Hannah Montana, Meet the Incredible Hulk

Last Updated Sep 2, 2009 10:46 AM EDT

If anyone needed evidence that content is still king, yesterday's blockbuster announcement that Disney is acquiring Marvel Entertainment for $4 billion provided some fairly persuasive proof. There is a lot to like here, starting with the inevitable line of new movies based on Marvel's cast of comic book heroes, like Iron Man, X-Men, Spider-Man and The Incredible Hulk.
Those, and other Marvel assets will no doubt allow Disney to attract more of the young male demographic to its offerings, in an era it has appeared to skew female, with girl stars like Hannah Montana/Miley Cyrus, Vanessa Hudgens, Ashley Tinsdale, Hilary Duff and the teen heart throb band, the Jonas Brothers.

It may be a small sample statistically, but in my household, the girls watch the Disney channel and like Princess movies, while the boys play video games and go to movies based on fantasy characters. An educated guess would be that our situation is hardly unique.

Normally, I'm not one to favor big M&A deals in the media industry, because they often lead to monstrous debt loads that strap the buyer to the vicissitudes of a market that may head south at any moment. Think of what's happened to The New York Times since its billion-dollar+ purchase of the Boston Globe. Or Sam Zell's bankruptcy and the decimation of the Chicago Tribune and the Los Angeles Times.

Plus it's not like Hollywood is exempt from the grief of a sudden unfriendly turn in the business cycle, any more than the newspaper industry. In fact, big budget movies are in some ways riskier today than they've ever been, for a lot of reasons, including a raft of complex intellectual property rights issues.

But, in this case, Disney's $3.3 billion in cash and cash equivalents, plus a variety of stock exchange maneuvers, appear to provide the resources and the cash flow necessary to absorb Marvel without any significant damage to its balance sheet.

This is easily the most significant acquisition of intellectual property muscle in Hollywood since Disney's ~$7.4 billion purchase of Pixar in 2006. As with Pixar, Disney says it intends to allow Marvel to continue to operate as an independent unit.

  • David Weir

    David Weir is a veteran journalist who has worked at Rolling Stone, California, Mother Jones, Business 2.0, SunDance, the Stanford Social Innovation Review, MyWire, 7x7, and the Center for Investigative Reporting, which he cofounded in 1977. He’s also been a content executive at KQED, Wired Digital, Salon.com, and Excite@Home. David has published hundreds of articles and three books,including "Raising Hell: How the Center for Investigative Reporting Gets Its Story," and has been teaching journalism for more than 20 years at U.C. Berkeley, San Francisco State University, and Stanford.