In the works for roughly three months, the Disney (NYSE: DIS) deal to acquire Marvel Entertainment (NYSE: MVL) has analysts fretting about premiums—and comics fans freaking about a future of Captain America Meets Tinkerbell. We’re likely months away from a close or from anything that might affect the Marvel roster but why put off speculating about what the deal really means ...
—Does Marvel have autonomy? Marvel CEO Ike Perlmutter will report to Iger. How much after that is written into the fine print could be in the merger agreement, which hasn’t been filed with the SEC yet, but people at both companies familiar with the thinking say a lot is riding on trust—as in “it would be crazy” (a phrase I heard often) for Iger and Disney to do anything that would muck up the creative integrity of a company they’re paying $4 billion to get. The broader deal was still being worked out overnight as Disney and Marvel prepared for Monday’s early announcement, and they have three or four months to work out the fine points. During the pitch to analysts, CFO Tom Staggs said: “We believe in the creative team at Marvel and dont see any reason to upset the apple cart. They have done a good job, and I think they have got a good pipeline in place, and we expect that they will continue to do a good job operating as they have.”
—How long will Perlmutter stay? Perlmutter owns nearly 37 percent of the company. He’s supposed to come along to “broadly” oversee Marvel. But, unlike Steve Jobs, who became a major shareholder and picked up a Disney board seat when Pixar was acquired, Perlmutter won’t be joining the board. No one from Marvel gets a seat in the deal. Disney wanted Jobs the strategist and icon; Perlmutter, who flies below the radar as much as possible, is known more for business skills. He got lots of love from Disney CEO Bob Iger and CFO Tom Staggs in interviews and today’s analysts call but whether he’ll have any real power on the other side of the deal is as much a mystery as X-Men V. I give it a year from the deal close before he veers into consultant status unless he’s tied to a longer earn out. On his stock alone, Perlmutter stands to make more than $1.4 billion—$500,000 in cash. Even without the deal, the 25 percent jump in Marvel’s stock price following the news helped him close Monday at nearly $1.4 billion on paper.
—What about the creative side? There’s no single John Lasseter equivalent at Marvel but Disney needs to keep Marvel Studios’ Kevin Feige and Marvel Publishing EIC Joe Quesada happy. Pixar’s Lasseter met with some of the top creatives before the deal, Iger said, adding, “The group got pretty excited very fast. I almost felt like saying, okay, guys, you have got to slow down a little bit.” Iger, who knows what it’s like to be on the wrong side of a badly handled acquisition, said the right things during the call: “We dont pretend to be more expert at this than they do ... one of the things that was really attractive to us about this acquisition is the fact that this is not just about buying great characters and great stories and a brand. This is about buying people who know this brand and these characters and these stories really well and know how to really create great value from that̶and we are going to rely on them thoroughly in this process.”
—Will Disney play well with others? It has to. For one, Marvel, which had limited movie financing resources, has licensing or distribution deals with roughly every major studio. The deal would make Disney instant partners with Viacom (NYSE: VIA) through Paramount (movie distribution) and Nickelodeon, Sony (NYSE: SNE) (Spider-Man movies), NBC Universal (NYSE: GE) through Universal Studios (theme park licensing). It’s already in business with News Corp (NYSE: NWS). through the Hulu JV; Twentieth Century Fox has rights to X-Men, Fantastic Four, Daredevil. Lionsgate has a direct-to-DVD deal; Time Warner (NYSE: TWX) through Turner’s Cartoon Network and so on. (Ben Fritz has done a solid job pulling together the details on these and more. ) But Disney also wants to play well. In some cases, it will make a lot more money from licensing than it would taking the same activity in house. Look for a blended approach to licensing.
—Are there any savings?: Disney isn’t making a cost-savings play here. Marvel only has around 300 employees; the bulk of its talent is freelance. The most immediate savings will be dropping the trappings of a public company—regulatory costs, board costs and the like. After that, the biggest chance at savings will come as movie distribution moves to Disney.
—How does Bob Iger fare? It’s not just PR—even Nikki Finke thinks Bob looks bold (although she says he’s paying too much). If integrating Marvel goes as well as Pixar, Iger’s in good shape. This wasn’t a deal Disney or Iger had to do but it’s one of the only deals that could tackle the gender gap issue with boys, especially teen boys, and it brings that huge character list with potential beyond the usual suspects. Staggs says Disney will gain financially from day one although the acquisition is expected to dilute earnings per share until fiscal 2012. It’s really about a long-term payoff for Disney—and its CEO.
By Staci D. Kramer