The Motley Fool's Rich Smith snagged some time with Peter Cuneo, vice chairman of longtime Motley Fool Stock Advisor recommendation Marvel Entertainment (NYSE:MVL). The company is determined to become a movie mogul on par with industry leaders. Here's how Cuneo plans to get it there.

Rich Smith: Marvel has revamped its business plan from intellectual property (IP) licensing house to movie mogul. How does the new Marvel differ from the old?

Peter Cuneo: Historically, we limited ourselves to the ownership, control, and content creation for our only asset -- IP; our characters and brands. We are now capable of producing forms of media ourselves given our exposure to these areas over the past seven years. We have moved into the production of direct-to-video animated films (with Lions Gate (NYSE:LGF)), TV animation (with Moonscoop), and more dramatically, into major film production (with Paramount as distributor). This allows us to capture more of the profit associated with each individual project, but with little financial risk, since others are providing most of the needed capital.

RS: When Fool co-founder David Gardner first recommended Marvel in 2002, he said, "The company gets a percentage of the movies' box office and DVD sales, but it's not responsible for paying for the movies' budgets. Sure, if any of the movies bomb, it will be a disappointment, but none of them is a sink-or-swim proposition." Marvel formerly offered low to no risk; even a movie flop would still make the company money. Now, Marvel has transformed itself into "something else." Reassure us that "something else" is "something better."

PC: Our Marvel feature film slate is the natural evolution of our company and acknowledges the tremendous success our creative team has achieved through feature film productions over the past several years. While revenue and net income remain very important performance benchmarks, most important is how much cash our operations are able to generate, particularly in comparison to the amount of capital that we employ in our business. On these terms, we believe Marvel has a very attractive, totally unique business model that is truly something better.

RS: How does Marvel operate in regard to IP that it's already licensed for particular films? For example, can Marvel make X-Men and Spider-Man movies on its own now, or only in cooperation with News Corp. (NYSE:NWS) and Sony (NYSE:SNE), respectively?

PC: In our feature film licenses, our studio partners are granted what is essentially a "use it or lose it" license. These licenses require that the studio continue to produce and release films based on the characters and to meet certain criteria, such as minimum budgets and producing and releasing film sequels within contractual time frames. Otherwise, the film rights will revert back to Marvel. This is what occurred when the film rights for Iron Man and Hulk reverted to us in the recent past.

RS: You recently announced a partnership with Hasbro (NYSE:HAS) in your toy segment. What advantages did you see in Hasbro's offer in comparison to offers from Mattel (NYSE:MAT) or any other interested parties?

PC: We selected Hasbro based on their passion and vision for the Marvel character brands, the strength of their global reach, their proven skills in the action figure and accessory market, and on their specific promotional commitments to support Marvel lines. Of course, we also like the overall financial terms of the agreement, which included a cash minimum guarantee that was substantially larger than we had secured from our previous master toy licensee.

RS: Marvel is contemplating taking on $525 million in debt. You've also partnered with Viacom's (NYSE:VIA) Paramount to distribute films. David told us in 2002: "[Marvel went bankrupt in 1996] as a result of ex-financier [Ronald] Perelman's big ego, and his belief that borrowing lots of money to expand the business would work. Perelman's no longer in charge, and new CEO Peter Cuneo isn't likely to make the same debt mistakes that have plagued Marvel in the past." Yet here we are four years later, and Marvel is taking on debt. What mistakes did Perelman make 10 years ago that you and your CEO, Isaac Perlmutter, hope to avoid making today?

Current Stock Advisor subscribers can read the full transcript of this interview by clicking right here. Not yet a subscriber? A 30-day free trial grants you access to the rest of this interview as well as all David and Tom Gardner's top 10 companies for new money now.

Fool contributor Rich Smith does not own shares of any company mentioned in this article. Hasbro is a Stock Advisor pick. The Fool has a disclosure policy.