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Disney to diversify empire with $4 billion purchase of Marvel Entertainment


With visions of movies, TV, video games and theme park attractions dancing in its head, the Walt Disney Co. said Monday that it is buying Marvel Entertainment and its 5,000 comic book characters for $4 billion.

However, theme park rival Universal Orlando will likely retain the park rights to its four Marvel superstars, including Spider-Man and the Incredible Hulk.

Disney president Bob Iger and Marvel Entertainment executives extolled the benefits of using Disney's worldwide, multiplatform marketing machine to promote such comic book characters as Iron Man, X-Men and Captain America.

The acquisition would give Disney rights to a wide variety of action characters that appeal to teenagers and young adults, and which have endured for generations. Iger said he is particularly interested in Marvel's recent success converting comic book characters into blockbuster movies.

"Over the last decade, (Marvel chief executive) Ike Perlmutter and his team have done a terrific job building a licensing, publishing and movie business around such great Marvel characters as Iron Man, Spider-Man and the X-Men, to name a few," Iger said. "In particular, they have shown a tremendous skill in increasing the appeal of characters like Iron Man that traditionally weren't well known outside Marvel's core fan community."

The Marvel acquisition is a signature Bob Iger deal, said Renny Ponvert of Management CV, a research firm that analyzes the management teams of all the companies on the Russell 3000 list.

"It takes great strategic courage for Iger to do a deal like this at what I think will be a fortuitous time — coming out of the doldrums of the summer, at arguably the bottom in terms of consumer spending," Ponvert said.

"Overall, we think Marvel's library and brands are a solid strategic fit for Disney," Anthony DiClemente, entertainment analyst at Barclays Capital, said in a note to clients.

"Disney should be able to leverage its global reach, execution, and distribution capabilities to grow Marvel's brands and business opportunities," he said.

Iger and others announcing the deal Monday had little to say about Marvel's current arrangement with Universal Orlando, which has an entire theme park area, Marvel Super Hero Island, dedicated to Marvel characters. Universal's contracts apparently gives it exclusive U.S. rights east of the Mississippi River for theme park attractions built around certain of those characters, notably Spider-Man, the Incredible Hulk, X-Men and Dr. Doom.

"Marvel characters have already proven to be strong in terms of theme park attraction," Iger said, "and we believe there are a lot of opportunities around the world, not in every one of our parks because there are some existing agreements that we obviously have to honor."

Universal Orlando said Marvel characters will remain a staple at its parks.

"Marvel Super Hero Island at Universal's Islands of Adventure and the Marvel characters are a beloved and important part of the Universal Orlando experience. They will remain so," said Tom Schroder, a Universal spokesman. "Our guests are going to get to meet Spider-Man and all our other Marvel characters. We believe our agreement with Marvel stands and that the Disney-Marvel deal will have no impact on our guest experience."

Marvel has several long-term agreements in place already with various other companies for many of its characters, including movie deals with Paramount, Sony and Fox, for such characters as Iron Man, X-Men, Spider-Man, Captain America and Thor. Those contracts will be honored until their terms expire, which could be several years in some cases.

Disney is offering Marvel shareholders a stock-and-cash deal worth $50 a share. That includes $30 cash and 0.745 shares of Disney stock for each share of Marvel stock. Disney chief financial officer Tom Staggs said he expects the deal to be completed by the end of the year.

Information from the Orlando Sentinel and MarketWatch was used in this report.

Disney to diversify empire with $4 billion purchase of Marvel Entertainment 08/31/09 [Last modified: Monday, August 31, 2009 9:31pm]
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