What happened
Shares of Genius Brands (GNUS -1.75%) rocketed 23.7% this week compared to where they closed last Friday, according to data from S&P Global Market Intelligence.
Investors didn't care so much that the children's entertainment outfit reported earnings that showed a 35% increase in sales (though the stock did go up almost 10% on the news). Rather it was the announcement that Genius Brands signed a 20-year deal with Disney's (DIS 0.18%) Marvel Studios to license the name and likeness of comic book legend Stan Lee for use in films and television, as well as to use in Disney theme parks globally, that sent shares soaring.
The stock had been up as much as 35% at one point during the day, before settling for a 12% gain. Genius Brands shares have eased back since.
Image source: Getty Images.
So what
Genius Brands has always tried to make a lot of hay out of its Stan Lee connection, saying it would develop shows based upon his intellectual portfolio. Although Lee has created some of the most iconic superhero characters, such as Spider-Man, Iron Man, Avengers, and X-Men, those aren't the ones Genius Brands has access too.
Rather, the media company would be creating shows based on characters like Lucky Man, Politenessman, and Alter Ego. Hardly the stuff to get the pulse pumping. This deal, however, has potential for Genius Brands.
Now what
Along with POW! Entertainment, the company Lee set up in 2001 to manage the rights to his creations, Genius Brands is managing how Lee's likeness can still be marketed. Lee remains a massively popular persona even after his death, particularly because he would often make cameos in movies starring his creations. The "Easter egg hunt" for his visage was a fun pastime for many.
Still, digitally inserting Lee into Marvel movies now carries risks, as it can appear to be exploiting his legacy. Disney received backlash from fans after digitally recreating the late Peter Cushing to use in Star Wars: Rogue One and shoehorning footage of Carrie Fisher taken before her death into The Rise of Skywalker.
Of potentially greater importance to Genius Brands will be the sale of Stan Lee merchandise and consumer products that will be sold in Disney theme parks, on its cruise ships, and at various other venues.
By elevating Lee once again through this deal, the media company has the potential to see the characters and intellectual property it has created with POW! gain wider recognition. Politenessman could get more attention than it otherwise would while Genius Brands is realizing a 20-year revenue stream from licensing fees and merchandising royalties.
