'Iron Man' Gave Marvel a Super Earnings Boost

Film Revenue Up, but Core Licensing, Publishing Units Take a Fall

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NEW YORK (AdAge.com) -- The $318.3 million box office success of "Iron Man" didn't just give a boost to marketers such as Burger King, Audi, LG and 7-Eleven. Marvel Entertainment, whose new Marvel Studios launched this year with the May release of "Iron Man," posted a 39% year-over-year boost in its third-quarter 2008 earnings today based on the runaway success of the new franchise.
'Iron Man'
'Iron Man' Credit: Marvel

Marvel reported net sales of $182.5 million and a net income of $50.6 million for the quarter, compared to net sales of $123.6 million and net income of $36.3 million during the same period in 2007. Film revenue brought in $60 million based on "Iron Man" and this June's "The Incredible Hulk."

Core businesses down
Marvel's two core businesses, however, did not fare as well. Licensing, which includes a joint licensing venture for the "Spider-Man" movies, declined $58.1 million in net sales compared with $82.2 million in the third quarter of 2007. Publishing also took a stumble, with net sales declining 3% to $34 million. Operating income dropped 37%, largely due to Marvel's investments in digital media initiatives, as well as higher costs for talent and paper, and lower revenue from custom publishing.

Marvel Chairman Morton Handel said in a statement, "In addition to achieving continued strength in our operating results during the third quarter, we made fundamental changes in our film facility and our film-distribution agreement, which enable us to improve the distribution terms of our coming Marvel film slate releases. The enhancements to our film slate structure reflect our long-term confidence in our self-produced feature films, while also maintaining discipline in limiting financial risk."

What's to come
Up next for Marvel's film division is the May 7, 2010, release date it's already reserved for "Iron Man 2," which has yet to start production. The sequel will be followed by "Thor," slated for July 16, 2010, and two Avenger movies, "The First Avenger: Captain America," on May 6, 2011, and "The Avengers," scheduled for July 15, 2011. On the licensing side, the company is partnering with Lionsgate for the Dec. 5 release of "Punisher: War Zone," as well as Fox's "X-Men Origins: Wolverine," due May 1, 2009. Marvel Animation also has seven animated series in development, including "Black Panther," an eight-episode, 30-minute series for BET slated for a second-quarter 2009 premiere.

But just like any media company in the current economic climate, Marvel is already dialing back its predictions for 2009, projecting losses in the 10% to 15% range. However, "Iron Man" continues to be the gift that keeps on giving. The earlier-than-expected revenue from "Iron Man" box office and DVD sales has helped the company offset some of its expected 2009 revenue.

Said Mr. Handel: "The 2009 decline reflects an expected substantial reduction in 'Spider-Man' [licensing] revenue, the absence of any new Marvel Studios feature film releases during the year and a related decrease in licensing activity, as well as the expectation that the economic environment may affect the performance of retailers and licensees."
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