MARVEL: FROM COMIC PUBLISHER TO MOVIE PRODUCTION HOUSE

[MattBrady]

According to Variety, Paramount is throwing its hat in the superhero movie ring with Marvel, signing an exclusive distribution deal with the company for upcoming movies based on the publisher’s characters. 10 films are in the pipe as a result of the deal, including Captain America and Nick Fury.

What will be different with these films and this relationship is that Paramount will distribute the films to theaters – Marvel will produce, which will be a new stage for the company to enter into. The deal will put virtually full creative control back into Marvel’s hands, as theirs will be the money being put up for the projects. Likewise, the possible return for Marvel on these films will be significantly higher than on other projects which were produced by studios other than Marvel.

To do this Marvel has already amassed a production war chest of around $500 million, which will allow the company to produce a slate of movies based on characters which already don’t have deals in the works (the 4,700 – 5,000 characters Marvel touts in its press releases). To fund the films, Marvel has established a $525 million revolving credit facility with Merrill Lynch Commercial Finance Corporation. The credit was secured against the movie rights to 10 Marvel characters, including Captain America.

As a result, Paramount will not have to put up any money for production, but instead, will be paid by Marvel for marketing and distributing the initial 10 films.

Reportedly, budgets for the upcoming films may range as high as $180 million. The first movie of the deal (yet unnamed) is slated to hit in two years, according to the trade, and all the films will be rated PG or PG-13 to ensure the largest audience. As the producer of the films, Marvel will shoulder more of the risk, but at the same time, stand to gain more of the reward, as the company will not ahve to share profits (both from the movies and ancillary products) with other studios. Additionally, Marvel will see 100% of the profit from DVD releases of its films, which have, traditionally, been strong for the company, even if the film was a modest success or even a non-starter in theaters.

Some observers are comparing Marvel's move akin to something that puts the company on smiliar footing as Pixar. While Marvel does not have it's own studio in which to shoot the films, both companies own a profitable collection of characters, produce their own films, and (now) see them distributed by larger studios.

Marvel's press release for the deal reads:

Marvel Enterprises, Inc. and Paramount Pictures, a part of the entertainment operations of Viacom, Inc. (NYSE: VIA and VIAB) announced that they have entered into an agreement under which Paramount will distribute a slate of feature films to be produced by Marvel. Marvel also announced a new, non-recourse financing facility to be provided by Merrill Lynch Commercial Finance Corp. that will allow the company to produce its own slate of feature films based on its renowned comic book characters.

"We are excited to be building our own film slate, and to be doing so using non-recourse financing," said Avi Arad, Chairman and CEO, Marvel Studios. "Paramount Pictures has the most collaborative and creative team in the business to help us market our films. Under its new leadership, we've found Paramount to be exceptional in every way and look forward to working together for a long, long time."

"Marvel has become a marquee entertainment brand," said Brad Grey, Chairman and CEO of Paramount Pictures. "It speaks to Marvel's strength in the marketplace and the great popularity of its brand and characters that Marvel can obtain such innovative financing for its film slate. We are thrilled to partner with them in this new venture."

Marvel has obtained a financing commitment from Merrill Lynch Commercial Finance Corp. for a $525 million non-recourse revolving credit facility over seven years to permit Marvel to fund the production of its film slate. The facility will be secured by the
theatrical and motion picture production and distribution rights for ten Marvel characters. The non-recourse element of the structure limits Marvel's cash risk to un-reimbursed development costs and general incremental overhead.

Marvel expects that producing its own slate of films will permit it to obtain greater participation in all revenue streams related to its films and the opportunity to begin building its own film library. The finance structure will also allow Marvel to receive a producer fee for each film and retain all merchandising revenues. Paramount will receive a distribution fee for each film it distributes and will retain worldwide distribution rights in sequels to the films covered under the agreement.

The distribution agreement between Paramount and Marvel specifies that Marvel may deliver up to ten films to Paramount over an eight-year period, with the first titles including "Captain America" and "Nick Fury." Marvel's budgets for each film may range from $45 million to $180 million. The first picture is expected to be released in 2007 or 2008. Paramount will not contribute to production costs, although it will provide advance funding of promotion and advertising for the films.

Marvel's financing is subject to numerous contingencies, including
the negotiation of definitive financing and distribution agreements. There is no assurance that the financing will be completed.

Relativity Management, Inc. assisted Marvel with the structuring of the financing.

[J.C. Bakken]

With so many films, it could very well be the undoing of the company. I hope they play it safe first, get the money in the bank BEFORE they start taking risks with the rest of the companys money.

Cool news about creative control, but... This is multi-edged sword.

[Blind Assassin]

Wow. Good to see Marvel taking control of its film properties.

Of course, once that happens, if a movie tanks, you can't blame the director, the script, etc. the blame for failure/success will fall squarely on Marvel's shoulders.

But, if it means we don't get crap like Catwoman or League of Extraordinary Gentlemen, then I am all for it.

[WebHobbit]

WOW.

Much, risk here..but it could be cool.

[palefire]

Interesting, but, hasn't Marvel sold just about all the movie rights to their most known characters already. I noted that Captain America and Nick Fury were listed as being still in Marvels hands - but it would be interesting to know who else they still have the movie rights to and when (and if) some of their top level characters will return to their control (in terms of movies).

[Sesshomaru]

Its a potential good move , if someday they get back the movies rights of a few characters . If thats the only way to do other teams movies like the avengers or heroes crossovers , i'm all for it .

[magellan]

I don't know about this one. . .

by licensing their products out to other companies, they were making guaranteed money and a piece of the gate, without any chance of losses. If a movie bombed, Marvel still made money.

This way, the risks are all Marvel. Sounds good on paper, but this is a huge risk for marvel.

[Justin M. Campbell]

I thought Captain America was part of the deal with Artisan/Lions' Gate.

Really stupid question: If the Punisher can be remade, is there any chance of new, closer-to-the-spirit-of-the-comics version of Howard the Duck?

[SpyGuy]

Well, this is interesting...

I'm not surprised to see Paramount make this kind of a move concerning existing properties, considering how few hits the studio has had of late and how they've systematically destroyed the STAR TREK franchise with their continued support of Rick Berman and Brannon Braga.

CAPTAIN AMERICA could be a great film if handled properly. You have a character built for lots of action, along with a tragic side if the "WWII hero in the 21st century" aspect is maintained. Plus, you already have the film's soundtrack ready and waiting -- namely, The Star-Spangled Banner, America, Stars and Stripes Forever, and as personal favorites, America The Beautiful sung by Ray Charles and Ragged Old Flag sung by Johnny Cash.

NICK FURY, meanwhile, has the potential to be the next James Bond franchise. As the popularity of the BOURNE movies has shown, people are ready for a new spy hero, only preferably without all that annoying "shakycam" that induces motion-sickness. Plus, you know that S.H.I.E.L.D. has enough gadgets to put MI6 to shame...

[JimShelley]

While I think it is good that Marvel now has the power to produce movies based on its characters (which is where the real money is) I don't know what characters are potentially still viable for big budget productions?

Thor <-- could be big and has *some* name recognition in the general public
Hulk Sequel <-- possible if Universal gives up rights to make a sequel
Deathlok <-- no name recognition, but a very cool concept that would awesome to see as a big movie
Dr. Strange <-- a BIG budge version would be great to see

[perk9600]

As a shareowner I'm not totally sure I like this news.

Yes the potential is there for bigger profits, but also for losses.

One of the best things about marvel's business model was that they got paid no matter what happened. Now that is not so certain.

I think the stock is down today on this news.

I have to re-evaluate my holdings.

[C.Kent]

I can see it now...

"Spider-man Starring in a Christmas Carol Remake"
"Bruce Banner is The Incredible Nanny"
"Weekend at Dr. Strange's"

The point is they can remake these however they see fit.
ala
Muppet Treasure Island
Barbie's the Prince and the Pauper

Just adapt the character to a Public Domain story and put Captain America on Ice Skates!!!

[kimota94]

Originally posted by SpyGuy
Well, this is interesting...

NICK FURY, meanwhile, has the potential to be the next James Bond franchise. As the popularity of the BOURNE movies has shown, people are ready for a new spy hero, only preferably without all that annoying "shakycam" that induces motion-sickness. Plus, you know that S.H.I.E.L.D. has enough gadgets to put MI6 to shame...

Paging David Hasselhoff... (not)

Captain America (the movie) has the potential to be something special (and I'm not even American) but what are the odds of anything like that even making it onto the silver screen. I mean, think about it: of the 400+ solo Cap stories that Marvel's published in the last 40 years, how many of them lived up to the potential of the character? Probably less than 1/10th of them, right? And, to be frank, about 1/3rd of them were either boring or dreadful in other ways. The current series is great, and the previous series started off strong... but my guess is a CA movie will not do the character justice.

[Rawle Austin]

If managed successfully this could help guarantee a comic book film prescence for a long time to come. Helping the genre to become a permanent feature on the cinema/theatre listings.

The full creative control can only be a good thing if the end product is ala Spiderman and X-Men. Good for their bottom line, good for the long term success of the company and good for the continuation of quality comics by the best creators (who don't come cheap!)

Oh, and can we have the next Daredevil film include the real mask design and the DD logo front and centre (like the comics)? I'm probably gonna get roasted for this...

Growler

[Lobok]

Wow, this is crazy! Never thought I'd see the day. Hope this works out for them.

[fredeur]

So after writing every Marvel comics, Bendis will now write every Marvel movies?
And Millar will direct?
hum


Well, lame jokes apart, il this bold move can avoid awfully crapy movie like Elektra, good. If not...

[Cyphon]

I would like to see the first Cap movie set during World War 2. Give us the origin and something unique, namely either Cap & Bucky, or the whole Invaders squad fighting in WW2. For all the WW2 movies that have been made, has there ever been one with superheroes? Think the opening of Saving Private Ryan, but in amongst all that bleak grey is a dazzling flash of red, white and blue.

At the end, he can get frozen, and then there you have the setup for a modern day sequel.

Cap needs to happen in WW2!

[MHELLER1974]

This goes 3 ways.
Either all this control goes nowhere, and they blow a good thing like WB does repeatedly ever year, or they use this to their advantage and make truly great movies, or they try real hard but maybe because the really major characters were already cherry picked, or maybe because they just weren't ready, they only get some mediocre movies out of the deal.
The other downside of this is, if this fails, it's going to annihilate Marvel comics as we know it, the effects of a 180 million dollar dud will be felt throughout Marvel's offices, and all it takes to do that is to make another Hulk.

I for one hope this makes for better movies, but we'll see.
Marvel was heading in the right direction film wise, and than with Punisher, Elektra, and Blade 3, they've slowly been reverting back to the old ways, were we had nothing but junk movies like Captain America, Dolph Lundgren's Punisher(not that I liked Janes any better), and Corman's FF. And in between there were the telefilms for Gen X, and Nick Fury, and whatever I'm forgetting I'm sure.

[DBHughes]

We've really already seen where this going. This means control will go completely to Avi Arad on the movies; Avi Arad had practically complete control of the television series Mutant X (it was even based on Arad's concepts). Further evidence could likely be found in how much control Arad had of properties like Man Thing and the Hulk (Universal is the most apathetic studio in Hollywood - it is highly doubtful they fought Arad on anything he wanted).

All it would take to tank Marvel on this strategy is two or three duds; and the odds are extremely high that will happen. I doubt it will bankrupt the company; but it is likely going to be a serious hit that will practically undo everything they've accomplished.

[palefire]

I did a little looking around. It appears that Marvel has a "use it or lose it" clause in their deals regarding movie rights to their characters. I don't know the details of the clause, but it would appear to be there to prevent their characters from sitting in movie limbo, in that the movie rights would return to marvel after a period of not being used. That could help this deal look better - what it actually does, I haven't a clue.

[Michael P]

Originally posted by magellan
I don't know about this one. . .

by licensing their products out to other companies, they were making guaranteed money and a piece of the gate, without any chance of losses. If a movie bombed, Marvel still made money.

This way, the risks are all Marvel. Sounds good on paper, but this is a huge risk for marvel.

As a non-Marvel character associated with Paramount once said, "Risk is our business."

I'm certainly not going to prognosticate, but I do have to applaud Marvel for having the guts to take such a risk. Business today is too complacent, too afraid to do anything that might benefit them in the long term if it means even a small loss in the short term. So, for that matter, are investors, politicians, and even some artists. Balance sheet fear has replaced courage. For all that people give lip service to "thinking outside the box," they really only mean it if there's no risk involved, if said thinking can generate immediate guaranteed results.

So I say, thank God. At least someone's taking a chance on something.

[Comic-Reader]

Originally posted by Justin M. Campbell
I thought Captain America was part of the deal with Artisan/Lions' Gate.

The deal with Artisan gave a specific time limit for them to make movies. Once that time limit elapsed, the movie rights to the characters reverted back to Marvel to shop around again. Now we find out that they're keeping all the rights for themselves.

I think the only movie to come out of the Artisan deal was the Man-Thing movie that was taken from theatrical distribution to go direct to DVD.

This may have been a primary factor, along with the relative failures of Daredevil, Punisher, and Elektra, in why Marvel wants to have more creative control.

This new deal allows them to hire the writer and director that they want for each project and to get script rewrites and a new director at any point in the process if they see that things are falling apart creatively.

[unlinear]

Originally posted by C.Kent
I can see it now...

[...]
"Weekend at Dr. Strange's"

It's probably more likely that this'll be "Weekend at Magneto's" where a couple of young ambitious mutants try to act like Magneto's head is still attached to his body during all the wacky parties on Asteroid M...with in the end, another Magneto showing up claiming that headless Mags is an imposter.Hilarity and hijinx ensue.

Look for it next september, starring Will Farrell as Magneto, with Ben Stiller as Fabian Cortez, Seth Green as the Neophyte, and guest starring Steven Segal as that wacky omnipotent Exodus.

[perk9600]

Originally posted by perk9600
As a shareowner I'm not totally sure I like this news.

Yes the potential is there for bigger profits, but also for losses.

One of the best things about marvel's business model was that they got paid no matter what happened. Now that is not so certain.

I think the stock is down today on this news.

I have to re-evaluate my holdings.

Shows what I know. The stock is up big.

But that doesn't make me feel any better about this.

[gredenko]

Man-Thing premieres this weekend on Sci-Fi. Maybe some of Marvel's in-house productions will fare better.