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Disney buys Marvel: Historical notes on a historic pairing

Monday, August 31, 2009

According to Wall Street sources, the Walt Disney Company will acquire Marvel Entertainment Inc. for $4 billion in stocks and cash. Comics industry observers and fans alike are already discussing the potential implications of the news, and will be for days — but at first blush, it appears to complete, in an ironic way, a trip that Marvel began in the summer of 1991, when Macandrews and Forbes sold 40% of Marvel to the public. [Update: See our timeline of Marvel ownership events.]

That sale created a stock that sparkled throughout the early 1990s speculator bubble period in comics, with Marvel buying additional assets along the way in financier Ronald Perelman's attempt, in his words, to form a "mini-Disney." Dan Raviv quotes Perelman in Comic Wars: Marvel's Battle for Survival:

"It is a mini-Disney in terms of intellectual property. Disney's got much more highly recognized characters and softer characters, whereas our characters are termed action heroes. But at Marvel we are now in the business of the creation and marketing of characters."

And market it did. There were a wide range of acquisitions in that era: trading-card makers Fleer (July 4, 1992, for $265 million) and Skybox (March 9, 1995, for $150 million); comics publisher Malibu (1994) and distributor Heroes World Distribution (Dec. 28, 1994); and sticker manufacturer Panini ($150 million) and magazine publisher Welsh. Marvel, itself, was on television with X-Men and Spider-Man cartoons and was working a mailing list with millions of names of young consumers, brought together through its own publishing efforts and co-branding promotions that put Marvel characters' names on supermarket shelves everywhere. By the end of the first half of the 1990s, Business Week reported, Marvel's stock was one of the five fastest-growth stocks in the first half-decade.

Marvel was doing business with Disney then, publishing Disney comics from 1994 to 1997 — though only using characters in the Disney cartoons appearing in theaters and in the "Disney Afternoon" slate of TV shows — the classic Ducks characters and reprint material remaining at Gladstone. That was one of Marvel's later forays into the "youth entertainment" market during that high-flying period for the stock; it's part of what pushed Marvel's title output high even after the comics market collapse began in earnest in 1994.

By the mid-1990s, of course, the debts incurred from Marvel's string of purchases — plus continuing malaise in the comic-book industry — forced Marvel to file for Chapter 11 bankruptcy protection on Dec. 27, 1996. Marvel emerged two years later after a bitter court fight that found financier Carl Icahn in control of the company for a time; the new firm's publishing slate had shrunk a lot by then, and would continue to shrink further before the comics industry righted itself at last this decade. Disney comics at Marvel were essentially gone by then, Disney's comics offerings in the United States pared back to what was at Gladstone and later Gemstone — and a few properties have landed more recently at Boom! Studios. (Disney's worldwide comics presence, by contrast, has long been more robust.)

Disney's original comics connection, of course, goes back almost as long as comic books have been around. Mickey Mouse Magazine first appeared from Western Publishing in the summer of 1935. That magazine would evolve into the venerable Walt Disney's Comics & Stories, beginning in October 1940. Its publishing history demonstrates the timeline of Disney publishing in general: under the label of Western's distributor Dell until 1962; at Western Publishing imprints Gold Key/Whitman from 1962 to 1984; at Gladstone (a company, by its own name, formed to celebrate classic Disney comics) from 1984 to 1990 — and then came Disney's attempt to publish comics under its own name, from 1990 to 1993. When the aforementioned split of properties between Marvel and Gladstone followed from 1994-97, Marvel actually distributed the Gladstone comics to the newsstand market under the Marvel/Disney imprint, as Brent Frankenhoff shows at CBGXtra.

Disney characters have had a major influence on comics, but notable is the influence of comics on Disney. Donald's wealthy Uncle Scrooge McDuck first appeared in "Only a Poor Old Man," in Dell Four Color #386, in March 1952; the character created by comics legend Carl Barks would migrate back into the larger Disney cartoon pantheon.

Marvel, again, also goes back near the dawn of comics publishing — with the first appearance of the Marvel name on a comic book from Martin Goodman's publishing company 70 years ago. Marvel's route to the 1991 public offering took it through holders at Cadence and, finally, Hollywood production company New World Entertainment when Perelman bought the company in January 1989. New World had intended to spin Marvel characters into films, but its reach was limited — mostly TV movies. It's of note that Disney buys Marvel at a time when Marvel is now a player on its own right in the film-making scene; 20 years ago, the impact of such an announcement would have been much different.

Of the announcement itself, it does appear clear that Marvel's film successes — plus the unraveling of the film rights to most of them, which took a long time — make the company an attractive purchase for Disney, particularly as the audience for its characters skews more male than the probable existing Disney customer base.

On the publishing side, which is what The Comics Chronicles focuses on, it would appear that there are opportunities for new products, and to get existing products into different venues, depending on how quickly synergies can be realized. It's difficult to see how changes to distribution could be on the horizon: Disney may have its own channels to reach the book trade with its products, but Diamond remains the only way to reach the direct market with the volume Marvel requires — that was shown in the Heroes World years — and it could well be that Diamond's specialization in comics gives it structural advantages against other book distributors that might potentially handle Marvel comics to the book trade. An interesting question is the newsstand, in decline for the magazine market in general; Disney may have additional relationships which might help Marvel on that score.

Also, at long last — there is finally a parity between the two major players in the comics industry when it comes to corporate ownership: DC has been owned by Time Warner for years, whereas Marvel had always been either a corner of a smaller conglomerate or on its own; now, the major two comics publishers are owned by two of the largest media corporations in the world.

A developing story for the industry, and certainly an important day in the history of comics — this could arguably be judged the most important single event in comics this decade.

Update: In response to questions of how Disney comics performed at Marvel when it published them, we can look at any of the known numbers from months from September 1996 onward until the end of the deal, in early 1997. It was at the end of the venture, and Disney Comic Hits was about all that was left — we can see it as the lowest-selling Marvel title in September 1996, in 256th place with 6,500 copies sold in the comics-shop market. Gladstone's numbers were similar. However, Disney Comic Hits was clearly a mail-order play as well for Marvel — the Statement of Ownership for the title put average monthly sales for 1996 at 60,732 copies, with a whopping 28,277 copies sold via subscription. Marvel was doing a lot of work with mailing lists at the time; that's an astonishing figure for subs. That may point to another place where corporate synergies might work to develop a sector of comics industry sales; subscriptions are not a major part of comics circulation except for among younger-reader titles, where direct-marketing efforts are more often targeted.

Update II (of a series, collect them all): Noting the $4 billion dollar price tag Disney paid for Marvel, that sale price is probably reasonably close to the number of comic books Marvel has sold in North America in its 70 year-history. The last back-of-the-envelope estimate I ran put the number of comic book copies sold across all Marvel incarnations from Timely to today at somewhere north of 4 billion units. (We might also note that purchase price is the equivalent of more than a billion comic books, if sold at today's prices!)

Another interesting bit of trivia is that, when last I ran a count of how many different comic books had been published in the United States by the various publishers across time, DC led Marvel by several thousand issues. Marvel had more titles with different names, but the typical DC series ran longer. My hunch is that if you were to parse out all the Disney-related comics from their individual publishers — particularly, those that Disney might have the continuing rights to — that probably closes the gap. It's not that meaningful a figure, except to the extent that it increases the reprint library for the fused companies. As prolific publishers go, the Marvel/Disney share of U.S. comics publishing history could thus be something close to DC's, by virtue of Disney's large slate in the Golden and Silver Ages.

Update III: A Title Spotlight is now on the site showing the sole Statement of Ownership that appeared in Marvel's Disney Comic Hits. I have not found any other Statements in other Marvel Disney series; they didn't run long enough. If you have found any, let me know.

7 comments:

Anonymous,  August 31, 2009 at 9:14 PM  

I would say this isn't bad for Marvel, on the contrary, let's face it the last batch of price increases has almost nothing to do with the profitability of the publishing business. It does however have to do with the Growth. Yes it is in caps because the last couple of quarters the growth in the publishing business has been in the single digits (Marvel licensing and whatever had apparent higher growths, but considering the cyclic nature of those releases and the amount of money involved...).
So I would say that a comics publishing business that doesn't have to worry as much for quarterly improvement in revenues might actually help the overall comics market.

John Jackson Miller August 31, 2009 at 9:27 PM  

I don't feel that publishing revenues have been quite as important for the overall business for a long time, so what you're suggesting would add to that. Of course, reducing the portion of revenue from the core business relative to other divisions has its downsides, too, as we saw -- while the downturn in comics had something to do with the bankruptcy, most of it had to do with non-publishing issues like the debt load from the acquisitions. There is security in the larger conglomerate, but probably also some new risks.

Anonymous,  September 1, 2009 at 2:17 PM  

I believe comics is just a fart in the soup. It is the character copyrights for the movie market they are after.

Since Gemstone went belly up, there has not been a publisher of disney comics in North America. In Europe Disney Comics are among the most popular.

I'm looking forward to see more of the european disney releases coming through a reliable publisher.

Jeff M. O'Boyle September 2, 2009 at 1:17 AM  

Speaking of Disney's large slate in the Golden and Silver Ages, Mark Evanier once wrote that (at its heyday), WALT DISNEY'S COMICS AND STORIES "often sold over two million, sometimes three million per month."

http://www.povonline.com/iaq/IAQ07.htm


Venerable, indeedy.

John Jackson Miller September 2, 2009 at 1:30 PM  

Yes, and WDC&S even entered the 1960s at a million copies per issue:

http://www.comichron.com/yearlycomicssales/1960s/1960.html

ChicagoLady September 2, 2009 at 3:29 PM  

Wow this is a really detailed history! If someone needs a good overview of the issue, I found this video really helpful as someone who doesn't know a lot about Marvel or comics in general.
http://www.newsy.com/videos/spidey_meets_mickey

Dana Gabbard October 11, 2009 at 6:39 PM  

Buried in the errata listing to his Barks book Michael Barrier posted on his website is this extraordinary note:

The Walt Disney Company's comic-book circulation records, mentioned in a footnote on this page, were not destroyed but were transferred to the company's Walt Disney Archives.

http://michaelbarrier.com/Barrier_Books/barks_errata.htm

These evidently were the cards with circulation figures mentioned by then Disney Publications head George Sherman in an interview published in Vanguard's 1968 issue. The material is evidently stored so the Archives can supply figures as needed for particular issues but not access to the entire records. Maybe a way can be found to copy them to make them available?

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