Company expects 'modest' profits next year
Marvel Entertainment delivered some much-needed superhero news Tuesday, reporting “Iron Man” boosted third-quarter profits 40%.The Gotham film, comic and licensing outfit also raised full-year guidance for 2008, but cautioned that 2009 will see a movie-less lull and resulting earnings softness and a recession hit of 10%-15%. In 2010 and 2011, the company forecasts a rebound thanks to a return to two tentpole releases a year. For the quarter, net profit hit $50.6 million, up from $36.3 million a year ago. Total revenue surged 48% to $182.5 million. Results were especially strong, execs said, because revenue associated with the B.O. on “Iron Man,” some $60 million, was recorded earlier than expected. The Paramount release kickstarted the summer in May. Along with “The Incredible Hulk,” a solid Universal hit in July, it pushed the company’s film unit to $90.2 million in revenue. “Iron Man” came out on DVD on Sept. 30, the last day of the quarter. Both titles together have collected nearly $1.1 billion in worldwide B.O. and homevid revenue. Marvel Studios, launched earlier this year, reported film production expenses of $45.2 million on an amortized basis, predicated on the company’s estimate of each pic’s “ultimate” tally from all revenue streams. That left operating income of $40.4 million, compared with an operating loss of $1.2 million in the year-ago period. Licensing hit a rough patch, as revenue dropped 29% to $56.1 million due to a decline in Marvel’s “Spider-Man” revenue given the lag since the last film installment in May 2007. Along with the quarterly results, Marvel upped its 2008 forecast for the film segment to $245 million-$275 million, a big change from its Sept. 29 estimate of $125 million-$140 million. In its first look at 2009, though, the company said it expects a $45 million decline in “Spider-Man” licensing coin and overall tough comparisons to 2008. Total revenue is now expected to reach $415 million-$460 million, well below analysts’ estimates. Chief exec David Maisel, in a conference call with analysts, noted the planned 2010 Broadway bow of Julie Taymor’s “Spider-Man” tuner, with music from U2’s Bono and the Edge. “In keeping with our conservative fiscal approach, we are not funding the show but are co-producing it and have meaningful first-dollar gross participation,” Maisel added. The company anticipates ending 2009 with $100 million in cash, though the production of “Iron Man 2″ and “Thor” will require some borrowing, which Maisel said means continued close monitoring of the turbulent credit markets. Maisel noted the company recently decided to consolidate production, post-production and other activities at Raleigh Studios in Manhattan Beach. That will be the epicenter of production on at least the next four titles. “We will not only have cost efficiencies by being able to have all the productions under one roof and negotiate various volume discounts and other sorts of cost efficiencies,” Maisel said, “but also have a better probability of having the quality that we all saw this past summer in the movies by being the hands-on producers, as we were with ‘Iron Man’ and ‘The Incredible Hulk.’ “ Marvel historically licensed out its potent comicbook brand names, as with the first “Spider-Man” and “X-Men” outings without getting involved in shooting. The Dow rose 305 points on Election Day, but Marvel stock bumped up just 1.5% to $31.45, perhaps because “Iron Man” had already been priced in.
Want Entertainment News First? Sign up for Variety Alerts and Newsletters!