MARVEL CHANGES NAME TO "MARVEL ENTERTAINMENT"

[MattBrady]

Reflecting the completion of a $525 million non-recourse debt facility (originally announced in April), Marvel today announced that, effective immediately, it has changed its name to “Marvel Entertainment, Inc.”

The deal, Newsarama readers will recall, will allow Marvel to produce the films itself, rather than option the properties to third parties, while Paramount will distribute the films. While there are specific differences (such as Marvel not having an in-house production facility), the relationship between the two is akin to the previous Pixar/Disney deal, where Pixar produced films, and had a distribution deal with Disney. As stated by Marvel, along with greater creative control over the film versions of its properties, the new deal allows Marvel greater profit potential, as it will no longer need profit-sharing arrangements with studios.

These relationships, particularly the Sony/Marvel partnership to create the Spider-Man film franchise, have been both a blessing and curse for the company. For example, while Sony’s weight helped attract attention (and money, talent, etc) to the film, Marvel and Sony occasionally found themselves at legal loggerheads over accounting issues, with the two occasionally brandishing suits and countersuits at one another (“The Mother of All Contract Suits”) in regards to the Spider-Man profits. The suits were "amicably settled" last June.

As previously reported, the Marvel-produced film slate includes up to 10 movies, based on characters that include Captain America, Nick Fury and The Avengers, with the first theatrical release expected for summer 2008.

It was due to this change in the company’s larger operations that it opted to change its name to “Marvel Entertainment,” according to a statement from the company.

Although, this is not the first time the larger company has gone by this name. Prior to the 1997-1998 bankruptcy proceedings (paperwork was filed in 1996), Marvel went by the name "Marvel Entertainment Group, Inc." It had taken that name in 1989, when it was sold by New World Pictures to Andrews Group Incorporated, and saw Terry Stewart step in as President in 1990. Andrews Group, Marvel observers will remember, was the Ron Perelman-financed organization which, many claim, led to Marvel's massive early '90s debt, and the utter financial ruin of Marvel, and the bankruptcy.

"Marvel Entertainment Group, Inc." was the official name the company carried through its bankruptcy proceedings.

From Marvel’s release:

These film production activities, to be carried out by subsidiaries of Marvel Studios, Inc., will complement existing and future film projects licensed to other studios. Marvel has a strong track record of working closely on Marvel character-based films it has licensed to other studios, such as Sony Pictures, 20th Century Fox, New Line Cinema, Universal Studios, and Lions Gate Entertainment. In 2006, Marvel anticipates the release of Ghost Rider, X-Men III and Punisher II through Sony, Fox and Lions Gate, respectively.

The seven-year, $525 million facility was arranged by Merrill Lynch, Pierce, Fenner & Smith Inc. and consists of $465 million in revolving senior bank debt and $60 million in mezzanine debt. Both S&P and Moody's have given the senior bank debt an investment grade rating. In addition, Ambac Assurance Corporation has insured the senior debt, raising its rating to AAA. MVL Film Finance LLC, a special purpose, bankruptcy-remote subsidiary of Marvel, will be the borrower under the facility. That subsidiary has pledged the theatrical film rights to the ten characters included in the film slate as collateral for the borrowings. The borrowings are non-recourse to Marvel Enterprises, Inc. and its other affiliates.

Avi Arad, Chairman and CEO of Marvel Studios, commented: "The film slate financing enables us to evolve our entertainment operations into film production, an area where we have experienced past success with our partners and which offers significant profit potential for our company. The characters involved are some of the most valuable in the Marvel Universe, and we are excited to launch them as consumer brands via feature film releases under our direction. We look forward to working with Brad Grey and the exceptional team he has put together at Paramount and are confident that this will be a successful venture for us both."

Brad Grey, Chairman and CEO of Paramount Pictures, commented: "Marvel has emerged as one of the strongest, most successful entertainment brands around the globe, with an enviable track record in feature films. We are excited to be working with Marvel on this new business."

"Merrill Lynch is pleased to have worked with Marvel in structuring and arranging this innovative and unique financing," said Michael Blum, head of global structured finance at Merrill Lynch.

"Obtaining a vast majority of financing at the AAA rating level backed by the intellectual property value of ten Marvel characters plus the movies created by Avi and his team is at the cutting edge of entertainment structured finance techniques."

Funds under the facility will be used for the production of films. Marvel will receive a gross participation on all revenues from the facility as the producer of each film and will retain all of the film-related merchandising revenues. These merchandising revenues and the gross participation are neither pledged as collateral nor subject to any cash restrictions under the facility. Marvel will also receive all profits, including all revenue streams (including box office receipts, DVD/VHS sales, television, and soundtrack sales) after film costs, distribution fees, marketing, principal repayment, and interest. In addition, Marvel will have the ability to build its own film library through this initiative. Marvel's distribution agreement with Paramount guarantees distribution for 10 films and encompasses two prime release periods each year - the spring/summer and fall/holiday seasons. Paramount has guaranteed Marvel wide distribution with commensurate advertising and marketing efforts. This is a worldwide arrangement with the exception of Japan, Germany, Australia/New Zealand, Spain and France, which Marvel will sell directly.

The ten Marvel characters in the arrangement are Captain America, The Avengers, Nick Fury, Black Panther, Ant-Man, Cloak & Dagger, Dr. Strange, Hawkeye, Power Pack, and Shang-Chi. Each film is expected to have a budget of up to $165 million dollars and a rating no more restrictive than PG-13. Although the financing allows for the production of animated films, Marvel currently intends to use the financing to make only live-action films.

Marvel will fund initial development including scripts for each production. Once a film is "green lit" (approved for production), the facility will reimburse Marvel for these costs. Marvel Studios will oversee the slate and has sole green light control. Unreimbursed overhead expenses and any unreimbursed development costs represent Marvel's only direct financial risk. The operating results for the film slate will be consolidated with those of Marvel and separate segment disclosure will be provided in Marvel's periodic financial reporting. However, there are restrictions on the cash generated by the films that will prevent Marvel from withdrawing any profits until after the release of the third film, and then only if financial tests are met. As is consistent with Generally Accepted Accounting Principles, the costs of each film will be capitalized until theatrical release.

Relativity Media LLC assisted Marvel with the structuring of the financing.

[New Alfonso]

I always liked "Marvel Comics" better myself. Because, you know, that's pretty much the core of the company.

[The Mirrorball Man]

Man, I'm so entertained. Marvellous.

[DrTzinTzin]

That's Entertainment.

Comics just got a little less user friendly.

[Spider Symbiote]

Very interesting.

It will be interesting to compare the quality of these movies to the pre-existing Spider-Man and X-Men ones. I also have concerns regarding the characters that Marvel intend to use; it would appear that the most bankable characters, such as Spider-Man, have already been used in their partnerships with other studios, and that they are now looking at using second-tier characters (in movie terms, not comic terms) to promote their own studio.

Can a Hawkeye or Black Panther movie generate the same level of interest that a Spider-Man or Fantastic Four movie can? - I doubt it, and, in order to maximise their profit potential, they will need a certain immediate bankability with the character(s) they propose to use.

That said, I wish Marvel Enterprises the very best of luck in the future. I hope they succeed.

[djm72]

This is a really big risk for Marvel. If the movies are successful, it's a great move and the company will make a lot of money. But spend million on a series of films that bomb and Marvel could end up in financial difficulty once again.

[Spider Symbiote]

Originally posted by New Alfonso
I always liked "Marvel Comics" better myself. Because, you know, that's pretty much the core of the company.

I can understand their reasons for the name change. A non-comic book fan may be put off by a film carrying the Marvel Comics brand (think with regard to the comic aspect).

Also, Marvel Entertainment perhaps describes best where the company stands as a whole right now. They don't just produce comics anymore. They produce movies too. Marvel Comics as a title suggests that they are promoting comic book material only. Entertainment suggests far more than that, and can include comics, video gaming, TV and, of course, movies in addtion to a range of various other merchandise.

[aphterburn]

So is Marvel Comics like a division of Marvel Entertainment, or is Marvel Comics no more?

[BlueThunderArmy]

I was under the impression they'd been calling themselves Marvel Entertainment for a while—it's not the first time I've heard the term.

Anyway, I really hope Marvel knows what they're doing with this movie thing. Lots of companies trying to diversify think "How hard could it be?" and then they find out in a big way.

[EmeraldGuy32]

hope this makes my stock go up!

[MattBrady]

Originally posted by BlueThunderArmy
I was under the impression they'd been calling themselves Marvel Entertainment for a while—it's not the first time I've heard the term.

I think you may have it confused with "Marvel Enterprises," which was their official name. Additionally, pre-bankruptcy, Marvel was known as "Marvel Entertainment Group." Adjusted article to relflect.

MattB

[BlueThunderArmy]

Originally posted by MattBrady
I think you may have it confused with "Marvel Enterprises," which was their official name. Additionally, pre-bankruptcy, Marvel was known as "Marvel Entertainment Group." Adjusted article to relflect.

MattB

Could be. Though I think they may have been calling themselves Marvel Entertainment on their Monster job postings. Of course, can't really verify now, since they've made the change official...

[Twigglet]

I really doubt that Ant-man and Hawkeye could carry thier own film, just doesn't seem a good story for a feature lenght movie.

I'm really hopful for some of these, I really think Cap America, Nick Fury and even Black Panther can be a big sucess if donw right by Marvel, and I think they will do great.

Dr Strange and Shang Chi could be done right as well, I can see them being quite good if handled ok.

But Power Pack? I don't know, I think a Runaways movie would be much better, the Power Pack kids never interested me.

Finally the Avegners, why I think it's GREAT to see Marvel trying something like this, I don't think Thor/Iron Man/Hulk can be included in the line up can they?

I think we'll see some lesser characters appear, probably Scarlet Witch and Quicksilver, as well as Cap America, hell Ant-man and Hawkeye as well.

[BrotherI]

Very good idea. Sounds a little less culty for the mainstream folk.

[Derek Ruiz]

I always thought the Companies name was Marvel Entertainment Group I didn't know they went back to just MArvel comics.

[KingPagla]

Originally posted by Twigglet

But Power Pack? I don't know, I think a Runaways movie would be much better, the Power Pack kids never interested me.

That's cause you're not a little girl.
(Huh?.... What's that? Twigglet's a what....)

Um ...Never mind











Seriously though, Power Pack would make a great kids movie with lots of merch tie ins and potential animated franchise.



And personally, I think an Ant Man flick could be Incredible.

[Vyper]

So long as they make a Deadpool movie and have Sam Raimi direct, I'll be a happy camper. And I sincerely hope that they consider strong storytelling over the "hot" Hollywood "stars" to sell their movies - Tobey McGuire was not exactly popping up on the radar until Spider-Man - and look how great that turned out.

Also, KEEP TOM CRUISE AWAY FROM IRON MAN!

[BuckySinister]

Originally posted by Twigglet
I really doubt that Ant-man and Hawkeye could carry thier own film, just doesn't seem a good story for a feature lenght movie.

I dunno. While Hawkeye doesn't have the "household name" status of Spider-Man or the X-Men, it could be a pretty compelling concept for a mainstream audience: the world's greatest archer fights crime. You probably wouldn't have to work too hard to make him seem cool. I can already see the trailer that shows why a bow and arrow beats out guns in this guy's hands.

And Ant-Man? A tougher sell, maybe, but... If they really play up the visuals, a movie about a tiny superhero who can control ants might fly. I'm seeing vertiginous perspective shots as he shrinks, and some really spectacular CG ants. Give it a humorous edge, and you might have something. I'm seeing that infamous Geoff Johns sex scene playing out here, and... Oh, god. They'd probably cast Rob Schneider, wouldn't they?

[KingPagla]

Originally posted by EmeraldGuy32
hope this makes my stock go up!

I hope so too, but these flicks aren't gonna start appearing untill 2008, and that's a loong time away for Wall Street these days.

Update Edit: Well it's up 0.27 - That's a good start.

[HeX111]

I am a little confused here... one part of this release leads me to believe that the only property risks that Marvel has is the loss of the Film rights to these 10 characters, but another portion indicates that the possible loss includes the "Intellectual Property Rights" to those 10 characters put up as collateral....

could someone clarify if Marvel runs the risk of losing the publishing rights to these characters or only the the Film rights?

[jza1218]

Originally posted by HeX111
I am a little confused here... one part of this release leads me to believe that the only property risks that Marvel has is the loss of the Film rights to these 10 characters, but another portion indicates that the possible loss includes the "Intellectual Property Rights" to those 10 characters put up as collateral....

could someone clarify if Marvel runs the risk of losing the publishing rights to these characters or only the the Film rights?

Its the same thing I believe. Not that they lose publishing rights, but that they lose the rights to use the intellectual property for film use, if I understand correctly.

This is a great low-risk move by Marvel. I hope they do great work with it. Contrary to what another poster speculated on, I think it is fairly unlikely that they could go bankrupt on this move as to the financing structure of the deal.

[Aaron]

Originally posted by New Alfonso
I always liked "Marvel Comics" better myself. Because, you know, that's pretty much the core of the company.

Not so much anymore, unfortunately. The comics themselves are probably pretty far down the totem pole in terms of priority. Instead they're mining the characters themselves.

If a character can be summed up in a few quick sentences, you can build an entire movie around them.

Marvel's given up on universe building. The universe is built. They're just stripmining it.

[HeX111]

Originally posted by jza1218
Its the same thing I believe. Not that they lose publishing rights, but that they lose the rights to use the intellectual property for film use, if I understand correctly.

This is a great low-risk move by Marvel. I hope they do great work with it. Contrary to what another poster speculated on, I think it is fairly unlikely that they could go bankrupt on this move as to the financing structure of the deal.

You are probably right, but Intellectual Property Rights indicates the ownership of the characters to me... and by ownership I mean FULL rights in all mediums... Film, Publishing, Merchandising, etc.... and if that were the case, these characters would have to be licensed back to Marvel to continue publishing them...

If you are right, keeping the financing through a subsidary company with no recourse open towards the parent company and only the film rights to 10 characters is a REALLY good move on Marvel's part... granted they could hit big on 2 movies and the other 8 tank causing them to lose all of the profits from the first 2 movies, but all in all, I see this as a very good move on their part, low risk/high reward deal...

[Twigglet]

Actually, a Hawkeye film could work if they used him like they did in Ultimates #8.

Hawkeye in a kitchen taking out a lot of men could be awesome!

Pity it's got to be pg-13 though

[Gordon McAlpin]

Originally posted by Aaron
Marvel's given up on universe building. The universe is built. They're just stripmining it.

Ouch.

True, to some extent.

But still... ouch.