the vice chairman does? How much time do you put into Marvel on an annual basis?

Peter Cuneo: Well, I am actually -- I work part time for Marvel, and my role, as well as sitting on the board, of course, is to do a lot of the investor relations and public relations for the company. Because I have been the CEO in the past, I am comfortable doing that. I am still a tremendous fan of Marvel. I still have a big personal stock position in the company, and I haven't sold any shares. I have been now associated with the company since July of '99 when I became CEO. I was CEO for three and a half years and continue to have just the best feeling about the company and its future.

David Gardner: Why did you step down as CEO, and then I guess more recently, why did Allen Lipson step down as CEO?

Peter Cuneo: Well in my case, my personal history is that of doing turnarounds, and the turnaround for Marvel was complete. I am really not the best guy to run a well-oiled company. My interests lie in making big changes and tackling really serious problems. I am a little weird. I think my mother dropped me on my head when I was young. But essentially, so for me, the transition really was to do something else and I have other outside interests.

Allen Lipson, who came on as CEO after me chose to retire. Allen is in his early 60s. He also had accomplished a great deal. In fact, if one looks at the stock price from the time I left the company to the time that Allen was the CEO for two years till he retired recently at the end of last year, you will see a substantial increase in the stock price under his leadership. We became debt-free under Allen's leadership, so there were a lot of important milestones over the past two years under Allen, and Allen, I think, felt that he had done his thing and he was at an age where he wanted to have some time off.

You know, being a CEO, particularly of a public company in the United States, is a 24/7 job. Any CEO that you meet that tells you that they are not under stress virtually all of the time may not be doing the job. It is the nature of the public markets. It is the nature of any CEO job. After a while, one can get tired. I think it is always a good thing when individuals recognize that it is time for a change.

David Gardner: Can you evaluate present management, and is it temporary or around to stay?

Peter Cuneo: Well, our new CEO is Isaac Perlmutter. Ike, as we call him, is the largest shareholder in the company. Controls close to 30% of the stock in the company. Ike has been always closely involved in the company from Day One. He really was in effect our chief operating officer prior to this, and so the organization really hasn't even batted an eyebrow over this change. Ike comes in knowing the people, knowing the issues facing the company, and it has been, I think, a very seamless change.

We also in the past couple of years have hired what I might call the new breed for Marvel. You know, those of us, such as myself, Allen Lipson, Isaac Perlmutter, and other people who have been around were the old breed who took Marvel out of bankruptcy and really set it on a proper footing. This new breed is a generation younger than we are generally and are people who have been involved in particularly the media side of entertainment for a long time and are bringing new thoughts, new ideas, new visions to the table that we never had. We were turnaround guys in consumer products. We didn't have a lot of experience other than Avi Arad, who heads up Marvel Studios, in the entertainment or the media side of the business. We thought we could do well with Marvel. We had no idea how well, and this new breed that has come in is really showing us the way.

Stay tuned for Part 4 tomorrow.

Did you miss the beginning of this interview? Check outPart 1 andPart 2. Marvel is aMotley Fool Stock Advisorpick. Want to learn more? Subscribe today without risk for six months.

David Gardner is co-founder of The Motley Fool and is the advisor of Motley Fool Rule Breakers. The Motley Fool isinvestors writing for investors.


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