Disney & Marvel: The Deal of the Decade?

Samantha Loveday

By Samantha Loveday

September 4th 2009 at 5:16PM
Disney & Marvel: The Deal of the Decade?

We ask some industry faces for their views on the $4 billion merger.

The news of Disney's $4 billion acquisition of Marvel Entertainment last week sent reverberations through the licensing industry. But what does it really mean long-term for our business and are we likely to see similar mergers between other entertainment giants in the near future? We asked some industry executives for their initial reactions to the news.

“The deal comes as a reasonably big surprise I think, given Marvel’s recent desire to become increasingly autonomous from the big studios on the production and CP sides of their business. On the Disney side of things it is less surprising, as they appear to have been in need of a game changing acquisition for a little while, and this deal is certainly that.
As for it being a good or bad thing, it’s difficult to say and it really depends on whether you believe that consolidation that maintains the health of the parties involved is a good thing or not. In this case, with both parties relatively robust, it’s less about the survival of either, and on that basis Disney further growing its content base to feed its global businesses only makes the playing field for the rest of us all the tougher.”
Andrew Kerr, Executive Director, Consumer Products & Marketing International, Classic Media

“The Disney acquisition of Marvel came as a complete surprise – I hadn’t heard a whisper. I can’t see that it will have any major impact on the licensing industry except for the loss of jobs as they consolidate their operations. Initially it appeared to be a strange fit, but actually it makes a lot of commercial sense as it takes Disney into an area they don’t already occupy. I imagine there will be a lot of upset comic enthusiasts, however.”
Janet Woodward, Head of Licensing, Coolabi

“I wasn’t surprised when I first heard about the merger and, like many others in the licensing industry, I’m acutely aware of the impact of this deal. It makes sense as Disney filled the remaining gap in their expanding portfolio to older boys and young men, and Marvel now has even greater support in bringing to market its impressive line-up of characters. The reverberations of this merger could lead to further consolidation in the licensing industry.”
Darren Kyman, Executive Director, Paramount Licensing

“This will make Disney a dominant force across virtually all entertainment age groups from 0 to 14 and across all mediums (TV, online and film). It makes it very difficult for new and potentially highly creative properties to break through at almost every level. It will strengthen their TV channel – Disney XD – which will help build confidence in the licensing industry to support non terrestrial TV-based properties. It will also drive ongoing success and growth in children’s entertainment and licensing, which has to be a good thing.”
Andrew Carley, Head of Licensing & Merchandising, E1 Entertainment

“Today’s tough economic environment presents significant challenges to media companies like Disney on how to achieve growth. When organic growth becomes harder to achieve, the merger/acquisition route presents considerable opportunities for large firms like Disney to realise their full potential.
As one of the largest acquisitions in the industry’s history, the Disney/Marvel consolidation presents a multitude of synergies, and allows a big player like Disney to get even bigger, even more dominant, gaining even more power through the value chain. As the world’s top licensor, Disney has successfully built the licensing business machinery with which to exploit Marvel’s wealth of IP. Disney can also achieve efficiencies by bringing film production in-house, as well as leverage its strong retailer relationships for its consumer products and grab a larger share of the toy market at the same time.
Importantly, Disney’s acquisition of Marvel allows the company to get closer to its consumers, both new and existing. They can exercise more control over the consumer experience by offering products that strengthen the emotional connection they have with their deepening and broadening consumer base. In one fell swoop, they have driven revenue, enhanced their marketing and increased market share at a time when many other firms are suffering from extremely poor trading conditions.”
Ciarán Coyle, MD, The Beanstalk Group

“Maybe my superhero radar wasn’t working properly, but I didn’t see this one coming. That said, I can see at lots of levels it has great benefits for Disney, not least access to great characters. This will be useful content for their growing TV networks which need more boy content for example. I guess for Marvel it will provide new resources and creative input to achieve more from their portfolio of characters. Perhaps a number of creative projects can now be realised that were maybe proving difficult to finance or coordinate without a global media partner.
I think a challenge with a deal like this is the integration and cultural mix of the two companies. Given Disney’s heritage and characters, I think this may need to be more of a silo type deal than a full integration with Marvel still running as a standalone business day to day. I will be keen to see what creative ideas emerge. Given the success of Spider-man, X-Men and Hulk it will be interesting to see if other characters are given some of the limelight.
Big deals like this are difficult to pull off and for that reason I don’t think it will be happening every week, but I can see more mergers and acquisitions at a lower level as companies strive to create more efficiency and mass.
As an aside, I thought it was a great boost for licensing and IP to see this story reported so widely. I think it is another sign that our industry is gaining in recognition.”
Ian Downes, MD, Start Licensing

“This deal has significant implications for the industry given Marvel’s huge stable of characters. Hasbro has a lengthy agreement to make toys and games based on Marvel characters, but what happens thereafter will be interesting as Disney has a longer history with Mattel. Whatever happens, both Hasbro and Mattel are going to face tricky licensing negotiations in the future given Disney’s reputation for driving tough deals.
From a wider perspective, I think that big mergers such as this will limit licensing opportunities, as the giants of the industry can afford to flex their muscles on all platform levels, including retail, and not allow smaller competitors in.”
Kirsty Guthrie, MD, KJG

“I think this merger shows that Disney is increasingly moving away from developing its own characters and concepts, and instead using its vast knowledge and expertise to exploit the potential of already established characters. This can be seen in a positive light, in that if companies such as Disney are moving their efforts towards the end of the licensing cycle by dealing with existing properties, as a consequence they are leaving more of the business of creating and developing new concepts to smaller competitors that are more focused on this area of the industry.”
Vicki Willden-Lebrecht, MD, The Bright Group