Looking to reap a windfall from Hollywood’s growing interest in its comic book characters, Marvel Entertainment announced Wednesday that toy creator Avi Arad will oversee development of all animated and live-action television and film projects.The move accelerates the number of activities Marvel already has going on in Hollywood. Moreover, the naming of a toy industry heavyweight is clear evidence that the company intends to wring more revenues from its characters through lucrative merchandising opportunities. That exposure will be widening when a slew of Marvel characters start coming to life from the printed page. An animated “X-Men” series, produced by Saban Entertainment and airing on the Fox Children’s Network, is currently one of the top-rated Saturday morning shows. Fox is also committed to an animated “Spider-Man” series for next fall with plans to eventually turn it into a five day-a-week afternoon strip. The animated web-slinger is getting a real workout: James Cameron is signed on to write, produce and direct a feature length live-action theatrical Spiderman for Carolco Pictures. Other Marvel characters are expected to pop up on the big screen. Columbia Pictures is developing “The Black Panther” to star Wesley Snipes, while horror-meister Wes Craven is inked to write and direct “Dr. Strange” for Savoy Pictures. Despite the increased popularity of its characters, Marvel has no desire to dive into production; all Marvel media projects will be funded on a project-by-project basis by sister company New World Entertainment (a wholly owned subsidiary of Ronald Perelman’s MacAndrews & Forbes which holds a 60% stake in Marvel) or outside sources. The carrot for Marvel is the fat margins from merchandise rather than royalties from licensing. Marvel has long said it would rather license its characters and then capitalize on the merchandising opportunities those projects generate. Industry sources note that toys and merchandise will translate much more quickly and forcefully to Marvel’s bottom-line than the royalty streams from the actual production and airing of television shows and films. Lisbeth Barron, an analyst at S.G. Warburg, said that films and series usually provide royalty rates of just 8% to 10%, vs. the gross margins on toys and merchandise that run as high as 70% to 80%. The ‘X’ factor Marvel was caught somewhat by surprise by the runaway success of the animated “X-Men.” While its “X-Men” line of action figures has been selling well, the company did not have in place a broad line of “X-Men” toys and merchandise. As president and CEO of Marvel Films and New World Family Filmworks, Arad will change that. Terry Stewart, president and COO of Marvel, said the appointment of Arad will provide the company substantial strategic and financial benefits: “We will be able to integrate these media projects with comic books, picture cards, toys, videogames, consumer products licensing and confections.” Just last month, Marvel announced that it was getting into the toy business with Arad and Toy Biz Inc., which currently merchandises Marvel Super Hero action figures. Marvel is contributing its master toy license and about $ 7 million of working capital for a 46% stake in a new, expanded Toy Biz. Entrepreneur Issac Perlmutter, who owns the privately held toymaker, will contribute all of the company’s assets and become chairman of the new company. Toy Biz had about $ 65 million in net revenues and $ 6.5 million of net income in 1992. An Arad climate Arad, who has developed toy lines for Hasbro, Mattel, Tyco and others, will develop toys exclusively for toy biz and will have an equity interest. “We can convert a standard royalty into a substantially greater economic interest,” Stewart said when the deal was announced. “In addition, we will have considerably more control than if we had granted a master license to a larger, unaffiliated company. Because Toy Biz contracts out all manufacturing we can maintain Marvel’s high-margin, low-capital investment profile.” Separately, MacAndrews & Forbes said a lawsuit has been filed in Delaware state court challenging its cash tender offer to buy up to 11 million common shares of Marvel for $ 25 a share. The lawsuit, which purports to be a class action suit on behalf of all of Marvel’s public shareholders, alleges that the tender offer is unfair and coercive and that MacAndrews & Forbes and Marvel’s board of directors have breached their fiduciary duties to stockholders and that the disclosure documents are false and misleading. The lawsuit seeks unspecified damages and an order directing MacAndrews & Forbes to improve the terms and structure of the offer. It does not enjoin or otherwise delay the offer which is set to expire at midnight EDT today. MacAndrews & Forbes said it believes the lawsuit is wholly without merit and that it intends to defend the action.
Follow @Variety on Twitter for breaking news, reviews and more