disney marvel case study

Illinois Business Law Journal

Marvel and Disney: A Merger with Character

I.  Introduction

On August 31, 2009, The Walt Disney Company (“Disney”) and Marvel Entertainment, Inc. (“Marvel”) entered into a merger agreement in which Disney would acquire Marvel. [ 1 ] At this time, it is up to debate whether the acquisition is a horizontal, vertical, or conglomerate/lateral transaction. Both Disney and Marvel are involved in a very broad range of products and services, but both companies center their business models on intangibles, particularly characters. As a result, much of Disney and Marvel’s business revolves around intellectual property. Unlike the products of technological and software companies, the intellectual property rights created by Disney and Marvel are less concrete but more versatile, and decidedly harder to enforce. As such, this article will consider the nature of characters as property rights, particularly those of Disney and Marvel, as they relate to the Department of Justice (“DoJ”) and Federal Trade Commission (“FTC”) Merger Guidelines and suggest areas of consideration that will require more study for a full antitrust analysis of the merger.

II.  Background

Disney was formed in 1923 [ 2 ] and has grown to very significant size in the time since then. Disney owns many varied assets in several different industries. Several are of interest for this merger. The Disney family of companies contains a motion picture arm that owns and operates film studios, and produces films based both on Disney intellectual property as well as the worlds and characters of other creators. [ 3 ] Furthermore, Disney controls a publishing company that is involved both in traditional books as well as comic book and magazine publications. [ 4 ] Finally, Disney relies a great deal on merchandising and licensing opportunities that arise out of their intellectual properties, especially characters. [ 5 ]

Marvel was founded in 1933 and exists mainly as a character-based entertainment and licensing business. Marvel owns and then licenses its intellectual properties, existing in the form of characters, and describes itself as a character-based entertainment company. [ 6 ] Marvel further owns and operates Marvel Publishing, Inc, which acts as the publishing arm of Marvel, with a focus on comic books. [ 7 ] Furthermore, Marvel owns and operates a film production office, known as MLV Productions, Inc. [ 8 ] Marvel does not, however, create films in-house and does not own or operate any movie studios. [ 9 ]

Under the terms of the agreement of merger, Disney is acquiring Marvel so that each share of common stock in Marvel will be converted into a receivership right to either $30 in cash, or 0.7452 shares of Disney common stock. [ 10 ] Furthermore, the agreement provides that Marvel Characters licensing and publishing offices will continue to be based in their original home cities. [ 11 ]

III.  Analysis

The Merger guidelines of the DoJ and FTC make a distinction between horizontal and non-horizontal mergers. [ 12 ] Each requires different analysis, but both treat efficiencies similarly. Because the Disney-Marvel merger has characteristics of both horizontal and non-horizontal mergers, each will be addressed separately, and then the concept of efficiencies, which the guidelines treat in the exact same way [ 13 ], will be addressed last.

Many analysts have speculated on the horizontal nature of the merger. Their approach centers on the idea that Marvel and Disney intellectual properties, especially characters, compete for the attention of the same market. [ 14 ] Several of these analysts point out that Disney has repeatedly tried and failed to capture the young male market share with their characters, especially in the television and film realms, but succeeded with young women. [ 15 ] These analysts point to Marvel’s strong hold on young males and weakness towards female in the comic book realm as indication that the two companies have synergistic competition and could significantly benefit from a merger. [ 16 ]

The merger guidelines provide that the first step in analyzing a merger that is considered to be horizontal is to define the markets in question, both geographically and in terms of product. [ 17 ] Disney and Marvel both operate as national corporations and make their products available across the United States, so the geographic market is clearly national. However, it is more problematic to try and identify the exact product market.

For two goods to be in the same market, they must be at least general substitutes. [ 18 ] If the price of Disney properties were to go up, or if they were to become unavailable, their customers would have to substitute with Marvel properties for the two to be competitors. It is questionable what portion of either customer base would substitute from one to the other. The nature of the products alone raise questions as to whether the two companies operate in a single market. Marvel has generally produced character properties in the realm of superhero, detective, and horror story characters. Disney, on the other hand, has a vast realm of fairies, princesses, dashing princes, and anthropomorphic critters. Furthermore, Marvel’s properties typically skew towards older customers whereas Disney properties typically skew towards the younger, family-appropriate crowds.

More specifically, the merger guidelines call for the identification of markets using the small-but-significant price increase method. [ 19 ] This method calls for the assumption of a monopolist, and then considering the effect of a price increase by said monopolist with all other prices held constant. [ 20 ] If Disney is considered a monopolist, and it increases the price of its character properties by five percent, would consumers shift towards Marvel?

The Guidelines' method seems to fail at this juncture. What is the price of an intellectual property as versatile as a character? There is no simple answer. Characters and the worlds that have been built around them can be sold for use in movies, television programs, books, advertisements, etc. There are few, if any, real limits to their use. Furthermore, Disney and Marvel generally create their own products based on their characters. Perhaps the price of a character property should be one that the end consumer pays. A new issue arises with this approach in that we must determine what media to consider. We must further question whether the traditionally movie-based characters of Disney can be compared alongside the generally comic book-based characters of Marvel fairly in any single media, and whether it is wise to compare across medias.

Existing data regarding the competition between Disney and Marvel at the intellectual property level is scarce and would serve no purpose in this instance. Historically, Marvel properties have been focused in a comic book format whereas Disney properties have been focused on animated and film media. As a result, it is hard to examine whether the properties can compete each other when their current preferred formats do not. It may well be impossible to ascertain whether Mickey Mouse and Wolverine are competing properties at this time. It will be critical for the regulators, however, to approximate date in this field so as to get a clearer picture of this character market. Doing so will be critical in determining whether concerns in this market should affect the agencies' stance on the overarching merger.

Non-Horizontal

Disney does not solely create and own intellectual properties. They also publish books and comic books, produce movies and television shows, and create amusement parks, all of which use the properties as a base for the product. [ 21 ] As a result, Disney is a significant consumer of intellectual properties as well a producer thereof. Marvel, on the other hand, publishes comic books, but does not own movie or television studios and does not operate any theme parks. As a result, Marvel could be considered to be a supplier for Disney if Disney were to use Marvel properties in creating such products as movies and television shows. Disney perhaps acquired Marvel for its intellectual properties as an act of vertical integration, to save itself the costs of acquiring such properties for use in their other ventures.

This approach has been suggested by several analysts. [ 22 ] However, some are quick to point out that, on the vertical level, this merger would be a less than favorable deal for Disney. [ 23 ] Marvel properties are already embroiled in license agreements that are set to last for several more years and, as a result, the merger may only work to Disney’s favor in a longer time horizon. [ 24 ] As a result, the non-horizontal effects of the merger on the markets is hard to fully quantify as there are both present and future effects.

The non-horizontal merger guidelines call for an examination of effects of the merger on barriers to entry. [ 25 ] They further call for an analysis centering on whether Disney owning both Marvel and its own character-property producing facilities raises the barriers to entry in Disney's primary market. [ 26 ] However, the issue is further confused by the difficulty in ascertaining, as mentioned above, whether Disney and Marvel characters, and therefore any products based on such characters, are in the same market.

Finally, the greatest question that arises is whether there could ever be barriers of entry in an industry that requires only imagination to create a product. Characters can be created by anyone, at any time, simply by imagining the character, and then publishing its characteristics to the world in some way. This raises a question as to whether barriers to entry can exist at all. No matter how big Disney and Marvel get, they cannot physically stop individuals from imagining characters and cannot stop individuals from consuming those characters in some way, whether it be through formalized media like television, or through an informal media, such as stories posted on a blog on the internet. As such, it seems that the non-horizontal merger guidelines are either not equipped to consider a merger where one of the primary products is non-technical intellectual property, or not interested in regulating a merger in such an industry.

Efficiencies

The legal world surrounding intellectual properties such as those produced by Disney and Marvel is complicated and murky. Multiple legal debates have arisen, and much of legal framework seems inefficient. Characters have long been established as copyrightable separate of their originating work. [ 27 ] A test was first created in Nichols v. Universal Picture Corp . for the copyright protection of characters, but it is considered unclear and generally inconclusive. [ 28 ] In Nichols , the court explained that “ the less developed the characters, the less they can be copyrighted” and further stated that identifying characteristics were critical for the copyrighting of characters, but did not elaborate a strict test. [ 29 ]

The tests that have since emerged continue to leave much to the imagination of lawyers and judges. Names cannot be copyrighted, but characters cannot be copyrighted without a name. [ 30 ] Stock characters, characters who are generic and generally only identifiable by their general purpose, such as two lovers who are “loving and fertile [and] that is really all that can be said of them”, are not copyrightable, as Judge Learned Hand recognized in Nichols [ 31 ], but at what point does a character exit the stock and become delineated? According to author Gregory Schienke, the answer remains unclear and requires further clarification to this day. [ 32 ]

This background creates a complicated legal landscape in which character-based entertainment companies such as Marvel or Disney must operate. This is further complicated by the ways in which characters can be infringed, and the decisions that must be made as to which infringements must be stopped and which should be allowed as fostering fan dedication and appreciation (the “fandom” as some refer to it). [ 33 ]

Disney derives a great deal of its market share and market power from copyright and its ability to control its intellectual properties. [ 34 ] However, the intangible nature of copyright infringement as well as the relatively loose and vague judicial guidelines discussed above mean that Disney may be accruing a great deal of costs in enforcing its rights with regards to these properties. The emergence of a significant international intellectual property issue further complicates this problem and acerbates the costs involved. [ 35 ]

Marvel has had a myriad of intellectual property issues of its own. The Superhero genre that Marvel operates in has been particularly prone to infringement from varied sources. [ 36 ] Only recently, a significant case arose from the video game industry, Marvel v. NCSoft, which considered whether the operator of an online game had a duty to prevent users from replicating Marvel characters and whether the game operators and designers had made it too easy to replicate such characters. [ 37 ] The case, though ultimately settled, relied heavily on the question of what constitutes the character and whether appearance or name was enough to be infringement. [ 38 ] The legal problem arises out of the difficulty of defining exactly what a character and what he or she represents. [ 39 ] Author Michael Price, in an article titled When Phone Booths are Inadequate Protection: Copyright and Trademark Infringement of Superheroes, points to the importance of flexibility in copyright protections in acknowledgment that a character is more than a name and appearance. [ 40 ] As a result, litigation arising out of these concepts is evidence-intensive and likely expensive to pursue.

A merger by Disney and Marvel may well operate to combine the legal aspects of the character-based business and afford the two companies a greater economy of scales in policing and enforcing their intellectual property rights. As a result, it would be critical for antitrust authorities to consider the exact ramifications of such efficiencies when considering the merger. Efficiency is typically recognized as a significant positive in a merger and may serve to convince antitrust authorities that a merger may be positive for the economic landscape. [ 41 ]

IV.   Recommendation

When two companies merge, antitrust authorities must regulate the merger and determine, based on the economic data before them, whether it will result in too great a reduction in competition. In this case, however, the two companies have a significant level of involvement in creating intangible products: characters. The only thing that can be clearly ascertained are the efficiencies gained by a merger of two such character-producing entities. As such, it becomes critical for the regulatory agencies to closely consider the exact ramifications of the merger, as the negative effects on competition are hard to quantify, and the positive effects are much clearer. However, it appears most likely that the approach delineated in the merger guidelines will not be sufficient to fully appraise this merger. This is a likely sign that the guidelines are not yet flexible enough to approach every type of industry and may require further revision.

V.   Conclusion

The nature of intellectual property does not meld well with that of merger regulation. One requires a flexible approach that allows for close consideration of the facts in each case; the other approaches the world with an inflexible viewpoint that requires hard facts. Any time the two meet, difficulties arise. However, the specific realm of intellectual property focusing on multimedia, creative properties leads to even greater difficulties in analysis. Unlike technological intellectual property such as software, or technical plans, or other such products, characters have nearly limitless use. Furthermore, the markets are hard to define, because these characters can base themselves in a number of media that do not directly compete for the same end consumer. Characters further cannot be clearly defined, and the boundaries between copyrighted character and similar but legally-acceptable character are extremely blurry. These characteristics lead to an awkward fit between such a merger and the “ideal” merger implied by the merger guidelines. As a result, these transactions will undoubtedly be hard to regulate, and may well push for a revision of the guidelines to a more flexible approach.

[1] Marvel Entertainment, Inc., General statement of acquisition of beneficial ownership (Schedule 13D/A) (Sept 10, 2009)

[2] The Walt Disney Company, The Walt Disney Company and Affiliated Companies – Company Overview, http://corporate.disney.go.com/corporate/overview.html (Last visited Sept. 20, 2009)

[3] The Walt Disney Company, 2008 Annual Report (2009), available at http://amedia.disney.go.com/ investorrelations/annual_reports/WDC-AR-2008.pdf.

[4] See Id. at 29.

[5] See Id. at 28, 63.

[6] Marvel Entertainment, Inc., Annual Report for the Year Ended December 31, 2008. (2009), available at http://marvel.com/company/pdfs/2008_annual_report.pdf.

[7] Id. at 7.

[8] Id. at 9.

[10] Marvel Entertainment, Inc., General Statement of Acquisition of Beneficial Ownership (Schedule 13D/A) (Sept 10, 2009)

[11] Marvel Entertainment, Inc., Policies for the Management of the Marvel Business (Form 425, EX-99.1) (Sept 4, 2009)

[12 ] U.S. Dep't of Justice, U.S. Dep't of Justice Merger Guidelines (1984) available at http://www.usdoj.gov/atr/public/guidelines/2614.htm . [hereinafter 1984 Merger Guidelines ]

[14] Brooks Barnes & Michael Cieply, Disney Swoops into Action, Buying Marvel for $4 Billion , N.Y. Times , Aug. 31, 2009, available at http://www.nytimes.com/2009/09/01/business/media/01disney.html; Sarah Jaffe, Can Marvel-Disney Help Close the Comic Book Gender Gap? , http://www.newsarama.com/comics/090902-Disney-Marvel-Girls.html (Sept. 2, 2009) (Last visited Sept. 14, 2009).

[15] Barnes & Cieply, s upra note 14 .

[16] Jaffe, supra note 14.

[17] U.S. Dep't of Justice & Fed. Trade Comm'n, U.S. Department of Justice and the Federal Trade Commission Horizontal Merger Guidelines §1.1 (1992, revised 1997) available at http://www.usdoj.gov/atr/public/guidelines/ horiz_book/hmg1.html [hereinafter 1997 Merger Guidelines ].

[18] Michael E. Porter, The Five Competitive Forces that Shape Strategy , HBR 79 (January 2008).

[19] 1997 Merger Guidelines , supra note 17, at §1.11.

[21] See The Walt Disney Company, 2008 Annual Report, s upra note 3 .

[22] See Steven Zeitchik, Analysis: Disney-Marvel Deal Brings Changes, Adweek , Sept 1, 2009, available at http://www.adweek.com/aw/content_display/news/media/

e3i76e7bfe15f67e9f1832a6af63f7c353c; Alex Dobuzinskis, ANALYSIS – Disney-Marvel benefits come with time lag, risks, Reuters, http://in.reuters.com/article/businessNews/idINIndia-42170020090902 (Last visited Sept 14, 2009).

[23] Dobuzinskis, s upra note 22 .

[25] 1984 Merger Guidelines , s upra note 12, §4.2

[27] Nichols v Universal Pictures Corp . , 45 F.2d 119 (2d Cir. 1930).

[28] Gregory S. Schienke, The Spawn of Learned Hand – A Reexamination of Copyright Protection and Fictional Characters: How Distinctly Delineated Must the Story be Told? , 9 Marq. Intell. Prop. L. Rev. 63, 70 (2005).

[29] Nichols, 45 F.2d at 121

[30] Schienke, s upra note 28, at 81.

[31] Nichols, 45 F.2d at 121-22 (1930).

[32] Schienke, supra note 28, at 83.

[33] Britton Payne, Super-Grokster: Untangling Secondary Liability, Comic Book Heroes, and the DMCA, and a Filtering Solution for Infringing Digital Creations , 16 Fordham Intell. Prop. Media & Ent. L.J. 939, 955 (2006).

[34] Michael J. Meurer, Copyright Law and Price Discrimination , 23 Cardozo L. Rev. 55, 83 (2001).

[35] See Marshall A. Leaffer, P rotecting United States Intellectual Property Abroad: Toward a New Multilateralism , 76 Iowa L. Rev. 273 (1991).

[36] Michael T. Price, When Phone Booths are Inadequate Protection: Copyright and Trademark Infringement of Superheroe s, 43 Wayne L. Rev . 321, 321-22(1996).

[37] See Payne, supra note 33, at 958.

[39] Price, supra note 36, at 323.

[41] See Alan A. Fisher & Robert H. Lande, Efficiency Considerations in Merger Enforcement , 71 Calif. L. Rev . 1582, 1582 (1983); 1984 Merger Guidelines , supra note 12 , at § 4.24; 1997 Merger Guidelines , supra note 17, at §4 .

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The Disney and Marvel merger

In 2009, Disney successfully acquire Marvel through a 4.2 billion dollars acquisition agreement, there are many reasons why this acquisition happened in the first place. But clearly both Disney and Marvel believe that combining the strengths of the two companies is in the best interests of each company and their stockholders. The detail of the merger process and also other analysis on this acquisition are as follow:

• This Video is a CNBC News report section that specifically talks about this merger case. This News report is unbiased and focus primarily on introducing the case and lay out some detailed analysis of the case.
• Since this Disney Marvel merger case happened in the year 2009, therefore this News report was published at this time.
• The detailed file that covers almost everything about this merger case, and was sent by Disney to Marvel’s stockholders. One can fully trust the credibility of this SEC file.
• This was also published in year 2009, and its purpose is to give Marvel stockholders all the information they need to know about this acquisition before the final voting.
• A 2015 news article that published on Fortune’s website talks about the 2009 Disney Marvel merger. Fortune is a reliable resource for business news and analysis. This article center on the “benefits” that Disney gained from this acquisition, the data introduced in this article provided a better understanding on the Disney’s gain.
• A full journal article that analysed the reason and effect of this merger case. Published on the  Illinois Business Law Journal , in September 2009.
• A case study of the Disney Marvel merger. Published in December 2009, around the time this $4.2 acquisition came to an agreement. This article was a very helpful guide for those who want to know why this acquisition happened and the whole process of the merger. And this article was also being cited by my Tax Accounting course’s professor.

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Harvard Business Review

How Marvel Went from Bankruptcy to $4B Buyout

When the world leader in comic books, a dying medium, entered bankruptcy in 1996, only a few visionary loyalists saw a viable future—let alone a path to retain leadership and high profitability.

By Chris Zook

• September 02, 2009

The $4 billion offer by the Disney Company to purchase Marvel Entertainment, Inc. is the apotheosis of an escape from disaster to rival even the most hair-raising Spiderman adventures. When the world leader in comic books, a dying medium, entered bankruptcy in 1996, only a few visionary loyalists saw a viable future—let alone a path to retain leadership and high profitability.

Yet, as described several years ago in my book Unstoppable (HBP, 2007), this reincarnation is not so unique, but follows the four-part pattern that we discovered at Bain & Company in a twenty-year analysis of successful transformations.

The four parts:

• The imperative of a strong, differentiated core: The renewal of Marvel was based not on leaping to new hot markets, or dramatic new technologies, but the reapplication of the strongest assets in the company's historic core—its loyal customer base, its stable of 5,000 characters, its library of 30,000 market-tested stories and its brand. These were the elements that made Marvel a dominant force at its best, and these are the elements that rejuvenated it.
• The value of following the profit pool: Profitability in the entertainment world has shifted dramatically from channels (e.g., stations, magazines) to proprietary content and from analog to digital. Marvel's strategy follows the profit pool.
• The power of a repeatable formula in the core: The most successful strategic transformations are not those that find a large singular opportunity, but those that find a repeatable formula to take the strongest elements in its core and reapply them to new situations over and over. This is quintessentially true in the case of Marvel's stream of movies, games, self-production initiatives and even treatment of individual characters (e.g., Spiderman I, II, III....). The great and lasting renewals like the Apple music strategy or the rejuvenation of P&G reveal this lesson too.
• The latent potential of hidden assets: We found that 90% of strategic comebacks were fueled, in part, by assets in the original core business when it was at its best that were adapted to a new environment and took on new value that had not been previously recognized. This was true of IBM's service business that led its turnaround, or Harman Kardon's automotive business that fueled its renewal, and even of Apple's software interface differentiation and young and loyal customer base.

So often, we found, companies held the right cards, but did not always see how to play that hand, or were organizationally constrained from acting on it until often too late. As surprising as it sounds, the ultimate lesson from Marvel, and others like it, is that the most important thing of all is self-awareness of the core. Yet sometimes that is also the most difficult insight of all—even though it can be right in front of us.

Chris Zook is co-head of the Global Strategy practice at Bain & Company. He is on The Times list of top 50 global business thinkers based on his work and books on how companies find their next wave of profitable growth. Chris currently lives in Amsterdam, The Netherlands.

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Disney’s Marvel Acquisition: A Strategic Financial Analysis

Strategy & Leadership, Vol. 38, No. 2, pp. 42-51, 2010

Posted: 4 Mar 2010

Joseph Calandro, Jr.

Fordham University - Gabelli Center for Global Security Analysis

Date Written: March 3, 2010

Purpose: Assess the value and risks of Disney’s 2009 $4 billion acquisition of the Marvel Entertainment Group (Marvel) in a case study utilizing the modern Graham and Dodd valuation approach. Design/methodology/approach: Presents a detailed valuation of Marvel in 2009 drawing on previously published Graham and Dodd methodological materials and Marvel’s publicly available financial reports. Findings: Disney’s $4 billion acquisition price for Marvel contained considerable risks based on certain valuation assumptions, which were identified in the context of our analysis. Practical and research implications: This acquisition is a useful one for executives to study because it involves a situation many of them could face: evaluating the purchase of a great company that is seemingly a strategic fit and offered at what appears to be a reasonable price. Assessing such opportunities utilizing the modern Graham and Dodd valuation approach facilitates greater levels of insight into key assumptions, value drivers, and risks. This is a methodology that has proved useful to successful value investors over time. Originality and value: Lessons executives in many industries can learn from a Graham and Dodd-based valuation of the 2009 Disney acquisition of Marvel include: better risk assessment, valuation of entertainment property assets and franchise assessment.

Keywords: M&A, Valuation, Investment

JEL Classification: G34, L2

Suggested Citation: Suggested Citation

Joseph Calandro, Jr. (Contact Author)

Fordham university - gabelli center for global security analysis ( email ).

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HOME PAGE: http://www.linkedin.com/in/josephcalandro/

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Please note you do not have access to teaching notes, m&a deal-making: disney, marvel and the value of “hidden assets”.

Strategy & Leadership

ISSN : 1087-8572

Article publication date: 2 April 2019

Issue publication date: 17 June 2019

This paper discusses the concept of hidden assets in the context of Disney’s 2009 acquisition of the Marvel Entertainment Group (Marvel), and its value realization activities post-acquisition.

Design/methodology/approach

The paper presents a hidden assets-based value realization analysis of the 2009 acquisition of Marvel by Disney. It draws on a previously published case study of that acquisition as well as further research conducted by the author.

The Disney-Marvel acquisition supports the view that hidden assets-based analysis can be a powerful M&A tool and an equally powerful value realization tool when managed strategically over time.

Practical implications

The Disney acquisition of Marvel is a dramatic example of how knowledge of hidden assets can be used to do a deal in a competitive marketplace and how the disciplined management of those assets over time can realize a “blue ocean” of value post-acquisition.

Originality/value

This is the first paper we are aware that evaluates the hidden assets of the Disney-Marvel acquisition. It follows another paper that evaluated the acquisition (Joseph Calandro, Jr., “Disney’s Marvel Acquisition: A Strategic Financial Analysis,” Strategy & Leadership, Vol. 38, No. 2 (2010), pp. 42-51), which followed a paper that evaluated Marvel’s 1996 bankruptcy filing (Joseph Calandro, Jr., “Distressed M&A and Corporate Strategy: Lessons from Marvel Entertainment Group’s Bankruptcy,” Strategy & Leadership, Vol. 37, No. 4 (2009), pp. 23-32).

• Disney Aquisitions
• Hidden assets
• Information advantage
• Value realization
• M%26A asset analysis

Calandro Jr., J. (2019), "M&A deal-making: Disney, Marvel and the value of “hidden assets”", Strategy & Leadership , Vol. 47 No. 3, pp. 34-39. https://doi.org/10.1108/SL-02-2019-0023

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Marvel’s Blockbuster Machine

How the studio balances continuity and renewal by Spencer Harrison , Arne Carlsen and Miha Škerlavaj

Summary .   

Marvel Studios has redefined the franchise movie, in part by finding the right balance between creating innovative films and retaining enough continuity to make them all recognizably part of a coherent family.

The authors analyzed 338 interviews with producers, directors, and writers and 140 reviews from leading critics. They digitally analyzed each movie’s script and visual style and examined its network of actors and behind-the scenes workers. They argue that Marvel’s success rests on four principles: (1) selecting for experienced inexperience, (2) leveraging a stable core, (3) continually challenging the formula, and (4) cultivating customers’ curiosity.

In just a decade Marvel Studios has redefined the franchise movie. Its 22 films have grossed some $17 billion—more than any other movie franchise in history. At the same time, they average an impressive 84% approval rating on Rotten Tomatoes (the average for the 15 top-grossing franchises is 68%) and receive an average of 64 nominations and awards per movie. Avengers: Endgame, released in the spring, has won rave reviews and generated so much demand that online movie ticket retailers had to overhaul their systems to manage the number of requests.

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The Walt Disney Studios

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Disney and Marvel

There was a remarkable period of intense negotiations for about two weeks. Despite the hot negotiations from both parties, some terms remained outstanding (Graser, 2009). For instance, Disney maintained that a “force the vote” provision that was contained in the merger agreement be retained. In addition, he insisted on being no deal of protection measures especially that was contained in its first draft. The first draft defined the voting agreement by Perlmutter. Marvel’s had developed a special transactions committee that was assigned the role of ensuring that its financial and legal advisor were well informed on various issues relating to the terms of agreement. On the contrary, Marvel considered Disney’s concept of “force the vote” as an improper form of restriction by Disney to Marvel (Patton, 1991). This forced the Marvel’s board to reconsider the terms of the agreement before they entered into any transactions.

They put into consideration bids by other potential buyers before they consummated the Disney’s deal. On the other hand, Marvel was willing to agree to break up the fee equal to about 2.9 % of the overall value of transaction. This was in return for the concession by their partner among any other deal that was considering the protection measures. The following were the terms of the agreement that Disney made with Marvel during the negotiations; firstly, to remove the force of what was referred to as “force the vote” (Fisher & Shapiro, 2006).

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Secondly, Marvel was to allow Marvel to end the terms of the merger in favor of the established superior proposal. This was only possible if the board that was involved in the negotiations decided to drop the bid. Another agreement was to reduce the process of break up fee. This was to be reduced from 4% to 3.5 % of the total transaction value (Lewicki, et al, 2009). Disney also agreed to allow the Marvel’s board to alter its recommendations of the overall transaction process.

This was in case Marvel claimed it had a fiduciary duty to change the recommendations. The last agreement was to eliminate the 18 month voting agreement. This implied that in case the merge agreemet will be terminated, the voting agreement will also be terminated. During the negotiations, marvels board of directors held a meeting. Disney’s proposal was revised by its legal and financial advisors.

During the meeting, Marvel’s legal advisor advised the company to protect measures concerning its fiduciary duties among other rights in the process of transaction. In case the company received a possible superior proposal mainly from a third party such as Delaware General Corporation, it would be allowed to drop the initial agreement by Disney.In the course of the meeting, Disney analyzed the procedure that consisted of various alternative bids that might develop under the merger agreement. The conditions under which the company would terminate the merger were also discussed. Moreover the condition under which the company would break up the payable amount to Disney was some of the important issues raised by the lawyers.

On the same, Marvel attorney’s Disney would also develop protection measures to bid the merger agreement (Lewicki, et al, 2009). They should provide Marvel’s directors with the most flexible way of entertaining the bona fide with the various alternative proposals. Their fiduciary duties should be honored by Disney. Most importantly, they were not to coerce Marvel and their stakeholders. After the meeting, Disney and Marvel entered into agreement by signing the merger agreement (Patton, 1991). Therefore, they entered into the voting agreement with Disney.

After the completion of the deal, Disney would acquire the ownership of Marvel as well as its characters. Criticism can be seen in the discussions between Disney and Marvel. This entails the background of the merger. Disney stresses on the measures of protection without first considering the direction of the negotiations. Disney established his own “superior” proposal describing the terms of agreement that Marvel had to abide with. This made Marvel develop a negative perception that they were restricted from expressing their autonomy.

Moreover, the negotiations that emphasized the terms of purchase, the price, the proportion of cash, as well as the stock, posses a major critic. This is because the state holders did not consider most of their subplots in the agreement and in taking the main action. Their back and forth negotiations show a negative picture. They resembled a theater that made the process more complicated because of their conflicting issues. Some critics thought that the marriage between the two companies would not last for long (Lewicki, J.

et al, 2009). Marvel’s board fiduciary duties were placed under the Delaware law. This was meant to minimize the purchase price of the company. However, it is obvious that the deal does not legally prescribe any steps that the director was obliged to follow in order to satisfy their Revlon duties. Thus, this was not a shrewd step by Marvel’s board (Patton, 1991).

However, Delaware has played a big role in outlining the major duties of the director to the shareholders to ensure that the sale of the company is done in the most effective manner.On the other hand, Disney’s S-4 was entangled with questions about the main purpose of including some of the terms in the overall deal. They argued that some of the terms were not useful in making the final decisions. For example, the term that stressed on bargaining chips in the process of making the initial offer by any potential buyer apart from Disney was useless. In deed, elimination of these terms as protection measure, does not add value to the transaction of the company.

On the same, some of the protective measures that each party held on did not concede any values to the transaction of Marvel (Lewicki, J. et al, 2009). It made the negotiation length and complicated. Much of the discussions between the two companies do not describe what a superior proposal entails. As earlier stated, Disney allowed Marvel to enter another agreement with any other buyer in case he offered a more superior bid. However, it does not specifically constitute other terms in the superior proposal.

Therefore, much of the discussions in the merger agreement signify very little in the overall process of negotiation. Some critics argue that Marvel was not worth $ 4 billion due to some of the issues surrounding the merger such as copyright.

Related posts:

• Disney Marvel Negotiation
• Case Study of the Walt Disney Company
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• Marvel Case
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• Walt disney

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Case Analysis: Disney’s Acquisition of Marvel

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Walt Disney’s acquisition of Marvel is a smart move to not only maintain Disney’s success in the entertainment industry, but to further its’ competitive advantage, success, and profitability. In relation to corporate strategy, Walt Disney should consider vertically integrating themselves into more partnerships to keep up with competitors, such as, Time Warner (DC Comics, Warner Brothers). In terms of business strategy, Disney should aim to be the competitor with dual advantage to combine both low-cost and differentiation strategies. This highlights marketing to be a functional strategy that Walt Disney should be highly focused on as they will need to continue advertising their products, additions to their parks, resorts, and more.

Overall, Walt Disney should consider all strategies mentioned above, however should also consider focusing on product development and market development by taking into consideration what Marvel adds to their competitive advantage over Time Warner.

Similar to Disney, Marvel has been successful at creating well-known and memorable characters from Iron Man to Thor to Black Panther to Daredevil and others. Not only are Marvel’s characters well-known, they also succeed in selling merchandise in relation to the films by diversifying into consumer products, apparel, collectibles, footwear and more. By combining Marvel’s already created success with that of Disney’s this should realistically increase profits for Walt Disney because of the gain in assets. However, competition does remain as companies such as Time Warner (DC Comics) also generate success through well-known characters The Flash, Green Arrow, Batman, Superman, and more. So how does Walt Disney gain the competitive advantage?

On a corporate level, Walt Disney should consider creating partnerships with other creative companies to improve their new product development. By partnering with other firms and creatives, they will have the potential and insight from new minds and imaginations to create more unique characters to compete with Time Warner’s DC and Warner Bros. The creation of more films and characters will aid in the continuation of Walt Disney’s brand and success of well-known characters to create profit through additional theme park rides, apparel, consumer products, footwear, and more.

Prior to the acquisition of Marvel, Walt Disney appeared to have been using a differentiation business strategy to keep up with competitors. The acquisition of Marvel creates an interesting take on their business strategy and what they should do moving forward. Walt Disney should not only focus on high costing products, but also those low-costing such as their consumer products sold at Walmart. The goal is to be the competitor with dual advantage to take advantage of low cost products, but also those higher costing such as the products in their retail stores. With the acquisition of Marvel, Disney not only holds onto their products as an asset, but now also those of Marvel. Disney has a competitive advantage over Time Warner in the sense that they cater to almost every population around the world in their films, products, and parks with a strong emphasis on family through their films from Moana to Coco to Princess and the Frog.

Functionally, Disney should continue to spend a significant amount of their budget on marketing to maintain the advertising of their films, parks, apps, tv shows and more. By having high market penetration, Disney can grow the sales of their existing products, attract customers, and showcase new products. By acquiring Marvel, Disney should also focus on their market development by growing their business into new market segments. For example, by acquiring Marvel (who owns comic books), in which Disney did not have, they are now able to establish operations in new markets to compete with Time Warner who does have comics under DC Entertainment.

Overall, by acquiring Marvel, Disney is now able to compete with Time Warner in other operational and market segments than they were able to before, for example comic publishing and licensing. Disney can also begin to incorporate Marvel characters (those not under another company’s licensing) into their theme parks, or even open a new park dedicated to their characters. They can also continue to fight for the rights of those characters Marvel is unable to produce to add even more assets. Disney may even consider creating a Marvel network, in which their functional strategy being focused on marketing could create new branding around. As Disney often uses diversification to support their business growth, the acquisition of Marvel seems to have been a smart choice for their growth. Disney is growing their presence not only domestically and internationally, but they are also seducing a new audience than before. This should gain them the competitive advantage of Time Warner, not only in profit, but also in diversification.

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Marvel Gets Scary Like You’ve Never Seen in a New ‘Agatha All Along’ Teaser

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Now less than one week from the premiere, Marvel's next Disney+ series just got its scariest look yet. The official Marvel Studios X account has unveiled a new teaser for Agatha All Along , which features jump scares, body horror contortions, and undead ghouls all in less than thirty seconds. It's well known at this point that Agatha All Along will tap into horror elements like no other project has before, and this teaser is prime proof of that.

Marvel Studios also recently released new posters for the upcoming Disney+ show, each inspired by iconic horror classics such as The Rocky Horror Picture Show , Mind Over Murder , True Detective , and Evil Dead . This also comes less than 24 hours after another teaser for Agatha All Along highlighting Aubrey Plaza 's Rio Vidal was released, where she declares she is not just a green witch, but the green witch.

There are two major questions heading into Agatha All Along: is Joe Locke 's mystery teen actually Wanda's ( Elizabeth Olsen ) son Billy, aka Wiccan? And is Scarlet Witch going to appear in the series? Marvel has not officially confirmed either of these rumors, nor have Locke or Olsen, but some hints could allude to them being true.

Marvel is going to extreme lengths to hide the true identity of Locke's character , who has only been referred to as "Teen" in all previous marketing material, which would not be the case if he wasn't someone important. A recent report also indicated that Agatha All Along would be the second chapter in a three-part story about Wanda and Vision ( Paul Bettany ), the first being WandaVision and the third being Vision Quest , meaning it makes sense for Wanda to appear in Agatha All Along in some capacity.

What’s Next for Marvel After ‘Agatha All Along’?

There are no other Marvel projects confirmed to premiere this year, but the 2025 schedule is jam-packed. First on the slate is Captain America: Brave New World in February, followed by Daredevil: Born Again in March. Both Thunderbolts* and The Fantastic Four: First Steps are also coming in May and July, with Blade still set for a November release, although likely to be moved considering the ongoing production issues that have caused it to be delayed several times.

The first two episodes of Agatha All Along premiere on Disney+ on September 28. Check out the terrifying new teaser above and stay tuned to Collider for future updates and coverage of the series.

Agatha All Along

Agatha Harkness, following the events of "WandaVision," embarks on a quest to reclaim her lost powers. Teaming up with unlikely allies, including the son of her former enemy, she faces new mystical threats while navigating a complex world of magic and intrigue.

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