Licensing deals swell Marvel's coffers

A correction was made to this article on April 14, 2004.

NEW YORK — With well over a month to go before “Spider-Man 2″ mania is unleashed upon the world’s megaplexes and Wal-Marts, character licensor Marvel is already counting the dough it believes will continue to pile up as the company dips deeper into its superhero catalog for film and videogame fodder.

Comicbook publisher released detailed historical financials Thursday on its licensing biz and predicted that the continued exploitation of popular characters on the bigscreen and DVD, and in vidgames will fuel a dramatic expansion in licensing sales.

Over the next two years, four vintage characters including Elektra, Ironman and Black Widow, will hit the screen, bringing with them a stream of royalties that could run several years after their feature debuts.

Company said growth in domestic consumer product licensing to a range of apparel, videogames and food and beverage providers has provided the bulk of growth in the past, as revenues climbed from $28.8 million in 2002 to $88.7 million last year.

In the last few months, Marvel has signed several major licensees for its characters (including those not yet adapted to the bigscreen) including Hanes/Sara Lee (underwear and other apparel), RM Palmer (candy) and Jay Franco (home products and bedding).

Company also signed a major videogame deal with Electronic Arts for new lines to bow in 2005.

The number of new licenses with minimum guaranteed royalty payments above $1 million increased to six in 2003, up from three in 2002. Marvel said this trend should continue as it consolidates its consumer product licenses.

Comicbook publisher anticipates that international licensing and its Marvel Studios production business “are poised to dramatically increase” over 2003.

Marvel Studios, which provides the creative input for films adapted from comics, drew royalty payments from its studio partners from box office, DVD, TV license fees and other ancillaries totaling $18 million last year. Company said the unit also reps a significantly underdeveloped revenue stream in its own right as it pushes to produce its own made-for-DVD animated features, TV animation and genre films.

Supercharged

Clearly bullish about the brand potential of its upcoming releases, Marvel recently upped its 2004 revenue and earnings guidance, expecting operating income of around $200 million from total sales of $448 million-$468 million.

Company recently announced first-quarter licensing revenues of $50 million, with big growth from fees related to branded clothing, food and other accessories.

International revenues grew from $1.9 million in the fourth quarter to $3.8 million. Company said overseas licensing revs should account for some 15% of total licensing revenue this year (or $25 million), compared with only 5% in 2003.

Based on the success of feature films in international markets — which typically account for 45% of total box office — management reckons international licensing should account for as much as 40%-45% of total licensing revenue within the next five years.

The Sony-Marvel joint venture that handles the “Spider-Man” film franchise contributed some $8 million in sequel merchandise in the run-up to the film’s June 30 opening.

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