MARVEL NOT SO

MARVELOUS
Considering the popularity of Marvel Entertainment today, with its blockbuster movies just

rolling in, it is quite unimaginable that it has gone thru a phase of bankruptcy in the past. From

years 1940’s to the early 1980’s marvel was considered a market leader in the comic book industry,

but everything started to change in 1989, when McAndrews and Forbes Holding, which was run

by Ronald Perelman, bought the company for $ 82.5 million from New Worlds Pictures. Perelman

already made a name for himself in the corporate industry, he was a millionaire/business man that

owned the popular cosmetic brand Revlon. Thinking that he could take Marvel, into greater heights

he made a lot of changes and risky decisions that pushed the company to the edge.

1989- 1990: THE PERELMAN TAKE-OVER

In the 1940’s after the great depression comic books, has been a cheap source of

entertainment for people, but as the comics and the issues continue to grow in popularity it become

more than just a hobby. In the 1980’s an event called Speculator Boom happened, people started

to collect and hoard comics thinking that it could be worth hundreds or thousands of dollars

someday due to the scarcity of the supply that would end up inflating the value of these comics.

Due to this lucrative collector frenzy that is happening in the comic community, Perelman thought

of taking advantage of this situation. In 1989, What he did first was increase the sales of the

company by trying to increase the prices of the comics, from $1.25 per comic increased to $2.25 -
$4.00, almost tripled the price within only a few years. He also increased the number of monthly

titles from 45 to 180, increasing its cost and saturating the market with a lot of overpriced poorly

written comic books. Printing a lot of covers for one issue, that would cause a price differentiation,

was also one of the strategies that Perelman devised that is still a marketing tool that is being used

today. The comic books were sealed individually with trading cards and signatures from the

illustrators. In about only a year these strategies were successful in generating revenue for the

company, almost increasing the revenue by tenfold. Marvel did make a lot of money and the

pressure for profit was taking a toll on the quality of the comics that was being published.

1991- 1995: MARVEL GOES PUBLIC AND ITS

ACQUISITIONS

Seeing how the sales were increasing Perelman decided to sell 40% of the company to

public offering in July 15, 1991. Then he used the proceeds to acquire divisions to further expand

Marvel into a multi-industry company. He bought Hero’s World, a small comic distributor that

become the sole distributor of the Marvel comics. In February it purchased Fleer, a company that

manufactures trading cards for $286 million. In March he purchased another trading card company

named Skybox Trading Card Company for $150 million.

These acquisitions did not stop there it still continued buying divisions until 1993.

Perelman bought 46% interest of children’s toys retailer Toys Blitz for an exclusive royalty free

license to use all Marvel Characters. In 1994, he acquired three publishing groups the first one was

51% of Welsh Publishing Group, then Bongo Publishing Groups, and Malibu Publishing. Due to
this acquisition Marvel found itself in deep debt, from $263 million in 1992 to $563 million in

1995, it doubled in a span of three years. The increase in debt is brought up by two factors, the

first one was the continuous acquisition and the second one was due to the decline in sales in the

comic book industry. The success that was happening in the early years of Perelman’s control was

short lived it wasn’t long enough for the customer to realized that they were being ripped off. The

new comics were not scarce in supply and were not of high quality, therefore they can’t expect a

high return in the future if they tried to sell it. This event is can also be known as the Bubble/ Tulip

Effect which talks about a market suddenly finding success only for the market to collapse in the

future. Because of this its comic sales fell by 19%, and also tarnished Marvel’s image by cheating

its customers in buying items that weren’t high value. In 1995, 74% of their company is operating

on debt, not only did its liabilities increase, they also recorded a loss of $48.5 million the same

year due to the losses in their comic book and publishing business.

Source: https://www.denofgeek.com/us/books-comics/marvel/243710/how-marvel-went-from-

bankruptcy-to-billions

1996: MARVEL FILES FOR BANKRUPTCY &

LEGAL DISPUTE

In 1996, Marvel definitely hit rock bottom operating at a loss of almost $460 million. Due

to the significantly loss recorded it was likely that the company will not be able to pay its liabilities

amounting to $610 million. Stock prices that cot $35.70 in 1993 declined to $2.36 in 1996. This
was also the same year in which Marvel lay off almost one-third of its working force to further

lessen its expenses, but it was still too late. Perelman try to take steps to mitigate the problem that

Marvel is experiencing by proposing to buy the remaining share of toy biz and merge the two

companies to make Marvel Studios. But due to distrust in Perelman Marvel Shareholders oppose

this proposal, so Perelman proceeded to file Chapter 11 bankruptcy in December 27, 1991 in New

York. In order for him to reorganize the company’s structure, which includes the opposing

shareholders.

There was a long legal dispute between the Marvel Shareholders, which was led by Carl

Icahn, and Perelman. In February 1997, the court ruled that Icahn really can foreclose a controlling

interest in the company and in June Icahn won in the dispute to replace Marvel’s board and finally

droving out Perelman from the company for good. Even though Icahn won, his proposal for

reorganization was still not supported by two-thirds of the board. The reorganization plan that was

followed was the one that was proposed by Toy Biz which was run by Isaac Perlmutter and Avi

Arad.

1999 - 2000: MARVEL REORGANIZED

In summary, the plan has three important points the first one was to get rid of those

acquisitions that Perelman has bought. The company immediately shed all the non-core and

unprofitable businesses that take up operating expense to save cash. Marvel let go of Fleer

Confections, and Heroes World Distribution. It was also able to cut down on depreciation expense

due to the disposal of a lot of its fix assets.

The second goal was to concentration on its intellectual properties both with the comics

and its comic characters. Marvel reorganized the company into only five divisions which are
licensing, publishing, film, internet/new media, and toys. The company also changed its vision

from just comic/toy company to a leading entertainment company that focuses in intellectual

rights.

The third goal was to get try to get the movie industry to make movies about Marvel

characters and stories. In this year’s Marvel was able to increase its revenue by selling its first

licensing deal with Sony, thus the Spiderman movies were born. It also sold the rights for X-Men,

Fantastic Four, and the Silver Surfer to 20th Century Fox.

2000-2008: MARVELS MOVIE COMEBACK

Marvel was basically forced to sell the right of its characters for very inexpensive prices to

Sony and 20th Century Fox. Marvel movies in the late 1990’s and early 2000’s were blockbusters

hits, but Marvel was only given a small percentage of the profit, cause most of the money goes to

the studio that made the movie. The movie Blade almost made $70 million in the box office, but

Marvel was only given $25,000, the Spiderman Movie Franchise was also a big hit having a sale

of almost $3 billion, but Marvel was only given $62,000,000.

In the year 2004, Marvel decided again to sell the its rights of Captain America to the

Warner Brothers and Thor to Sony. But it was stopped by business man David Maisel, telling Arad

and Perlmutter to make the actual movies themselves, so that they can actually have 100% of the

profit. With this goal in mind Perlmutter immediately loaned $525 from finance giant, Merrill

Lynch. Marvel was more than ready to risk it all by collateralizing movie rights to 10 main

characters such as Black Panther, Dr. Strange, Captain America, and many more.
 The first thing that Marvel did was the reacquisition of the characters that they previously

sold such as the Hulk, Iron Man, and Black Widow. Now that Marvel has enough money to make

any movie it wants; the choice was what movie exactly are they going to make. The whole future

of the Marvel Studio was basically threading on the success of the single movie, which was Iron

Man.

In May 2, 2008, Iron man was launched, and it was an instant success the first movie made

almost $590 million dollars in the box office. Due to this feat , Marvel peaked the interest of Disney

and acquired Marvel in 2009, for $4.3 billion.