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Marvel Explains Its Sweet Movie Deal

At Merrill Lynch Conference

Published: 10/31/2006 12:00am

The Motley Fool Website reported on Marvel's presentation at Merrill Lynch's Media and Entertainment Conference.  Marvel's unique financing for a series of ten films it is producing involves no capital expenditure on its part.  If one of the films that it develops and produces bombs, Marvel loses nothing except the rights to the character the film is based on (see 'Marvel to Produce Its Own Movies').  Marvel receives a 5% production fee and retains all merchandising rights as well as 100% of the profits (after production costs and distribution fees).

 

But just exactly how will all this work and what are the benchmarks that the Marvel-produced movies starting with Iron Man and Hulk 2 will have to hit?  Marvel Studios Vice Chairman Peter Cuneo explained that in general terms a $100 million domestic box office would mark the breakeven point for Marvel, while a $200 million domestic growth and $400 million worldwide take would net Marvel about $117 million in profit.

 

In addition to direct revenues from box office and DVD sales, Marvel Studios Vice Chairman David Maisel told the conference that toy and merchandising revenues from previously produced Marvel-based films ranged from between $17 and $80 million per film.  Maisel painted a rosy picture of potential profits from the 10 Marvel-produced films that will be produced over the next seven years using the Merrill Lynch credit facility, which according to Maisel could potentially yield profits of $1.5 billion.

 

One of the major points in the Marvel presentation was that, unlike the case with such disappointing Marvel-based projects such as Daredevil and Elektra where Marvel didn't have any say in creative decisions, Marvel will have full creative control over its projects and has assembled creative teams, that like Sam Raimi who has been able to make the Spider-Man films without interference, really love and understand the material.  The difference however is that Sam Raimi had Spider-Man to work with, whereas Marvel's creative teams will have to make do with a stable of lesser known heroes such as Iron Man, Hulk, Thor, Ant Man, Nick Fury, Captain America and the Avengers.

 
 
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