Marvel looking to end Lee-gal battle

Spider-Man creator still hoping for reimbursement

Marvel Enterprises said Monday it believes “conditions are good” to settle a costly legal battle with legendary comicbook creator Stan Lee, who the courts say is entitled to a 10% slice of profits from Marvel movie and TV productions.

During an earnings call, Marvel Enterprises vice chair Peter Cuneo said the January ruling actually has facilitated negotiations between the two sides. That’s because the ruling handed down in federal court in Gotham didn’t entirely resolve Lee’s suit.

U.S. District Court Judge Robert W. Sweet left it up to a jury to decide whether Lee also is entitled to share in the profits from Marvel’s joint licensing merchandising with Sony Pictures Entertainment for “Spider-Man” and with Universal Studios for “The Hulk.”

“The judge … left a few areas open for interpretation. What that did was define the playing field better and allow for us to talk to each other,” Cuneo said.

That didn’t diminish Marvel’s upbeat mood over its earnings last quarter or enthusiasm for “Fantastic Four,” a co-production of 20th Century Fox and Marvel Studios that bows July 8.

Marvel’s net income more than doubled during the final quarter of 2004 over the same time last year — jumping from $13.5 million to $30.1 million — largely due to the “Spider-Man” joint merchandising venture and an uptick in revenues from international licensing.

Also boosting Marvel’s bottom line was a noncash, one-time tax credit of $6.2 million.

Sales in the fourth quarter rose 17% from $85.7 million to $100.5 million.

For Marvel during the quarter, the consolidated joint merchandising venture with Sony racked up $29 million in sales — $20 million higher than Wall Street estimates.

One dim spot: Toy receipts fell nearly 50% to $21.8 million during the quarter as sales trailed off for “Lord of the Rings” and “Hulk” action figures.

Publishing sales climbed 16.4% in the last quarter to $22.1 million on comic and paperback sales. Cuneo said this division was further bolstered by a recent deal to sell Marvel comicbooks in thousands of 7-Eleven stores nationwide.

While the company’s financial performance generally came in ahead of Wall Street’s expectations, analysts took note of Marvel’s prediction that overall sales will be down in 2005 compared to the previous year.

Briefing investors on the upcoming film slate, Marvel Studios topper Ari Avad said theater auds will soon start seeing trailers for tentpole “Fantastic Four.” Marvel, through its Cover Concepts division, will introduce “Fantastic Four” characters to elementary school children nationwide when it sends 2 million comicbooks written by educators to 6,000 schools.

On the matter of movie and TV profits alone, Lee is likely owed northwards of $20 million, although no one has locked in a precise dollar figure. He would be owed millions more should he likewise prevail on the joint merchandising issue.

Lee, Marvel’s chairman emeritus and co-creator of numerous characters including Spider-Man and the X-Men, says he’s entitled to participate in all production deals, while Marvel has argued otherwise.

If no settlement is reached, Marvel will continue through the appeals process, which could take years, Cuneo said. Lee said in a recent interview that he too hopes to resolve the matter out of court.

Marvel shares closed down 45 cent; Monday at $18.

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