I'm betting that a solid majority of you readers have already heard the
news: Disney has offered to buy Marvel Entertainment for $4 billion, subject
to regulatory (antitrust) approval and a vote by the Marvel shareholders.
Both seem likely to happen, meaning Mickey just went on another expensive
While the news is shocking on one front (Mickey together with Spider-Man?
Belle and Wolverine? Bambi and the Hulk?), upon reflection we shouldn't
really be so surprised. The Disney empire has in recent history almost
always grown in leaps in bounds, especially since 1984 (the start of the
Eisner regime), and often the "leaps" have been by acquisitions rather than
You've got the gigantic Capitol Cities/ABC (and ESPN) purchase in 1995
for a whopping $19 billion, but this purchase brought two full-sized
networks and a ton of other properties. Fox Family was bought in 2001 for $3
billion, adding Digimon, some sportscasts, and Mighty Morphin Power Rangers
to the Disney line-up. Then, in 2004, Disney bought the Muppets for an
Since taking the reins as CEO in 2005, Bob Iger hasn't been afraid to
continue in Eisner's shoes. He moved quickly to acquire Pixar in 2006 for
$7.7 billion, a move derided by a few as too expensive at the time, but
those voices have largely been silent ever since. How will the Marvel
purchase measure up?
The purchase price is closer to Fox Family than Pixar. Did Fox Family
really provide $3 billion worth of value to Disney over the past
near-decade? Probably not. But there's a world of difference between Power
Rangers and Marvel. Do you know the Marvel line-up? You've got Spider-Man,
Hulk, X-Men, Iron Man, Captain America, Fantastic Four, Thor, and 5,000
other assorted characters, many of which you probably haven't heard of
unless you're a comic book collector.
The iconic Hulk coaster
The question on almost every theme park fan's lips, including my own, is
what this all means for the existing theme park Marvel properties, presently
situated at Universal Studios' Islands of Adventure: the phenomenal
Spider-Man simulator ride, the sublime Hulk roller-coaster, the Doctor Doom
freefall ride, and smaller locations such as the Fantastic Four restaurant
and an eatery dedicated to Captain America.
The answer? Probably not much. Iger has said that Disney will honor
existing Marvel contracts, and Universal's original filings indicate it has
a long-term lock on using the Marvel characters in theme park attractions.
It's still early in the game, but Universal has already issued a statement
that its rides are not going anywhere: "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."
Then, Universal sent this missive to their own employees: "You may have
seen reports this morning that Disney intends to acquire Marvel
Entertainment. Naturally, Team Members and guests may wonder how this will
impact Islands of Adventure. Marvel Super Hero Island and the Marvel
characters are a beloved and important part of the Universal Orlando
experience and will remain so. Our guests are still going to be able 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."
In other words, the Hulk and Spider-Man rides get to remain there, at
least for the time being. Some online reports indicate Universal may have
essentially perpetual rights to use those characters in the theme park
rides, so long as the same rides remain open. That having been said, it's a
sure bet that the lawyers on both sides of the equation are about to go over
everything with a very fine-toothed comb. One is especially struck with the
less-than-certain phrase "we believe" that the agreement will stand.
The (amazing) Spider-Man ride.
For his part, Iger did not dispute Universal's claim, but his rejoinder
implies Disney may want to build their own theme park presence for the
Marvel characters: "Marvel characters have already proven to be strong in
terms of theme park attraction, and we believe there are a lot of
opportunities around the world, not in every one of our parks because there
are some existing agreements that we obviously have to honor, but in a
number of places for us to use the Marvel characters to basically help us
grow our theme park business and better entertain people."
What exactly does this mean? Speculation is easy, and relatively rampant.
Not for nothing did this news break on a Monday. There's an old media adage:
if you want a lot of press, attention, and speculation, then break the news
on a Monday morning. If you want to bury a story, break the news on a Friday
afternoon. One might even cynically wonder if the still-not-debuted (but
"was supposed to debut today") Fantasmic dragon in Anaheim had anything to
do with the timing of this announcement.
Online message boards quickly lit up. Would we see Disney characters side
by side with Marvel ones? I hate to burst any bubbles, but that seems
unlikely in the extreme. It's much more likely that the two properties will
stay segregated, and maintain their own brand identities.
After all, we see that now with the "external" brands that Disney has
bought. We don't see Miss Piggy in parades next to Minnie Mouse, or the
Power Rangers posing with Chip & Dale. Rather, Disney will maintain a
portfolio of brands, not a mashup. At present, the Power Rangers only appear
by themselves in Disney's Hollywood Studios (DHS), and they maintain a
pretty low profile.
Stitch and Stitch.
All that said, Disney isn't above a little mashup now and then, for
properties that are well-entrenched. Think about the Indiana Jones and Star
Wars franchises. They are "external" to Disney and probably gave purists
some serious pause when they were first added to the theme park fold two
decades ago. But now it's not uncommon to see the Disney and Lucas
characters conflated. Haven't you ever seen the Stitch Yoda or the Stitch
Emperor action figures? They used to be sold only at Star Wars Weekends, but
you can find them at other times of the year in DHS, too.
I can't help but think that there would have been a fan uproar had this
kind of mashup been attempted in 1987, when the theme park confluence had
been new. But now, with the characters so closely aligned, you find fans not
only accommodating, but actually fawning over the "cuteness" of the mashup.
In other words: give it time.
But what else might Disney have in mind? Could it be superheroes as such?
They've got the Incredibles, and now several hundred other heroes to call
upon! One assumes they could craft a giant heroes section of Disney's
Hollywood Studios if they so desired.
Or think bigger: maybe that elusive "fifth park" to Walt Disney World
could be more than just the proposed "villains" park… how about villains AND
(super)heroes? Now you've got a winning formula. Disney has long had heroes,
but they've always been plain-vanilla, and somehow they seemed less
memorable. But we'd best not get ahead of ourselves. A fifth park to WDW
seems unlikely in the extreme. They need to fix several parts of the
existing parks first, and I think they know this. Plus the fourth gate (DAK)
didn't really extend vacations as much as they were hoping, so would a fifth
park really be worth the expense?
Café 4 serves pizza and uninspired salads.
So maybe smaller scale. How about a heroes and villains themed private
party? They've had some success with the Pirate and Princess Party concept;
maybe this is a new way to milk the visitors for yet another hard-ticket
event. (Sorry, my inner cynic invaded there for a moment).
One hopes they will restrict the Marvel characters to DHS only. They
would be out of place in the Magic Kingdom, and they would positively burn
retinas if spotted by paying customers in DAK or Epcot. But hold. Even that
may be a bit much for the visitors. Could it really be possible to stroll
through DHS on Saturday, take my photo with Spider-Man, and travel up
Interstate-4 on Sunday to IOA where I ride the Spider-Man attraction a day
That scenario seems vanishingly unlikely. Tourists are confused enough as
it is when it comes to "who owns what" intellectual property, and the last
thing Disney wants is for them to conflate their product with the
competition. Perhaps Disney intends to exploit only the "new" characters who
have no presence yet in Islands of Adventure. If so, we can expect a heavy
emphasis on Iron Man (a successful movie by any measurement) and the X-Men
(there is a small spinner ride themed to Storm at IOA, but Wolverine is all
the rage now anyway).
The Storm Force Accelatron.
And here is where we get to the heart of the matter. Why did Disney want
Marvel? What did Marvel have that Disney didn't have? Answer: cachet with
young males. Have a look at Marvel-themed discussion boards today and you
will find much wailing that the uncool Disney company has taken over "their"
properties. Disney is not cool with young males, while Marvel is.
Seen in this light, the purchase makes sense. Disney has been chasing
youthful demographics for decades. They've been smashingly successful with
younger girls and the one-two punch of princesses and fairies. Older girls
swoon and faint at properties like Jonas Brothers and High School Musical.
But where are the young boys in this mix?
It's not like Disney hasn't tried. Movies such as Treasure Planet tried
to reach the skateboard crowd pretty explicitly, but failed to generate much
tailwind. There's been more success with the pirates franchise, but that is
both limited and probably nearing the end of its run.
And consider the planned Magic Kingdom expansion of Fantasyland. What's
been proposed is not a pirate and princess land, but just a princess land.
The girls are being catered to. What about the boys?
The superheroes from Marvel's roster could easily fill that void, and
without the pretense of coolness. Let's face facts: Marvel movies make
money. Look no further than X-Men and Spider-Man for proof (all figures from
X-Men: $296 million worldwide
X2: $407 million
X-Men Last Stand: $459 million
Wolverine: $363 million
Spider-Man: $821 million
Spider-Man2: $783 million
Spider-Man3: $890 million
Spider-Man4: expected 2011, to be distributed by
Sony/Columbia (not Disney)
Wolverine cost about $150 million to make, implying profit of $150
million. Spider-Man3 cost $258 million to produce, with gains of $632
million world-wide. That's a lot of scratch right there already. But brace
yourself: these figures do not include the DVD sales and rental sales – this
is just the worldwide box office. No matter how you slice it, these movies
are immensely, enormously profitable. In some ways, it's a stroke of genius
to bring such movies into the Disney fold, and Iger has established himself
in the pantheon of great Disney leaders.
Any foaming at the mouth, however, is instantly tempered by other,
contrary realizations. To wit: it's hard not to think of this move as the
slow-in-coming reaction to the Harry Potter expansion soon to materialize at
Islands of Adventure. "How will Disney counter the Potter juggernaut,"
everyone has been wondering to everyone else. Well, now we have an answer.
The cynics question whether Disney lost Potter by not offering enough money
to begin with, and now have to "overpay" for Marvel to come up with an
effective counterpoint. Could be.
But it seems to me that Disney didn't pass on Potter so much for reasons
of pure cost, but of creative control. Whispers consistently have it that
J.K. Rowling insisted on such creative control that Disney could hardly say
yes. Even the Mary Poppins author, P.L. Travers, could not exercise creative
control over Walt Disney himself. So in some ways it was perhaps proper that
Disney not land the Potter contract. But that doesn't change the fact that
Disney needed an extremely loud comeback of its own.
Cynics might otherwise point to Disney's timing. Marvel could have been
purchased in the early 1990s for under $100 million, and now it's worth 40
times that? From a stock-picking perspective, it sure looks like Mickey has
bought a hot company rather than scouting out a bargain before the rest of
the crowd recognized the diamond in the rough. The worst-case scenario
posits that Disney has paid for these movies at the exact second that their
popularity has peaked.
IOA makes use of a lot of the Marvel
And what about the larger financial picture? Disney has weathered the
economic storm of 2008/2009 better than most companies. Part of their
success with Wall Street has been the narrative they've been able to weave
about their operations. Disney was able to stay profitable due to cuts in
operating expenses, keeping a razor-thin layer of profit at the expense of
some less than central operations.
Let's focus on that for a second. Disney laid off 1,900 in April 2009
(300 in Anaheim, the rest in Orlando) to persuade Wall Street that it was
taking the downturn seriously. At the same time, it saved much more money
(orders of magnitude, really) by dramatically trimming hours at the theme
parks this summer. Rather than run seven nights a week, Fantasmic only
performed twice weekly this summer. Rather than close at midnight, as had
been the case in previous years (especially early on), Hollywood Studios was
closed by 7pm. On Saturdays. In summer.
Just how is it that the same company which cuts corners so dramatically
has the money to make dramatic purchases? Part of the answer must surely be
that the mergers and acquisitions money is in a separate "bucket" than the
operating expenses. But that's just the moving around of money. If Disney
has $4 billion lying around, couldn't they spend it on the theme parks? For
that matter, couldn't they build a brand new theme park from scratch? Surely
$4 billion would buy a lot of theme park, even in today's economy.
Then again, Disney may not be able to build whatever they'd like. If IOA
is going to keep some Marvel properties around for now, Disney may be paying
for what's to come rather than what's there now.
Could that mean a new X-Men ride in the works? What about Iron Man?
In a promising development (and perhaps a sign of things to come), Pixar
exec and major voice at the Disney table John Lasseter was quickly excited
by the possibilities of some Marvel properties being developed by Pixar.
And let's not forget the letter of Iger's response to Universal. While
Disney may not capitalize immediately on Hulk and Spider-Man in Orlando,
where confusion would ensue, that doesn't mean Disney's hands are tied in
other locations, like Paris, Hong Kong, or even… Anaheim.
Ultimately, what may well happen will be something like the Disney/Lucas
properties. Eventually, it will be seen as natural (even desirable) that the
two rosters merge a bit. For that to happen, Disney and Iger will have to be
taking the long view. As someone who hammers on the Disney company
constantly for taking the short-term profit, I can hardly blame them now for
taking the long view. Disney and Marvel may not meld and merge for now, but
give it a few decades and we'll be wondering what the big deal was.