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http://www.nytimes.com/2007/06/18/b...e359b1692c2ee9&ei=5088&partner=rssnyt&emc=rss
Very good read. A few errors in the reporting regarding The Hulk, Iron Man, and Maisel and Arad but overall shows a bit of the dark side.
Marvel Wants to Flex Its Own Heroic Muscles as a Moviemaker
By SHARON WAXMAN
Published: June 18, 2007
LOS ANGELES, June 17 — This month David Maisel, the newly minted chairman of Marvel Studios, was discussing plot points in his Beverly Hills office with Edward Norton, the Academy Award-nominated actor whom he has cast as the star of a new version of “The Incredible Hulk.”
“It’s a nice environment,” Mr. Maisel said the next day, in an interview in that same office. “Some guys in their 30s sitting around and talking about a script, planning the movie. Edward is so into the Hulk.”
Mr. Maisel is actually 45, but the movie-mogul life he describes is true enough. Until recently a little-known deal maker trained by the former kingpin Michael S. Ovitz, Mr. Maisel has quickly become a serious Hollywood player. No longer content to leave the actual moviemaking (and most of the profits) to the studios, Mr. Maisel is able to green-light movies of his choosing at budgets up to $165 million, backed by $525 million of financing. “I don’t think there’s been a new studio making $100 million movies since DreamWorks,” he said. “We’re going Hollywood, but in a smart way.”
Whether Mr. Maisel’s claim proves true or merely another example of Hollywood hubris will be determined over the next several years, beginning in May and June of 2008 with the release of its first two self-financed films, “Iron Man” (starring Robert Downey Jr. and Gwyneth Paltrow) and “The Incredible Hulk.”
Until now, Hollywood’s major studios have paid to license Marvel characters to create blockbuster franchises — including the three “Spider-Man” hits, which have raked in close to $2.5 billion at the global box office for Sony Pictures — and 20th Century Fox’s “X-Men” and “Fantastic Four” movies. The latest, “Fantastic Four: Rise of the Silver Surfer,” took in an estimated $57 million in its opening this weekend.
But Marvel makes relatively little money from these box-office bonanzas, because of unfavorable deals struck in the 1990s. A Lehman Brothers analysis calculated that Marvel made just $62 million from the first two “Spider-Man” films.
By making his own movies based on other Marvel characters, Mr. Maisel hopes to transform his division of Marvel Entertainment into a true filmmaking brand, maintaining control from script to release, keeping all the profits for the company and building a film library, while using someone else’s capital.
Paramount Pictures will market and distribute the movies, for a fee. (Universal Pictures, which made 2003’s “Hulk” by the director Ang Lee but sold back the rights to Marvel after its poor box-office performance, will handle that sequel.)
The financial model seems unusually favorable. Because most of the financing raised by Merrill Lynch (the $465 million revolving credit facility) is insured by Ambac Assurance, Marvel is not liable to repay its senior creditors if the movies tank. The Ambac deal uses the comic characters as collateral and thus requires no capital outlay by Marvel.
And on top of the profits, Marvel gets 5 percent of all film-related revenues as a producer fee.
Wall Street has already showed its approval, steadily lifting the company’s stock to Friday’s close of $26.78 from $19.43 a year ago.
“What they’ve done is take themselves from a niche licensing company and have really knocked the cover off the ball as far as execution where the stock is concerned,” said Brad Ruderman, of Ruderman Capital Partners. “If they can make appealing movies, I don‘t see any reason why they can’t be successful.”
But that if — making successful movies — has tripped up many a brilliant financial model in the past. And the favorable terms mask a hidden risk: If the movies are not successful, Marvel will forfeit the film rights to the characters in the deal, including Captain America, Thor, Nick Fury and the Avengers.
“It’s a convoluted, almost Rube Goldberg-type apparatus for generating higher profitability with minimal risk,” said Harold L. Vogel, of Vogel Capital Management. “But we all know the movie business depends on how profitability is defined. We know most movies do not actually make money, or a lot of money. So I don’t know that they come out ahead at the end of the day, even when you adjust for risk and the time it takes. Why go through all this, except to generate fees for Merrill Lynch and some lawyers?”
Veteran Hollywood insiders raised other caveats about the Marvel arrangement, including the company’s dependency on major studios for setting their marketing budgets and for overseeing distribution. The studios have been known to pay more attention to their own movies rather than those made elsewhere.
Additionally, Marvel’s slate of up to 10 films will be based on second-tier superheroes, who may not resonate with younger moviegoers. With the major studios continuing to pump out blockbusters based on the better-known Marvel characters, it could lead to a glut of the genre.
Tom Rothman, co-chairman of Fox Filmed Entertainment, was not worried, however. “It’s not a competitive issue,” he said. “We are used to competition. It doesn’t matter who you’re competing with. Ultimately, it’s a meritocracy.”
Some of Mr. Maisel’s casting choices have veered from the typical Hollywood bet. In the case of the $135 million “Iron Man,” for example, Marvel chose Mr. Downey, 42, to play the millionaire industrialist Tony Stark, an actor well beyond the demographic of the movie’s natural fan base of adolescent boys.
Mr. Maisel becomes animated when defending his hires. “Our films are as much about the man as the superhero,” he said. “These are great actors who will appeal to adults. We set this up to appeal to everyone.”
Mr. Maisel has been in Hollywood for more than a decade, but is largely an unknown figure to the public. A Harvard M.B.A. who collects comic hero figurines, he is slight and soft-spoken, citing major Hollywood moguls as his mentors and peers — Robert A. Iger, the Walt Disney chief executive, and Ron Meyer, the Universal Studios president and chief operating officer — though none so fondly as Mr. Ovitz, whom he reverentially refers to as Michael.
In 1994 Mr. Maisel, at the time a young executive at the Boston Consulting Group, wrote a cold-call letter to Mr. Ovitz, asking to be considered for a job at Creative Artists Agency. What he wrote was persuasive enough to win an interview, and then a job, where he worked on deals with Mr. Ovitz, and accompanied him to Disney during Mr. Ovitz’s brief reign there as president.
Mr. Maisel then joined the Endeavor talent agency for two years before landing at Marvel, where he was hired by Avi Arad, the entrepreneurial chairman and chief executive of Marvel Studios, who is credited with leading the company successfully after it landed in bankruptcy in 1996 during the stewardship of the financier Ronald O. Perelman.
Mr. Maisel aimed to develop Marvel Studios as “the master of its own destiny,” as he puts it. But that path has resulted in clashes with colleagues and created ill will in some relationships.
Mr. Arad left Marvel last year after a power struggle with his former deputy in which he tried to have Mr. Maisel ousted, according to two executives knowledgeable about the tension. One of those executives said that Mr. Arad had disagreed with Mr. Maisel over budget cuts to the new Marvel movies and the production timetable, which Mr. Arad considered too rushed.
Asked about the conflict, Mr. Arad said that he had left Marvel because he wanted to start his own company, Avi Arad Productions. Mr. Maisel declined to comment on the relationship, but said the budget and timing were in line with similar Hollywood productions.
Mr. Maisel has also clashed with Ryan Kavanaugh, a Hollywood financier, over credit for Marvel Studios’ financial formula. Mr. Maisel said repeatedly during the interview that he had devised the strategy. But documents from early 2004 indicate that Mr. Kavanaugh’s Relativity Management, which was hired as a consultant on the deal, made the initial proposal and the subsequent plans.
“We came up with the initial structure, the concept, created the models, the overall ideas, and brought in the various banks, and helped to do the transaction,” Mr. Kavanaugh said. Another adviser to the project, Gordon Steel, agreed: “Ryan came up with the whole thing. He drew it up, got everyone excited.”
Mr. Maisel declined to comment on the matter. Sid Ganis, a Marvel board member and the president of the Academy of Motion Picture Arts and Sciences, said that Mr. Maisel’s determination saw the project through. “Someone had to have the guts to grab it and make the damn thing happen, and he did,” said Mr. Ganis. “It’s David, not as the architect, but as the contractor in this.”
Regardless, Marvel Studios is now Mr. Maisel’s house to manage. And despite the risks, Mr. Maisel is confident of his plan to release 10 self-financed films in the next five years.
“We’re doing this in as smart a way as has been done in this town,” he said, cradling his favorite statuette, Captain America holding a tattered flag in the ruins of 9/11. “These films are so important, we’re giving them all the care and nurturing we can.”
Very good read. A few errors in the reporting regarding The Hulk, Iron Man, and Maisel and Arad but overall shows a bit of the dark side.
