When Disney (NYSE:DIS) and Marvel Studios screens Captain America: Civil War next May, directors Anthony and Joe Russo will be borrowing from best-selling material that generated worldwide media coverage over the last decade.
I'm talking specifically about the "Civil War" crossover comic book series that pitted various heroes of the Marvel Universe against each other. Trouble is, "Civil War" No. 2 -- the key issue of that series and also the top-selling comic book of 2006 -- involves Spider-Man.
Sony (NYSE: SNE) has owned the rights to make movies and TV shows featuring the web-slinger since the late '90s, and up until now there had been no indication that the studio was ready to strike a deal that would allow Disney to borrow the character for Civil War or any other upcoming Marvel movie.
But yesterday Latino Review, which is well known for nabbing comic book movie scoops, reported that Marvel and Sony had come to a deal to get Spidey back into the Marvel Cinematic Universe in time for Avengers: Infinity War - Part 1 on May 4, 2018.
Origins of Marvel Studios -- financial forces at work
Surprised? Don't be. The comic book king has struck cooperative deals in the past, like the one that gave birth to Marvel Studios and the Marvel Cinematic Universe.
Rewind to April 28, 2005. That's when Marvel announced plans to partner with Paramount Picture to distribute original films produced in-house and financed by a $525 million fund facilitated by Merrill Lynch. You can still read the original press release here, dug out from the nether realms of the SEC archives.
Refer to the end of the first page of the release -- this section, in particular:
The finance structure will also allow Marvel to receive a producer fee for each film and retain all merchandising revenues. Paramount will receive a distribution fee for each film it distributes and will retain worldwide distribution rights in sequels to the films covered under the agreement. [Emphasis mine.]
Why can't this same arrangement, or one like it, be used for shared-universe films? Working with Paramount didn't cost Marvel any character rights. Here, Sony would get a cut of film proceeds while studio chiefs worked out the creative details with their writers and directors.
Yes, I realize that's easier said that done. Read the various snippets at Mashable to see how Sony executive Amy Pascal argues with herself in email about how much control to cede in a potential deal with Marvel.
"If we have Spider-Man in Cap 3 ... What is our fee and our back end? Need script approval, casting approval of [Spider-Man] and Aunt May and consultation of May's house in Queens and any other Spider-Man locations we may need in future movies," Pascal wrote in an Oct. 21 email to herself.
Fair points, save for the first. History has given us a financial model for shared responsibility when it comes to comic-book filmmaking. In this case, Sony would negotiate the terms for allowing Marvel and Disney to use Spidey while retaining lucrative distribution rights. The question is whether either studio has the will to implement that sort of arrangement.
No longer your friendly neighborhood Spider-Man
Sony may be more amenable, and for good reason. According to my math, every film in the Spider-Man franchise has made less box-office profit than the one to have preceded it.
How big is the drop-off? The Amazing Spider-Man 2 generated an estimated $24.5 million in box office profit for Sony last year, down 88% from an estimated $200.9 million for the 2002 breakout hit Spider-Man. Marvel's minuscule share of the box office and DVD proceeds from that first Spider-Man film -- just $10.4 million in licensing fees, according to the company's 10-K annual filing for 2002 -- started the comic book king down the path toward creating the hit-making studio we know today.
Now it's Sony that has a profit problem which needs fixing, fast. S&P Capital IQ data shows that the Pictures segment responsible for shepherding the Spider-Man franchise is also the company's second-most profitable division. Lagging performance from new Spidey films plus a dearth of new franchises to take their place threatens that position. Putting Spider-Man back in Marvel's hands for production -- via a deal that mirrors the one that birthed the MCU -- may be the best solution for fans, for Sony, and for its investors.