When New World Entertainment acquired Marvel Comics in 1986, the new owners believed they had the makings of a "mini-Disney." Two years later, corporate raider Ron Perelman would say exactly the same thing after acquiring Marvel, writes Sean Howe in Marvel Comics: The Untold Story, an unofficial history of the comic book king.
Reading the book, I get the sense that Walt Disney's (NYSE:DIS) $4 billion buyout of Marvel in 2009 was inevitable. Decades of booms and busts seem like necessary steps toward bringing the two together in a partnership that would forever change the way Hollywood thinks about comics.
Today, studios and TV networks are profiting from the medium like never before. Marvel's The Avengers set a new opening-weekend box office record over the summer, surprising most. Howe recounts the history that brought us to this point.
I recommend his book to comics fans and Disney investors alike, though students of business might also appreciate his handling of byzantine topics such as creator's rights and intellectual property. Here are eight things the book taught me about Marvel's flirtations with Hollywood and earlier owners' attempts to create a "mini-Disney."
1. Marvel profited from Star Wars first.
After a marketing consultant tried and failed to convince Stan Lee that a new sci-film should be adapted into the comics, Lee protege Roy Thomas took a second look and decided to push for the project. He won the argument, Howe reports, and the first Star Wars comics went into multiple printings. A rare $0.35 variant of the first issue is valued at more than $3,000 in excellent condition, according to data supplied by Comics Price Guide.
2. Sabotage helped Marvel topple DC as the market leader.
For a time, Marvel was hamstrung by having the publisher of rival DC Comics also act as its distributor. The arrangement put a cap on the number of titles Marvel could push to newsstands, Howe reports.
Company founder Martin Goodman would turn the tables in 1970 by collaborating with DC to push the price of comics to $0.25 for a 52-page book. He'd then renege on the deal -- cutting prices and offering newsstand operators a larger share of comic book profits, Howe reports. Marvel became the industry's top seller shortly afterward and hasn't looked back since.
3. The man who could have owned Marvel... for just $2,500.
In 1971, Goodman's son, Chip, licensed rights to all Marvel characters to a concert promoter named Steve Lemberg for just $2,500 up front with an option to renew indefinitely. "I owned more rights to Marvel than Marvel had," Howe quotes Lemberg as saying. That Marvel ever got to make its own films is itself a turnabout fit for the comics.
4. Marvel's big-screen debut didn't star a superhero.
Disney has Donald; Marvel had Howard. And in 1986, Howard the Duck was the comic book king's first real attempt at taking Hollywood by storm.
Co-creator Steve Gerber wrote Howard -- a cigar-chomping alien that resembled an oversize Earth duck in every other respect -- to comment on the absurdity around him, including the often-outlandish world of comic books, Howe reports. But what worked on the newsstands and in comics shops failed on the big screen: Howard the Duck grossed just $37.9 million on a $37 million budget, according to Box Office Mojo.
5. Stan the Man never understood his customers.
Despite serving as the voice of Marvel for generations, Stan Lee said he wouldn't read comics if he "weren't in the business," Howe reports. Perhaps that's because he came into the business via a family connection: Marvel owner Goodman was his uncle via marriage. To Lee, superheroes offered a ticket to Hollywood and a chance at fame and fortune.
6. Mattel is partially responsible for Spider-Man 3.
Despite its reputation as the House of Ideas, Howe says Marvel based one of its best selling mini-series -- 1984's Marvel Super Heroes Secret Wars -- on market research. Toy company Mattel (NASDAQ:MAT), with which Marvel had struck a deal, found that the phrase "secret wars" resonated with kids. The series introduced a black costume for Spider-Man, later revealed as a sentient alien that would bond with criminal Eddie Brock to form the villain known as Venom, played by Topher Grace in Spider-Man 3.
7. Carl Icahn wanted Marvel first.
Long before the activist investor decided to go after Lions Gate and Netflix, he made a partially successful bid for Marvel.
In 1996, after then-owner Ron Perelman presented a plan to recapitalize Marvel that involved acquiring a toy company, Icahn, a bondholder who controlled a third of Marvel's debt, swooped in, Howe reports. A bankruptcy court would later hand temporary control of the company to bondholders, installing Icahn as chairman until an unlikely maneuver by Toy Biz chief Ike Perlmutter won the support of banks and control of Marvel.
8. We've seen this movie before.
Hollywood is exploiting the comic book genre in ways reminiscent of the late '80s and early '90s, a time when comics were so popular that titles based around Marvel's X-Men characters were selling multiple millions of copies each issue.
Among that era's big winners were three films
based on the indie comic hit Teenage Mutant Ninja Turtles as well as Dark Horse Comics adaptation The Mask, which introduced the world to Cameron Diaz. Losers included DC Comics adaptation Steel, starring Shaquille O'Neal, Barb Wire, starring Pamela Anderson, and Judge Dredd, starring Sylvester Stallone. It's a safe bet our current fascination with comics will lead to a handful of awful box office performers.
I've been a comics fan since I was a pre-teen. I still am. (Pro tip: Pick up a copy of Marvel's Hawkeye.) As an investor, I'm interested in the medium because big franchises have a way of producing big profits. Look at AMC Networks (NASDAQ:AMCX), which has transformed popular indie comic book series The Walking Dead into the top-rated cable TV show of all time. The stock is soaring as a result.
Disney has an even better record thanks to decades of cultivating character-driven brands across media, experience chief Bob Iger has since brought to Marvel. The executive team at Time Warner's (NYSE:TWX.DL) DC Entertainment unit should take a lesson and make Howe's book required reading.