How Bankrupt Marvel Risked Its Main Characters to Save Itself

August 14, 2018

In 1996 Marvel filed for Chapter 11 bankruptcy. Afterward, they were stuck. While their IP was seeing success in the form of Blade, X-Men, and Spider-Man movies, not much of that money was making its way back to the company. Today, Marvel is owned by Disney and one of the biggest success stories in the entertainment industry. So how did they go from almost losing it all to riding high? Cheddar examines.

FULL TRANSCRIPT

FEMALE_1: [APPLAUSE] [MUSIC] It's December 27th, 1996.

FEMALE_1: After years of bleeding money,

FEMALE_1: Marvel just fired one-third of its employees.

FEMALE_1: Shares that had been worth $35.75 in 1993 are now $2.38.

FEMALE_1: The company is $610 million in debt.

FEMALE_1: They're filing for bankruptcy.

FEMALE_1: For the next seven years, Marvel was stuck.

FEMALE_1: Movies like Blade, X-Men,

FEMALE_1: and Spider-Man were relative successes,

FEMALE_1: but Marvel saw a meager percentage of the profits.

FEMALE_1: But one man had a plan to restore glory for Marvel.

FEMALE_1: A plan that risked

FEMALE_1: their rights to their pivotal characters.

FEMALE_1: In 1989, Ronald Perelman bought Marvel for $82.5 million.

FEMALE_1: The billionaire businessman with

FEMALE_1: a signature grin and a huge cigar had

FEMALE_1: a long repertoire of turning

FEMALE_1: around dying brands for a profit.

FEMALE_1: He immediately raised prices and pumped out more titles.

FEMALE_1: Initially, fans were buying multiple copies of

FEMALE_1: each new comic betting on their eventual high worth.

Charles Soule: And so, that generated a,

Charles Soule: sort of a speculator boom in- in the same way

Charles Soule: that any speculator boom happens, and so,

Charles Soule: people were buying 10 copies of,

Charles Soule: of a comic and,

Charles Soule: and stocking nine of them away

Charles Soule: in the hopes that they would be worth

Charles Soule: millions of dollars someday.

FEMALE_1: Within just two years, profits increased tenfold.

FEMALE_1: But, what Marvel made in cash,

FEMALE_1: the comics lost in quality.

Charles Soule: Comic sellers at all levels

Charles Soule: were printing what were called variants.

Charles Soule: And, and so, you'd have a comic with the same inside,

Charles Soule: the same story in the inside

Charles Soule: but like a different cover or

Charles Soule: a slight- a slight variation

Charles Soule: on the way that it was presented.

FEMALE_1: The pressure for profits was decreasing

FEMALE_1: the quality of the product

FEMALE_1: which was now flooding the market.

FEMALE_1: The rise in the future value

FEMALE_1: was becoming increasingly unlikely.

FEMALE_1: To double down on profits,

FEMALE_1: Marvel decided to produce more memorabilia,

FEMALE_1: but the industry was shrinking and Marvel was in trouble.

Stan Lee: We haven't been too lucky.

FEMALE_1: [NOISE] By 1995,

FEMALE_1: chasing profits caught up to Perelman and marvel.

FEMALE_1: The company reported a loss of

FEMALE_1: $48 million and a death of $581 million.

FEMALE_1: At this point, Perelman knew the future was

FEMALE_1: in film and not in cards or comics.

FEMALE_1: So, he proposed merging

FEMALE_1: Marvel with action figure company,

FEMALE_1: Toy Biz to launch Marvel Studios.

FEMALE_1: However, shareholders blocked the plan arguing

FEMALE_1: financial damage to shares would be too great.

FEMALE_1: Perelman filed for bankruptcy in order to

FEMALE_1: continue his plan without shareholder consent.

FEMALE_1: After a two year court case,

FEMALE_1: Mr. Perelman's ties to the company were severed.

FEMALE_1: Marvel was now owned by two Toy Biz executives,

FEMALE_1: Isaac Perlmutter and Avi Arad.

FEMALE_1: Like Perelman, they had a direct target, movies.

FEMALE_1: They knew this was the future but Marvel

FEMALE_1: fresh out of bankruptcy needed quick cash.

FEMALE_1: So, they auctioned the cinematic rights

FEMALE_1: of their characters to Hollywood.

FEMALE_1: The problem was, Hollywood executives didn't see

FEMALE_1: the value and Marvel was forced into unfavorable deals.

FEMALE_1: [NOISE] [MUSIC] Marvel movies

FEMALE_1: of the late '90s and early 2000's were Blockbuster hits.

FEMALE_1: Blade meets $70 million in the box office,

FEMALE_1: but Marvel reportedly took in just $25,000.

FEMALE_1: Spider-Man made $3 billion

FEMALE_1: off the first two Spider-Man movies,

FEMALE_1: but Marvel only saw $62 million total.

FEMALE_1: They were sitting on

FEMALE_1: a goldmine but couldn't reap the benefits.

FEMALE_1: David Maisel calls himself a

FEMALE_1: cross between Iron Man and Peter Pan.

FEMALE_1: He lives in a two bedroom rental in LA.

FEMALE_1: He doesn't have an assistant lawyer or an agent.

FEMALE_1: But, Maisel is a multimillionaire

FEMALE_1: whose bold idea defined a generation of film. [NOISE]

FEMALE_2: In 2003, Marvel was getting ready to sell

FEMALE_2: Captain America to Warner Brothers,

FEMALE_2: and Thor, to Sony Pictures.

FEMALE_2: This is when Maisel stepped in.

FEMALE_2: Maisel met owners Araud and

FEMALE_2: Perlmutter with an audacious plan.

FEMALE_2: Make the movies yourself.

FEMALE_2: Not only would this give

FEMALE_2: Marvel 100 percent of the profits,

FEMALE_2: but it would also allow characters to

FEMALE_2: cross over stories just like

FEMALE_2: they do in the comics creating the

FEMALE_2: potential for endless sequels.

FEMALE_2: Araud and Perlmutter were eventually

FEMALE_2: convinced but needed the money.

FEMALE_2: It took until 2005 to get a deal.

FEMALE_2: Merrill Lynch contributed $525 million

FEMALE_2: over seven years allowing Marvel to

FEMALE_2: make any superhero movie they wanted.

FEMALE_2: But there was one big condition.

FEMALE_2: The collateral was the movie rights

FEMALE_2: to 10 main characters.

FEMALE_2: Marvel Studios was all in.

FEMALE_2: Their first order of business was

FEMALE_2: assembling previously sold characters.

FEMALE_2: They managed to reacquire

FEMALE_2: the rights to characters like Black Widow,

FEMALE_2: The Hulk and of course Iron Man.

FEMALE_2: From there, Marvel Studios chose

FEMALE_2: self-proclaimed comic book nut

FEMALE_2: Kevin Feige as their president,

FEMALE_2: a man passionate about Marvel.

FEMALE_2: On May second 2008,

FEMALE_2: Iron Man hit the big screen.

FEMALE_2: The future of Marvel was at stake.

FEMALE_2: It was an instant blockbuster hit.

FEMALE_2: In the first weekend,

FEMALE_2: the movie pulled in close to $100 million.

FEMALE_2: In total, the first film made $585 million.

MALE_1: Yeah, I can fly.

FEMALE_2: It was such a massive success that in

FEMALE_2: 2009 at Disney bought Marvel for $4.3 billion.

FEMALE_2: The rest is history.

FEMALE_2: In total, Marvel movies have grossed

FEMALE_2: over $14 billion since Iron Man.

FEMALE_2: That's roughly 13 percent of

FEMALE_2: the total box office since 2008.

FEMALE_2: In July of 2018,

FEMALE_2: Disney's shareholders approved the acquisition of

FEMALE_2: 21st Century's film and television studios.

FEMALE_2: Fox previously owned the rights to X-Men,

FEMALE_2: Fantastic Four, and Deadpool.

FEMALE_2: You can bet future movies will be jam packed with

FEMALE_2: characters spanning the entire Marvel Universe.

FEMALE_2: It's the next chapter in Marvel's Hollywood takeover.

FEMALE_2: Over a decade of blockbusters made possible

FEMALE_2: in part by one man's big gamble.

FEMALE_2: [MUSIC]