Marvel/Disney Offer More Acquisition Details To Investors


Starting a few minutes late at approximately 10:20 EST, The Walt Disney Company held an investor conference call to discuss its acquisition of Marvel Entertainment for a whopping $4 billion. Marvel, known on the stock market as MVL, was the largest independently-run comics company in the industry.

The conference call began by introducing moderator and Senior Vice President of Investor Relations Lowell Singer, Disney's President and CEO, Bob Iger, as well as the company's Senior Executive Vice President and CFO, Tom Staggs.

Iger said that he hopes to complete the transaction by the end of the calendar year. "Their known appeal is particularly valuable in a world of consumer choice," Iger said. Meanwhile, Mort Handel, the chair of Marvel Entertainment's Board of Directors, said he and Marvel CEO Ike Perlmutter "are delighted" about the transaction, adding "Disney is the perfect home for our collection of characters and their stories... I believe the collaboration of our companies can do big things for our characters."

"We believe Marvel will be more valuable as a part of the Walt Disney Company than it is on a stand-alone basis," Stagg said. He said one of the company's goals was to focus on some of the less well-known characters of the Marvel catalog and "develop them across multiple medias and territories." Additionally, any third party licensing Marvel had worked out will be honored by Disney. "We're happy to assume these agreements as part of the transaction," Stagg added.

According to the deal, Marvel shareholders will receive $30 in cash as well as .745 Disney shares for each Marvel share they own. Disney will give approximately 59 million shares for this $4 billion deal. Stagg said Disney expects minor dilution for 2010 in this deal, but expects to start seeing some impact through Marvel by 2012.

The Disney execs then opened the call up for questions. Singer was asked about the cost savings in this deal: "One thing that's important to note is that this deal is not motivated by cost savings or redundancies," Singer said. "What I think drives that is the synergies over time."

Meanwhile, another person asked Stagg about whether or not Disney could bring several of the characters used in features films at other studios, such as Spider-Man or Iron Man, back to Disney. "The deal that Marvel has put in place, which we have looked at, those deals generally stay enforced in the terms that they started with at Marvel," Stagg said.

Stagg was then asked to elaborate on revenue-driven synergies that could be expected for 2012. Stagg discussed the timing of releases had a bit to do with the delay, but added that "we look to exploit the library of characters more broadly by leveraging Disney's infrastructure. That's when we think the revenue synergy is going to kick in." He used Iron Man as an example of "less exploited names" which Disney hopes to further promote via their worldwide marketing and distribution apparatus. Iger then stressed that "what Marvel has done a great job of doing  is really looking at and understanding the characters and their stories and figuring out which ones make the most sense in how they operate in the market... we don't pretend to be more expert at this than they are."

Answering another question about opportunities through video games and television, Iger said that Disney XD currently runs about 20 hours a week with Marvel television shows, such as the '90s Spider-Man and X-Men cartoons. "We actually have been looking to license more Marvel content for that channel in the future," he said. He said Disney's infrastructure "gives us the opportunity to expose these characters to people around the world in a way that Marvel was only able to do in the past by going through a third party." Branching off into video games, Staff said that he while Disney had been typically integrating its video game production operations, Marvel has "a smart licensing agreement with some of the best video game manufacturers in the business." He did not rule out outside producers or self-distributing Marvel games.

Responding to a question about the future of Marvel Studios -- especially with the burgeoning technologies of 3D -- Iger said "that'll probably be determined by the talented people who are in charge of producing Marvel's theatrical films -- they did a brilliant job with Iron Man and we're confident in their abilities for Iron Man 2." Another person asked about possible cross pollination between Marvel and Pixar: "We actually have had some conversations internally, and [Pixar's] John Lasseter met with some of the key Marvel creative executives fairly recently and the group got very excited pretty fast," Iger said. "We had to say, 'slow down guys, we haven't done this deal yet.'" Still, Iger said, "you can put a lot of creative, enthusiastic people in a room that can appreciate the value of great characters and interesting worlds, a lot can happen... sparks can fly, is the expression that comes to mind."

After Stagg discussed that Disney's leverage with powerhouses such as Wal-Mart could also help promote the brand, Iger responded to another question regarding Marvel and its film slate, and whether or not they would remain an autonomous entity in that regard. "No one knows the Marvel characters and stories better than Marvel," Iger said. "We continue to be impressed... not just from a creative perspective, but as a business perspective. I think there's an expression, if it ain't broke, and that's our feeling here."

Later on, Stagg answered a question over whether or not there were any competing bids in the Marvel acquisition, and what the impetus for the transaction was. Stagg said that Iger reached out to Marvel CEO Ike Perlmutter a few months ago, and that the motivation behind the purchase was one of mutual admiration. "We believe in the creative team at Marvel, and we see no reason to upset that apple cart," Stagg said. Iger then answered another question, saying that company execs "see no reason to move [Marvel Studios] from Manhattan Beach." In addition, he said that it was not Disney's goal to take away from the Marvel brand: "It's not to make 'Marvel/Disney,' it's in fact the opposite -- it's to put a brighter spotlight on Marvel as a brand."

"This is not a deal [Marvel] had to do," Stagg said near the conclusion of the conference. "It became clear to both sides... because of the unique benefits of bringing these two companies together, we will create value for our shareholders." Comparing the purchase to that of Pixar, Staggsaid "we think this deal has the same aspects, so we think we will create value over and above the purchase price." Iger, meanwhile, said "it never became an imperative.... [but] when you see a good opportunity in this market, it's smart to move with alacrity."

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