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A Marvel-ous Deal for Mickey 

That is, if Disney can stop itself from ruining the comics company

Wednesday, Sep 2 2009
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The first thing you should know is that Bob Iger has comic books in his blood. And the second thing you should know is that the Disney president/CEO’s ties to Marvel go back two generations. His late great-uncle (his grandfather’s brother) was illustrator-cartoonist Jerry Iger, who partnered with illustrator-cartoonist Will Eisner back in the 1930s to create — you guessed it — the comic book packager Eisner & Iger Studios. (I couldn’t make up this stuff if I tried.) And their first hire, was Jack Kirby, who, with Stan Lee, as you know, later became the co-creator of many of Marvel’s best-known characters.

So Bob Iger had a better-than-the-average-mogul appreciation for the comic book biz, one that dates back to his childhood days, when his great-uncle would draw for him. Fast-forward to the Disney-Marvel shocker of a deal, announced on August 31.

I’ve learned that it was 10 years in conception, and that Iger and Marvel CEO Ike Perlmutter negotiated for three months over the 7,000 Marvel characters. That’s right, 7,000 — not the 5,000 figure every media outlet keeps reporting, including me. One more thing you should know: For the past two months, Iger has been reading the new Marvel Encyclopedia in order to soak up the back stories of all the Marvel characters and comics.

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I’m told that, during the 1990s, when Michael Eisner ran Disney and Bob Iger was his No. 2 (a team I liked to call FrankenEisner and Igor back then), the moguls had on-again, off-again conversations about acquiring Marvel. But there was never any attempt at a negotiation because “the brand didn’t seem Disney,” as a source tells me.

Once Iger took over Disney as CEO, and recently embarked on its stock buyback, the Big Media company found itself sitting on excess cash, even after investing in Pixar and everything else. That’s when the troika of Iger, Senior Executive Vice President/Chief Financial Officer Tom Skaggs, and EVP of Corporate Strategy, Business Development and Technology Group Kevin Mayer, stepped up their look for growth opportunities.

And Marvel came up again, this time much more seriously. Iger even discussed this directly with his division heads. It’s a testament to Disney’s limitless penchant for secrecy that even though about a dozen people knew Disney had decided to go after Marvel, there was no leak.

In June, Iger flew to New York to meet with Perlmutter in his Marvel office. In a show of transparency, Iger had already let the wily but no-nonsense Israeli (who’d beaten back two billionaires, Ron Perelman and Carl Icahn, for control of Marvel) know that Disney was interested in buying Marvel and wanted to start negotiating. (“It would have been manipulative if I’d approached it any other way,” Iger told a pal. “You know how that goes. Someone invites you for dinner. And, after a glass of wine, he tells you he wants to buy you. And the wine never tastes quite as good after that.”)

But Perlmutter expressed little interest in a deal, even though he liked Disney and all that the name, company, branding, implied. “I’ve heard good things about Disney. But I don’t need to sell. I don’t want to sell,” Perlmutter told Iger, according to my insiders. But, eventually, Iger got to the heart of Perlmutter’s objection: Ike didn’t want to retire. He wanted to continue to work because Marvel was what he loved.

As due diligence went on, Disney saw nothing in Marvel’s books that indicated Marvel was under financial pressure. So the price had to be right. From June to Sunday night, both sides eventually became “more comfortable” with the $4 billion valuation, according to my insiders. A little math shows that Perlmutter, who owns 37 percent of his public company, stands to reap $1.5 billion in cash and stock. Sources tell me that this sell-out has been Perlmutter’s strategy all along. “This was always an acquisition play for Ike,” one insider explains to me. “This deal with Disney just ups his game, creates shareholder value and lets him walk away a billionaire.”

Contentwise, the two moguls agreed that Marvel would continue to operate independently of the notoriously micro-managing Disney, in the same way that Miramax did under the Weinstein brothers. Every subsequent meeting between Iger and Perlmutter took place in New York.

Finally, it was very late Sunday night when the deal was done. There was no celebration. Both moguls went back to their respective homes to prepare for Monday’s early morning announcement.

I knew something was up all weekend, when a tipster told me that Disney had arranged an unscheduled investors call, and the art department at Disney Online went into a “lockdown” to create a logo. But the best guess by some of the experts I contacted was that Disney might be buying Electronic Arts. Marvel seemed outside the realm of possibility.

That Marvel would be a Hollywood prize worth having is shown by the entertainment company’s many deals with Sony, Paramount and Universal. But especially by its own aggressive self-financed exploitation of its comic book heroes in movies. Some believe Marvel Studios is about to flood the box office with product. Yet the public has shown an endless appetite for superhero fare.

But will hardcore fanboys? Given what Iger likes to refer to as the “combustion of digital word of mouth” that has more and more replaced traditional marketing operations these days, Iger and Perlmutter have their work cut out for them trying to get skeptical fanboys to believe that Disney has no intention of altering the creative approach Marvel takes with its comic books and movies. Because those fanboys are crucial to Disney’s strategy to attract teenage boys. As Iger said on CNBC: “We obviously know Disney has a lot of products that are more girl-skewed than boy. And we’d like the opportunity to go after boys more aggressively.”

Did Disney overpay for Marvel? Well, the run-up of the stock since March of this year has been +58 percent. Why didn’t Bob Iger make the move sooner? Nevertheless, with this deal, today, he finally steps out of FrankenEisner’s shadow and earns his keeps as Corporate America’s third-highest-paid CEO.

Eisner, when he ran Disney, had to be pushed kicking and screaming to make acquisitions like ABC (believing that Disney did best when it grew its businesses organically). But Iger, first with Pixar, and now with Marvel, is showing himself to be the boldest Big Media CEO with an acquisition that he summarized as one that “highlights Disney’s strategic focus on quality, branded content, technological innovation and international expansion to build long-term shareholder value.”

Now the question is, can the other moguls keep up with him?

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