"Marvel is running out of cash" says David Poland

[TheVileOne]

Hiruu,

You present good points I did not know about. Is it possible though that spending money on say an Iron Man sequel though and after a certain time they might not have enough to do like an Avengers movie which Disney would have to fund?

I mean just to put it in perspective, if a movie like Spider-man 3 costs over $250 million or Pirates of the Carribbean 3 cost $300 million, I don't see any way Avengers can be feasibly made for LESS than around $200 million.

 

[TheVileOne]

This seems to contradict this...



They are gonna make badass books but then turn them into wimpy movies (sweeping generalizations of course)? That makes little sense to me.

Not necessarily. He was referring to the theatrical movies in one and in the other talking about Marvel's publishing for comics. Marvel does offer a line of comics aimed at younger readers, a more PG demographic in the MARVEL ADVENTURES stuff.

 

[cerealkiller182]

Not necessarily. He was referring to the theatrical movies in one and in the other talking about Marvel's publishing for comics. Marvel does offer a line of comics aimed at younger readers, a more PG demographic in the MARVEL ADVENTURES stuff.

I know.

But the theatrical movies are not based on marvel adventures stuff

 

[TheVileOne]

I know.

But the theatrical movies are not based on marvel adventures stuff

That's the point.

 

[topdog1]

Article posted by FlawlessVictory in the Disney/Marvel thread ....

http://www.deadlinehollywooddaily.com/behind-the-scenes-of-disney-marvel-deal/

"As due diligence went on, Disney saw nothing in Marvel's books that indicated Marvel was under financial pressure or Perlmutter had any need to sell. So the price had to be right."

 

[FaT_tONle]

I interpreted running out of cash meant using up all/most of their original loan and having to revert back to their own pockets to finance the films. I never assumed Marvel was out of money or anything, but that's how I interpreted "financial struggles". Of course who knows how much Marvel had in their own pockets to begin with that was available for them to spend on their self-financed films. I guess we could estimate. Take 5% from the box office of every Marvel movie since... Blade. Or X-Men plus the license fee the other studios had to fork over. Add that all up. THen subract from that the budgets or estimated budgets of their movies plus the loan (with interest). Then add up the profits of IM/TIH thus far and see how much money they still have to make up. Of course I am only counting the money from their leased properties and the loan. Feel free to do the math.

 

[TheVileOne]

Marvel is publically traded so there's possibly a way to at least guestimate it. Just not sure how DVD/blu-ray/merchandise and what not profits work or where you can get some exact numbers.

 

[AVEITWITHJAMON]

Article posted by FlawlessVictory in the Disney/Marvel thread ....

http://www.deadlinehollywooddaily.com/behind-the-scenes-of-disney-marvel-deal/

"As due diligence went on, Disney saw nothing in Marvel's books that indicated Marvel was under financial pressure or Perlmutter had any need to sell. So the price had to be right."

This just begs the question then why the hell did they sell up?

 

[wobbly]

This just begs the question then why the hell did they sell up?

According to the article it's thought that selling up was CEO Ike Perlmutter's long term goal in any case, he was just waiting for the right price (he will be walking away from this deal with a billion dollars in his pocket).

 

[FaT_tONle]

Marvel is publically traded so there's possibly a way to at least guestimate it. Just not sure how DVD/blu-ray/merchandise and what not profits work or where you can get some exact numbers.

I really don't know where to look to get the figures for how much Sony/Fox/Universal had to fork over for those characters (I'd assume a couple dozen million for each of the heavy hitters). If we had those figures then finding information like box office/DVD sales would be easy. We'd basically have the majority of their profits and costs for the movies thus far. Would take a little time, but I for one am curious.

 

[The Overlord]

I had my doubts on The Incredible Hulk been profitable for real.
Now Disney's move makes it all clear as day: Marvel Studios was losing money and the Thor/Cap flicks were going to put them in bankruptcy because there was no way those movies would have made a good profit.
The problem is that superhero movies non-Spider-Man/Dark Knight are not profitable solely through boxoffice income.
.

Then how do you explain the sucess of Blade and Iron Man?

 

[Spidey-Quad]

How the hell does that give them more leverage?

Do you get it man. Marvel is a wholly owned subsidiary of Disney now. Sony doesn't have the Avengers. I don't think there's any way they could put Avengers under another tent right now.

Sony already paid Marvel to license out Spider-man to make Spider-man movies.

Hold your horses, the deal still needs aproval. You're probably correct, I'm only saying the intended annoucement has been made, the closing of the deal may take weeks, months, or possibly denied.

Besides Disney is buying Marvel to make money, not deny movies. Think before panicing people!

 

[FaT_tONle]

Hold your horses, the deal still needs aproval. You're probably correct, I'm only saying the intended annoucement has been made, the closing of the deal may take weeks, months, or possibly denied.

Besides Disney is buying Marvel to make money, not deny movies. Think before panicing people!

We were discussing something else at the time...

Anyhow... I took the libery of crunching a few numbers with a couple of assumptions on Marvel's box office bank account. I estimated they made a 100 million up front as a license fee for all their distributed characters (Spidey, Hulk, X-Men, Blade, FF, etc.) THen I took 5 % out of the WW box office for each of those films, put it into Marvel's account. The total was just short of 350 million. I assumed the loan they took out was 500 million and I estimated 100 million dollars interest, so 600 million. Then I added up IM/TIH's WW box office (850 millionish). I took out the percentage owed to Paramount to cut that to 768 million of Marvel profit. Add the previous 350 million from the licensed property and Marvel has a little over 1.1 billion. Subtract the 600 million dollars they owe to their loaner and that gives them 500 million to finance IM2, Thor, and Cap. Of course those figures don't include DVD/Blu-Ray sales, TV, merchandising, video games, comics, etc, although I can see why Marvel may have been under a tight budget. Take it for what it is worth.

 

[Venom'sDad]

Hold your horses, the deal still needs aproval. You're probably correct, I'm only saying the intended annoucement has been made, the closing of the deal may take weeks, months, or possibly denied.

Besides Disney is buying Marvel to make money, not deny movies. Think before panicing people!

I agree with everything you said, particular the highlighted. But keep in mind the economy and these proposed film still have to me Disney criteria to be viable. I think that's what Poland was referring, imo.

 

[ClarkLuther55]

Looking at the debate over The Incredible Hulk's profitability, I was immediately reminded of this eye-opening article that I recently read:

Forget about the box office.

First, the reported "grosses" are not those of the studios but those of the movie houses. The movie houses take these sums and keep their share (or what they claim is their share)—which can amount to more than 50 percent of the original box-office total. Consider, for example, Touchstone's Gone in 60 Seconds, which had a $242 million box-office gross. From this impressive haul, the theaters kept $129.8 million and remitted the balance to Disney's distribution arm, Buena Vista. After paying mandatory trade dues to the MPAA, Buena Vista was left with $101.6 million. From this amount, it repaid the marketing expenses that had been advanced—$13 million for prints so the film could open in thousands of theatres; $10.2 million for the insurance, local taxes, custom clearances, and other logistical expenses; and $67.4 million for advertising. What remained of the nearly quarter-billion-dollar "gross" was a paltry $11 million. (And that figure does not account for the $103.3 million that Disney had paid to make the movie in the first place.)

It appears that advertising and other expenses cost a lot more than most people think. From reading this forum for years, I had gotten the impression that a box office of 1.5 or more times the production budget would be good. In the example given, the "hit" movie making almost 2.5x its budget actually left the company (Disney, coincidentally) $92.3 million in the red.

That's not the end of it though:

Finally, and most important, the fixation on box-office grosses obscures the much more lucrative global home-entertainment business, which is the New Hollywood's real profit center. The six major studios spoon-feed their box-office grosses to the media, but they go to great lengths to conceal the other components of their revenue streams from the public, as well as from the agents, stars, and writers who may profit from a movie.

Each of the major studios, however, supplies the real numbers to its trade association, the MPAA, including a detailed breakdown of the money they actually receive, country by country, from movie theaters, home video, network television, local television, pay television, and pay-per-view, which is then privately circulated among the six studios as "All Media Revenue Report." (To see these private data click here.)

These numbers tell the story. Ticket sales from theaters provided 100 percent of the studios' revenues in 1948; in 2003, they accounted for less than 20 percent. Instead, home entertainment provided 82 percent of the 2003 revenues. In terms of profits, the studios can make an even larger proportion from home entertainment since most, if not all, of the theatrical revenues go to pay for the prints and advertising required to get audiences into theaters. (Video, DVDs, and TV have much lower marketing costs.)

Long story short, box office is an extremely limited measurement and very misleading. On average studios lose money from theatrical releases. They actually make the vast majority of their money from other things such as DVD sales, information that is largely withheld from the public.

This article is slightly dated coming from 2005, but the data provided suggested that DVD sales would become even more important with time. It was also linked to in this recent July 2009 article (which interestingly analyzed The Dark Knight's performance), so I assume that its findings still stand.

After all this, I can see TIH being unprofitable, if its DVD sales weren't up to par. If that's the case then it's too bad; it wasn't an amazing movie but it got the Hulk right, and was the film that should have been made in 2003.

That said, I seriously doubt Disney would actually skip out on Thor and The Avengers. Iron Man was obviously successful for everyone to be talking about it the way they have. There is no way in hell that the Avengers will be canceled after they've been hyped up in two movies, especially when they have a now bankable star in Robert Downey Jr. If Marvel could aspire to make the Avengers (selling out their company for money and all), then a corporate empire like Disney surely can.

 

[FaT_tONle]

Impressive find... shocking might I add...

 

[Kingfish]

Theatrical runs are really just further advertising for the DVD release. That's where the actual money comes from (since a standard DVD costs pennies to produce and retails for around 24.95).

 

[topdog1]

Shocking maybe but untrue mostly.

"which can amount to more than 50 percent of the original box-office total."

The split for most major summer films is around 80/20 for the first two weeks in a theatre run. 80% goes to the studio. As everyone knows, summer blockbusters are very frontloaded.

Here's a better article...

http://www.themovieblog.com/2007/10...re-the-money-goes-and-why-it-costs-us-so-much

"Most of the money that a theatre takes in from ticket sales goes back to the movie studio."

 

[FaT_tONle]

Yeah that theatre figure for 60 Seconds seemed way too high I'll give you that.

 

[JeetKuneDo]

This guy appears to be looking at this sale from only one possible angle. "Marvel agreed to sell so they must be in trouble". He's totally ignoring, "Disney wanted to buy so it must be a valuable property". There were two parties involved here. I doubt Disney is buying to do Marvel a favor.

Also interesting stuff on the home market accounting for so much of the profit. If TIH's box office only accounted for less than 20% of the profit I would say they made plenty of money on that one. (Heck...even if it accounted for 50%! )

 

[Maximum Carnage]

I loved Incredible Hulk. I'm surprised it didn't do all that well. :/

 

[TheVileOne]

Hold your horses, the deal still needs aproval. You're probably correct, I'm only saying the intended annoucement has been made, the closing of the deal may take weeks, months, or possibly denied.

Besides Disney is buying Marvel to make money, not deny movies. Think before panicing people!

You are right. Also don't forget the pending antitrust investigation which this acquisition has led to.

 

[wobbly]

The Incredible Hulk did well in DVD sales so though it barely broke even in the domestic box office it did make Marvel a profit on their investment.

Interesting article posted on the importance of box office above. Cant say I agree the theatrical run can be quite so readily dismissed but that would account for how some god awful films manage to get sequels.

 

[highguard]

Hey guys, relax this David probably has only like one class in finance and he probably got a C.

His argument is not informed. Marvel arranged financing for all their films before they even declared a movie lineup. They have on average 150 million available for each film that they announced and included in the figures they revealed in the public filing with the SEC.

If Marvel was not able to follow through on that it would have been reflected in the stock price by now.

Please take note.. Disney is paying a premium for Marvel's stock. That indicates that they have determined based on the discussions with Marvel that their stock is worth even more than what the market values them at.

...... and that market value includes all the information available as of the time the deal was declared. That obviously includes the returns on the Incredible Hulk and the proposed expenditures for the slate of movies on tap up to this point.

Marvel is well positioned to finish their movie lineups. However they can now take on more risk as they now have other funding sources.

Go read Tuesday's edition of USA today and see what the companies are valued at and 2008 sales. they do a really good analysis of the health of the two companies.

 

[ClarkLuther55]

Shocking maybe but untrue mostly.

"which can amount to more than 50 percent of the original box-office total."

The split for most major summer films is around 80/20 for the first two weeks in a theatre run. 80% goes to the studio. As everyone knows, summer blockbusters are very frontloaded.

Here's a better article...

http://www.themovieblog.com/2007/10...re-the-money-goes-and-why-it-costs-us-so-much

"Most of the money that a theatre takes in from ticket sales goes back to the movie studio."

Interesting. Even these article writers are conflicting, showing that most people are largely kept in the dark about the movie industry. I've heard the story about theaters making most of their money off of overpriced food as well.

Yeah that theatre figure for 60 Seconds seemed way too high I'll give you that.

That $242 million was for the movie's world wide gross, which matches up closely (off by a few million) from Box Office Mojo.