SHOCKER! Disney Buying Marvel For $4B!

15TH UPDATE: Behind-The-Scenes Of Disney-Marvel Deal

14TH UPDATE: Universal vs Disney Over Marvel Characters

13TH UPDATE: Why Disney Must Wait For Marvel Synergy

12TH UPDATE: VIDEO: Stan Lee On Disney-Marvel Deal

11TH UPDATE: Here's the list of characters included on Universal Islands Of Adventures' Marvel Island -- Spider-Man (also attraction), Dr. Doom (also attraction), Hulk (also attraction), Storm (also attraction), Captain America, Cyclops, Green Goblin, Rogue, Storm, Wolverine, "and lots more if you include stores and dining," a Uni exec tells me.

10TH UPDATE: I get the impression that Universal lawyers right now are scrutinizing their theme park licensing and merchandising contracts with Marvel. Universal has just updated its earlier statement to me to say this, "Marvel Super Hero Island at Universal’s Islands of Adventure and the Marvel characters are an important part of the Universal Orlando experience. They will remain so. Our agreement with Marvel stands for as long as we follow the terms of our existing contract and for as long as we want there to be a Marvel Super Hero Island." So privately Universal execs tell me they've got the Marvel characters "until the end of time if we want them" and use phrases like "in perpetuity". But here's the rub: a Universal insider tells me the studio only retain the existing characters it's already made use of. Sure there are Spider-Man and Hulk attractions, but what about all the other characters? Do those revert to Disney?

9TH UPDATE: Let's not forget the still active lawsuit that clouds the Disney-Marvel deal. The usually insightful THR, Esq does an excellent job boiling down the outstanding legal dispute involving Stan Lee and the rights to many of Marvel's most valuable characters. Presently, the defendants in the case have filed motions to dismiss, but the federal judge hasn't made a ruling yet:

"The executors and shareholders of Stan Lee Media, an online comic site created in the 1990s, are unhappy with the way that Lee parted ways with the company that bears his name and took his intellectual property to Marvel. In 2007, Stan Lee Media filed a lawsuit against Marvel Entertainment that claimed that Lee assigned the rights to his creations to SLM in a 1998 "Employment Agreement/Rights Assignment" contract. In the lawsuit filed in New York District Court, SLM claimed 50% of all income, proceeds, and profits realized by Marvel's use of the characters. Then, this past January, shareholders of SLM filed a separate lawsuit in California claiming $750 million in damages after a District Court denied Lee's claim that he properly transferred assets belonging to SLM..."

"...Here's another twist of fate: Five years ago, Marvel sued Disney after the Mouse House bought the Fox Family Channel and rebranded it as ABC Family. At the time, the channel aired an animated series that featured Marvel characters. Marvel claimed that Fox couldn't transfer the copyright license to these characters to Disney. Ironic."

And here's still more irony courtesy of one of DHD commenters: "What’s hilarious is that years ago, when Disney was looking for new direction, Stan Lee had a meeting with the board and said he had the solution to all their problems – “Me!” (meaning Stan Lee and Marvel). They thought he was crazy then."

8TH UPDATE: Paramount just issued this statement to me: “Paramount Pictures has enjoyed a productive and fruitful relationship with Marvel Studios from the start of our distribution agreement in 2005. So much so, we announced a five-picture slate distribution deal last year which includes worldwide distribution rights for upcoming films: Iron Man 2, Thor, Captain America, Avengers, and Iron Man 3. This distribution deal will be unaffected by today’s transaction. We look forward to continuing to work with Marvel and, with today’s announcement, to working with Disney to replicate the incredible success of Iron Man on all our future collaborative projects.”

7TH UPDATE: Bob Iger on CNBC: "We'd like love to attract more boys, and we think Marvel's skew is more in boys' direction. Although there's a universal appeal, we think, to a lot of their characters and a lot of their story. Just look at Spider-Man and Iron Man films. This is a great fit. But 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."

6TH UPDATE: Did Disney overpay for Marvel? Well, here's the argument for a resounding "Yes!" In both November 2008 and March 2009, Marvel's stock traded below $24 per share. And the run-up of the stock since March of this year has been +58%. If Disney was interested in buying Marvel, why didn't Bob Iger do it when he could have bought it at a far cheaper price? Meanwhile, in today's trading, Marvel stock is up more than 25% (+$9.75) at midday, while Disney shares are trading down almost 3% (-$.75).

5TH UPDATE: Paramount still has a 5-film distribution deal with Marvel, and Bob Iger has confirmed in his press remarks that Marvel's upcoming films will be released by Paramount.

4TH UPDATE: I'm told that Sony's deal on Spider-Man motion picture right is unaffected by today's announcement and not subject to renewal. In fact, Sony is currently developing the next three films in the franchise.

3RD UPDATE: No official word from Paramount yet about how this affects the lucrative distribution agreement with Marvel, or Sony and its Spider-Man franchise. But Universal just issued this statement to me about the future of their theme park licensing pact with Marvel: "Marvel Super Hero Island at Universal’s Islands of Adventure and the Marvel characters are a beloved and important part of the Universal Orlando experience. They will remain so. Our guests are going to get to meet Spider-Man and all our other Marvel characters. We believe our agreement with Marvel stands and that the Disney/Marvel deal will have no impact on our guest experience." Hmm, interesting how there's a "we believe" in there. Sounds unsure.

But it's important to note that the Disney/Marvel deal statement today does not mention Marvel in connection with Disney theme parks. In fact, Disney may not be able to use the 5,000 Marvel characters to freshen its theme parks for some time. Because Universal theme parks have a long-term licensing deal with Marvel that gives them the rights to the characters, and Universal not only has Marvel attractions (like the Spider-Man ride) in Orlando and Osaka but has also built them into future theme park plans. "We have a license deal that goes on for a long time," a Universal insider tells me. Or do they?

2ND UPDATE: Wow, was this kept secret. I knew something was up all weekend when a tipster told me that Disney had arranged an unscheduled investors call this AM and the art department at Disney Online went into a "lock-down" to create a logo. But the best guess by some of the experts I contacted was Disney buying Electronic Arts. Marvel seemed outside the realm of possibility. Yet I've learned that this was a deal which Bob Iger told intimates he'd been pursuing for a long time!

With the whole deal worth $4 billion in cash and stock, a little math shows that Marvel CEO Ike Perlmutter, who owns 37% of his public company, stands to reap $1.5 billion in cash and stock. With so much to lose, and the SEC casting a watchful eye, Perlmutter had every reason to keep this negotiation secret from everyone, even intimates who described themselves to me as "completely blindsided". But they tell me that this sell-out has been the strategy all along of this no-nonsense Israeli. "Ike is the real story here. He's really operated like the Great Oz behind the scenes, not accessible to the public but always mindful of shareholders. This was always an acquisition play for Ike," one insider explains to me. "The bottom line is he turned the whole thing around after he fought tooth and nail with Ron Perelman for the company. Today he runs a nifty company that's tidy on expenses and has no cash flow issues. This deal with Disney just ups his game and creates shareholder value and lets him walk away a billionaire."

With this morning's announcement, Bob Iger today finally steps out of Michael Eisner's shadow and earns his keeps as Corporate America's 3rd highest paid CEO. Because everyone knows that 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 Marvel, is showing himself to be the boldest Big Media CEO with an acquisition 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 whether the other moguls can keep up with him, especially Time Warner CEO Jeff Bewkes who's sitting on a pile of cash after the spinoff of Time Warner Cable and needs to start making acquisitions and adding value to the company instead of just buying back the company stock.

That Marvel would be a prize worth having is a foregone conclusion: the entertainment company's aggressive exploitation of its comic book heros in movies and toys and licensing is so far unparallelled. In fact, some believe Marvel Studios is moving too fast and about to flood the comic book film market with product. Yet the public has shown an endless appetite for superhero fare. Nevertheless, marketing all those movies, when P&A costs for tenpoles average $60+M these days, was going to prove costly for Marvel. Now it can rely on the Disney distribution and marketing machine, especially around the world where Marvel was weakest.

On the other hand, there's a real possibility that the fanboys may not want their comic book fare "Disney-fied" by the Magic Kingdom. It undermines the cool quotient. But that hasn't hurt Pixar and it probably won't hurt Marvel, either, as long as Iger and his team are smart enough to keep their hands off Marvel and just count the money about to come in. But can they? Considering how dark some of those Marvel comics have become -- the sex, the gore? Yet that's the stuff that addicts those fanboys crucial to Disney's strategy here because the company is weakest attracting teenaged boys. And the merchandising possibilities are endless given that Disney does something like $1 billion a year sales with Wal-Mart alone. Meanwhile, the deal puts Marvel on much the same footing as the DC Comics/Warner Bros relationship. But to date Disney has been much better at building synergy with its brands, and Iger emphasized that ad nauseum in his investors call this morning.

Here's the official Disney/Marvel announcement:

August 31, 2009
DISNEY TO ACQUIRE MARVEL ENTERTAINMENT

Burbank, CA and New York, NY, August 31, 2009 —Building on its strategy of delivering quality branded content to people around the world, The Walt Disney Company (NYSE:DIS) has agreed to acquire Marvel Entertainment, Inc. (NYSE:MVL) in a stock and cash transaction, the companies announced today.

Under the terms of the agreement and based on the closing price of Disney on August 28, 2009, Marvel shareholders would receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own. At closing, the amount of cash and stock will be adjusted if necessary so that the total value of the Disney stock issued as merger consideration based on its trading value at that time is not less than 40% of the total merger consideration.

Based on the closing price of Disney stock on Friday, August 28, the transaction value is $50 per Marvel share or approximately $4 billion.

"This transaction combines Marvel's strong global brand and world-renowned library of characters including Iron Man, Spider-Man, X-Men, Captain America, Fantastic Four and Thor with Disney's creative skills, unparalleled global portfolio of entertainment properties, and a business structure that maximizes the value of creative properties across multiple platforms and territories," said Robert A. Iger, President and Chief Executive Officer of The Walt Disney Company. "Ike Perlmutter and his team have done an impressive job of nurturing these properties and have created significant value. We are pleased to bring this talent and these great assets to Disney."

"We believe that adding Marvel to Disney's unique portfolio of brands provides significant opportunities for long-term growth and value creation," Iger said.

"Disney is the perfect home for Marvel's fantastic library of characters given its proven ability to expand content creation and licensing businesses," said Ike Perlmutter, Marvel's Chief Executive Officer. "This is an unparalleled opportunity for Marvel to build upon its vibrant brand and character properties by accessing Disney's tremendous global organization and infrastructure around the world."

Under the deal, Disney will acquire ownership of Marvel including its more than 5,000 Marvel characters. Mr. Perlmutter will oversee the Marvel properties, and will work directly with Disney's global lines of business to build and further integrate Marvel's properties.

The Boards of Directors of Disney and Marvel have each approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, certain non-United States merger control regulations, effectiveness of a registration statement with respect to Disney shares issued in the transaction and other customary closing conditions. The agreement will require the approval of Marvel shareholders. Marvel was advised on the transaction by BofA Merrill Lynch.