How Marvel Went From Near-Bankruptcy to Powerhouse Game-Changer for the Entire Movie Industry

10:11 PM PST 11/02/2010 by Jay A. Fernandez, Borys Kit
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Ruthless paydays for talent, megasized box office and creative domination.

In late 2004, New Line Cinema was gearing up to make Iron Man. David Hayter, Alfred Gough and Miles Millar had turned in a script the studio liked, Nick Cassavetes was lined up to direct and a 2006 release was scheduled. Avi Arad, then Marvel Studios head and a longtime true believer in the comics company's potential, already had produced several films based on Marvel characters, including Spider-Man, Punisher, Hulk, Blade and Daredevil. As Marvel's chief creative officer -- he widely was considered its "heart and soul" -- Arad was confident he understood how to turn superheroes into movie stars. Still, he found himself in a galling creative dispute with New Line chairman and CEO Bob Shaye. Despite Arad's assurances and Iron Man's long history and fervent fan base, Shaye was convinced that no one would buy a guy flying around in a 3,000-pound metal suit. According to one studio head with knowledge of the discussions, Shaye's concerns went even deeper: "Bob didn't believe in Marvel as film producers."

Six years later, Marvel Entertainment has proved its doubters wrong. As if borrowing from the ad line of rival Warner Bros.' 1978 Superman, it did make moviegoers believe an iron man could fly. In the process, Marvel transformed itself from a comic-book publisher and toy company into a muscle-flexing independent movie studio. Starting from scratch in late 2005 with little production infrastructure, its Marvel Studios quickly made three films -- two Iron Man movies and a pumped-up The Incredible Hulk -- that grossed a combined $1.5 billion worldwide.

Following Disney's purchase of Marvel Entertainment for more than $4 billion last year, Marvel is one of the most powerful moviemakers in Hollywood. But as it readies four new summer tentpoles and adjusts to its new Burbank corporate home, it also faces added pressures. Not content just to be Marvel's passive owner and eager to be more deeply involved in the release of its movies, Disney struck a deal last month to pay Paramount, Marvel's current distributor, at least $115 million for rights to market and distribute two looming Marvel titles, The Avengers and Iron Man 3. How much more deeply Disney intends to involve itself in Marvel's affairs is an open question.

If Disney starts to meddle too much, it's likely to encounter resistance from Marvel's current executive team: Marvel Entertainment CEO Ike Perlmutter, Marvel Studios president Kevin Feige and co-president Louis D'Esposito, acting in sync like one of their own superhero teams.

Looking back at Marvel's efforts to forge its own destiny, Michael Helfant, who was Marvel Studios president and COO from 2005-07, says: "We knew these new Marvel movies had to deliver in a big way. The marketplace was going to expect them to be competitive at the level of the Spider-Mans and the X-Mens. But because we were doing this independently, and not within the studio system, we were able to be more efficient and flexible in many respects than our studio counterparts. We were very cost-conscious. We made tough deals because we had set parameters about how much we were going to spend for cast and other things. That was challenging and painful at times, but we never compromised on talent."

Feige maintains that now that Marvel has cast its lot with Disney, it can reach out to an even larger universe. "They know how to get it done in terms of brand management and in terms of getting characters out there strategically," he says.

Every superhero story is about a character discovering, denying then embracing his destiny, and Marvel's story line is no different. At a crucial juncture, a group of passionate and frustrated executives got tired of watching such studios as Fox and Sony make hundreds of millions of dollars at the box office from material licensed from Marvel. So pulling together financing and reacquiring key pieces of intellectual property, they began making their own movies. Along the way, the company also developed a financial paradigm that keeps budgets and star salaries low, but that doesn't keep actors from fighting for the chance to sit atop a surefire global hit. Marvel has come to epitomize Hollywood's current brand-trumps-everything mainstream moviemaking model.

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